DCIT(OSD)(TDS)-2(3), MUMBAI V. WOCKHARDT LTD., MUMBAI

ITA 1821/MUM/2025

AI Insights

The case involves an appeal by the revenue against the order of the CIT(A) which had partly allowed the appeal of Wockhardt Ltd., the respondent. The primary contention was whether the discounts and bonuses given to stockists, and the interest on delayed payments to MSMEs, were subject to TDS under sections 194H and 194A of the Income-tax Act, 1961. The CIT(A) had ruled in favor of the assessee, citing previous ITAT decisions that were consistent with the assessee's position. The revenue challenged this interpretation, but the Tribunal upheld the CIT(A)'s decision, referencing the principle of consistency in judicial decisions.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 314281 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2025
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: misc
• Other Referred Cases: AY 2010-11 to 2015-16
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: PIYUSH CHHAJED; AYUSH; MAHENDRA BISHNOI
• Keywords: Rule of consistency; TDS; Liquidation
• Section: 201(1)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “G”, MUMBAI BEFOR SHRI ANIKESH BANERJEE, JUDICIAL MEMBER AND MISS PADMAVATHY S. ACCOUNTANT MEMBER ITA No. 1821/Mum/2025 (Assessment year : 2016) DCIT(OSD)(TDS)-2(3), Mumbai R.No.320, 3rd Floor, MTNL Building, Mumbai-400 026 vs WOCKHARDT LTD WOCKHARDT TOWERS BANDRA MURLA COMPLEX BANDRA PAN : AAACW2472M APPELLANT RESPONDENT Assessee by : Shri Piyush Chhajed-CA & Ayush Chhajed, CA Respondent by : Shri Mahendra Bishnoi - CIT DR Date of hearing : 06/05/2025 Date of pronouncement : 08/ 05/2025 O R D E R PER ANIKESH BANERJEE, J.M: The instant appeal of the revenue was filed against the order of the Learned Commissioner of Income-tax (Appeals), Pune-12 [for brevity, ‘Ld.CIT(A)’] passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’), for Assessment Year 2016-17, date of order 28.01.2025. The impugned order was emanated from the order of the Ld.Income-tax Officer (TDS) (OSD), Circle 2(3), 2 ITA No.1821 /Mum/2025 Wockhardt Ltd Mumbai, (in short, ‘the A.O.’) passed under section passed under section 201 (1) / 201(1A) of the Act, date of order 21/03/2023. 2. The revenue has taken the following grounds of appeal:- “I hereby direct the DCIT (TDS)-2(3), Mumbai, to file an appeal to the Appellate Tribunal, Mumbai against the order of No. ITBA/APL/S/250/2024- 25/1072618951(1) dated 28.01.2025, in the above case on the following ground(s): 1. \"On the facts and in the circumstances of the case and law, the Id. CIT(A) has erred in 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.\" 2. \"On the facts and circumstances of the case and in law, the ld. CIT(A) 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 are offered subsequent to sales and therefore are essentially are offered subsequent to sales and therefore are essentially in nature of commission as envisaged u/s 194H.\" 3. \"On the facts and circumstances of the case and law, the Id. CIT(A) has erred in holding that provision of interest made was in nature of liquidation damages and therefore connected to sales or purchase without appreciating the fact that the assessee itself categorized this expenditure as interest and therefore the same is covered u/s 194A of the Act.