John Deere India Pvt. Ltd., Pune V. Deputy Commissioner of Income-tax,

ITA 392/PUN/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0900 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 07-10-2015
• Assessment Year: 2012-2013
• Appeal Filed On: 03-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B C MALAKAR
• Assessee Lawyers: SUNIL PATHAK
• Section: 201(1)

Judgement Text

] ]] ] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE , !', $ % BEFORE MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA, AM ITA NOS.390 TO 392/PN/2014 ASSESSMENT YEARS : 2010-11 TO 2012-13 JOHN DEERE INDIA PVT. LTD., TOWER XIV CYBERCITY, MAGARPATTA CITY, HADAPSAR, PUNE 411 028. PAN : AAACJ4233B . APPELLANT VS. THE DCIT (TDS) 2, PUNE. . RESPONDENT / APPELLANT BY : SHRI SUNIL PATHAK / RESPONDENT BY : SHRI B. C. MALAKAR / DATE OF HEARING : 08.10.2015 / DATE OF PRONOUNCEMENT: 06.11.2015 & / ORDER PER PRADIP KUMAR KEDIA, AM : THE CAPTIONED THREE APPEALS FILED BY THE SAME ASSES SEE RELATE TO DIFFERENT ASSESSMENT YEARS AND INVOLVE A COMMON ISSUE. THERE FORE, THEY HAVE BEEN CLUBBED AND HEARD TOGETHER AND A CONSOLIDATED ORDER IS BEING PASSED FOR THE SAKE OF CONVENIENCE AND BREVITY. 2. THIS BUNCH OF THREE APPEALS FILED BY THE SAME AS SESSEE ARE AGAINST THE THREE SEPARATE ORDERS OF CIT(A)-V, PUNE EVEN DATED 23.12.2013 RELATING TO THREE DIFFERENT ASSESSMENT YEARS I.E. A.Y. 2010-11, 2011-12 AND 2012-13 PASSED UNDER SECTION 201(1)/201(1A) OF THE INCOME-T AX ACT, 1961 (IN SHORT THE ACT). 2 ITA NOS.390 TO 392/PN/2014 3. SINCE THE FACTS AND CIRCUMSTANCES IN ALL THE THR EE APPEALS ARE IDENTICAL, THE APPEAL OF THE ASSESSEE RELATING TO ASSESSMENT Y EAR 2010-11 IN ITA NO.390/PN/2014 IS TAKEN AS THE LEAD CASE. 4. IN THIS APPEAL, THE ASSESSEE HAS RAISED FOLLOWIN G GROUNDS OF APPEAL :- 1] THE LEARNED CIT (A) ERRED IN HOLDING THAT THE A UTHORITY TO GUARANTEE EXPENDITURE WAS IN THE NATURE OF COMMISSION EXPENDI TURE INCURRED BY THE ASSESSEE COMPANY AND HENCE, THE ASSESSEE COMPANY OUGHT TO HA VE DEDUCTED TAX U/S 194H IN RESPECT OF THE EXPENSES UNDER THE HEAD 'AUTHORITY T O GUARANTEE' AND THEREBY, UPHOLDING THE DEMAND RAISED BY THE A.O. U/S 201 AND 201(1A) OF THE ACT. 2] THE LEARNED CIT(A) ERRED IN HOLDING THAT THE AUT HORITY TO GUARANTEE EXPENDITURE PAYABLE TO SUNDARAM FINANCE LTD. WAS IN CURRED AGAINST THE CREDIT FINANCE SERVICES PROVIDED BY SUNDARAM FINANCE LTD. TO THE CUSTOMERS OF THE ASSESSEE COMPANY FOR THE PURPOSES OF PROMOTING THE SALES OF THE ASSESSEE AND THUS, THE SAID EXPENDITURE WAS COVERED BY THE DEFINITION OF 'COMMISSION' AS ENVISAGED IN EXPLANATION TO SECTION 194H AND THEREFORE, THE ASSE SSEE COMPANY OUGHT TO HAVE DEDUCTED THE TAX THEREON U/S 194H OF THE ACT. 3] THE LEARNED CIT (A) FAILED TO APPRECIATE THAT TH E AUTHORITY TO GUARANTEE EXPENDITURE PAYABLE TO SUNDARAM FINANCE LTD. WAS NO T IN NATURE OF COMMISSION EXPENDITURE AS ENVISAGED IN SECTION 194H AND THEREF ORE, THE ASSESSEE COMPANY WAS NOT LIABLE TO DEDUCT TDS IN RESPECT OF THE SAID EXP ENDITURE. 4] THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THA T THE PAYMENT OF AUTHORITY TO GUARANTEE EXPENDITURE HAS NO NEXUS WITH THE AMOU NT OF SALES MADE BY THE ASSESSEE AND THE SAME WAS PAYABLE ONLY IN CASE WHER E THE CUSTOMER FAILS TO PAY THE AMOUNT FINANCED BY SUNDARAM FINANCE LTD. TOWARDS SH ARING OF LOSSES INCURRED BY SUNDARAM FINANCE LTD. AND THUS, THE SAID EXPENDITUR E DID NOT PARTAKE THE CHARACTER OF COMMISSION ENVISAGED IN SECTION 194H OF THE ACT AND HENCE, THE ASSESSEE WAS NOT LIABLE TO DEDUCT THE TDS IN RESPECT OF THE SAID EXP ENDITURE. 5] THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL. 5. THE SOLITARY ISSUE ARISING IN THE PRESENT APPEAL IS IMPOSITION OF PENALTY UNDER SECTION 201(1) ON ACCOUNT OF ALLEGED FAILURE OF THE ASSESSEE TO DEDUCT TAX AT SOURCE UNDER SECTION 194H AND CONSEQUENT LEVY OF INTEREST THEREON UNDER SECTION 201(1A) OF THE ACT. 6. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE COMPA NY IS ENGAGED IN THE BUSINESS OF SELLING TRACTORS AND HAS SETUP A UNIT A T SANASWADI NEAR PUNE. SOME SPOT VERIFICATION WAS CARRIED OUT BY THE TDS OFFICE RS ON 21.03.2012 TO VERIFY CORRECTNESS OF DEDUCTIBILITY OF TDS ON VARIOUS PAYM ENTS. IT WAS FOUND BY THE 3 ITA NOS.390 TO 392/PN/2014 ASSESSING OFFICER THAT THE ASSESSEE HAS INCURRED AN EXPENDITURE OF RS.3,28,29,048/- ALLOCATED TOWARDS EXPENDITURE UNDE R THE HEAD AUTHORITY TO GUARANTEE. THE ASSESSEE SUBMITTED THAT IT HAS ENT ERED INTO AN AGREEMENT WITH M/S SUNDARAM FINANCE LTD. (CREDIT COMPANY) FOR PROV IDING CREDIT FACILITIES TO ITS CUSTOMERS. THE ASSESSEE EXPLAINED THAT THEIR C USTOMERS MAINLY COMPRISES OF FARMERS WHO DO NOT HAVE RESOURCES AND LIQUIDITY TO PURCHASE TRACTORS AND OTHER AGRICULTURAL EQUIPMENTS. ACCORDINGLY, THE AS SESSEE HAS ENTERED INTO AN AGREEMENT AS PER WHICH SOME PART OF LOSS IF ANY, IN CURRED ON ACCOUNT OF NON- PAYMENT OF LOAN BY THE BORROWING FARMERS WOULD BE B ORNE BY THE ASSESSEE. HENCE, THE AMOUNT REPRESENTS THE CONTRACTUAL LIABIL ITY OF THE ASSESSEE TO MAKE GOOD THE LOSSES THAT WOULD BE INCURRED BY THE FINAN CE COMPANIES ON THE CREDIT ASSISTANCE GIVEN TO THE FARMERS TO WHOM PRODUCTS OF ASSESSEE ARE SOLD. IT WAS SUBMITTED THAT THE ASSESSEE HAS TO BEAR ONLY STIPUL ATED PERCENTAGE OF AMOUNT WHICH IS NOT RECOVERABLE FROM THE ULTIMATE CUSTOMER S. THUS, THE EXPENSES IN ESSENCE IS TOWARDS PROVIDING CREDIT TO ITS CUSTOMER S BY THE FINANCE COMPANY ON RECOURSE BASIS TO THE ASSESSEE UPTO A CERTAIN AGREE D PERCENTAGE. HENCE ANY LOSSES MADE BY THE FINANCE COMPANY ARISING