I.T.O (TDS) Wd - 58(3),Kolkata, Kolkata V. M/s Metro Diary Limited, Kolkata

ITA 853/KOL/2013

• Counselvise Citation: 85323514 RSA 2013
• Duration Of Justice: 2 year(s) 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2004-2005
• Appeal Filed On: 18-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M K BISWAS
• Keywords: Question of law
• Section: 133A; 201(1)

Judgement Text

ITA NO.852 & 853/KOL/13 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH B KOL KATA [BEFORE HONBLE SHRI P.M.JAGTAP AM & SHRI N.V.VAS UDEVAN JM ] ITA NOS.852 & 853/KOL/2013 ASSESSMENT YEARS : 2003-04 & 2004-05 ITO (TDS) WARD-58(3) M/S.METRO DIARY LIMITED, 21, GOPAL MUKHERJEE ROAD, KOLKATA. -VERSUS- KOLKATA-700 002. TAN CALMO2193C FOR THE ASSESSEE : NONE FOR THE RESPONDENT : SHRI M.K.BISWAS, JCIT SR.DR. DATE OF HEARING : 20.10.2015 DATE OF PRONOUNCEMENT : 20.10.2015 ORDER PER N.V.VASUDEVAN, JM: THESE ARE APPEALS BY THE REVENUE AGAINST TWO ORDERS BOTH DATED 3.1.2013 OF CIT(A)-I, KOLKATA, PASSED U/S.201(1) & 201(1A) OF THE INCOME TAX ACT, 1961(ACT) PERTAINING TO AY 2003-04 & 2004-05. 2. NOTICE SENT TO THE ASSESSEE HAS BEEN RETURNED U N-SERVED WITH THE LEFT. SINCE THE ISSUE ARISING FOR CONSIDERATION IN THIS APPEAL HAVE BEEN CONSIDERED AND DECIDED IN SEVERAL CASES OF MANUFACTURERS OF DAIRY PRODUCTS BY HIGHER JUDICIAL FORUMS UNDER IDENTICAL FACTS AND CIRCUMSTANCES, WE PROCEED TO DECIDE THESE APPEALS, AFTER CONSIDERING THE ARGUMENTS OF THE LEARNED DR. 3. THE ISSUE INVOLVED IN BOTH THESE APPEALS ARE ID ENTICAL AND ARISE OUT OF SAME FACTS AND CIRCUMSTANCES. WE DEEM IT APPROPRIATE TO PASS A CO MMON CONSOLIDATED ORDER. 4. THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINE SS OF PRODUCTION AND SALE OF MILK, ICE- CREAM AND OTHER DAIRY PRODUCTS. THE ASSESSEE SELL S ITS MILK AND OTHER PRODUCTS TO THE PUBLIC THROUGH FRANCHISES WHO HAVE DIFFERENT RETAIL OUTLET S(BOOTHS). THE ASSESSEE ENTERS INTO AGREEMENT WITH FRANCHISEE SETTING OUT THE TERMS AND CONDITIONS UNDER WHICH THEY WERE TO ACT ITA NO.852 & 853/KOL/13 2 AS FRANCHISEES OF ASSESSEES PRODUCTS. THE ASSESSE E FIXES THE MAXIMUM RETAIL PRICE(MRP) FOR EACH OF THE PRODUCTS SOLD THROUGH THE FRANCHISE E. THE ASSESSEE COLLECTS PRICE OF THE PRODUCT FROM THE FRANCHISEES WHICH IS LESS THAN THE MRP. THE DIFFERENCE BETWEEN THE MRP AND THE PRICE THAT THE FRANCHISEES PAY TO THE ASSES SEE ACCORDING TO THE ASSESSEE WAS NOTHING BUT DISCOUNT OR MARGIN ALLOWED BY IT TO THE FRANCHI SEE SO THAT THEY MAY EAR PROFIT FROM THEIR BUSINESS OF SALE OF DAIRY PRODUCTS OF THE