\" 3. The brief facts of the case is that a survey was conducted under section 133A(2A) at the assessee’s premises on 14/02/2017 for the purpose of verification of compliance of provisions of Chapter XVIIB of the Act. During the survey, the discrepancies were found and accordingly, the assessee’s case was taken for scrutiny. After the scrutiny, finally the Assessing Officer a tax liability of 3 ITA No.1821 /Mum/2025 Wockhardt Ltd Rs.53,60,41,868/- was determined, being tax of Rs.28,11,99,937/- under section 201(1) and interest of Rs.25,48,41,931/- under section 201(1A) in an order passed section 201(1) and interest under section 201(1A) totalling was determined. The aggrieved assessee filed an appeal before the CIT(A). The Ld.CIT(A) partly allowed the appeal by holding that the assessee will not be treated as liable to pay any interest on non-deduction of TDS as there is no liability in the first place to deduct TDS for the assessment year under consideration. Being aggrieved on the appeal order, the revenue filed an appeal before us. 4. We heard the rival submissions and considered the documents available on the record. Both the issues agitated before us are related to violation of section 194H and 194A duly considered by the Ld.CIT(A) in the impugned appeal order at paragraphs 4.5 to 4.7, which are extracted below:- “4.5 Therefore, the Appellant submitted that since, there is no change change in the facts and the law, the Rule of Consistency should be followed and the proceedings initiated to review the TDS applicability on discount offered to stockiest, payment of bonus and interest on delayed payment to MSMEs should be dropped. 4.6 I have gone through the order of the AO, the Statement of Facts and the submission made by the appellant. It is an undisputed fact that the impugned issue is already decided by the Hon'ble ITAT, Mumbai and the Ld. CIT(A) in favour of the appellant for the AYs 2010-11 to 2015-16. The Ld. AO had also mentioned in his assessment order for the AY 2016-17 in Para 3.2 that \"the assessee has also contended that ITAT vide order dated 11.12.2020 and CIT(A) vide order dated 29.09.2018 has decided the issue in favour of the assessee for AY 2010-11. Further, the assessee also submitted that the issue has been decided in its favour by the Ld. CIT(A) for AY 2011-12, AY 2012-13, AY 2013-14 and AY 2014-15.\" 4.7 Hence, respectfully following the decision of Hon'ble ITAT and the Ld. CIT(A) for AY 2010-11 to 2015-16, the Grounds of appeal No. I to V of the appellant are hereby ALLOWED.” 4 ITA No.1821 /Mum/2025 Wockhardt Ltd 5. In argument, the Ld.AR stated that the same issue was already dealt with by the Tribunal in assessee’s own case for A.Ys 2010-11 to 2015-16, the details of the orders are as below:- A.Y. ITA Nos Date of pronouncement 2010-11 6803/Mum/2018 CO 51/Mum/2020 11/2/2020 2011-12 & 2012-13 894/Mum/2022 893/Mum/2022 21/11/2022 2013-14 2314/Mum/2022 20/12/2022 2014-15 2131/Mum/2022 30/12/2022 2015-16 2633/Mum/2024 05/08/2024 6. The Ld.DR fully relied on the order of the Ld.AO, but he was unable to bring on record any contrary judgement against the submission of the Ld.AR. 7. In our considered view, we find that the issue related to the discount pad to stockists and interest on delayed payment to MSMEs are squarely covered by the orders of the co-ordinate benches of Tribunal. The facts are identical and the rule of consistency should be followed and respectfully following the orders of the Tribunal for the preceding assessment years, we have the same view and accordingly, the addition made by the Ld.AO is duly deleted. As a consequence, the grounds taken by the revenue are dismissed. 8. In the result, the appeal of the revenue bearing ITA No.1821/Mum/2025 is dismissed. Order pronounced in the open court on 08th day of May, 2025. Sd/- sd/- (MISS PADMAVATHY S.) (ANIKESH BANERJEE) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, दिन ांक/Dated: 08/05/2025 Pavanan 5 ITA No.1821 /Mum/2025 Wockhardt Ltd Copy of the Order forwarded to: 1. अपील र्थी/The Appellant , 2. प्रदिव िी/ The Respondent. 3. आयकर आयुक्त CIT 4. दवभ गीय प्रदिदनदि, आय.अपी.अदि., मुबांई/DR, ITAT, Mumbai 5. ग र्ड फ इल/Guard file. BY ORDER, //True Copy// (Asstt. Registrar), ITAT, Mumbai "