OUT OF N ON-PERFORMING CREDIT AGREEMENTS FOR WHICH THE FINANCED GOODS OF THE ASSE SSEE CANNOT BE REPOSSESSED FROM THE CUSTOMERS WITHIN THE STIPULATED TIME SHALL BE BORNE UPTO THE STIPULATED PERCENTAGE BY THE COMPANY. IN ELABORATION, THE ASS ESSEE SUBMITTED THAT THEIR COMPANYS PRODUCTS ARE SOPHISTICATED AND EXPENSIVE AND HENCE THE RETAIL CUSTOMERS (FARMERS) WOULD BUY THEM ONLY IF THEY ARE ENABLED CREDIT ASSISTANCE. THE INCOME OF THESE CUSTOMERS ARE DEPENDENT ON NATU RAL FACTORS AND HENCE DO NOT HAVE FIXED INCOME AND ESTABLISHED FINANCIAL STA BILITY. THUS, TO ENSURE THAT THE DEMAND FOR THE PRODUCTS OF THE ASSESSEE CONTINU ES TO GROW AMONGST THE RETAIL CUSTOMERS, THE ASSESSEE ENDEAVORED TO ENSURE THAT THEIR CUSTOMERS GET CREDIT ASSISTANCE FROM THE FINANCING COMPANY. IN C ONSIDERATION OF THIS COMMITMENT BY THE ASSESSEE TO SHARE STIPULATED PERC ENTAGE OF LOSSES, M/S SUNDARAM FINANCE LTD. AGREED TO PROVIDE CREDIT ASSI STANCE TO THE RETAIL CUSTOMERS OF THE ASSESSEE. THE ASSESSEE ALSO SUBMI TTED THAT THE OBLIGATION OF THE ASSESSEE TO PAY THE AMOUNT TO THE FINANCE COMPA NY ARISES ONLY IN CASE OF 4 ITA NOS.390 TO 392/PN/2014 NON-PAYMENT OF LOAN BY THE FARMERS. NEEDLESS TO SA Y THAT THE FINANCE COMPANY EARNED INTEREST INCOME FROM THE FARMERS ON LOAN GIV EN. ACCORDINGLY, THE ASSESSEE EMPHASIZED THAT SHARING OF LOSS DOES NOT R EPRESENT PAYMENT OF ANY COMMISSION TO THE FINANCE COMPANY AS ALLEGED. THE ENTIRE ARRANGEMENT ENTERED INTO BY THE ASSESSEE IS IN ORDER TO PROVIDE CREDIT FACILITIES TO THE FARMERS. AS PER EXPLANATION TO SECTION 194H OF THE ACT, THE IMPUGNED EXPENDITURE WOULD COME WITHIN THE AMBIT OF DEFINITI ON OF COMMISSION ONLY WHERE ANY SERVICE IS RENDERED BY ANY PERSON FOR SEL LING THE GOODS OR ARTICLES ETC.. IN THE CASE OF THE ASSESSEE, THE FINANCE COM PANY IS NOT PROVIDING ANY SERVICE TO THE ASSESSEE PER SE FOR SELLING ITS GOODS. IT IS PROVIDING FINANCE TO THE FARMERS. IT IS ONLY OUT OF COMMERCIAL EXPEDIEN CY THAT THE ASSESSEE HAS AGREED TO SHARE SOME OF THE LOSSES. WHEN THE ASSES SEE HAS AGREED TO SHARE THE LOSSES, NO SERVICE IS RENDERED BY THE FINANCE COMPA NY TO THE ASSESSEE PER SE . IT IS MERELY SHARING OF LOSSES WITHOUT ANY ELEMENT OF SERVICES. 7. THE ASSESSING OFFICER, HOWEVER, REJECTED THE CON TENTIONS OF THE ASSESSEE THAT THE AGREEMENT WAS ENTERED TO TAKE CARE OF CERT AIN PERCENTAGE ON LOANS WHICH WOULD OCCUR TO THE FINANCE COMPANY IN CASE TH E CUSTOMERS DO NOT REPAY THE LOAN ADVANCED. THE ASSESSING OFFICER OBSERVED THAT THE EXPENDITURE HAS BEEN INCURRED AS A PART OF ITS SALE PROMOTION ACTIV ITY. THE SERVICES FOR SALE PROMOTION HAS BEEN GIVEN BY THE FINANCIAL INSTITUTI ONS BY GIVING LOANS TO THE CUSTOMERS. THE SERVICES RENDERED BY THE FINANCIAL INSTITUTIONS OBVIOUSLY HAS HELPED IN INCREASING THE SALE OR ELSE THE ASSESSEE WOULD NOT HAVE INCURRED SUCH HIGH EXPENDITURE. FOR THESE SERVICES, THE ASSESSEE IS INCURRED AUTHORITY TO GUARANTEE CHARGES. THIS IS NOTHING BUT PAYMENT SIM ILAR TO COMMISSION/BROKERAGE. 