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TMI Blog2010 (2) TMI 917X X X X Extracts X X X X X X X X Extracts X X X X ..... tlets within the Fab Mall's stores and as rightly pointed out by CIT(A), this would certainly not be the case if the title of the goods were being transferred in a contract for sale - order of CIT(A) is correct and in accordance with law and no interference is called for, appeals filed by the assessee are dismissed X X X X Extracts X X X X X X X X Extracts X X X X ..... - for AYs 2005-06 and 2006-07 respectively to sales commission inadvertently which was essentially "discount" and not commission at all. iii) As there was no principal and agency relationship between the appellant and M/s Fab Mall and since the amount did not constitute commission but was in effect discount, the provisions of section 194H were not applicable. iv) A confirmation letter issued by M/s Fab Mall clarified that there was no principal and agency relationship between them. v) The AO had disallowed Rs.10,68,033/- and Rs.11,40,956/- u/s 40(a)(ia) of the I T Act, 1961. The appellant had not shown the amounts as payable or outstanding in the balance sheets as on 31.3.2005 and 31.3.2006. The amounts in question were paid during the previous year and as there was no outstanding amount payable to M/s Fab Mall as alleged commission, the disallowance was not as per the provisions of the Act. vi) The word "paid" has been defined in section 43(2) of the I T Act, 1961 as "actually paid or incurred according to the method of accounting upon the basis of which the profits or gains are computed under the head "profits and gains of business or profession". This definition, accordi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consumers of its products that buy them at its outlets. Even these invoices do not bear the name of the purported buyer, M/s Fab Mall. 2) The extract of Fab Mall's a/c in the appellant's books also shows that the appellant is meeting electricity charges pertaining to its outlets within Fab Mall's stores. This would certainly not be the case if the title of the goods were being transferred in a contract for sale. 3) In the absence of anything to show that the transaction constituted a contract for sale, one would have to conclude that there exists a principal-agency relationship and the provisions of s. 194H therefore do apply. 4) From the facts outlines above too, it is clear that the only thing being credited by the appellant to the a/c of M/s Fab Mall is sales commission. The argument that this is merely incorrect nomenclature and the amount actually constitutes a discount is not borne out by any corroborative evidence and the only so-called evidence that has been produced is self-serving in nature. No invoices worth their name have been produced. Even the so-called invoices produced do not bear Fab Mall's name nor do they reflect any discount. Sales-related discounts, if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missions and perused the material on record. The short question to be answered is whether the amounts retained by Fab Mall on account of sale of assessee's products, is whether "discount" as contended by the assessee or "commission" or "Brokerage" as enumerated u/s 194H of the Act. In other words, whether the Fab Mall and the assessee had dealings on principal to principal basis. The relevant portion of the section 194H is reproduced below:- "194H Any person, not being an individual or a Hindu undivided family, who is responsible for paying, on or after the 1st day of June, 2001, to a resident, any income by way of commission (not being insurance commission referred to in section 194D) or brokerage, shall, at the time of credit of such income to the account of payee or at the time of payment of such income in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of [ten] per cent": Provided----- Provided further----- Provided also------ Explanation:- For the purpose of this section- (i) "commission or brokerage" includes any payment received or receivable, directly or indirectly, by a person acting on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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