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TMI Blog2013 (11) TMI 371X X X X Extracts X X X X X X X X Extracts X X X X ..... ore permitted to retain it’s discount on passing over of the proceeds. The discounts and rebates depend upon the quantity of purchase as also the early payment. Therefore, the rebates are in the nature of deduction from the sale price. Payments required to be made within a specific time as per the schedule fixed. Therefore, there was a rebate in respect of early payment - Certain incentives as given by the assessee did not constitute a ‘commission’; hence, out of the purview of the provisions of Section 194H of IT Act - In the light of the judgments cited above i.e. Hindustan Coca Cola Beverages [2007 (8) TMI 12 - SUPREME COURT OF INDIA], the assessee was not simultaneously required to deduct the tax at source – Decided in favor of Assessee. Applicability of section 194J or section 194C of the Income tax act – Held that:- The scope of work of Nandesari Environment Control Ltd. and M/s Gujarat Enviro Protection & Infrastructure ltd. was for collection, transportation and disposal of Hazardous Solid Waste from GFL, Dahej site to Gujarat Enviro Protection & Infrastructure ltd., Surat as per GPCB norms. Again the work of Nandesari Environment Control Ltd. was for operation and ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 3. The Appellant craves leave to add to, withdraw or modify any of the grounds of appeal at the time of hearing. 2. An order u/s. 201(1)/201(1A) was passed for all the three years by AO, dated 29.03.2010. It was noted that a survey u/s. 133A was conducted on 17.11.2009. The assessee company is in the business of manufacturing of refrigerant gases, chloromethane, PTFE, etc. The company has a manufacturing unit at Ranjit Nagar, Dahej Near Bharuch. The commercial activities are conducted from the registered office situated at Baroda. During the course of survey, it was noticed that the assessee was paying commission to its dealers and agents. It was further noted that on some payment the TDS was deducted, however, a substantial amount was also paid to those dealers and agents without deduction of TDS on the pretext of payment of discounts and rebates . Therefore, the issue was whether the payment of discount and rebate was subject to deduction of TDS. As far as the payment of commission to dealers and agents was concerned, there was no dispute because the assessee had already deducted the TDS. In respect of rebates and discounts, the explanation of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s. 201(1A) was imposed, Rs.71,53,162 for the years under consideration. 4. The explanation of the assessee before learned CIT(A) was as under: We are engaged in the business of manufacture and sale of Refrigerant Gases Caustic Soda, Hydrogen, Chloromethane, PTFE etc. As regards the deduction of TDS on discounts rebates the assessing officer has treated the same as a part of commission to the dealer and hence in his opinion TDS was also required to be deducted on such amounts of discount rebates. The issue is involved in case of 10 parties. The company is engaged in the business of manufacturing of, Refrigerant Gases Caustic Soda, Hydrogen, Chloromethane, PTFE etc. The company has entered in to the agency agreements with all the above parties. These parties are dealers/distributors of our product caustic soda, Hydrogen, MDC, etc. The market conditions of these products are always fluctuating and therefore prices are subject to variation on month to month basis. Therefore, while entering to the agreement even though the commission at the rate of Rs.250/- per MT was fixed as per annexure-1 of the agreement regarding the quantity discount/incentive, the clause no.6 pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cle, Baroda has only worked out the interest u/s 201(1A) for these two assessment years which are chargeable on such amounts of non-deduction of tax at source. In view of this the ACIT(TDS) Circle, Baroda is directed to work out non deduction of tax at source u/s 201(1) of the I.T. Act for A.Y 2008-09 for A.Y 2009-10 also which in my opinion may be necessary for applying other provisions of Section of the I.T. Act i.e Section 271C etc. In this regard, it would be relevant to mention that the ratio of decision of Hon'ble Supreme court in the case of Hindustan Coca Cola Beverages Pvt. Ltd. vs CIT [2007] 293 ITR 226 is applicable in the cases where the deductee (i.e recipient of the income) has already paid taxes on amount received from the deductor and in such circumstances the department once again cannot make the recovery of the tax from the deductor on the same income. However, in case if the assessee fails to deduct the tax at source on any payments as per Chapter XIV of the I.T. Act, then the TDS officer is required to hold such assessee an assessee in default u/s 201(1) of the I.T Act for such non deduction of tax at source on the payments. This is a different issue that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsignment stockiest is permissible to retain the settled discount. It is not the case that the assessee is passing the discounts/rebates to the consignment stockiest . Such stockiest is required to sell certain minimum guaranteed quantities of the assesee s product per month and therefore permitted to retain it s discount on passing over of the proceeds. The discounts and rebates depend upon the quantity of purchase as also the early payment. Therefore, the rebates are in the nature of deduction from the sale price. We have been informed that the payments required to be made within a specific time as per the schedule fixed. Therefore, there was a rebate in respect of early payment. We are of the view that certain incentives as given by the assessee did not constitute a commission ; hence, out of the purview of the provisions of Section 194H of IT Act. We, therefore, hold that for all the years, learned CIT(A) should have adopted a consistent view. The necessary relief is hereby granted. Without prejudice to the above findings, once the undisputed fact was that the assessee has placed on record the information about the payment of tax on the rebates and discounts by the recipient ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and M/s Gujarat Enviro Protection Infrastructure ltd. as well as above entire submission of the appellant have been considered. In my opinion the ITO(TDS) Circle, Baroda is not correct in holding the view that services rendered for handling and disposal of Hazardous Chemical Waste Management are services of technical nature. The scope of work of Nandesari Environment Control Ltd. and M/s Gujarat Enviro Protection Infrastructure ltd. was for collection, transportation and disposal of Hazardous Solid Waste from GFL, Dahej site to Gujarat Enviro Protection Infrastructure ltd., Surat as per GPCB norms. Again the work of Nandesari Environment Control Ltd. was for operation and maintenance charges and was also based on the quantity lifted. The work of these two companies were of collection, transportation and disposable of waste and these two companies were not giving any technical or managerial or consultancy services as envisaged in Section 194J of the I.T. Act. As per the appellant in its case the waste is also processed in its own FTP Plant at factory location and the above two companies do not have any role in such process. As per the appellant these two companies were carryi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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