TaxTMI 
TaxTMI 
2003 (1) TMI 705
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Assessing Officer has held that the assessee was under an obligation to deduct tax at source from the payments termed as 'commission', though, according to the assessee, in the nature of trade discount, sales incentives or bonus on achieving the targeted sales. The Assessing Officer has further held that as the commission credited by the assessee, to the dealers, amounted to ₹ 92,81,460, the assessee is liable to pay the amount of tax non-deducted which, worked out at the rate of 10 per cent of the amount of commission, comes to ₹ 9,28,146. The Assessing Officer further held that the assessee is liable to pay interest under section 201(1A) on the aforesaid amount which worked out to further ₹ 9,74,505 till 31st March, 19....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s by acting on behalf of the company and, therefore, there is no de facto payment of commission in terms of connotations of that expression in commercial parlance. It is also submitted that all transactions between the assessee and the dealers/distributors are on principal-to-principal basis, the sales made to the dealers/distributors is on their account and that, irrespective of the terminology employed, the relationship between the assessee vis-a-vis the dealers/distributors is of the seller and buyer. It is also submitted that the goods are sold to dealers vide sales bills and the property in goods passes to the dealers on the invoices being raised and the goods being shipped to the dealers. A reference was then made to the CBDT Circular....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nd decline to interfere in the matter. 4. We find that section 194H, which was reintroduced by the Finance Act, 2001, w.e.f. 1st June, 2001, imposes certain tax deduction obligations on persons, other than individuals and HUF, paying commission or brokerage to a resident. The expression 'commission or brokerage', for the purpose of section 194H, has been defined as follows: '"Commission or brokerage" includes 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 relating to any asset valuable article or thing not being securi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... sociis is a broader version of the maxim ejusdem generis. A man may be known by the company he keeps and a word may be interpreted with reference to be accompanying words. Words derive colour from the surrounding words. 5. Broom's Legal Maxims (10th Edn.) observes that "It is a rule laid down by Lord Bacon, that copulatio verborum indicat acceptationem in eodem sensu the coupling of words together shows that they are to be understood in the same sense." 6. Let us now deal with legal connotations of these two expressions, namely 'commission' and 'brokerage'. The Law Lexicon (Edited by Justice Y.V. Chandrachud; 1997 Edn.) observes that "in commercial law, commis- sion is a compensation to a factor or other agent for services....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ipal basis, and the relationship between the assessee and the persons to whom commission in question is concerned is of seller and buyer, and not of principal and agent. 8. If we are to look at the connotations of expression 'commission or brokerage' in its cognate sense, as in the light of the principle of noscitur a sociis we are obliged to, a view indeed seems possible that the scope of expression 'commission', for this purpose, will be confined to 'an allowance, recompense or reward made to agents, factors and brokers and others for effecting sales and carrying out business transactions' and shall not extend to 'trade discounts' which at best the assessee's commission claim in the present case. As we are adjudicating, on legality of a ....