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TMI Blog2012 (2) TMI 80X X X X Extracts X X X X X X X X Extracts X X X X ..... provided by the Dairy – Decided against the Revenue. - IT Appeal NOs. 1925 of 2010 and 310, 312, 313 & 319 of 2011 - - - Dated:- 30-1-2012 - SANJIV KHANNA and R.V. EASWAR, JJ. JUDGMENT R.V. Easwar, J. These are five appeals filed by the Revenue under Section 260A of the Income Tax, hereinafter referred to as the "Act". ITA Nos. 1925/2010 and 313/2011 relate to the assessee M/s Mother Dairy India Ltd. for the assessment years 2004-05 and 2005-06. ITA Nos. 310/2011, 319/2011, 312/2011 have been filed by the Revenue in the case of connected assessee namely Mother Dairy Food Processing Ltd. for the assessment years 2004-05 and 2005-06. The issue in all the five appeals is the same and we shall refer to it in the succeeding paragraphs. 2. We may first take up the case of M/s Mother Dairy India Ltd. for the assessment year 2004-05. This company hereinafter referred to as 'Dairy', was incorporated on 1.4.2003 as wholly owned subsidiary of another company by name Mother Dairy Fruit and Vegetable Ltd. The main objects of the assessee are to act as selling agents, sale organizers and advisors and to undertake activities in connection with procurement, processing, storage a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that it cannot be taken as a admission of the assessee that what was paid to the concessionaires represented commission requiring deduction of tax under Section 194H. 5. The Assessing Officer considered the submissions of the assessee. He noted that the booths were constructed by the assessee on its own and they were allotted to the concessionaires at its discretion. The milk and other products were sold from these booths by concessionaires during fixed hours of the day. An agreement was entered into between the assessee and the concessionaires. Clause 43 of the agreement provided that the assessee will sell milk and other products to the concessionaires at the sale price fixed by the Dairy from time to time. The concessionaires cannot sell the milk to consumers for any other sale price and if he is found to be indulging in this, the agreement was liable to be terminated. As per Clause 13, the concessionaire did not have any right, title or interest over the booth or the machinery, equipment, furniture etc. which were all to be provided by the Dairy. This Clause also provided that the possession and control of the shop was with the assessee and the looks were also to be provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich the relevant assessing year was 2004-05, the CIT(Appeals) passed an order on 31.7.2008 affirming the order passed by the Assessing Officer. A similar view was taken by him in the appeal order passed for the assessment year 2005-06 (FY 2004-05) on 3.10.2009. The CIT(Appeals) for this year followed his earlier order for the assessment year 2004-05. 9. Against the order passed by the CIT(Appeals) for the assessment year 2004-05 (FY 2003-04), the assessee filed a further appeal before the Tribunal in ITA No.2975 (Del.) of 2008. The appeal was accepted by the tribunal by order dated 12.12.2008. On a perusal of the agreement entered into between the assessee and the concessionaires and the other relevant facts of the case, the Tribunal held that the relationship between the assessee and the concessionaires was that of principal and principal and not that of principal and agent in order to attract 194H. The concessionaires under the agreement, had to purchase tokens from the assessee for the sale of milk at the booths and the milk can be sold only on the basis of the tokens. The concessionaires had to pay the consideration to the assessee as per the delivery invoices at the time of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tribunal that this judgment did not apply to its case because in the cited case there was a finding recorded by the departmental authorities as well as the Tribunal that the agreements, which were found in the course of survey of the premises of DMS were found to have been re-drafted and those redrafted agreements had been produced before the CIT(Appeals) and the Tribunal. The Tribunal, after comparing the two sets of the agreements had opined that the agreements produced before itself and the CIT(Appeals) were an afterthought. The assessee thus submitted that the judgment of this Court in the case of DMS (supra) was clearly distinguishable on facts. The assessee's submission was accepted by the Tribunal in the present case in its order dated 12.12.2008. In paragraphs 7 and 8 of the impugned order, the Tribunal has extracted the relevant portions from the earlier order dated 20.1.2006 of the Tribunal in the case of DMS in which a finding that DMS had filed the redrafted agreements before the CIT(Appeals), which were different in crucial aspects from the agreements found during the survey, was recorded. The tribunal in the present case, after noticing the earlier order of the trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ery then he is thereafter liable for the same and would be dealing with them in his own right as a principal and not as an agent of the Dairy. The clauses of the agreements show that there is an actual sale, and not mere delivery of the milk and the other products to the concessionaire. The concessionaire purchases the milk from the Dairy. The Dairy raises a bill on the concessionaire and the amount is paid for. The Dairy merely fixed the MRP at which the concessionaire can sell the milk. Under the agreement the concessionaire cannot return the milk under any circumstance, which is another clear indication that the relationship was that of principal to principal. Even if the milk gets spoiled for any reason after delivery is taken, that is to the account of the concessionaire and the Dairy is not responsible for the same. These clauses have all been noticed by the Tribunal. The fact that the booth and the equipment installed therein were owned by the Dairy is of no relevance in deciding the nature of relationship between the assessee and the concessionaire. Further, the fact that the Dairy can inspect the booths and check the records maintained by the concessionaire is also not dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e are two separate legal relationships. The income-tax authorities were not justified or correct in law in mixing up the two distinct relationships or telescoping one into the other to hold that because the concessionaires were selling the milk and other products from the booths owned by the Diary and were using the equipment and furniture in the course of the sale of the milk and other products, they were carrying on the business only as agents of the Diary. 14. We may refer to the judgment of this Court in the case of Delhi Milk Scheme v. CIT (supra). In that case the facts were different. Under the terms of agreement entered into between DMS and its concessionaires, the milk and other products did not become the property of the concessionaires on delivery. The unsold milk was taken back by the DMS from the concessionaires . The ownership of the milk and other products did not pass from DMS to the concessionaires inasmuch as there was no sale of the milk or milk products to them. Further the unsold milk was to be taken back by the DMS from the concessionaires. The agreement also provided that the daily cash collection of the concessionaires was to be handed over to DMS. On thes ..... X X X X Extracts X X X X X X X X Extracts X X X X
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