Law:

Section:

Section 194H of the Income-tax Act, 1961 - Deduction of tax at source - Commission or brokerage, etc. - Assessment years 2002-03 and 2003-04 - Assessee had appointed a large number of agents to sell its milk and milk products from booths owned by it - Commission was being paid to agents for milk sold and unsold milk was taken back by assessee at same price - Cash collection was daily handed over to assessee by agents - Whether there was principal to agent relationship and, thus, assessee was liable to deduct tax at source on commission paid by it - Held, yes FACTS A survey operation under section 133A was carried out in case of the assessee on the basis of information that it was not deducting tax at source on the commission paid by it to its agents (called concessionaires) who sold milk on its behalf. During the course of survey, it was found that the assessee had appointed a large number of agents to sell its milk and milk products from booths owned by it; that the commission was being paid to the agents for the milk sold; and that the milk, which was not sold, was taken back by the assessee at same price. The assessee claimed that there was no principal to agent relationship between it and the agents, but was a principal-to-principal relationship and, therefore, commission as defined in the Explanation to section 194H was not applicable. The contention of the assessee was rejected by the Assessing Officer as well as the Commissioner (Appeals) and the Tribunal. On appeal under section 260A : HELD On the facts of the case, it was quite clear that the milk and milk products were not sold by the assessee to the concessionaires. On the contrary, unsold milk was taken back by the assessee from the concessionaires, without any price reduction. Therefore, whichever way one looked at the matter from the point of view of the definition of the word 'commission', as appearing in the Explanation to section 194H or from the meaning of the word 'discount', the transaction between the assessee and the concessionaires was a principal to agent transaction and not a principal-to-principal transaction. [Para 11] The Tribunal had found as a matter of fact, that the milk booths…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492