ADDL CIT TDS RG, THANE V. RAYMOND LTD, THANE

ITA 5889/MUM/2010

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1908 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 22-01-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 26-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K SRIVASTAVA
• Section: 133A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE S/SHRI N. K. BILLAIYA, ACCOUNTANT MEMBER AND AMARJIT SINGH, JUDICIAL MEMBER / I.T.A. NO.5889/M/10 ( / ASSESSMENT YEAR: 2008-09) ASSTT. COMMISSIONER OF INCOME TAX TDS CIRCLE, 3 RD FLOOR, QUERESHI MANSION, GOKHALE ROAD, NAUPADA, THANE(W) / VS. M/S. RAYMOND LTD. POKHARAN ROAD, NO.1, JEKEGRAM, THANE (W) DIST. THANE ./ ./ PAN/GIR NO. : PNER07782F ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY: SHRI NITESH JOSHI DEPARTMENT BY: SHRI A.K.SRIVASTAVA (CIT-DR) !' # $ / DATE OF HEARING: 28.10.2015 %&' # $ /DATE OF PRONOUNCEMENT: 18.12.2015 () / O R D E R PER AMARJIT SINGH, JM: THE REVENUE HAS FILED THE APPEAL AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-II, MUMBAI [HE REINAFTER REFERRED TO AS THE LEARNED CIT(A)] DATED 26.03.2010 IN CONNECTIO N WITH THE A.Y. 2008-09. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS P UBLIC LIMITED COMPANY ASSESSED AT THANE / MUMBAI. FOR THE PURPOSE OF TDS PERTAINING TO THANE BRANCH THE ABOVE COMPANY WAS ALLOTTED A TAN BEARING NO. PNER07782F. THE COMPANY IS ENGAGED IN THE MANUFACTURING AND SALE OF CLOTH AND MERCHANDISE. A SURVEY U/S 133A OF THE INCOME TAX ACT,1961 (IN SHOR T THE ACT) WAS CONDUCTED IN THE OFFICE PREMISES OF THE ASSESSEE TO ASCERTAIN WHETHER TDS HAS ITA NO.5889/M/10 ASSESSMENT YEAR: 2008-09 2 RIGHTLY BEEN DEDUCTED ON 09.03.2008 OR NOT. THE IS SUE WHICH WAS TAKEN AT THAT TIME IS THAT WHETHER THE ASSESSEE IS LIABLE TO DEDU CT TDS ON SALES INCENTIVES AND REBATES OR NOT. THE ASSESSING OFFICER TOOK A VIEW THAT THE CASE OF THE ASSESSEE FALLS U/S 194H OF THE ACT THEREFORE, THE ASSESSEE W AS UNDER OBLIGATION TO DEDUCT THE T.D.S UPON THE REBATES AND INCENTIES IN ACCORDA NCE WITH LAW. SUBSEQUENTLY, ASSESSEE FILED AN APPEAL BEFORE LEARNED CIT(A) WHO ALLOWED THE APPEAL ON ARRIVING AT THIS CONCLUSION THAT SECTION 194H OF TH E ACT IS NOT APPLICABLE TO THE PRESENT CASE. FEELING AGGRIEVED THE REVENUE HAS FI LED THE PRESENT APPEAL BEFORE US. 3. WE HAVE HEARD THE ARGUMENTS ADVANCED BY THE LEAR NED REPRESENTATIVE OF THE PARTIES AND PERUSED THE RECORDS. BEFORE DECIDI NG THE MATTER OF CONTROVERSY IT IS NECESSARY TO ADVERT THE BONUS SCHEME OF THE A SSESSEE ON RECORD. ASSESSING OFFICER HAS MENTIONED THE BONUS AND INCENTIVES SCHE ME AS UNDER:- 4.1. THE SLAB OF BONUS WILL BE DETERMINED BY AGGR EGATING THE TOTAL QUANTITY OF NET CONFIRMATION (AFTER CANCELLAT ION/WITHHELD) OF MAIN AND ADDITIONAL SALE NOTES OF SUMMER, WINTER AND MINI BOOKINGS, EXCLUSIVE AND EXOTICS QUALITIES AND WILL BE ARRIVED