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2023 (4) TMI 1165 - AT - Income TaxTDS u/s 194H - incentive paid to various parties - Non deduction of tds - addition u/s 40(a)(ia) - CIT(A) has viewed that the discount given to the various parties by the assessee in the nature of turnover discount did not attract TDS u/s 194H and assessee in the instant case did not have any right or control over the goods sold to the retailers and the goods hold by the retailers on their own behalf and not on behalf of the appellant - HELD THAT - CIT(A) rightly observed that the payment of incentive are made to the various parties by the assessee leading to transfer of ownership in the goods (with complete risk and rewards) the assessee in such a situation did not have any right or control over the goods sold to the retailers, as the retailers held the goods on their own behalf and not on behalf of the assessee and therefore they did not act as an agents of the assessee as such no TDS is deductible u/s 194H as it is not applicable in the case of assessee. Thus we confirmed the order passed by the ld. CIT(A) - Decided against revenue.
Issues Involved:
The issues involved in this case are: 1. Deletion of addition made by the AO on account of non-deduction of TDS invoking section 40(a)(ia) of the Income-tax Act, 1961. 2. Consideration of payment of amount credited separately which is not part of sale bill as commission. 3. Allowance of adding, amending, or altering the grounds of appeal. Deletion of Addition on Account of Non-Deduction of TDS: The assessee-firm, engaged in the business of distributor of readymade garments, received an incentive from a company on which TDS was deducted. The AO viewed that the assessee was liable to deduct TDS on the incentive paid to dealers as it was considered commission. The ld. CIT(A) allowed the appeal of the assessee, stating that the incentive was in the nature of turnover discount and not subject to TDS under section 194H. The CIT(A) observed that the goods were invoiced to retailers, transferring ownership to them, and the retailers held the goods on their own behalf, not as agents of the assessee. Therefore, the TDS disallowance was not justified under section 40(a)(ia) of the Act. Payment of Amount Credited Separately Not as Commission: The ld. CIT(A) reasoned that the incentive payments made by the assessee were akin to turnover discounts and not commission. The AO's misconception that the incentive was in the nature of commission led to the disallowance under section 40(a)(ia) of the Act. The CIT(A) highlighted that the incentive was part of a sales scheme announced prior to the completion of the task, making it a turnover discount exempt from TDS under section 194H. The retailers, not acting as agents of the assessee, held the goods on their own behalf, further supporting the non-applicability of TDS. Conclusion: The Appellate Tribunal upheld the decision of the ld. CIT(A) in allowing the appeal of the assessee. The Tribunal confirmed that the incentive payments were not subject to TDS under section 194H as they were turnover discounts and the retailers did not act as agents of the assessee. Therefore, the grounds taken by the revenue were dismissed, and the appeal of the revenue was ultimately dismissed on 31.03.2023.
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