8. IT WAS FURTHER OBSERVED BY THE ASSESSING OFFICER THAT DEFINITION OF COMMISSION UNDER SECTION 194H OF THE ACT IS INCLUSI VE WHICH INCLUDES ANY PAYMENT BY WHATEVER NAME CALLED, TOWARDS RENDERING OF SERVICES. IN THE FACTS OF THE CASE, IT IS CLEAR THAT DUE TO THIS RISK SHAR ING AGREEMENT WITH THE LENDING 5 ITA NOS.390 TO 392/PN/2014 COMPANY, THE SALE OF THE ASSESSEE HAS INCREASED AND THEREFORE THE CHARGES INCURRED FOR SUCH ASSISTANCE IS IN THE NATURE OF CO MMISSION/BROKERAGE. THE ASSESSING OFFICER FURTHER OBSERVED THAT THE PLEA OF THE ASSESSEE HAS NO ACTUAL PAYMENT HAS BEEN MADE SO FAR TILL THE DATE AGAINST THIS CONTRACTUAL LIABILITY IS OF NO CONSEQUENCE FOR THE PURPOSE OF APPLICABILITY OF SECTION 194H OF THE ACT. THE LIABILITY OF DEDUCT TDS UNDER SECTION 194H ARIS ES EVEN WHEN THE EXPENDITURE HAS BEEN RECORDED IN THE BOOKS IRRESPEC TIVE OF ACTUAL PAYMENT. HE THEREFORE JUSTIFIED HIS ACTION OF INVOKING SECTION 201(1) AND SECTION 201(1A) R.W.S. 194H OF THE ACT AND IMPOSED PENALTY AND INTE REST FOR THE ALLEGED DEFAULT IN NOT DEDUCTING TDS. 9. AGGRIEVED BY THE ACTION OF THE ASSESSING OFFICER , THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). 10. THE CIT(A), INTER-ALIA , TOOK NOTICE OF THE VARIOUS CLAUSES OF THE FINANCE AGREEMENT AND OBSERVED THAT THE SCHEME OF RISK SHAR ING AS PER FINANCE AGREEMENT HAS BEEN FORMED TO PROMOTE THE SALES OF P RODUCT OF THE ASSESSEE. BY ENTERING INTO AN ARRANGEMENT OF FINANCE OF TRACTOR WITH THE CUSTOMERS OF THE ASSESSEE, THE SAID M/S SUNDARAM FINANCE LTD. HAS RE NDERED SERVICE TO THE ASSESSEE AS THE VERY NATURE OF THE CUSTOMER PROFILE I.E. FARMER WAS NOT ENCOURAGING AND THEREFORE ASSESSEE MADE ARRANGEMENT WITH ITS DEALER TO COMPENSATE POSSIBLE LOSSES TO M/S SUNDARAM FINANCE LTD.. IN VIEW OF THESE REASONS, THE CIT(A) HELD THAT THE FINANCING OF PROD UCTS OF THE ASSESSEE IS NOTHING BUT SERVICE TO THE ASSESSEE TO PROP UP THE SALES OF ITS PRODUCTS. THE CIT(A) ALSO DISCREDITED THE ARGUMENT OF THE ASSESSE E THAT NO PAYMENT WAS MADE IN TERMS OF THE AGREEMENT AS NO INVOICE WAS RA ISED BY LENDING COMPANY, M/S SUNDARAM FINANCE LTD.. HE ACCORDINGLY DISMISSE D THE APPEAL OF THE ASSESSEE SUBJECT TO SOME CORRECTIONS IN THE ARITHME TIC FIGURES. 