TaxTMI 
TaxTMI 
TaxTMI 
2014 (1) TMI 230
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....ds raised in AY 2008-09 in ITA No. 367/K/2013 reads as under: "1. For that the orders of the Deputy Commissioner of Income Tax, Circle-57 (TDS) and the appellate order dated 18.01.2013 passed by the Ld. CIT(A)-1 are arbitrary, illegal and void ab initio. 2. For that the petitioner has never violated the provision of law and deducted tax on commission of Rs.21,20,87,178/- allowed to his franchisees. But the petitioner has not allowed any discount to its franchisees for the year in consideration and therefore there is no question of deduction of tax at source. Therefore the action of the appellate authority is challenged. Appellate authority has partially modified but the assessing authority has raised the revision demand notice based on original demand prior appeal, which is erroneous. 3. For that the appellate authority has not correctly passed his order nor he has directed the assessing authority clearly the quantum of modification, through all the copies of returns in Form 26Q and paid challans with audited final accounts were produced at appeal." 3. At the outset, Ld. counsel for the assessee fairly conceded that on commission the issue is covered by the decision of Hon'ble ....
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....l-to-principal basis and there cannot be any principal-agent relationship between a seller and a buyer. 4. Ld. counsel also argued that as far as commission is concerned, the issue is covered but in view of the decision of Hon'ble Supreme Court in the case of Hindusthan Coca Cola Breverage Pvt. Ltd. 293 ITR 226 that the recipients have paid tax on income embedded in these payments, the taxes cannot once again be recovered from the assessee. For this, he also relied on the coordinate bench decision in the case of Ramakrishna Vedanta Math Vs. ITO in ITA Nos. 477, 478 & 479/K/2012, AY 2005-06 to 2006-07 and 2008-09 dated 31.07.2012, wherein the similar principle is laid down and the relevant portion reads as under: "4. The issue in appeal lies in a very narrow compass of material facts. The assessee before us is a charitable trust, set up in the year 1939, doing significant public service. During the relevant period, the assessee has made several payments, in respect of book binding charges, printing charges, advertisement and publicity and bus hire charges etc, but had not deducted tax at source from these payments. On these facts, the Assessing Officer required the assessee to sho....
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....that vicarious recovery liability can be invoked. Learned counsel contends that once all the details of the persons to whom payments have been made, it is for the Assessing Officer, who has all the powers to requisition the information from such payers and from the income tax authorities, to ascertain whether or not taxes have been paid by the persons in receipt of the amounts from which taxes have not been withheld. It is learned counsel's submission that as a result of Hon'ble Allahabad High Court's judgment in the case of Jagaran Prakashan (supra), this paradigm shift in the interpretation of Section 201(1) has been brought about. 8. The plea is indeed well taken. Learned counsel is quite right in his submission that, as a result of the judgment of Hon'ble Allahabad High Court in Jagran Prakashan's case (supra) and in the absence of anything contrary thereto from Hon'ble jurisdictional High Court, there is a paradigm shift in the manner in which recovery provisions under section 201(1) can be invoked. As observed by Their Lordships, the provisions of Section 201(1) cannot be invoked and the "tax deductor cannot be treated an assessee in default till it is found that assessee ha....
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.... taxes on income of the recipient directly from the recipients of income. It is not the revenue's case before us that, on the facts of this case, such an exercise by the Assessing Officer is not possible. It does put an additional burden on the Assessing Officer before he can invoke Section 201(1) but that's how Hon'ble High Court has visualized the scheme of Act and that's how, therefore, it meets the end of justice." Ld. counsel for the assessee stated that similar direction may be given in this case of assessee company. 5. We find that the issue is covered by the decision of Hon'ble Calcutta High Court in the case of Bharati Cellular Ltd. (supra) (from head notes), wherein it is held as under: "In order to hold the assessee is liable for deducting tax at source under section 194H of the Income-tax Act, 1961, whether the relationship between the assessee and its franchisees created by the agreement is of a principal and agent has to be gathered from the nature of the contract, its terms and conditions, and the terminology used by the parties is not decisive of the relationship. The court is to examine whether after delivery of the goods to the buyer, the seller has retained th....