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TMI Blog2016 (5) TMI 1028X X X X Extracts X X X X X X X X Extracts X X X X ..... PER BENCH: These four appeals filed by the revenue are directed against the common order of CIT(A), Vijayawada dated 14.11.2010 for the assessment years 2008-09 to 2010-12. Since, the issues are common, they are clubbed, heard together and disposed off, by way of this common order for the sake of convenience. 2. The brief facts of the case are that the assessee M/s. The Krishna District Milk Producers Mutually Aided Co-operative Union Ltd. is engaged in the business of procuring, processing and selling milk. A survey u/s 133A of the Income-Tax, 1961 (hereinafter called as The Act ) was conducted in the business premises of the assessee on 4.12.2009. During the course of survey proceedings, it was noticed that the assessee has been making payments to the retail agents, through whom sale of milk is effected under three different heads viz. trade discounts, maintenance charges and compensation for leaked milk packets @ 1%, 3.2% and 0.3% respectively. It was further noticed that though these payments are in the nature of commission as defined u/s 194H of the Act, the assessee has not deducted TDS on such payments. Hence, a show cause notice was issued to the assessee on 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reported in 28 SOT 42 (Delhi). 3. The A.O. after considering the explanations furnished by the assessee, held that the relationship between the assessee and the retailers is nothing but a principal to agency relationship, therefore, the payment made by the assessee to the retailers is in the nature of commission as defined u/s 194H of the Act and hence, liable for TDS. The assessee has failed to deduct TDS on payments made to its retail dealers, therefore, held that the assessee as an assessee in default u/s 201(1) of the Act and computed the tax and interest. The A.O. has passed elaborate order wherein he has discussed how the relationship between the assessee and the retailer is pit into the definition of commission as defined u/s 194H of the Act, therefore, held that the payments made by the assessee to its retail dealers such as trade discount, maintenance charges and compensation or in the nature of commission, which attracts TDS u/s 194H of the Act. 4. Aggrieved by the assessment order, the assessee preferred an appeal before the CIT(A). Before the CIT(A), the assessee reiterated the stand taken before the assessing officer. The assessee further submitted that the agree ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fined u/s 194H of the Act. The CIT(A) after considering the assessee submission and also taken into account the remand report of the A.O., held that the relation between the diary and its concessionaire is nothing but principal to principal basis and as such the provisions of section 194H of the Act are not applicable. The CIT(A) further held that it is a well settled proposition of law that the property in goods is transferred and gets vested with the concessionaires at the time of the delivery of the goods. Thereafter the concessionaires would be dealing with them on their own right as a principal and not an agent of the diary. With these observations, the CIT(A) deleted the additions made by the A.O. u/s 201(1) and 201(1A) of the Act. Aggrieved by the CIT(A) order, the revenue is in appeal before us. 6. The Ld. D.R. submitted that the CIT(A) was erred in deleting the additions made by the A.O. u/s 201(1) 201(1A) of the Act. The D.R. further submitted that the CIT(A) was erred in holding that the relation between the assessee and its concessionaire is nothing but principal to principal basis and as such the provisions of section 194H of the Act are not applicable. The D.R. f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey operation u/s 133A of the Act was conducted in the business premises of the assessee. During the course of survey proceedings, it was noticed that the assessee is selling the goods through its retail concessionaires and paid the fixed percentage of margin on such sale. The A.O. held that the amount paid by the assessee to its retail concessionaire is in the nature of commission as defined u/s 194H of the Act which attracts TDS. Therefore, held that the assessee as an assessee in default for not deducting TDS on such payments. It was the contention of the assessee that it is merely a contract of sale and not a contract for service. The assessee further submitted that it sells the goods through its retail concessionaire and the property involved in the goods is vest with the retailers. Therefore, any payment made to its retail concessionaires does not attract TDS u/s 194H of the Act. 9. The only issue came up for our consideration is whether or not the amount paid by the assessee to retail concessionaires is in the nature of commission as defined u/s 194H of the Act which attracts TDS provisions. On going through the agreement copy entered into by the assessee with its retail c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the sale is of principal to principal basis. The assessee further contended that as per the principles of contract of agency, the principal would indemnify the agent for any liability on account of loss of goods in transit. Whereas in the instant case, the assessee does not indemnify the agent for any loss of goods in transit which shows that there is no contract of agency between the assessee and retailers. We find force in the arguments of the assessee for the reason that on perusal of the agreement, which is available in the paper book, we find that the assessee has clearly specified that once the goods are delivered to the retailers, it is the exclusive property of the retailer and any unsold goods cannot be taken back. From this, it is abundantly clear that the risk involved in the property has been transferred to the retailers as and when goods are delivered. The goods sold or not, the retailer has to pay the amount as per the bill. Though assessee pays fixed percentage of margin to the retailers, it is only to facilitate the business and not for any reasons. Therefore, we are of the opinion that on perusal of the documents available on record, no document suggest that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 c1ear 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 no4 decisive. As rightly pointed out by the tribunal the Dairy having given space, machinery and equipment to the concessionaire would naturally like to incorporate c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... escoping 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 vs 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 these facts, it was held by the Tribunal that the concessionaires only tendered a service to VMS For selling milk to the customers and, therefore, the rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncessionaires and the risk and property of the goods has been transferred to the retailers as and when the delivery is made and the unsold goods are not taken back. Therefore, the facts of the case are different from the facts of the case before the Delhi High Court and hence not relied upon. 14. The Ld. D.R. relied upon another decision of Hon ble Madras High Court in the case of Tube Investments of India Ltd. Vs. ACIT (2009) 223 CTR 99. We have gone through the case law relied upon by the Ld. D.R. in the light of the facts of the present case and find that the case law relied upon by the D.R. is not applicable to the facts of the present case. The case before the Hon ble Madras High Court was that the assessee has paid trade incentive to its dealers. Both lower authorities treated same as commission or brokerage attracting provisions of section 194H of the Act. The Tribunal remitted matter back to the A.O. to ascertain as to whether trade discount allowed to dealers by assessee was commission or discount. The High Court could not interfere with the order of the Tribunal and declined to answer the question of law raised before it. Therefore, the case law relied upon by Ld. D.R. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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