ASSESSEE TO THE PUBLIC. ACCORDING TO THE REVENUE SUCH DIFFERENCE IS NOTHING BUT IN THE NATURE OF CO MMISSION AND THEREFORE THE ASSESSEE WAS BOUND TO DEDUCT TAX AT SOURCE U/S.194H OF THE ACT ON THE DIFFERENCE BETWEEN THE MRP AND THE PRICE WHICH THE FRANCHISEE PAY TO THE ASSESSEE. SEC.194-H OF THE ACT READS THUS: 'SECTION 194H: COMMISSION, BROKERAGE, ETC. (1) ANY PERSON, NOT BEING AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY, WHO IS RESPONSIBLE FOR PAYING, ON OR AFTER THE 1ST DAY OF OCTOBER, 1991 BUT BEFORE THE 1ST DAY OF JUNE, 1992, TO A RESIDENT, ANY INCOME BY WAY OF COMMISSION (NOT BEING INSURANCE COMMISSION REFERRED TO IN SECTION 194D) OR BROKERAG E, SHALL, AT THE TIME OF CREDIT OF SUCH INCOME TO THE ACCOUNT OF THE PAYEE OR AT THE T IME OF PAYMENT OF SUCH INCOME IN CASH OR BY THE ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE, WHICHEVER IS EARLIER, DEDUCT INCOME-TAX THEREON AT THE RATE OF TEN PER CE NT. (2) THE PROVISIONS OF SUB-SECTION (1) SHALL NOT APP LY (A) TO SUCH PERSONS OR CLASS OR CLASSES OF PERSONS AS THE CENTRAL GOVERNMENT MAY, HAVING REGARD TO THE EXTENT OF INCONVENIENCE CAUSED OR LIKELY TO BE CAUSED TO THEM AND BEING SATISFIED THAT IT WILL NOT BE PREJUDICIAL TO THE INTERESTS OF THE REVENUE, BY NOTIFICATION IN THE OFFICIAL GAZETTE , SPECIFY IN T HIS BEHALF; (B) WHERE THE AMOUNT OF SUCH INCOME OR, AS THE CASE MAY BE, THE AGGREGATE OF THE AMOUNTS OF SUCH INCOME CREDITED OR PAID OR LIKELY T O BE CREDITED OR PAID DURING THE FINANCIAL YEAR BY THE PERSON REFERRED TO IN SUB-SEC TION (1) TO THE ACCOUNT OF, OR TO, THE PAYEE, DOES NOT EXCEED TWO THOUSAND FIVE HUNDRED RU PEES. EXPLANATION : FOR THE PURPOSES OF THIS SECTION, - (I) 'COMMISSION OR BROKERAGE' INCLUDES ANY PAYMENT RECEIVED OR RECEIVABLE, DIRECTLY OR INDIRECTLY, BY A PERSON ACTING ON BEHALF OF ANOT HER PERSON FOR SERVICES RENDERED (NOT BEING PROFESSIONAL SERVICES) OR FOR ANY SERVICES IN THE COURSE OF BUYING OR SELLING OF GOODS OR IN RELATION TO ANY TRANSACTION RELATING TO ANY ASSET, VALUABLE ARTICLE OR THING; (II) 'PROFESSIONAL SERVICES' MEANS SERVICES RENDERE D BY A PERSON IN THE COURSE OF CARRYING ON A LEGAL, MEDICAL, ENGINEERING OR ARCHIT ECTURAL PROFESSION OR THE PROFESSION OF ACCOUNTANCY OR TECHNICAL CONSULTANCY OR INTERIOR DECORATION OR SUCH OTHER PROFESSION AS IS NOTIFIED BY THE BOARD FOR THE PURP OSES OF SECTION 44AA; ITA NO.852 & 853/KOL/13 3 (III) WHERE ANY INCOME IS CREDITED TO ANY ACCOUNT, WHETHER CALLED 'SUSPENSE ACCOUNT' OR BY ANY OTHER NAME, IN THE BOOKS OF ACCOUNT OF TH E PERSON LIABLE TO PAY SUCH INCOME, SUCH CREDITING SHALL BE DEEMED TO BE CREDIT OF SUCH INCOME TO THE ACCOUNT OF THE PAYEE AND THE PROVISIONS OF THIS SECTION SHALL APPLY ACCO RDINGLY.' 