2025 (8) TMI 771

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....AT gives rise to the following substantial question of law:- (a) "Whether the lower authorities was justified in holding that the payment of Rs. 80 Crores made by the assessee to Assay Developers Pvt. Ltd. is not covered under the provisions of 194H of the Act for deductibility of tax at source and no tax was required to be deducted under the provisions of 194H of the Act whereas the proviso to explanation (i) of Sec. 194H states that "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 processional services) or for any services in the course of buying or selling goods or in relation to any transaction relating ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ne, the Assessee was an "Assessee in default" under the provisions of Section 201(1) and 201(1A) of the IT Act. 3. Being aggrieved by this decision of the Assessing Officer, the Assessee preferred an Appeal before the CIT (Appeals). The CIT (Appeals), by its order dated 26th March 2015, allowed the Appeal of the Assessee interalia holding that the amount paid by the Assessee to M/s. Assay Developers Pvt Ltd was not in the nature of "commission or brokerage" and hence there was no requirement of the Assessee to deduct tax at source under Section 194H. This finding was arrived at by the CIT (Appeals) after examining all the documents on record including the agreements entered into by the Assessee with M/s. Assay Developers Pvt Ltd as well ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... to be brought in for the purposes of development, the joint venture agreement entered into between M/s. Assay Developers Pvt Ltd and the Assessee [forming the AOP] provided for payment of Rs. 80 Crores to M/s. Assay Developers Pvt Ltd. It is in this light that the ITAT held that Section 194H could not be attracted. 5. We find that the ITAT has correctly examined all the material on record and has thereafter come to the finding that it has. What is interesting to note is that in the present Appeal, the Revenue has not challenged any of the factual findings given by the ITAT, the most important one being that the transactions entered into by the Assessee and M/s. Assay Developers Pvt Ltd were on a principal to principal basis. Once this i....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ny services in the course of buying or selling of goods, or (iii) in relation to any transaction relating to any asset, valuable article or thing. The element of agency is to be there in case of all services or transactions contemplated by Explanation (i) to Section 194-H. If a car dealer purchases cars from the manufacturer by paying price less discount, he would be the purchaser and not the agent of the company, but in the course of selling cars, he may enter into a contract of maintenance during the warranty period, with the customer (purchaser of the car) on behalf of the company. However, such services rendered by the dealer in the course of selling cars does not make the activity of selling cars itself an ac....