2016 (11) TMI 718

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....izag/2014 dated August 10, 2015, for the assessment years 2008-09, 2009-10 and 2010-11. 2. The respondent-assessee is engaged in the manufacture and sale of beer to the Andhra Pradesh Beverages Corporation Limited (APBCL). After a tax deducted at source survey was conducted in the premises of the assessee on March 25, 2010, an assessment order was passed. The Assessing Officer held that the assessee had committed default in terms of section 201(1) of the Act, and levied interest under section 201(1A) of the Act in respect of the amounts paid under the trade schemes and discounts. The assessee contended that, under section 194H of the Act, tax was required to be deducted at source at the time of payment of commission/brokerage ; trade disco....

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.... of another for services rendered or for any services in the course of buying or selling of goods, etc., fell under the category of "commission or brokerage" ; provision of service, by a person acting on behalf of another person, signified the principal- agent relationship between the payer and payee, since the agent acts on behalf of the principal ; it cannot be said to be a service provided by one person on behalf of another person, and the said payment cannot fall under the definition of "commission" ; in the case on hand, the assessee supplied beer to APBCL, a Government of Andhra Pradesh undertaking, which, in turn, sold beer to various retail dealers ; in effect there was no direct relationship between the assessee and the retail deal....

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....e benefits of the activities of the agent would be reaped by the principal ; since the agent was not the owner of the goods, the loss, if any, suffered by the agent was to be borne by the principal, and the agent was required to be indemnified by the principal ; and the payment received by the agent for the services rendered to the principal is understood as "Commission". 6. After referring to the judgment of the Gujarat High Court in the case of Ahmedabad Stamp Vendors Association v. UOI [2002] 257 ITR 202 (Guj), the Tribunal held that the "element of agency" was an essential requirement in order to characterise a payment made for services provided as "commission". The Tribunal relied on the judgment of the Bombay High Court in Harihar Co....

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....of "commission" attracting section 194H of the Act. 8. Before us Sri K. Raji Reddy, learned senior standing counsel for income- tax, would reiterate the very same submissions as were urged by the Revenue before the Tribunal. As has been noted by the Tribunal, in the order under appeal, the Explanation to section 194H of the Act defines "commission or brokerage" to include any payment received directly or indirectly by a person acting on behalf of another person for services rendered, or for any services in the course of buying or selling of goods, or in relation to any transaction relating to any asset, valuable articles or thing, not being securities. Payment received by a person from another, for services rendered, constitutes "commissio....