11. AGGRIEVED FURTHER, THE ASSESSEE IS IN APPEAL BE FORE US. 6 ITA NOS.390 TO 392/PN/2014 12. THE LD. AUTHORIZED REPRESENTATIVE ON BEHALF OF THE ASSESSEE SUBMITTED THAT PROVISION FOR SHARING OF PROBABLE LOSSES UNDER THE HEAD AUTHORITY TO GUARANTEE IN THE BOOKS OF ACCOUNTS WERE MADE AS PE R AGREEMENT WITH THE LENDING COMPANY, M/S SUNDARAM FINANCE LTD. FOR ASSE SSMENT YEARS 2010-11, 2011-12 AND 2012-13 IN APPEAL. THE PROVISION HAS B EEN REVIEWED BY THE ASSESSEE COMPANY PERIODICALLY AND THE SAME HAS BEEN REVERSED, WHEREVER FOUND NECESSARY. THE LD. AR REITERATED THE SUBMISS IONS MADE BEFORE THE AUTHORITIES BELOW AND STRENUOUSLY ARGUED THAT THERE IS NO ELEMENT OF SERVICE RENDERED IN THE PRESENT ARRANGEMENT WHEREBY THE POR TION OF THE POSSIBLE LOSSES INCURRED BY THE FINANCE COMPANY, IF ANY, IS REPLENI SHED BY THE ASSESSEE AS A PART OF THE CONTRACTUAL LIABILITY. THE SERVICES TO HAVE BEEN RENDERED BY THE FINANCE COMPANY TO ITS CUSTOMERS (FARMERS) AND NOT TO THE ASSESSEE PER SE . HE RELIED UPON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. JDS APPARELS PVT. LTD., 2014-TIOL-2046-HC-DEL-IT AN D THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. IN TERVET INDIA P. LTD., (2014) 364 ITR 238 (BOM) AND SUBMITTED THAT RELATIO NSHIP BETWEEN THE ASSESSEE AND THE FINANCE COMPANY IS PRINCIPAL TO P RINCIPAL AND NOT ACTING ON BEHALF OF THE ASSESSEE. ACCORDINGLY, IT WAS PLEADE D ON BEHALF OF THE ASSESSEE THAT SECTION 194H OF THE ACT HAS NO APPLICABILITY T O THE FACTS OF THE CASE. 13. THE LD. DEPARTMENTAL REPRESENTATIVE ON BEHALF O F THE REVENUE, ON THE OTHER HAND, RELIED UPON THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND SUBMITTED THAT THE SERVICES ARE DEEMED TO BE RENDER ED TO THE ASSESSEE IN VIEW OF SALE PROMOTION DUE TO SUCH ARRANGEMENT AND THERE FORE ACTION OF THE REVENUE IS WHOLLY JUSTIFIED. 14. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ON, ORDERS OF THE AUTHORITIES BELOW AND PERUSED THE CASE LAWS CITED. THE PRIMARY QUESTION BEFORE US IS WHETHER THE IMPUGNED EXPENDITURE TOWAR DS AUTHORITY TO GUARANTEE CHARGES FALLS WITHIN THE AMBIT OF SECTIO N 194H OF THE ACT OR NOT. ON ANALYSIS OF FACTS NOTED EARLIER, WE FIND THAT TH E FINANCE SUPPORT IS BEING 7 ITA NOS.390 TO 392/PN/2014 PROVIDED BY M/S SUNDARAM FINANCE LTD. TO THE CUSTOM ERS OF THE ASSESSEE UNDER THE ARRANGEMENT WHEREBY THE PORTION OF THE LOSS ARI SING, IF ANY, DUE TO FAILURE ON THE PART OF THE CUSTOMERS OF THE ASSESSEE TO MAK E PAYMENT THEREOF, WILL BE BORNE BY THE ASSESSEE. IT IS THE CASE OF THE REVEN UE THAT SHARING OF SUCH LOSSES IF ANY, HAS AUGMENTED TO DEMAND AND SALES OF THE PR ODUCTS OF THE ASSESSEE. THUS, AS PER REVENUE, SERVICES HAVE BEEN RENDERED B Y THE FINANCIAL INSTITUTION WHICH HAS HELPED IN INCREASING THE SALES OF THE ASS ESSEE. IN VIEW OF THE INCLUSIVE DEFINITION OF SECTION 194H OF THE ACT, TH E RISK SHARING ARRANGEMENT WITH THE FINANCE COMPANY WHICH HAS RESULTED IN INCR EASE IN SALE IS SIMILAR TO COMMISSION/BROKERAGE AND THEREFORE SECTION 194H OF THE ACT IS SQUARELY APPLICABLE. 