4. IT IS CLEAR FROM THE AFORESAID PROVISION THAT T AXES HAVE TO BE DEDUCTED AT SOURCE BY A PERSON RESPONSIBLE FOR PAYING ANY INCOME BY WAY OF COMMISS ION OR BROKERAGE. THE EXPRESSION 'COMMISSION' OR 'BROKERAGE' HAS BEEN DEFINED IN THE EXPLANATION, WHICH INCLUDES ANY PAYMENT RECEIVED OR RECEIVABLE DIRECTLY OR INDIRECT LY BY A PERSON ACTING ON BEHALF OF ANOTHER PERSON FOR SERVICES RENDERED (NOT BEING PROFESSIONA L SERVICES) OR FOR ANY SERVICES IN THE COURSE OF BUYING AND SELLING OF GOODS OR IN RELATION TO AN Y TRANSACTION RELATING TO FOLLOWING: (I) FOR SERVICES RENDERED (NOT BEING PROFESSIONAL); (II) FOR ANY SERVICES IN THE COURSE OF BUYING AND S ELLING OF GOODS OR IN RELATION TO ANY TRANSACTION RELATING TO ANY ASSET, VALUABLE ARTICLE OR THING 5. SEC. 201(1) OF THE ACT PROVIDES THAT WHERE A PE RSON IS OBLIGED TO DEDUCT TAX AT SOURCE IN ACCORDANCE WITH THE AFORESAID PROVISIONS FAILS TO D EDUCT TAX AT SOURCE OR AFTER DEDUCTING TAX AT SOURCE FAILS TO PAY IT TO THE GOVERNMENT THEN SUCH PERSON WILL BE DEEMED TO BE AN ASSESSEE IN DEFAULT AND IS LIABLE TO PAY THE TAX NOT SO DEDUCTE D OR NOT PAID. FURTHER SEC.201(1A) PROVIDES THAT SUCH PERSON SHALL ALSO BE LIABLE TO PAY INTERE ST ON THE TAX NOT SO DEDUCTED OR PAID FROM THE DATE ON WHICH SUCH TAX OUGHT TO HAVE BEEN PAID TO T HE GOVERNMENT TILL SUCH TIME SUCH TAXES ARE PAID TO THE GOVERNMENT. 6. ACCORDING TO THE AO, THE FOLLOWING TERMS OF THE AGREEMENT BETWEEN THE ASSESSEE AND THE FRANCHISEE CLEARLY SHOWED THAT THE FRANCHISEE WAS A CTING AS AGENT OF THE ASSESSEE AND THEREFORE THE PAYMENT BY THE ASSESSEE TO THE FRANCH ISEE PARTAKES THE CHARACTER OF COMMISSION: A) CLAUSE 6.1 WHICH PROVIDES THAT THE FRANCHISEE SHAL L PAY A DEPOSIT OF RS.10,000 TO MDL (ASSESSEE) FOR DUE PERFORMANCE AND OBSERVANCES OF THE VARIOUS TERMS AND CONDITIONS OF THE AGREEMENT BY THE FRANCHISEE; ITA NO.852 & 853/KOL/13 4 B) CLAUSE 6.2 OF THE AGREEMENT WHEREBY THE FRANCHISEE AGREED TO PAY AN ADVANCE CRATE DEPOSIT CALCULATED AT RS.100/- PER CRATE FO R THE MILK CRATES TO BE PROVIDED BY THE ASSESSEE TO THE FRANCHISEE. C) CLAUSE 9.1 OF THE AGREEMENT WHEREBY THE ASSESSEE HA D THE RIGHT TO MIX MARGIN PAYABLE TO THE FRANCHISEE FOR CONDUCTING THE SALE O F MILK OTHER PRODUCTS AS PRESCRIBED FROM TIME TO TIME. D) CLAUSE 10.1 WHEREBY THE OFFICIALS OF THE ASSESSEE H AD A RIGHT TO ENTER THE SELLING PREMISES FOR