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TMI Blog2008 (12) TMI 436X X X X Extracts X X X X X X X X Extracts X X X X ..... on the ground that the agreement with the concessionaires were an agreement between principal, being the assessee and the agent, being the concessionaires had held that the provisions of section 194H was attracted on the difference between MRP and the sale price charged by the assessee to the concessionaires and as the assessee had not deducted TDS at the requisite rates, had passed an order under section 201(1) and 201(1A) of the Act on 31-3-2008 holding the assessee to be an assessee in default. 3. Aggrieved the assessee had filed first appeal to the ld. CIT(A) who had confirmed the order of the Assessing Officer. Aggrieved the assessee had filed this appeal. 4. At the time of hearing it was submitted by the ld. Counsel on behalf of the assessee that the assessee enters into an agreement usually with ex-service man (concessionaires) for the sale of liquid milk, fresh fruits and vegetables, Ice-creams, Juices, vegetable products etc. These concession-aires run the milk booths and shops on a principal-to-principal basis as per the terms of the agreement. The booths and the plant and machinery, i.e., the chilling plant, dispensing machine and weighing machinery etc. in the booths ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at on the reading of the agreement, the same was to be read as a contract entered into between 2 persons and both the parties having specifically understood the same and having accepted that there would be no principal - agent relationship nor employee, employer relationship but to be a commercial one, the relationship between the 2 persons could not be read to be one of principal and agent by the revenue. It was his further submission that 2 circulars had been found in the course of survey wherein the term commission had been mentioned. It was his submission that the said circulars related to the retailers distributors and transporters with whom also the assessee was dealing in and it did not relate to the transaction with the concessionaires. He drew attention to pages 54 and 55 of the paperbook, which was the copy of the 2 circulars. At page 54 was a circular dated 28 July, 2003 which was in Hindi and the English translation therein was shown at page 33 and it read as "attractive scheme for light milk to all retailers, distributors and transporters." As per the said circular there was no term of commission in the said circular and all it said was that extra income as per the inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been specifically mentioned. It was his further submission that this Tribunal in the case of Delhi Milk Scheme v. CIT [2008] 301 ITR 3731 (Delhi) had held that the sums paid by the assessee therein to the agents who are merely rendering their services for selling the products was commission and not discount of sales and consequently, the provisions of section 194H had attracted in respect of payment made to the agents. It was the submission that this decision of the Tribunal had also been upheld by the Hon'ble Jurisdictional High Court in Delhi Milk Scheme's case (supra). It was the submission that the said decision did not apply to the assessee's case insofar as this Tribunal had given a categorical finding that the agreements which had been found in the course of survey in the case of Delhi Milk Scheme ( supra) had been re-drafted and it was the redrafted agreements which had been produced before the CIT(A) and the ITAT in that case. This Tribunal had also categorically given a finding that on the basis of the agreements found in the course of survey in that case the transaction between the assessee therein and the concessionaires was one of principal and agent and the redrafti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on as per the delivery invoices at the time of delivery of the milk and any quantity of unsold milk is to be recorded within 15 minutes of the close of the scheduled vending time or before the supply of the milk is taken by the concessionaires from the assessee whichever is earlier. The agreement also clearly shows that the assessee would not take back any portion of the unsold milk in any condition whatsoever. A perusal of the customer detail trial balances found at pages 4E, F, G and H of the paperbook show that during a day the concessionaires takes two deliveries of milk. The quantity of milk that is purchased by the concessionaires varies, continuously ranging from a minimum of 40 liters to a maximum of 120 liters. For example on 3rd September the said concessionaires had taken 120 liters on the first purchase and on the second purchase 100 liters, on 4-9-2003, 60 liters on the first purchase and 90 liters on the second purchase. Obviously, this when read with the clauses of the agreement would mean that at the end of the time of vending the balance milk as available with the concessionaires would be considered and considering the average milk required on a day, the concession ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Delhi Milk Scheme (supra) confirming the decision of this Tribunal also clearly show that the fact in the case of Delhi Milk Scheme (supra) was completely different from the facts in the present case. The facts as recorded by the Tribunal in the case of Delhi Milk Scheme (supra) are as follows:- "The facts emerging from the orders of tax authorities below and which also remained uncontroverted before us are that during course of survey on 12-6-2002, the department found appointment letters of certain agents/concessionaires as well as agreements with those agents indicating that the assessee, DMS, was selling its milk and milk products to them. The certified copies of the appointment letters and agreements obtained during the course of survey were annexed as Annexures 'A' and 'B'. As per these agreements the agents/concessionaires appointed by DMS numbering 1,600 were to sell the milk and milk products from booths owned by the DMS on commission basis the rate of which was mentioned in those, agreements/appointment letters, as detailed in the orders of tax authorities below. It was further mentioned in those agreements executed between DMS and concessionaires/agents that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s first time produced before the CIT(A) were not made available to the department at the time of survey. It means that DMS has redrafted the agreements and the appointment letters after the date of survey wherein, the word 'commission' used in the appointment letter and agreement found during survey replaced by the word 'discount' in the newly drafted appointment letter and agreement. Similarly, in the newly drafted agreement and appointment letter the words 'rate of commission' has been replaced by the words 'rate of discount'." 8. On the basis of these facts this Tribunal had arrived at the conclusion that the transaction therein was the one of commission. The findings therein are as follows:- "From these facts it is clear that redrafted agreement/appointment letters first time produced before the ld. CIT(A), incorporating the word 'discount' in place of 'commission' and the words "DMS accepts unsold milk from the concessionaires", with the words "the unsold milk from agents is not taken back by DMS" was an afterthought and was a ploy used by the assessee to come out from the mandatory requirement of deducting tax at source on the payments made to the agents/concessionaires, so ..... X X X X Extracts X X X X X X X X Extracts X X X X
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