AI Drafter 
TaxTMI 
TaxTMI 
2014 (4) TMI 353
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....ected. The Assessment year is 2005-06. 3. The facts in nutshell are:- (i) The Respondent - assessee is engaged in the business of manufacturing and trade of biological vaccines and animal health care pharmaceutical products. The assessee sells its products either through consignment, commission agents or directly through the distributors / stockists. For the purpose of selling its products the assessee had appointed consignment agents in various territories. The stock of its products are transferred to the consignment agents who in turn sale the products under its own name to the distributors / dealers / stockists in their respective territories. (ii) During the said assessment year, the assess....
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.... distributors / stockists as a part of product campaign scheme. The objection of the product campaign is " to promote the product sale and viability in competitor's market." (iii) In implementation of the aforesaid sales promotion schemes, the assessee passed on the incentives to the distributors / dealers / stockists through the consignment agent by way of sale credit notes. (iv) The assessee filed its returns of income on 29.10.2005 declaring total income of Rs.6,33,78,696/-. The return was accompanied with audit report in form 3CA and 3CD under Section 44 AB of the Income Tax Act,1961, balance-sheet, profit and loss account, challans for payment of taxes. The case of assessee was selected f....
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....se fell under Explanation (i) to Section 194H of the Income Tax Act which defined "commission or brokerage" to include any payment received or receivable directly or indirectly by a person acting on behalf of another person for services rendered (not being professional services) or for any services in the course of buying or selling of goods or in relation to any transaction related to any asset, valuable article or things (not being securities). Applying the said definition, the Assessing Officer held that as the assessee was paying the dealers/ stockist/ agent for the services rendered by them for buying and selling of goods, on the basis of quantum of sale made by them, such expenditure cannot be considered as sales promotion expenditure....
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....ssee on this ground and held that the distributors / stockists were not acting on behalf of the Assessee and that most of the credit was by way of goods received on meeting sales target and hence, it was observed that it cannot be said to be a payment received as 'commission' within the meaning of explanation (i) of Section 194H of the Income Tax Act. Accordingly, the addition of Rs.70,67,089/- was deleted. (vii) The Revenue being aggrieved by the order passed by the Commissioner of Income Tax (Appeals) approached the Tribunal in an appeal under Section 253 of the Act. The Tribunal after considering the order of the Assessing Officer and the order passed by the Commissioner of Income Tax (Appeals) by its impugn....
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....liable to deduct tax at source on such payments and the failure to do so attracted the provision of section 40(a)(ia) read with section 194H of the Income Tax Act,1961?" 6. On the other hand, learned Counsel appearing for the Assessee submitted that the concurrent findings of fact as recorded in the orders passed by CIT (Appeals) and the Tribunal do not call for any interference and no substantial questions of law arise in the present case. It was contended that the sales promotion expenditure as incurred on behalf of the Assessee under the Sales Promotion Schemes do not amount to payment of commission as falling under Section 194H of the Act. 7. We have perused the concurrent orders with the assistance of the learned Counsel for both....