IMPLEMENTATION AND OBSERVANCE OF VARIO US PROVISIONS OF THE AGREEMENT AND TO COLLECT SAMPLE OF THE MILK SUPPLIED BY THE A SSESSEE AND TO CHECK THE VARIOUS RECORDS IN CONNECTION WITH THE AGREEMENT. E) CLAUSE 10.2 WHEREBY THE ASSESSEE RESERVED A RIGHT T O CHANGE THE SELLING PRICE OF MILK TO THE CONSUMERS FROM TIME TO TIME AND THE SAME WIL L NOT HAVE ANY CONNECTION WITH THE MARGIN ALLOWABLE TO THE FRANCHISEE. F) CLAUSE 22 WHEREBY THE FRANCHISEE WAS OBLIGED TO DIS PLAY SIGNBOARD AND PRICE LIST AS SPECIFIED BY THE ESSENTIAL COMMODITIES ACT OR THE A SSESSEE. G) CLAUS 24 OF THE AGREEMENT WHICH PROVIDES THAT THE F RANCHISEE SHALL NOT UNDER ANY CIRCUMSTANCES WHATSOEVER SELL ANY OTHER TYPE OF MIL K OTHER THAN THE MILK SUPPLIED TO THEM BY THE ASSESSEE EITHER DIRECTLY OR THROUGH ANY OTHER PARTY FROM THE SAID SELLING PREMISES AND THAT SUCH SALE SHALL BE ONLY AGAINST C ASH PAYMENT ON FIRST CUM FIRST SERVED BASIS. 7. BEFORE CIT(A), THE ASSESSEE SUBMITTED THAT KEY CLAUSES OF THE AGREEMENT BETWEEN THE ASSESSEE AND FRANCHISEE WOULD SHOW THAT THE ARRANGE MENT FOR SALE OF DAIRY PRODUCTS OF THE ASSESSEE TO THE PUBLIC THROUGH FRANCHISEES WAS ON T HE BASIS OF PRINCIPAL TO PRINCIPAL THERE BEING AN OUTRIGHT SALE OF PRODUCTS BY THE ASSESSEE TO THE FRANCHISEE AND NOT IN THE CAPACITY OF COMMISSION AGENT. THE ASSESSEE POINTED OUT THAT PA RA 2 OF THE FRANCHISEE AGREEMENT PROVIDED THAT THE ASSESSEE WILL SELL MILK AND THE F RANCHISEE WILL PURCHASE THE SAME. THIS WAS VERY IMPORTANT AS AN AGENT WOULD ONLY TAKE STOCK OF GOODS OF HIS PRINCIPAL AND NEVER PURCHASE IT. PARA 8 AND 9.2 OF THE AGREEMENT PROVI DED THAT THE FRANCHISEE HAS TO MAKE PAYMENT FOR THE PRODUCTS AND ONLY THAN THE GOODS WO ULD BE SUPPLIED TO THE FRANCHISEE. THE ASSESSEE POINTED OUT THAT PARA 13 AND 14 OF THE AGR EEMENT PROVIDED THAT TITLE TO THE GOODS PASSES ON THE FRANCHISEE ON DELIVERY AND RISK ALSO PASSES ALONG WITH SUCH PASSING OF TITLE. THE ITA NO.852 & 853/KOL/13 5 FRANCHISEE WAS RESPONSIBLE FOR UNSOLD OR DAMAGED ST OCK. THE LICENSE FOR RUNNING THE BUSINESS HAD TO BE OBTAINED BY THE FRANCHISEE IN ITS OWN NAM E AND COST. STORAGE OF THE PRODUCTS WAS THE RESPONSIBILITY OF THE ASSESSEE. THE AGREEMENT ALSO SPECIFICALLY PROVIDED THAT THE ARRANGEMENT SHOULD NOT BE MISTAKEN TO CONSIDER THE FRANCHISEE AN AGENT, SERVANT OR EMPLOYEE OF THE ASSESSEE. 8. THE ASSESSEE RELIED ON THE DECISION OF THE HON BLE DELHI ITAT IN THE CASE OF MOTHER DIARY INDIA LTD. VS. ITO 28 SOT 42(DEL) WHEREIN ON IDENTICAL FACTS THE HONBLE ITAT HELD THAT THE PROVISIONS OF SEC.194H WERE NOT APPLICABLE . SIMILAR DECISION RENDERED IN THE CASE OF ITO VS. MOTHER DAIRY FOOD PROCESSING LTD. 40 SOT 9 (DELHI) WAS ALSO BROUGHT TO THE NOTICE OF THE CIT(A). 