15. ON THE OTHER HAND, IT IS THE CASE OF THE ASSESS EE THAT THE RISK SHARING ARRANGEMENT ENTERED INTO BY THE ASSESSEE FOR SHARIN G A PORTION OF LOSSES ARISING FROM DEFAULT BY ITS CUSTOMERS CANNOT BE EQUATED WIT H COMMISSION AS DEFINED IN EXPLANATION TO SECTION 194H OF THE ACT. 16. IN VIEW OF THE JUDICIAL PRECEDENTS CITED, WE AR E OF THE CONSIDERED VIEW THE PLEA OF THE ASSESSEE DESERVES TO BE ACCEPTED. IT IS NOTICEABLE FROM THE DEFINITION OF EXPRESSION COMMISSION OR BROKERAGE AS APPEARING IN SECTION 194H OF THE ACT THAT (A) A PAYMENT SHOULD BE RECEIV ED BY A PERSON FOR SERVICES RENDERED ONLY AND (B) SUCH PERSON SHOULD BE ACTING ON BEHALF OF THE OTHER PERSON TO WHOM THE SERVICES HAVE BEEN RENDERED IN R ESPECT OF BUYING AND SELLING OF GOODS, ETC.. IT IS CLEAR FROM THE FACTU AL MATRIX OF THE CASE THAT THERE IS NO COMPONENT OF SERVICE RENDERED BY THE FINANCE COM PANY TO THE ASSESSEE AGAINST RECOVERY OF PORTION OF LOSSES, IF ANY. IN OUR VIEW, IT IS A SIMPLE BUSINESS PROPOSITION WHEREBY AN ARRANGEMENT HAS BEE N ENTERED INTO BY THE ASSESSEE TO ASSIST ITS CUSTOMERS TO ENABLE THEM REA DY FINANCE OF THEIR PRODUCTS AND SIMULTANEOUSLY ASSURED THE FINANCE COMPANY FOR RECOVERY OF LOSSES, IF ANY DUE TO DEFAULT IN REPAYMENT BY THE CUSTOMERS. THE REQUIREMENT OF AN AGENT AND PRINCIPAL RELATIONSHIP IS FOUND ABSENT IN THIS CASE. ALSO, NO NEXUS IS FOUND 8 ITA NOS.390 TO 392/PN/2014 BETWEEN THE AMOUNT OF SALES MADE BY THE ASSESSEE AN D THE EXPENDITURE TOWARDS AUTHORITY TO GUARANTEE CHARGES. IN THE FACTS OF THE CASE, THE RATIO OF DECISION IN THE CASE OF JDS APPARELS PVT. LTD. (SUPRA) AS WE LL AS INTERVET INDIA P. LTD. (SUPRA) ARE SQUARELY APPLICABLE. IN THE CASE OF JD S APPARELS CASE (SUPRA), THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF TRADING REA DYMADE GARMENTS. THE ASSESSEE PAID COMMISSION TO HDFC ON PAYMENT RECEIVE D FROM CUSTOMERS WHO HAD MADE PURCHASES FROM THE ASSESSEE THROUGH CREDIT CARDS. THE HONBLE HIGH COURT HELD IN THE FACTS OF THE CASE THAT SECTION 19 4H OF THE ACT IS NOT ATTRACTED SINCE THE HDFC WAS NOT ACTING AS AN AGENT OF THE AS SESSEE. SMALL FEE DEDUCTED BY THE BANK WHO HAS NOT UNDERTAKEN THE ACT ON BEHAL F OF THE ASSESSEE CANNOT BE TERMED AS COMMISSION OR BROKERAGE. THE RELATIONSHI P BETWEEN THE HDFC AND THE ASSESSEE IN THAT CASE WAS HELD TO BE NOT OF AN AGENCY BUT THAT OF TWO INDEPENDENT PARTIES ON PRINCIPAL TO PRINCIPAL BASIS . THE HDFC WAS ALSO ACTING OR PROTECTING THE INTEREST OF THE CUSTOMERS WHOSE C REDIT CARD WAS USED IN THE SWIPING MACHINES. THE ASSESSEE HAS RECEIVED SALE C ONSIDERATION TOWARDS SALE AND THE BANK HAS UNDERTAKEN A RISK AND REMAINED OUT OF POCKET FOR SOME TIME AS THERE WOULD BE A TIME GAP BETWEEN THE DATE OF PA YMENT AND RECOVERY OF THE AMOUNT PAID. ON THESE FACTS, THE HONBLE HIGH COUR T HELD SECTION 194H OF THE ACT IS NOT