TaxTMI 
TaxTMI 
2022 (11) TMI 1580
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....se and the decision rendered therein would apply mutatis mutandis to the other appeal filed by the Revenue for the assessment year 2012-13. ITA no.894/Mum./2022 Revenue's Appeal - A.Y. 2011-12 3. In its appeal, the Revenue has raised the following grounds: "(a) On the facts and in the circumstances of the case and law, the Hon'ble ITAT learned m holding that the transaction of sale between the assessee company and stockiest was on principal to principal basis and therefore discount offered would not come under ambit of 194H, without appreciating the fact that the entire liability in goods had not been transferred to the stockiest and that the company had to still carry liability in terms of expired goods and quality of goods etc, and therefore the stockiest were working as agents of assessee company, to promote and effect sales on behalf of assessee. (b) On the facts and circumstances of the case and in law, the Hon'ble ITAT has erred in holding that bonus and incentive offered by the assessee company to stockiest were also in nature of discount and therefore not covered under Section 194H, without appreciating the fact that such bonus/incentive a....
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....ntives, respectively. 6. The learned CIT(A), vide impugned order dated 09/03/2022, allowed the appeal filed by the assessee on this issue following the decision of the Co- ordinate Bench of the Tribunal rendered in assessee‟s own case for the assessment year 2010-11. Being aggrieved, the Revenue is in appeal before us. 7. During the hearing, the learned Departmental Representative ("learned D.R") vehemently relied upon the order passed by the Assessing Officer (TDS). 8. On the other hand, the learned Authorised Representative ("learned A.R.") placed reliance on the decision of the Co-ordinate Bench of the Tribunal rendered in assessee‟s own case for the preceding assessment year. 9. We have considered the rival submissions and perused the material available on record. We find that the Co-ordinate Bench of the Tribunal in assessee‟s own case in DCIT v/s Wockhardt Ltd., in ITA no.6803/Mum./2018, vide order dated 11/12/2020, for the assessment year 2010-11, decided similar issue in favour of the assessee by observing as under:- "11. Considered the rival submissions and material placed on record. With the ground no. (a) and (b), we notice that the....
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....ty of the product being drugs-medicine handled by the assessee company otherwise it could have severe health hazard impacts on the consumer which is a normal market practice in the industry but the same is not decisive to conclude that the property in the goods with all risks and rewards have not passed to the distributor on sale of products by the assessee company to the distributor at the time of delivery by the carrier to the distributor as per stipulated terms of distribution agreement. We have also observed that the assessee company is raising sale invoice's on the distributor M/s Rudra Pharma Distributors Limited which are placed on the paper book filed by the assessee company at page 35 while the ledger account showing invoices raised and payments received from distributor M/s Rudra Pharma Distributors Limited by the assessee company is also placed in the paper book filed by the assessee company at page 36 to 51. We have also observed that the said distributor M/s Rudra Pharma Distributors Limited is registered with VAT authorities and is raising its invoices (including VAT) to their customers, whereby all the above facts clearly reflects that the distributors is buying ....
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....Act was computed at Rs.1,64,203. 13. The learned CIT(A), vide impugned order, allowed the appeal filed by the assessee on this issue following the decision of the Co-ordinate Bench of the Tribunal rendered in assessee‟s own case for the assessment year 2010-11. Being aggrieved, the Revenue is in appeal before us. 14. We have considered the rival submissions and perused the material available on record. We find that the Co-ordinate Bench of the Tribunal in assessee‟s own case in DCIT v/s Wockhardt Ltd. (supra), for the assessment year 2010-11, decided similar issue in favour of the assessee by observing as under:- "13. With the ground no. (c), we notice that the Coordinate Bench of ITAT in the case of Income-tax Officer, Ward-2(2), Ahmedabad v. Parag Mahasukhlal Shah [2011] 12 taxmann.com 37 (Ahmedabad) has already decided the similar issue raised by the revenue in the present case. For the sake of clarity, which is reproduced below:- "5. We have heard both the sides at some length. Admitted factual position is that the assessee is having a dealership of FAG Bearing (India) Ltd. and, therefore, in the business of sales of ball-bearings. This fact ....