9. THE ASSESSE ALSO HIGHLIGHTED AS TO HOW THE VARI OUS ASPECTS POINTED OUT BY THE AO IN THE ORDER U/S.201(1) & (1A) OF THE ACT WERE MORE FOR TH E PURPOSE OF CONTROL OF THE QUALITY AND GOODWILL OF THE PRODUCT SOLD BY THE FRANCHISEE. TH E ASSESSEE ALSO HIGHLIGHTED THAT THE DECISION RENDERED BY THE HONBLE CALCUTTA HIGH COUR T IN THE CASE OF BHARTI CELLULAR LTD. VS. ACIT ITA NO.222 OF 2006, WERE DISTINGUISHABLE IN AS MUCH AS THE SAID DECISION WAS RENDERED IN THE CONTEXT OF TERMS OF AGREEMENT BETWE EN BHARATI CELLULAR LTD., AND ITS FRANCHISEE WHEREBY IT WAS SPECIFICALLY PROVIDED THA T THE PROPERTY IN GOODS WILL NOT PASS ON TO THE FRANCHISEE AND UNSOLD STOCK WAS THE RESPONSIBIL ITY OF BHARATI CELLULAR LTD.AS FOLLOWS: 10. THE CIT(A) AGREED WITH THE CONTENTIONS OF THE ASSESSEE AND HELD THAT THE RELATIONSHIP BETWEEN THE ASSESSEE AND ITS FRANCHISEE WAS ON A PR INCIPAL TO PRINCIPAL BASIS AND WAS NOT IN THE NATURE OF RELATIONSHIP BETWEEN PRINCIPAL AND AG ENT. THE CIT(A) ALSO RELIED ON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. MOTHER DIARY INDIA LTD. (INFRA) RENDERED ON IDENTICAL FACTS AND CIRCUMSTANCES AS TH E CASE OF THE ASSESSEE. THE CIT(A) THEREFORE CONCLUDED THAT THE PAYMENT BY THE ASSESSE E TO THE FRANCHISEE WAS NOT IN THE NATURE OF COMMISSION WITHIN THE MEANING OF SEC.194-H OF THE ACT AND THEREFORE THERE WAS NO OBLIGATION ON THE PAYMENT OF THE ASSESSEE TO DEDUCT TAX AT SOURCE ON SUCH PAYMENT. 11. AGGRIEVED BY THE ORDERS OF THE CIT(A), THE REV ENUE IS IN APPEAL BEFORE THE TRIBUNAL. 12. WE HAVE HEARD THE SUBMISSION OF THE LEARNED DR WHO RELIED ON THE ORDER OF THE AO. WE HAVE CONSIDERED THE ORDER OF THE AO AND THAT OF THE CIT(A) IN THE LIGHT OF THE VARIOUS JUDICIAL ITA NO.852 & 853/KOL/13 6 PRONOUNCEMENTS REFERRED TO THEREIN IN THE LIGHT OF THE AGREEMENT BETWEEN THE ASSESSEE AND ITS FRANCHISEE. 13. THE HONBLE DELHI HIGH COURT IN ITS JUDGMENT D ATED 19.12.2011 IN THE CASE OF CIT VS. MOTHER DAIRY INDIA LTD. ITA NO.1925/2010 AND ITA 31 3/D011 HELD IN PARA-12 TO PARA 15 OF ITS JUDGMENT AS FOLLOWS: 12...........THE PRINCIPAL QUESTION THAT FALLS FOR CONSIDERATION IS WHETHER THE AGREEMENTS BETWEEN THE ASSESSEE AND THE CONCESSIONAIRES GAVE R ISE TO A RELATIONSHIP OF PRINCIPAL TO PRINCIPAL OR RELATIONSHIP OF PRINCIPAL TO AGENT. ON A FAIR READING OF ALL THE CLAUSES OF THE AGREEMENT AS HAVE BEEN REFERRED TO IN THE ORDER S