TaxTMI 
TaxTMI 
2018 (6) TMI 397
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....ng the provisions of Section 194H of the Income Tax Act, 1961 on the payment of turnover discount of Rs. 4,57,52,494/-?" 3. A few facts relevant for the decision of the controversy involved as narrated in the appeal may be noticed. During inspection on 20.1.2009 of the office records of the respondent-assessee i.e. M/s OCM India Limited, GT Road, Chheharta, Amritsar, a company engaged in manufacturing and sale of woolen articles, it was noticed that the assessee debited an amount of Rs. 4,57,52,494/- to the account of Trade turnover discounts which had been netted out from the gross turnover and did not appear an item of expense in profit and loss account. The assessee pleaded before the Assessing Officer that commission or brokerage arose on account of agency transactions which did not attract TDS for the services rendered by the third party. The Assessing Officer after considering the explanations of the assessee concluded that the amount of Rs. 4,57,52,494/- being turnover discount was directly or indirectly for the services rendered as per the inclusive definition of the Explanation to Section 194H of the Act. The respondent company was held liable to deduct the tax at source....
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....in the course of buying or selling of good, or (iii) in relation to any transaction relating to any asset valuable article or thing, not being securities. In order to examine whether Explanation (i) to Section 194H of the Act is attracted, necessarily, it is to be seen whether the assessee has made any payment and, in case it is so, whether it is for service rendered by the payee to the assesseee. 6. Having crystallized the legal position, we proceed to examine various pronouncements relied upon by learned counsel for the parties. Learned Counsel for the revenue, on the strength of judgments in Commissioner of Income Tax Vs. Director, Prasar Bharti [2010] 325 ITR 205(Ker), Commissioner of Income Tax Vs. Idea Cellular Ltd. [2010] 325 ITR 148 (Delhi), Vodafone Essar Cellular Ltd. Vs. Assistant Commissioner of Income Tax (TDS) [2011] 332 ITR 255 (Ker), Bharti Cellular Limited Vs. Assistant Commissioner of Income Tax, (2011) 244CTR (Cal) 185, Hindustan Coca Cola Beverages Private Limited Vs. Income Tax Officer (2005) 98TTJ (JP) 1 assailed the decision of the tribunal. 7. In Prasar Bharti's case (supra), the assessee a fully owned Government of India undertaking was engaged in telecas....
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.... The Calcutta High Court in Bharti Cellular Limited's case (supra) also expressed in favour of the revenue in view of judgments of the Delhi and Kerala High Courts. 10. Learned Counsel for the Assessee had cited judgments in The Bhopal Sugar Industries Limited Vs. Sales Tax Officer Bhopal, AIR 1977 SC 1275, Ahemdabad Stamp Vendors Association Vs. Union of India, (2002) 257 ITR 202 (Guj.), Commissioner of Income Tax Vs. Qatar Airways, (2011) 322 ITR 253 (Bomb.) and M.S. Hameed and others Vs. Director of State Lotteries and others, (2001) 249 ITR 186 (Kerla). 11. Heavy reliance was placed by learned Counsel for the assessee in Ahemdabad Stamp Vendors Association's case (supra). The issue before the Gujarat High Court in the said case was whether tax at source was required to be deducted under Section 194H of the Act where a licensed vendor of stamp paper was collecting the stamp papers from the Government and then depositing the value of the stamp papers less the discount with the Government in terms of Gujarat stamps supply and sales Rules, 1987 (in short, 1987 Rules). It was held that the discount made available to the licensed stamp vendors under the provisions of 1987 Rules, do....
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....s association that the discount made available to the licensed stamp vendors under the provisions of the Gujarat Stamps Supply and Sales Rules, 1987, does not fall within the expression "commission" or "brokerage" under section 194H of the Income-tax Act, 1961. The impugned communication dated March 14, 2002, from the Incometax Officer, TDS 4, Ahmedabad, to the Senior Treasury Officer, Ahmedabad, is, therefore, quashed and set aside, and so also the consequential instructions dated March 19, 2002 (annexure "D" to the petition) issued by the Senior Treasury Officer, Ahmedabad, to the secretary of the petitioner's association are quashed and set aside." 12. Adverting to the factual matrix herein, admittedly, the assessee debited an amount of Rs. 4,57,52,494/- to the account of "Trade Turnover Accounts" which had been netted out from the gross turnover and did not appear as expense in the profit and loss account. The Assessing Officer held that the said amount being turnover discount was directly or indirectly for the services rendered as per Explanation to Section 194H of the Act and thus demand on account of TDS and interest under Section 201(1A) of the Act was raised. On appeal b....
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....ct to product. Further, the A.O. has failed to established and bought on record any living instance on the basis of which it can be safely inferred that trade discount is only a sham arrangement and the payment has not been actually made to the trade dealers, Neither, the A.O. has bought on record any solid information coming to his possession which could led that the trade discount is virtually a commission paid to the intermediaries. On the contrary, it has been all along the appellant's contention that after the deal in a particular case is over, it loses its right over the same and it becomes the absolute property of the customer/buyer who was also paid trade discount so as to motivate towards appellant's products in the open market full of competition. It is a general trade phenomenon amongst all the business community to enter into sale transaction directly with the customer and also procure orders through its commission agents. I am of the considered opinion that the A.O. has not appreciated the entire state of affairs of the appellant company in its true business spirits and in the right perspective. He has rather misled himself in inter-mixing the two types of sales i.e. d....
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.... that the assessee is a company engaged in manufacture and distribution of nonalcoholic packed glass bottle and plastic crates. The said company has been filing TDS return in respect of TDS of salary, contract/sub-contract and interest but no TDS return in respect of commission payment has been filed. A survey u/s 133 A of the Act was conducted on 20th Dec., 2002 on business premises for the purpose of verification regarding TDS being made by the assessee. During the course of survey, a trial balance showing affairs of the company for the period between 1st Jan., 2002 to 19th Dec., 2002 was obtained. From this trial balance, it was found that distributor commission has been debited by an amount of Rs. 4,75,22,929/-. However, it was found that no TDS was deducted and paid on corresponding credit entries or commission payment whatsoever. The distributors of the said company had admitted that they have been getting the commission from the said assessee and there were many other facts available before the ITAT, Jaipur Bench, while deciding the issue against the assessee. The assessee in that case was also maintaining books of account, in which he has declared the purchase and sale of t....