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TMI Blog2013 (1) TMI 482X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest u/s 201(1A) of the Act was also levied for the assessment years 2006-07 to 2008-09. The assessee challenged the said orders by filing appeal before Ld CIT(A), who allowed the appeals in part. Still aggrieved, the assessee is in appeal before us for all the four years. Aggrieved by the relief granted by Ld CIT(A), the revenue is in appeal before us for all the four years. 3. The facts which are relevant to the issue under consideration are set out in brief. The assessee herein is an IATA approved agent and is engaged in the business of booking air travel tickets for various airline companies. The Deputy Commissioner of Income tax (TDS) (hereinafter "TDS officer") noticed that the assessee has been paying commission to various persons without deducting tax at source as required under sec. 194H of the Act. The year wise details of commission paid; tax deductible u/s 194H, interest charged u/s 201(1A), as stated by the TDS officer, are tabulated below:- Asst. year Commission paid TDS deductible Interest u/s 201(1A) 2006-07 4,37,11,778 22,29,301 7,80,255 2007-08 10,40,85,910 53,08,381 12,20,910 2008-09 13,88,02,925 1,31,05,309 14,41,583 2009-10 1,03,32,865 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing officer. Accordingly, in our view, there is no violation of Rule 46A of the Income tax Rules on the part of Ld CIT(A). Accordingly, the grounds raised by the revenue on this issue are dismissed. 6. The department is aggrieved by the decision of Ld CIT(A) in holding that the payments made to the retail customers and group customers are in the nature of discount and hence TDS need not be deducted there from. We notice that the Ld CIT(A) was persuaded by the following contentions raised by the assessee before him in this regard. "5. Vide letter dated 08.01.2011 the assessee filed following submissions in support of its contentions: "1. The appellant is a travel agent recognized under IATA Rules and doing business representing various Air Lines. The various Air Line companies are providing air tickets to them after prescribing the minimum and maximum fare as per the standard fares informed to the Director General of Commercial Aviation which are called Published Fares. The appellant is receiving commission as a percentage of the fares in respect of which tax is deducted at source by the Air Lines u/s. 194H. 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count payments would fall in the definition of "Commission or brokerage" as given in sec. 194H of the Act. The term "Commission or brokerage" covered by sec. 194H is defined as under in the Explanation to sec. 194H:- "Commission or brokerage" includes any payment received or receivable, directly or indirectly, by a person acting on behalf of another person for services rendered (not being professional services) or for any services in the course of buying or selling of goods or in relation to any transaction relating to any asset, valuable article or thing, not being securities" Though the above said definition is an inclusive one, yet the key points are (a) A person should act on behalf of another person and he should render services to another person or (b) A person should render any service in the course of buying or selling of goods or in relation to any transaction relating to any asset, valuable article or thing, not being securities. 9. The retail customers or group customers are not providing any service to the assessee herein. They only get flight tickets at a concession from the assessee herein. Under this scena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gents for and on behalf of the travelling public for bargaining and buying the ticket from the main travel agent the category in which the appellant belong. In the assessment order and elsewhere this category of self-styled travel agents are termed as SUB-AGENTS of the appellant. But this treatment in accounting and taxation is totally erroneous. They are the buyers of ticket from the appellant acting for and on behalf of the traveller. They buy air tickets, train tickets or bus tickets in the same fashion for the travelling public and they are in fact agents of the travellers for whom they receive service charges. 5. To the category 2 travel agent the tickets are sold by the appellant and bills are made in the name of the traveller and the name of the contact person or organization will be mentioned in the top of the bill. Trade Discount is given in these type of sale bill which goes to the benefit of the traveller. This trade discount is given to make the sales competitive with the other travel agents with IATA recognition. This trade discount is not a 'COMMISSION' given to the category 2 travel agent. There is no contract or understanding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TOR OF STATE LOTTERIES & ORS. 249 ITR 186 When the lottery tickets are sold no commission is paid or credited to the account of the person who purchased the ticket. The purchaser gets the benefit of the trade discount due to less price for the tickets. Sec. 194H is not applicable. 10. THE COMMISSIONER OF INCOME TAX (TDS), MUMBAI Vs. QUTAR AIRWAYS in the High Court of Judicature at Bombay - Income Tax Appeal No. 99 of 2009. The Air Lines tickets sold at lower price will not be termed as 'COMMISSION OR BROKERAGE' u/s. 194H. The ratio in the decision of the Honourable Bombay High Court is directly applicable in appellant's case. In this case, assessee is an airlines company, engaged in passenger transportation who enters into agreement with travel agents. Assessee collected only the net fare against the published fare of tickets. Revenues' stand was that TDS is applicable on the special commission given to travel agents who retain the difference between the published fare and the net fare paid to airlines. On appeal Tribunal allows assessee's appeal. On Revenue's appeal, the Court held that the airlines had no information abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ickets. On the contrary, they act on behalf of the travelling public or their respective customers. Thus, they provide service only to their customers by identifying the best available rates for the flight tickets ordered by their respective customers. Accordingly, in our view, the commission income ceded by the assessee herein in respect of the tickets purchased by the small time travel agents on behalf of their respective customers, would partake the character of "Discount" only. Accordingly, in our view, such discount payments will not be attracted by the provisions of sec. 194H of the Act. 14. With regard to the decision rendered by the Hon'ble jurisdictional High Court in the case of Vodafone Essar Cellular Ltd, the assessee has distinguished the same in the following lines:- "In the case of Vodafone Essar Cellular Ltd, the Honourable High Court of Kerala held that the discount given by the Vodafone Cell Ltd to its distributors are in the nature of commission for which sec. 194H is applicable. In the above connection we may submit that the relation between Vodafone Essar Cellular Ltd and the distributors are similar to the relation between the Airline Comp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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