APPLICABLE TO THE FACTS OF THE CASE. LI KEWISE, IN THE CASE OF INTERVET INDIA CASE (SUPRA), THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF BIOLOGICAL VACCINES AND ANIMAL HEALT H CARE PHARMACEUTICAL PRODUCTS, ETC.. THE ASSESSEE INTRODUCED A SALE PRO MOTION SCHEME TO BOOST SALES, VIZ. PRODUCTS DISCOUNT SCHEME AND PRODUCT CA MPAIGN. THE ASSESSEE PASSED ON THE INCENTIVES TO THE DISTRIBUTORS OR DEA LERS/STOCKISTS THROUGH THE CONSIGNMENT AGENTS BY WAY OF SALE CREDIT NOTES. TH E HONBLE HIGH COURT HELD THAT THE RELATIONSHIP BETWEEN THE ASSESSEE AND THE DISTRIBUTOR WAS THAT ON PRINCIPAL TO PRINCIPAL AND DISTRIBUTOR AND STOCKIST S WERE NOT ACTING ON BEHALF OF THE ASSESSEE. THEREFORE, THE PAYMENT WAS NOT IN TH E NATURE OF COMMISSION PAYMENT. WE FIND THAT THE RATIO OF BOTH THE AFORES AID JUDGEMENTS ARE SQUARELY APPLICABLE TO THE PRESENT FACT-SITUATION ALSO, WHER EIN FINANCE COMPANY IS NOT ACTING ON BEHALF OF THE ASSESSEE. THE FINANCE COMP ANY IS MERELY PROVIDING 9 ITA NOS.390 TO 392/PN/2014 FINANCIAL SERVICES IN THE FORM OF LOAN AND SUBSEQUE NTLY COLLECTING THE PAYMENT AGAINST THE ASSURANCE FOR SHARING A PART OF LOSSES. RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY THE HONBLE JURISDICTIONAL HIGH COURT IN INTERVET INDIA P. LTD. (SUPRA) AND ALSO BY THE HONBLE DELHI HIGH COU RT IN JDS APPARELS PVT. LTD. (SUPRA), WE ARE OF THE CONSIDERED VIEW THAT SE CTION 194H IS NOT APPLICABLE IN THE FACTS OF THE CASE. ACCORDINGLY, SECTIONS 20 1(1) AND 201(1A) DOES NOT GET TRIGGERED. 17. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN IT A NO.390/PN/2014 RELATING TO ASSESSMENT YEAR 2010-11 IS ALLOWED. 18. IN SO FAR AS, THE OTHER TWO APPEALS OF THE ASSE SSEE IN ITA NOS.391 & 392/PN/2014 RELATING TO ASSESSMENT YEARS 2011-12 AN D 2012-13 WHEREIN THE FACTS AND ISSUES INVOLVED ARE IDENTICAL TO THE FACT S AND ISSUES IN ITA NO.390/PN/2014 RELATING TO ASSESSMENT YEAR 2010-11. FOLLOWING THE SAME PARITY OF REASONINGS, OUR DECISION IN ITA NO.390/PN /2014 SHALL APPLY MUTATIS- MUTANDIS IN THESE TWO APPEALS OF THE ASSESSEE IN IT A NOS.391 & 392/PN/2014. ACCORDINGLY, BOTH THE APPEALS OF THE ASSESSEE IN IT A NOS.391 & 392/PN/2014 RELATING TO ASSESSMENT YEARS 2011-12 AND 2012-13 AR E ALSO ALLOWED. 19. RESULTANTLY, ALL THE THREE CAPTIONED APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED ON THIS 06 TH DAY OF NOVEMBER, 2015. SD/- SD/- ( SUSHMA CHOWLA ) ( PRADIP KUMAR KEDIA ) / JUDICIAL MEMBER $ / ACCOUNTANT MEMBER PUNE ; DATED : 06 TH NOVEMBER, 2015. 10 ITA NOS.390 TO 392/PN/2014 & ' ()* +*( / COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-V, PUNE; 4) THE CIT-V, PUNE; 5) THE DR B BENCH, I.T.A.T., PUNE; 6) GUARD FILE. &, / BY ORDER , ' # //TRUE COPY// $ %& # '( / SR. PRIVATE SECRETARY ) '* , / ITAT, PUNE