OF THE TRIBUNAL AS WELL AS THOSE OF THE INCOME TAX AUTHORITIES, WE ARE UNABLE TO SAY TH AT THE VIEW TAKEN BY THE TRIBUNAL IS ERRONEOUS. IT IS A WELL-SETTLED PROPOSITION THAT IF THE PROPERTY IN THE GOODS IS TRANSFERRED AND GETS VESTED IN THE CONCESSIONAIRE A T THE TIME OF THE DELIVERY THEN HE IS THEREAFTER LIABLE FOR THE SAME AND WOULD BE DEALING WITH THEM IN HIS OWN RIGHT AS A PRINCIPAL AND NOT AS AN AGENT OF THE DAIRY. THE CLA USES OF THE AGREEMENTS SHOW THAT THERE IS AN ACTUAL SALE, AND NOT MERE DELIVERY OF T HE MILK AND THE OTHER PRODUCTS TO THE CONCESSIONAIRE. THE CONCESSIONAIRE PURCHASES THE MI LK FROM THE DAIRY. THE DAIRY RAISES A BILL ON THE CONCESSIONAIRE AND THE AMOUNT IS PAID FOR. THE DAIRY MERELY FIXED THE MRP AT WHICH THE CONCESSIONAIRE CAN SELL THE MI LK. UNDER THE AGREEMENT THE CONCESSIONAIRE CANNOT RETURN THE MILK UNDER ANY CIR CUMSTANCE, WHICH IS ANOTHER CLEAR INDICATION THAT THE RELATIONSHIP WAS THAT OF PRINCI PAL TO PRINCIPAL. EVEN IF THE MILK GETS SPOILED FOR ANY REASON AFTER DELIVERY IS TAKEN, THA T IS TO THE ACCOUNT OF THE CONCESSIONAIRE AND THE DAIRY IS NOT RESPONSIBLE FOR THE SAME. THESE CLAUSES HAVE ALL BEEN NOTICED BY THE TRIBUNAL. THE FACT THAT THE BOO TH AND THE EQUIPMENT INSTALLED THEREIN WERE OWNED BY THE DAIRY IS OF NO RELEVANCE IN DECIDING THE NATURE OF RELATIONSHIP BETWEEN THE ASSESSEE AND THE CONCESSIO NAIRE. FURTHER, THE FACT THAT THE DAIRY CAN INSPECT THE BOOTHS AND CHECK THE RECORDS MAINTAINED BY THE CONCESSIONAIRE IS ALSO NOT DECISIVE. AS RIGHTLY POINTED OUT BY THE TRIBUNAL THE DAIRY HAVING GIVEN SPACE, MACHINERY AND EQUIPMENT TO THE CONCESS IONAIRE WOULD NATURALLY LIKE TO INCORPORATE CLAUSES IN THE AGREEMENT TO ENSURE THAT ITS PROPERTY IS PROPERLY MAINTAINED BY THE CONCESSIONAIRE, PARTICULARLY BECAUSE MILK AN D THE OTHER PRODUCTS ARE CONSUMED IN LARGE QUANTITIES BY THE GENERAL PUBLIC AND ANY D EFECT IN THE STORAGE FACILITIES WHICH REMAINS UNATTENDED CAN CAUSE SERIOUS HEALTH HAZARDS . THESE ARE ONLY TERMS INCLUDED IN THE AGREEMENT TO ENSURE THAT THE SYSTEM OPERATES SA FELY AND SMOOTHLY. FROM THE MERE EXISTENCE OF THESE CLAUSES IT CANNOT BE SAID THAT T HE RELATIONSHIP BETWEEN THE ASSESSEE AND THE CONCESSIONAIRE IS THAT OF A PRINCIPAL AND A N AGENT. THAT QUESTION MUST BE DECIDED, AS HAS BEEN RIGHTLY DECIDED BY THE TRIBUNA L, ON THE BASIS OF THE FACT AS TO WHEN AND AT WHAT POINT OF TIME THE PROPERTY IN THE GOODS PASSED TO THE CONCESSIONAIRE. IN THE CASES BEFORE US, THE CONCESSIONAIRE BECOMES THE OWNER OF THE MILK AND THE PRODUCTS ON TAKING DELIVERY