DCIT CIR 2(2)(2), MUMBAI V. MAHINDRA AUTOMOBILE DISTRIBUTOR P. LTD, MUMBAI

ITA 7406/MUM/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6506 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2011-2012
• Appeal Filed On: 27-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D G
• Keywords: TDS

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D, MUMBAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER ITA NO.7406/M/2017 ASSESSMENT YEAR: 2011-12 DCIT, CIRCLE -2(2)(2), ROOM NO.545, 5 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 VS. M/S. MAHINDRA AUTOMOBILE DISTRIBUTOR P. LTD., GATEWAY BUILDING, APOLLO BUNDER, MUMBAI, MAHARASHTRA 400 101 PAN: AAECM2999P (APPELLANT) (R ESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI VIRAL SHAH, A.R. SHRI KARTHIK NATRAJAN, A.R. REVENUE BY : SHRI D.G. PANSARI, D.R. DATE OF HEARING : 13.02.2019 DATE OF PRONOUNCEMENT : 19.02.2019 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVEN UE AGAINST THE ORDER DATED 09.10.2017 OF THE COMMISSIO NER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2011-12. 2. THE ONLY ISSUED RAISED BY THE REVENUE IS AGAINST THE ORDER OF CIT(A) HOLDING THAT THE DEALERS INCENTIVES IS N OT COVERED BY THE PROVISIONS OF SECTION 194H OF THE ACT ON THE GR OUND THAT SALE MADE IS PRINCIPAL TO PRINCIPAL BASIS BY IGNORING TH E FINDINGS OF THE AO ON THE RELATIONSHIP OF ASSESSEE WITH DEALERS WERE THAT OF PRINCIPAL AND AGENT. ITA NO.7406/M/2017 M/S. MAHINDRA AUTOMOBILE DISTRIBUTOR P. LTD. 2 3. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS ENGA GED IN THE BUSINESS OF DESIGNING, MANUFACTURING AND MARKETING OF MOTOR VEHICLES. THE AO OBSERVED FROM THE PROFIT AND LOSS ACCOUNT OF THE ASSESSEE THAT ASSESSEE HAS CLAIMED RS.2,89,74,7 43/- AS DEALERS INCENTIVES. SUCH PAYMENTS WERE PAID TO THE DEALERS UNDER INCENTIVE SCHEMES FLOATED BY THE ASSESSEE DEP ENDING UPON THE TARGETS SET FOR THE DEALERS AND ACHIEVEMEN TS THEREOF BY THE DEALERS. ACCORDING TO THE ASSESSEE THE PROVISIO NS OF SECTION 194H ARE NOT APPLICABLE TO THE ASSESSEE AS PER THE INVOICES, THE INCENTIVES ARE FIXED AND IT DOES NOT HAVE CONNECTIO N WITH THE SALES TO THE DEALERS BUT DEPENDENT UPON THE TARGETS ACHIEVED. FURTHER ASSESSEE ALSO GIVES SERVICE COMMISSION COUP ONS TO THE DEALERS FOR RENDERING FREE SERVICES TO THE CONSUMER S OF VEHICLES. THE AMOUNT IS FIRST RECOVERED FROM THE DEALERS AT T HE TIME OF INVOICING AND LATER ON THIS AMOUNT IS PAID TO THE D EALERS WHEN THE SERVICE IS RENDERED TO THE CUSTOMERS. HOWEVER T HIS PLEA OF THE ASSESSEE DID NOT FIND FAVOUR WITH THE AO AND HE DISALLOWED THE SAID INCENTIVES FOR NON DEDUCTION OF TAX U/S 40 (A)(IA) OF THE ACT ON THE GROUND THAT RELATION BETWEEN THE ASSESS EE AND THE DEALERS ARE THAT OF PRINCIPAL AND AGENT AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 4. THE LD CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE BY FOLLOWING THE COORDINATE BENCH DECISION IN ITA NO.586/MUM/2013 IN THE CASE OF MAHINDRA AND MAHINDR A LTD A SISTER CONCERN OF THE ASSESSEE WHEREIN IDENTICAL IS SUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE HOLDING THAT THE INCENTIVES PAID TO DEALERS ARE NOT COVERED BY THE PROVISIONS O F SECTION 194H OF THE ACT AND NOT LIABLE FOR TDS DEDUCTIONS FOR TH E REASONS THAT ITA NO.7406/M/2017 M/S. MAHINDRA AUTOMOBILE DISTRIBUTOR P. LTD. 3 THE RELATIONSHIP BETWEEN THE ASSESSEE AND DEALERS A RE THAT OF PRINCIPAL TO PRINCIPAL BASIS. 5. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIALS ON RECORDS INCLUDING THE DECISION OF THE COORDINATE BENCH AS CITED SUPRA, WE OBSERVE THAT IDENTICAL ISSUE HAS BE EN DECIDED IN FAVOUR OF THE ASSESSEE IN ITA NO.586/MUM/2013 IN TH E CASE OF MAHINDRA AND MAHINDRA LTD AND LD CIT(A) AFTER FOLLO WING THE SAME ALLOWED THE APPEAL OF THE ASSESSEE. SO WE DO N OT FIND ANY INFIRMITY IN THE ORDER OF LD CIT(A) WHICH IS PASSED AFTER FOLLOWING THE COORDINATE BENCH DECISION AS STATED SUPRA. WE A RE, THEREFORE, UPHOLDING THE ORDER OF THE LD CIT(A) BY DISMISSING THE APPEAL OF THE REVENUE. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19.02.2019. SD/- SD/- ( RAM LAL NEGI) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 19.02.2019. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASS TT. REGISTRAR, ITAT, MUMBAI.