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....r third month's delay and so on. If the contention of revenue is accepted, merely because the assessee has described the additional sale proceeds as interest in case of contract as per illustration (a ) above, such payment would not be profits derived from industrial undertaking, but in case of illustration (b) above, if the payment is described as sale price it would be profits derived from the industrial undertaking. This can never be, because in sum and substance these are only two modes of realising sale consideration, the object being to realise sale proceeds at the earliest and without delay. Purchaser pays higher sale price if it delays payment of sale proceeds. In other words, this is a converse situation to offering of cash discount. Thus, in principle, in reality, the transaction remains the same and there is no distinction as to the source. It is incorrect to state that the source for interest is the outstanding sale proceeds. It is not the assessee's business to lend funds and earn interest. The distinction drawn by Revenue is artificial in nature and is neither in consonance with law nor commercial practice." 7. In the light of the above precedent, we ....
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....e the damages were described as by way of interest that did not convert them into interest under the Act. The word used in the order of the State Commission was not "interest" as defined in section 2(28A). Interest, in the order of the Commission, meant compensation or damages for delay in construction or handing over possession of the same causing consequential loss to the complainant by way of escalation in the price of the property and also on account of distress and disappointment faced by him. Interest, in the order, had been used merely as a convenient method to calculate the amount of compensation in order to standardize it. Otherwise, each case of an allottee would have to be dealt with differently. Nomenclature did not decide the issue. In view of the definition of "interest" in section 2(28A), the provisions of section 194A were not applicable and the petitioner Authority was wrong in deducting tax at source from the interest payable to the respondent (complainant)." 7.3 This decision is very helpful to decide this appeal because it was held that if the nature of payment is to compensate an allottee, then the provisions of section 194A not to be applied as far as....
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....at only two modes are plausible for realization of sale consideration. However, for a businessman the object is to realize the sale proceeds at the earliest and without any delay. When the purchaser pays a higher sale price on account of delay in payments of the sale proceeds, then the source being trade activity, therefore, held as eligible profit of the Industrial Undertaking for the purpose of computation of deduction. 8.2 Almost on identical situation in the case of Phatela Cotgin Industries (P.) Ltd. (supra), the Hon'ble Court has stated that the interest which was received on delayed payment on account of sale to customers has to be termed as income derived from the Industrial Undertaking and such an income was held as distinct from interest income which is received from Fixed Deposit. The Courts have delivered these judgements by taking into consideration the immediate source of said receipt. If the immediate source is a loan, deposit, etc., then the payment is in the nature of "interest" but if the immediate source of receipt of payment is trade activity, then the nature of receipt is not "interest payment" but in the nature of payment of compensation. ....
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....is that since the nature of payment did not fall within the category of "income from other sources" as also cannot be allowed as payment of interest under section 36(1)(iii), therefore, it's true nature is nothing but added value of cost of purchase, hence no TDS was required to be deducted. 12. In the light of the overall discussion made hereinabove, we are of the view that the impugned payment had a direct link and immediate nexus with the Trade liability being connected with the delayed purchase payment, hence, did not fall within the category of "Interest" as defined in section 2(28A) of the Income-tax Act for the purpose of deduction of Tax at Source as prescribed under section 194A of the Act. Resultantly, this assessee cannot be held a defaulter of non-deduction of tax at source under section 194A of the Act. The Learned CIT (Appeals) has rightly reversed the findings of the Assessing Officer. Ground raised of the revenue is, therefore, dismissed." 14. We also notice that the Coordinate Bench of ITAT in the case of Sri Venkatesh Paper Agencies (Hyd.) (P.) Ltd. v. Deputy Commissioner of Income-tax, Circle-3(1), Hyderabad [2012] 24 taxmann.com 52 (Hyd.) h....
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....tion 2(28A) of the Act. The payment made by the assessee in the present appeal being of similar nature also cannot be termed as interest as defined u/s. 2(28A) of the Act." 15. Therefore, respectfully following the decision of Coordinate Bench of ITAT which is applicable mutatis mutandis 24 I.T.A. No. 6803/Mum/2018 & CO 51/Mum/2020 M/s. Wockhardt Ltd. in the present case, we are inclined to accept the submission of Ld. AR. Accordingly, the grounds (c) raised by the revenue are dismissed." 15. The learned D.R. could not show us any reason to deviate from the aforesaid decision and no change in facts and law was alleged in the relevant assessment year. Thus, respectfully following the decision of the Tribunal rendered in assessee‟s own case cited supra, we find no infirmity in the impugned order passed by the learned CIT(A) on this issue. As a result, ground no. (c) raised in Revenue‟s appeal is dismissed. 16. In the result, the appeal by the Revenue for the assessment year 2011-12 is dismissed. ITA no.893/Mum./2022 Revenue's Appeal - A.Y. 2012-13 17. In this appeal, the Revenue has raised the following grounds:- "(a) On the facts and in t....