OF THE SAME FROM THE DA IRY. HE THUS PURCHASED THE MILK AND THE PRODUCTS FROM THE DAIRY AND SOLD THEM AT THE MRP. THE DIFFERENCE BETWEEN THE MRP AND THE PRICE WHICH HE PAYS TO THE DAIRY IS HIS INCOME FROM BUSINESS. IT CANNOT BE CATEGORIZED AS COMMISSION. T HE LOSS AND GAIN IS OF THE CONCESSIONAIRE. THE DAIRY MAY HAVE FIXED THE MRP AN D THE PRICE AT WHICH THEY ITA NO.852 & 853/KOL/13 7 SELL THE PRODUCTS TO THE CONCESSIONAIRE BUT THE PRO DUCTS ARE SOLD AND OWNERSHIP VESTS AND IS TRANSFERRED TO THE CONCESSIONAIRES. TH E SALE IS SUBJECT TO CONDITIONS, AND STIPULATIONS. THIS BY ITSELF DOES NOT SHOW AND ESTABLISH PRINCIPAL AND AGENT RELATIONSHIP. THE SUPERVISION AND CONTROL REQUIRED IN CASE OF AGENCY IS MISSING. 13. IT IS IRRELEVANT THAT THE CONCESSIONAIRES WERE OPERATING FROM THE BOOTHS OWNED BY THE DAIRY AND WERE ALSO USING THE EQUIPMENT AND FUR NITURE PROVIDED BY THE DAIRY. THAT FACT IS NOT DETERMINATIVE OF THE RELATIONSHIP BETWEEN THE DAIRY AND THE CONCESSIONAIRES WITH REGARD TO THE SALE OF THE MILK AND OTHER PRODUCTS. THEY WERE LICENCEES OF THE PREMISES AND WERE PERMITTED THE US E OF THE EQUIPMENT AND FURNITURE FOR THE PURPOSE OF SELLING THE MILK AND OTHER PRODU CTS. BUT SO FAR AS THE MILK AND THE OTHER PRODUCTS ARE CONCERNED, THESE ITEMS BECAME TH EIR PROPERTY THE MOMENT THEY TOOK DELIVERY OF THEM. THEY WERE SELLING THE MILK AND TH E OTHER PRODUCTS IN THEIR OWN RIGHT AS OWNERS. THESE ARE TWO SEPARATE LEGAL RELATIONSHI PS. THE INCOME-TAX AUTHORITIES WERE NOT JUSTIFIED OR CORRECT IN LAW IN MIXING UP T HE TWO DISTINCT RELATIONSHIPS OR TELESCOPING ONE INTO THE OTHER TO HOLD THAT BECAUSE THE CONCESSIONAIRES WERE SELLING THE MILK AND OTHER PRODUCTS FROM THE BOOTHS OWNED B Y THE DIARY AND WERE USING THE EQUIPMENT AND FURNITURE IN THE COURSE OF THE SALE O F THE MILK AND OTHER PRODUCTS, THEY WERE CARRYING ON THE BUSINESS ONLY AS AGENTS OF THE DIARY. 14. WE MAY REFER TO THE JUDGMENT OF THIS COURT IN T HE CASE OF DELHI MILK SCHEME VS CIT (SUPRA .) IN THAT CASE THE FACTS WERE DIFFERENT. UNDER THE TERMS OF AGREEMENT ENTERED INTO BETWEEN DMS AND ITS CONCESSIONAIRES, T HE MILK AND OTHER PRODUCTS DID NOT BECOME THE PROPERTY OF THE CONCESSIONAIRES ON D ELIVERY. THE UNSOLD MILK WAS TAKEN BACK BY THE DMS FROM THE CONCESSIONAIRES . TH E OWNERSHIP OF THE MILK AND OTHER PRODUCTS DID NOT PASS FROM DMS TO THE CONCESS IONAIRES INASMUCH AS THERE WAS NO SALE OF THE MILK OR MILK PRODUCTS TO THEM. FURTH ER THE UNSOLD MILK WAS TO BE TAKEN BACK BY THE DMS FROM THE CONCESSIONAIRES. THE AGREE MENT ALSO