Trade discount on stamp paper sales is not commission or brokerage, so no tax deduction at source applies.

Discount allowed by the Treasury to licensed stamp vendors on sale of stamp paper is not commission or brokerage for TDS purposes under section 194H. The vendors purchased stamp paper as independent dealers, not as agents of the Government, and the discount was only a reduction from face value rather than consideration for services rendered. A trade discount between seller and buyer does not attract deduction of tax at source as commission or brokerage. Accordingly, no TDS was payable on the discount.

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Issues: Whether the discount allowed by the Treasury to licensed stamp vendors on sale of stamp paper is liable to tax deduction at source as "commission" or "brokerage" under section 194H of the Income-tax Act.

Analysis: Section 194H applies to income by way of commission or brokerage paid for services rendered in the course of sale, ordinarily involving a third party such as an agent or broker. The licensed stamp vendors purchased stamp paper from the Treasury as independent dealers and not as agents of the Government. The discount allowed at the time of sale represented only a reduction from the face value payable by the purchaser and did not constitute consideration for any service rendered in the course of buying and selling. A trade discount granted by the seller to the buyer does not answer the description of commission or brokerage for the purpose of TDS.

Conclusion: The discount allowed to stamp vendors is not liable to deduction of tax at source under section 194H and does not amount to commission or brokerage.

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