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2015 (12) TMI 622 - HC - Income TaxTDS u/s 194H - Non-deduction of TDS on payment made to M/s ACE Calderys Limited - ITAT held that the transaction is in the nature of principal to principal and not principal to agent basis - Held that - Even though the Assessing Officer held M/s ACE Calderys Limited to be a broker of the assessee and liable for deduction under section 194-H, the appellate authorities found that the assessee company sells the branded product to M/s ACE Calderys Limited at mutually agreed price and the appellant s liability in respect of the product sold ceases as soon as the products are dispatched from the premises of the appellant for delivery. It was found that the product order, dispatch instructions etc are given by M/s ACE Calderys Limited, and even particulars of the party to whom supply is made is given by M/s ACE Calderys Limited alongwith the quantity to be dispatched, the billing rate etc. Thereafter, in the invoice prepared for payment of Excise, M/s ACE Calderys Limited is shown as the consignee and the person to whom the purchase is made is shown as the purchaser of M/s ACE Calderys Limited. The appellant company raises commercial invoices in the name of M/s ACE Calderys Limited on mutually agreed prices. It was also found that documents required for Excise Act, Central Sales Act and General Sales Tax are issued to the appellant by M/s ACE Calderys Limited, who was responsible for making payment of commercial invoices raised by the appellant company and the responsibility of settlement of any dispute for loss etc was solely on M/s ACE Calderys Limited. - Decided against revenue
Issues:
- Tenability of orders dated 27.5.2015 passed by the Appellate Tribunal in ITA Nos. 208/Jab/2013 and 210/Jab/2013 regarding deduction of TDS on payment made to M/s ACE Calderys Limited. - Whether the relationship between the assessee and M/s ACE Calderys Limited is that of a principal and an agent or principal to principal basis. - Applicability of section 194-H and other provisions for deduction of TDS. - Interpretation of orders passed under section 201(1) and 201(1-A) dated 28.3.2011. Analysis: The High Court heard the revenue's appeal challenging the tenability of the orders passed by the Appellate Tribunal regarding the deduction of TDS on payments made to M/s ACE Calderys Limited. The assessee, a Company engaged in manufacturing and trading minerals, had supplied branded products directly to a third party on behalf of its customer M/s ACE Calderys Limited. The Assessing Officer added the amount on account of non-deduction of TDS, but the Commissioner and the Appellate Tribunal held that the transaction was on a principal to principal basis, not principal to agent. The counsel for the appellant argued that the relationship should be considered that of a principal and an agent, making TDS deduction mandatory under section 194-H. However, both the Commissioner and the Tribunal examined the details of the arrangement and found that the appellant company operated under the supervision and brand name of M/s ACE Calderys Limited, selling products as per the customer's instructions. The Tribunal's findings were based on a thorough evaluation of the material on record, leading to the dismissal of the appeals. The appellant contended that the Tribunal erred in not considering the fact that the orders passed under section 201(1) and 201(1-A) were not for the relevant years. The High Court reviewed the submissions but found no grounds for interference. The concurrent findings of the Commissioner and the Appellate Tribunal were deemed sound, based on a comprehensive assessment of the available evidence. Consequently, the High Court dismissed the appeals, concluding that no substantial question of law arose for consideration in the matter.
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