PROVIDED THAT THE DAILY CASH COLLECTION OF THE CONCESSIONAIRES WAS TO BE HANDED OVER TO DMS. ON THESE FACTS, IT WAS HELD BY THE TRIBUNAL THAT THE CONCESS IONAIRES ONLY RENDERED A SERVICE TO DMS FOR SELLING MILK TO THE CUSTOMERS AND, THEREFOR E, THE RELATIONSHIP BETWEEN DMS AND THE CONCESSIONAIRES WAS THAT OF A PRINCIPAL AND AN AGENT. THIS ATTRACTED THE PROVISIONS OF SECTION 194H . THIS IS APART FROM THE FACT, AS NOTICED EARLIER, THAT THE DMS REDRAFTED THE AGREEMENTS AND FILED THEM BEFORE THE CIT(A) AND THE TRIBUNAL AND SUCH REDRAFTED AGREEMENTS WERE FOUND TO BE DIFFEREN T FROM THE AGREEMENTS FOUND DURING THE SURVEY UNDER SECTION 133A . THIS COURT, ON THE ABOVE FACTS HELD THAT SECTION 194H WAS ATTRACTED. AS ALREADY POINTED OUT, THE TERMS O F THE AGREEMENT ENTERED INTO BETWEEN THE PRESENT ASSESSEES AND THEI R CONCESSIONAIRES ARE DIFFERENT IN CRUCIAL ASPECTS. THEREFORE, THE JUDGMENT OF THIS CO URT IN THE CASE OF DMS(SUPRA) IS NOT APPLICABLE TO THE PRESENT CASES. 15. WE ARE, THEREFORE, OF THE VIEW THAT NO SUBSTANT IAL QUESTION OF LAW ARISES FROM THE ORDER OF THE TRIBUNAL. THE APPEALS OF THE REVENUE I N ITA NO.1925 AND 313/2011 ARE ACCORDINGLY DISMISSED WITH NO ORDER AS TO COSTS. (EMPHASIS SUPPLIED) ITA NO.852 & 853/KOL/13 8 14. IT IS CLEAR FROM THE JUDICIAL PRONOUNCEMENT OF THE HONBLE DELHI HIGH COURT THAT PASSING OF TITLE IN THE GOODS IS IMPORTANT AND DETERMINATIV E OF THE QUESTION WHETHER FRANCHISEE WAS ACTING AS AGENT OR ACTING ON A PRINCIPAL TO PRINCIP AL BASIS OF THE ASSESSEE. IT IS AN UNDISPUTED FACT THAT AS PER THE TERMS OF THE AGREEMENT BETWEEN THE ASSESSEE AND ITS FRANCHISEE PROPERTY IN GOODS WAS TO PASS ON DELIVERY AND THE RISK OF OWNER SHIP (IN THE FORM OF THE FRANCHISEE NOT BEING TO SELL THE PRODUCT OR DAMAGE TO THE PRODUCT) WAS THAT OF THE FRANCHISEE. WHEN THAT IS THE FACTUAL POSITION IN THE CASE, WE ARE OF THE VIE W THAT THE DECISION OF THE HONBLE DELHI HIGH COURT WAS SQUARELY APPLICABLE TO THE CASE OF T HE ASSESSEE. WE THEREFORE CONCUR WITH THE VIEW OF THE CIT(A) AND DISMISS THESE APPEALS BY THE REVENUE. 15. IN THE RESULT THE APPEALS BY THE REVENUE ARE D ISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 20.10.2015. SD/- SD/- (P.M.JAGTAP) (N.V.VASUDEVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 20.10.2015. DKP/PS. COPY OF THE ORDER FORWARDED TO: 1. M/S.METRO DIARY LIMITED, 21, GOPAL MUKHERJEE ROAD, KOLKATA-2. 2. ITO WARD 58(3), KOL-71 3. THE CIT 4. THE CIT(A) 5. DR. KOLKATA BENCHES, KOLKATA TRUE COPY BY ORDER ASST.REGISTRAR, ITAT, KOLKATA BENCHES, KOLKATA.