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TMI Blog2010 (9) TMI 536X X X X Extracts X X X X X X X X Extracts X X X X ..... is of commission - When there is no contract of agency at any point of time between the assessee and the intermediaries and the discount made available to the intermediaries does not fall within the term commission or brokerage, then , such discount allowed by the assessee is not liable for deduction under section 194-H - Decided in favor of assessee - ITA No. 5746/Mum/2009 - - - Dated:- 9-9-2010 - SHRI S V MEHROTRA, ACCOUNTANT MEMBER J. SHRI VIJAY PAL RAO, JUDICIAL MEMBER J. Appel lant by : Shri Kirit Sheth Respondent by : Shri Shravan Kumar ORDER PER VIJAY PAL RAO, JM This appeal by the assessee is directed against the order dated 7.10.2009 of CIT(A)-II for the assessment year 2006-07. 2. The assessee has rais ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de by the AO. 5. Before us, the learned AR of the assessee has submitted that the assessee while booking the tickets through intermediaries is passing on the part of its earning in the form of handling charges. He has further pointed out that the assessee passed on part of its earning to all types of customers irrespective of the fact whether they come directly or through some intermediary. The handling charges are in the nature of discount and the same varies according to the airline to airline and the sector it relates. It also varies from time to time even in respect of some airlines and some sector. He has forcibly contended that the discount offered to the direct customers and the intermediaries is the same and in the case of cancel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is given to the customers and not to the intermediaries. It is nothing but commission given to the intermediaries though there is no written agreement between the parties which is otherwise not essential for earning commission 7. We have considered the rival contentions and relevant record. The AO has considered this issue in paragraphs 3.2 of his order as under : 3.2 I have carefully considered the above submissions. However, the fact remains that the intermediaries are bringing business to the assessee and in return the assessee is passing out some handling charges to them. The assessee has preferred to call these chares as discount. However, whatever may be the nomenclature these charges are paid to intermediaries for bringing bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such discount allowed by the assessee is not liable for deduction under section 194-H. Though the assessee has deducted the TDS, but mere deduction of TDS does not alter the nature of transaction and relation between the assessee and the intermediaries which is otherwise apparent and not disputed. In the case of Ahmedabad Stamp Vendors Association V/s Union of India reported in 257 ITR 202 (Guj), the hon.Gujarat High Court at page 215 of the report has held as under : Applying the aforesaid definitions and the judicial pronouncements to the fact of the present case and in backdrop of the aforesaid rules, it is clear that although the Government has imposed a number of restrictions on the licensed stamp vendors regarding the manner of ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the agent of the company, but in the course of selling cars, he may enter into a contract of maintenance during the warranty period, with the customers (purchaser of the car) on behalf of the company. However, such services rendered by the dealer in the course of selling cars does not make the activity of selling cars itself an act of agent of the manufacturer when the dealings between the company and the dealer in the matter of sale of cars are on principal to principal basis. This is just an illustration to clarify that a services in the course of buying or selling of goods has to be something more than the act of buying or selling of goods. When the licensed stamp vendors take delivery of stamp papers on payment of full prices less dis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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