AT THE FOLLOWING BASIS: (A) FOR EX-MILL PRICE UPTO RS. 501/- THE TOTAL QUANTITY OF NET CONFIRMATION EXCLUDING MINI SALE-NOTES WILL BE TAKEN ACTUAL. (B) FOR EX-MILL PRICE BETWEEN RS. 501 TO RS. 1000 THE TOTAL QUANTITY OF NETT CONFIRMATION EXCLUDING MINI SALES NOTES WILL BE INCREASED 2 TIMES. (C) FOR EX-MILL PRICE ABOVE RS. 1000/- THE TOTAL QUANTITY OF NETT CONFIRMATION EXCLUDING MINI SALE- NOTES WILL BE INCREASED 3 TIMES. 4.2. A DEALER MAY QUALIFY FOR A HIGHER RATE OF BON US THAN AS PER PROVISION IN PARA 4.1 ABOVE BY VIRTUE OF HIGHER ACTUAL DELIVERIES. SUCH STEP-UP WILL BE LIMITED TO THE NEX T HIGHER SLAB ONLY I.E THE SLAB ONE-STEP HIGHER THAN THE ONE FOR WHICH HE QUALIFIES UNDER PARA 4. 1 ABOVE. 4.3. BONUS WILL BE PAID ONLY ON NET VALUE OF DISPA TCHES, PROVIDED, THE BUYER TAKES DELIVERY OF GOODS ORDERED AND PAYS FOR THEM WITHIN THE STIPULATED PERIOD OR AS PER THE TERMS OF THE CONTRACT. IF THE BUYER FAILS TO FULFILL HIS OBLIGAT IONS IN ANY WAY, ITA NO.5889/M/10 ASSESSMENT YEAR: 2008-09 3 BONUS IS LIABLE TO BE FORFEITED ON THE SPECIFIC DOC UMENTS AND/IR FOR THE YEAR. 4.4. THE SLABS OF BONUS WILL BE AS FOLLOWS: 4.4.1 FOR ALL RETAILERS AND FRANCHISEES OF FABRICS IN AGRA, AHMEDABAD, BANGALORE, BHOPAL, MUMBAI, CALCUTT A, COIMBATORE, DELHI, HYDERABAD, INDORE, JAIPUR, KANPU R, LUDHIANA, CHENNAI, NAGPUR, PATNA, PUNE, SECUNDERABA D, SURAT, THANE AND VADODARA (HEREINAFTER REFERRED TO AS THE SPECIAL CITIES) 1.0% - 3000 METERS AND 4000 METERS 1.5% - 4001 METERS AND 5500 METERS 2.0% - 5501 METERS AND 7500 METERS 2.5% - 7501 METERS AND 10000 METERS 3.0% - 10001 METERS AND 12500 METERS 3.5% - 12501 METERS AND ABOVE 4.4.2 FOR ALL RETAILERS AND FRANCHISEES OF FABRICS IN A11 CITIES IN HILLY & DISTURBED AREAS CONSISTING OF STATES VIZ. KASHMIR, HIMACHAL PRADESH UTTRANCHAL, ASSAM, ORISSA , NEPAL, NORTH BENGAL AND GOA (HEREINAFTER REFERRED TO AS TH E OTHER THAN SPECIAL AND REGULAR CITIES) 1.0% - 1500 METRES AND 2500 METRES 1.5% - 2501 METRES AND 3500 METRES 2.0% - 3501 METRES AND 4500 METRES 2.5% - 4501 METRES AND 5500 METRES 3.0% - 5501 METRES AND 6500 METRES 3.5% - 6501 METRES AND ABOVE 4.4.3 FOR ALL RETAILERS AND FRANCHISEES OF FABRICS IN ALL OTHER CITIES NOT COVERED IN PARA 4.4.1 AND IN PARA 4.4.2 ABOVE (HEREINAFTER REFERRED TO AS THE REGULARCITIES) 1.0% - 2000 METRES AND 3000 METRES 1.5% - 3001 METRES AND 4000 METRES 2.0% - 4001 METRES AND 5500 METRES 2.5% - 5501 METRES AND 7000 METRES 3.0% - 7001 METRES AND 9000 METRES 3.5% - 9001 METRES AND ABOVE 4.4.4 FOR ALL WHOLESALERS OF FABRICS IN 'SPECIAL CI TIES' 1.5% - 20000 METRES AND 40000 METRES 2.5% - 40001 METRES AND 65000 METRES 3.5% - 65001 METRES AND ABOVE ITA NO.5889/M/10 ASSESSMENT YEAR: 2008-09 4 4.4.4 FOR ALL WHOLESALERS OF FABRICS IN OTHER THAN SPECIAL AND REGULAR CITIES. 