TMI Blog2023 (11) TMI 743X X X X Extracts X X X X X X X X Extracts X X X X ..... hus, in the present case, assessee has duly submitted declarations and PAN of the transporters. Thus, in light of the above mentioned facts and circumstances of the case, addition made by AO and confirmed by CIT(A) on account of non-deduction of tax u/s 194C is bad and liable to be deleted. Appeal of assessee allowed. - Dr. B. R. R. Kumar, Accountant Member And Ms. Astha Chandra, Judicial member For the Assessee : Sh. Ved Jain, Adv. And Ms. Supriya Mehta, CA For the Revenue : Sh. Vivek Vardhan, Sr. DR ORDER PER BENCH: The present appeals have been filed by assessee against the orders of ld. CIT(A), Rohtak dated 31.10.2019. 2. Since, the issue involved in all these appeals are similar, they were heard together and being adjudicated by a common order. 3. In ITA No. 9268/Del/2019, following grounds have been raised by the assessee: 1. On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax (Appeals) [CIT(A)] is bad, both in the eye of law and on the facts. 2. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in confirming the action of the ITO( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n law, in confirming the above said demands raised by the AO by grossly ignoring the proviso to section 201 according to which assessee shall not be treated as assessee in default if the deductee has included such income in its income tax return and the taxes are paid on such income. 9. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in confirming the action of the ITO(TDS) in initiating penalty under section 271C of the Income Tax Act. 10. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in confirming the action of the ITO(TDS) in initiating penalty under section 272A(2)(j) of the Income Tax Act on account of delay in furnishing of Form 27C. 4. This is an appeal filed by the assessee against the order passed by CIT(A) confirming the additions made by AO u/s 201(1) 201(1A) of the Act by holding that the assessee in default for not deducting tax on freight charges u/s 194C and on bill discounting charges u/s 194H. 5. Brief facts of the case are that the assessee is engaged in the business of manufacturing of machined engine parts for Hero MotoCorp Ltd. 6. Dur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... educts amount for immediate payment of a bill, all that it is doing making immediate payment by purchasing the invoices whose payment will be further collected from the debtor directly by the factor. Thus, all the risks and rewards shift to the factor in such a case and it is in no way such factor can be termed as an agent of the assessee. d) No basis or rationale was given by the AO for holding that such bill discounting charges are in the nature of commission or suspense account. e) The addition was made arbitrarily by the AO without furnishing any cogent reason for bringing bill discounting charges under the ambit of commission u/s 194H. 13. The ld. CIT(A) disregarded the submissions filed by the assessee and upheld the action of AO by holding that the nature of payment of discount falls u/s 194H(iv) of the Act. 14. Aggrieved by the order of the ld. CIT(A), the assessee filed appeal before the Tribunal. 15. It is pertinent to note that, a) no principal to agent relationship exists between the assessee company and Hero Moto Corp Ltd and Hero Fin Corp Ltd. b) the amount of bill discounting charges borne by the assessee company do not constitute commission. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsaction relating to any asset, valuable article or thing. The element of agency is to be there in case of all services or transactions contemplated by Explanation (i) to section 194H. If a car dealer purchases cars from the manufacturer by paying price less discount, he would be the purchaser and not the agent of the company, but in the course of selling cars, he may enter into a contract of maintenance during the warranty period, with the customer (purchaser of the car) on behalf of the company. However, such services rendered by the dealer in the course of selling cars does not make the activity of selling cars itself an act of agent of the manufacturer when the dealings between the company and the dealer in the matter of sale of cars are on principal to principal basis. This is just an illustration to clarify that a service in the course of buying or selling of goods has to be something more than the act of buying or selling of goods. When the licensed stamp vendors take delivery of stamp papers on payment of full price less discount and they sell such papers to retail customers, neither of the two activities (buying from the Government and selling to the customers) can be te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of any debt incurred or money borrowed. Instead, the assessee had merely discounted the sale consideration respectively on sale of goods. The following discussion of the Tribunal in this behalf is relevant: . 13. Having regard to the aforesaid, we are of the opinion that no substantial question of law arises, as the matter stands settled by the dicta of the Supreme Court as well as clarification of CBDT itself. PR. CIT-06 VERSUS M. SONS GEMS N JEWELLERY PVT. LTD. (FORMERLY: M SONS ENTERPRISES PVT. LTD.) C/O SSAR ASSOCIATES, 2016 (4) TMI 1132 - DELHI HIGH COURT, Dated April 25, 2016 8. Further the Court finds that the term sheet issued by the GTFL showed that the interest at 13% pa will be charged in the event of repayment of any borrowings. This is different from the factoring charges @ 0.10% payable to GTFL. As a matter of fact, the assessee has debited the above sum to its P L account towards factoring/discounting charges . In light of the above factors, there was no factual basis for the AO to have disbelieved the assessee's explanation and simply treat the entire amount as interest. The question of disallowing the entire amount under Section 40( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he order of the AO, the assessee filed appeal before the ld. CIT(A). 24. During the appellate proceedings, the assessee submitted that the declaration from the transporters was duly taken under section 194C(6) of the Act and were also duly submitted before the AO and accordingly no TDS was liable to be deducted on such freight payments. 25. The Id. CIT(A) rejected the submissions filed by the assessee and upheld the action of the AO. 26. Aggrieved by the order of the Ld. CIT(A), the assessee filed an appeal before the Tribunal. 27. It is relevant to note that, a) During the year under consideration the assessee paid freight charges to three parties namely Ankit Tempo Service prop. Fateh Singh, Rambir Transport Company prop. Rambir Sharma and SCO Cargo. b) All these three transporters owned not more than 10 goods carriages at any time during the previous year. c) A declaration to this effect along with PAN was duly submitted before the AO. d) The AO had arbitrarily rejected these declarations filed by the assessee. 28. There is no dispute with regard to the fact that once the assessee submits declaration to substantiate that the transporters did not own mo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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