1.5% - 12000 METRES AND 20000 METRES 2.5% - 20001 METRES AND 35000 METRES 3.5% - 35001 METRES AND ABOVE 4.4.5 FOR ALL WHOLESALERS OF FABRICS IN 'REGULAR CI TIES' 1.5% - 15000 METRES AND 30000 METRES 2.5% - 30001 METRES AND 50000 METRES 3.5% - 50001 METRES AND ABOVE 4.5. RUGS, BLANKETS AND SHAWLS WILL BE TREATED AS S EPARATE PRODUCT GROUP, HAVING INDEPENDENT BONUS SLABS 4.5.1 THE SLABS OF BONUS FOR RUGS, BLANKETS & SHAWL S WILL BE DETERMINED BY AGGREGATING THE TOTAL QUANTIT Y OF NETT CONFIRMATION IN PIECES WHICH WILL BE ARRIVED AT ON THE FOLLOWING BASIS A) EXOTIC, WOOL MARK & WOOLEN (SERIES 111, 178, 277, 195, 401 & 404) RUGS, BLANKETS & SHAWLS WILL BE MULTIPLIED BY A FACTOR OF 2. 5 B) ALL OTHER RUGS, BLANKETS & SHAWLS (OTHER THAN BABY BLANKETS) WILL BE TAKEN ACTUAL C) BABY BLANKETS WILL BE MULTIPLIED BY A FACTOR OF 0.5 4.5.2 THE SLABS OF BONUS FOR RUGS, BLANKETS, & SHAW LS WILL BE AS FOLLOWS: FOR RETAILERS / FRANCHISEES IN ALL CITIES 1.0% BETWEEN 50 AND 100 BLANKETS 1.5% BETWEEN 101 AND 150 BLANKETS 2.0% BETWEEN 151 AND 225 BLANKETS 2.5% BETWEEN 226 AND 1200 BLANKETS 3.0% BETWEEN 1201 AND 1600 BLANKETS 3.5% 1601 AND ABOVE. 4.5.3 BOOKINGS IN TROVINE QUALITY 0155512345 WILL N OT BE CONSIDERED FOR BONUS SLAB DETERMINATION 4.6. BONUS SLAB DETERMINATION FOR DEALERS OF SECOND S WILL, HOWEVER, BE BASED ON ACTUAL METERAGE DISPATCHED DUR ING THE YEAR 4.7 BONUS PERCENTAGE AS DETERMINED ABOVE WILL BE PA YABLE ON DISPATCHES DURING THE CALENDAR YEAR (JANUARY TO DECEMBER) ITA NO.5889/M/10 ASSESSMENT YEAR: 2008-09 5 AGAINST PAID BILLS. FOR NEW DEALERS APPOINTED DURI NG THE MID YEAR, SLAB WILL BE DETERMINED ON THE NET BOOKINGS R ECEIVED DURING THE SUBSEQUENT FULL CALENDAR YEAR AND WILL B E APPLIED ON THE DISPATCHES MADE DURING THE FIRST INCOMPLETE YEA R OF OPERATION. 4.7.1 NETT VALUE' OF DISPATCHES MEANS INVOICE VALUE NETT OF EXCISE-DUTY, OTHER TAXES/CHARGES, VALUE OF RETUR NED GOODS AND PRODUCT CLAIMS IF ANY. 4. THE REPRESENTATIVE OF THE DEPARTMENT HAS ARGUED THAT THE LEARNED CIT(A) HAS WRONGLY ARRIVED AT THIS CONCLUSION THAT PROVISI ON OF SECTION 194H OF THE ACT IS NOT APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE CASE. THEREFORE, THE ORDER IN QUESTION DATED 26.03.2010 IS WRONG AGAINST LAW A ND FACTS AND IS LIABLE TO BE SET ASIDE IN VIEW OF THE LAW SETTLED IN [2008]173 T AXMAN 54(DELHI) CASE TITLED AS DELHI MILK SCHEME VS. CIT DELHI, [2015] 59 TAXMANN. COM 176 (CALCUTTA) TITLED AS HUTCHISON TELECOM EAST LTD. VS. CIT, TDS, KOLKAT A & [2010] 42 SOT 125, MUMBAI IN THE ITAT MUMBAI B BENCH IN CASE TITLED AS MAHESH ENTERPRISES VS. INCOME TAX OFFICER WARD 22(1)(1). HOWEVER, ON THE OTHER HAND LEARNED REPRESENTATIVE OF THE ASSESSEE REFUTED THE SAID CON TENTIONS AND ARGUED THAT THERE IS NO RELATION OF PRINCIPLE AND AGENT WITH THE FRAN CHISEE HOLDER AND INFACT IN VIEW OF THE AGREEMENT ON RECORD THE RELATIONSHIP WI TH THE FRANCHISEE IS OF THE PRINCIPLE TO PRINCIPLE THEREFORE, THERE IS NO AGE NCY OF ANY KIND WITH THE DEALERS AND FRANCHISEE HOLDERS HENCE, SECTION 194H OF THE ACT IS NOT APPLICABLE TO THE PRESENT CASE AND ALSO PLACED RELIANCE UPON T HE LAW SETTLED IN [2014] 364 ITR 238 (BOM) CASE TITLED AS CIT VS. INTERVET INDIA PVT. LTD. AND [2012] 348 ITR 378 (SC) CASE TITLED AS CIT & OTHERS VS. AHMEDA BAD STAMP VENDORS ASSOCIATION. AFTER GOING THROUGH THE CASE LAWS REL IED BY THE LEARNED REPRESENTATIVE OF THE PARTIES AND GOING THROUGH THE RECORD. WE ARE OF THE VIEW THAT TO PAY THE COMMISSION / BROKERAGE THERE SHOULD BE AGENCY BETWEEN THE PARTIES. IN THE INSTANT CASE THE COPY OF AGREEMENT IS IN THE FILE WHEREIN CLAUSE 4(1) SPEAKS ABOUT THE RELATIONSHIP AND IS HEREBY RE PRODUCED BELOW FOR READY REFERENCE: ITA NO.5889/M/10 ASSESSMENT YEAR: 2008-09 6 NONE OF THE TERMS OF THIS AGREEMENT SHALL BE CONST RUED AS CONFERRING THE STATUS OF AN AGENT ON THE FRANCHI SEE AND ALL DEALINGS BETWEEN THE FRANCHISEE AND THE COMPANY SHA LL BE ON A PRINCIPAL TO PRINCIPAL BASIS AND SHALL NOT BE D EEMED TO CREATE ANY OTHER FORM OF RELATIONSHIP OTHERWISE THA N AS EXPRESSLY STIPULATED HEREIN. 5. SECTION 194H SPEAKS AS UNDER: COMMISSION OR BROKERAGE INCLUDES ANY PAYMENT RECEIVED OR RECEIVABLE, DIRECTLY OR INDIRECTLY, BY A PERSON ACTING ON BEHALF OF ANOTHER PERSON FOR SERVICES REN DERED (NOT BEING PROFESSIONAL SERVICES) FOR ANY SERVICES IN TH E COURSE OF BUYING OR SELLING OF GOODS OR IN RELATING TO ANY TR ANSACTION RELATING TO ANY ASSET, VALUABLE ARTICLE OR THING NO T BE SECURITIES 6. APPARENTLY, THERE SHOULD BE AN AGENCY AMONG THE PARTIES FOR THE PAYMENT OF COMMISSION AND BROKERAGE TO BRING THE PARTIES WI THIN THE AMBIT OF SECTION 194H. THERE IS NO DISPUTE THAT THE LAW RELIED BY T HE COUNSEL OF THE PARTIES BUT THE CRUX OF THE SAID LAW IS THAT IN THE CASE OF INC ENTIVES AND REBATES WHERE THERE IS NO ELEMENT OF AGENCY THE PROVISION U/S. 194H OF THE ACT IS NOT APPLICABLE. THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE IS SIMILAR OF THE LAW SETTLED BY THE JURISDICTIONAL HIGH COURT BOMBAY IN [2014] 364 ITR 238 (BOM) CASE TITLED AS CIT VS. INTERVET INDIA PVT. LTD. IN VIEW OF TH E SAID CIRCUMSTANCES WE ARE OF THE VIEW THAT THE LEARNED CIT(A) HAS PASSED THE ORD ER JUDICIOUSLY AND CORRECTLY WHICH DOES NOT REQUIRE TO INTERFERENCE WITH THIS A PPEAL AT THIS STAGE. 7. IN RESULT THE APPEAL OF THE REVENUE IS HEREBY OR DERED TO BE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH DECEMBER, 2015 SD/- SD/- (N.K.BILLAIYA) (AMARJIT SINGH) ( / ACCOUNTANT MEMBER + ( /JUDICIAL MEMBER MUMBAI; ,(! DATED : 18 TH DECEMBER, 2015 MP MP MP MP ITA NO.5889/M/10 ASSESSMENT YEAR: 2008-09 7 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. -$ ( ) / THE CIT(A)- 4. -$ / CIT 5. .'/0 +$+! , , / DR, ITAT, MUMBAI 6. 0 1 2 / GUARD FILE. / BY ORDER, .$ +$ //TRUE COPY// / !' (DY./ASSTT. REGISTRAR) '# $ , / ITAT, MUMBAI