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TMI Blog2004 (10) TMI 607X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that such payment was being treated by the assessee as a discount or incentive. Such a claim by the assessee was not acceptable to him. He also referred to the information collected in the course of a survey conducted u/s. 133A of the Act, which according to him confirmed his view that what was being paid by the assessee to the travel agents was only commission. He referred to the billing analysis received under the Billing Settlement Plan (BSP), which is an IATA approved organization, in support of his conclusion that the amount paid by the assessee to the travel agents in excess of the commission approved by the IATA was to be treated as supplementary commission which varied from transaction to transaction, on which the assessee failed to deduct tax u/s. 194H. 3. In addition to the claim that such excess payment cannot be treated as a payment of commission or supplementary commission, but should be viewed as a discount given to the travel agents, the assessee raised various other contentions, the gist of which is like this. The IATA approved commission was earlier 9% on the published fare in respect of the ticket which was brought down to 7% w.e.f. 1.1.2002. The published f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... defaulter u/s. 201(1) in respect of the aforesaid amount and interest of ₹ 21,13,224 was charged u/s. 201(1A). This order of the AO was passed on 28.8.2000. 5. On appeal, the assessee took up various contentions including the contention that the AO has no jurisdiction over the assessee, having regard to the provisions of section 124 of the Act and the notification dated 14.09.01 issued by the CBDT. On merits, the assessee contended that the amount collected by the travel agent over and above the net fare cannot be described as commission or supplementary commission paid by it to the travel agent, and therefore, it was not subject to TDS u/s. 194H. The CIT(A). on a consideration of all the arguments taken before him rejected both the contentions relating to jurisdiction as well as merits. He thus confirmed the order of the AO subject to minor relief in respect of certificate u/s. 197 given to some travel agents in respect of transactions prior to 1.6.01. the date of which Sec. 194H was reintroduced. 6. The assessee is in further appeal before us. We have heard the rival contentions ably put forth before us by both the sides. The contention of the assessee with regard to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor General of Chief Commissioner of Commissioner of any of the other officers specified therein and if they are not in agreement, the question shall be determined by the CBDT or by such other designated authority. In view of this provisions, we refrain from adjudicating upon the issue. Mr. Irani, the Ld. Counsel for the assessee drew our attention to the judgment of the Punjab Haryana High Court in Joginder Singh v. CIT, 128 ITR 14, in which a provision similar to Section 124(2) was considered with reference to the provisions of Section 132 of the I.T. Act and it was held that such a provisions applied only to an assessee and it does not debar any other person, who is not an assessee from questioning the jurisdiction of the AO. In the present case, the appellant before us is not assessed to tax and, therefore, is not an assessee according to Mr. Irani and the appellant is only another person who is treated as in default and hence the provision of Section 124(2) or 124(3) do not apply. This contention cannot be accepted because though Section 124(2) uses the words jurisdiction to assess any person , the word assess has a very wide meaning and includes the whole procedure laid do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the defaulter, the defaulter will also be required to pay simple interest at 15% p.a. on the amount of the tax from the date on which it was deductible to the date on which it was actually paid. In the present case, he appellant has been treated as an assessee in default and it has also been directed to pay interest and both the actions are under challenge. 8. The following questions arise for our consideration : a) Can the amount realized by the travel agent in excess of the net fare be considered to be commission? b) Can be assessee be said to be a person responsible for paying the commission? c) Was there a credit of the commission to the Account of the travel agent in the assessee's books? d) Was there a payment of the commission (in cash or cheque or any other mode) by the assessee to the travel agent? 9. The example (already given) can be recapitulated for ready reference. a) Delhi-Singapore published fare - ₹ 1 lac. b) Net fare to be paid to the assessee (minimum fare) - ₹ 60,000 c) Amount realized by the travel agent for the ticket - ₹ 80,000 d) IATA Commission at 9 on ₹ 1 lac - ₹ 9,000 The basis question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the travel agent can be considered as commission. It refers to a payment received for services rendered . It cannot be said, as already noted, that in respect of the excess of ₹ 10,000 realised by the travel agent any services were rendered by him to the airline company. No doubt, he was able to realize the excess rice only by virtue of the agency, but that is different from saying that the realized the same as remuneration for any services rendered to the airline company. 11. The ld. Counsel for the assessee, Mr. Irani cited several authorities in support of the above contentions, but we are of the view that the judgment of the Kerala High Court M.S. Hameed and Ors. v. Director of State Lotteries and Ors., 249 ITR 86 is more appropriate to the present case. In that case, the lottery agents received bulk quantities of lotteries ticket from the State Govt. They were given a discount on a slab system. for example, for a ticket of Re. 1, the agent had to pay only 71.5 to 75 paisa. The ticket purchased were thereafter distributed through other agents and sub-agents on commission basis. The income-tax deptt. Demanded that tax be deducted at source by the State Govt. u/s. 194G. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he agent at the time of purchase of the ticket the section automatically becomes inapplicable. If any prize or remuneration is payable by the Govt. to any person, deduction at source as envisaged under the section, may arise. But when no payment is made in view of the mandate of the section, no deduction is envisaged. That the ticket is given on a discount of 28 per cent, can be not imagination be pressed into service for an interpretation that none the less, ten per cent. of 28 paise is deductible as tax perhaps the intention might have been t bring the agents within the tax net, but the section as it stands, according to me, is not authority for taxation at source, as is envisaged by exhibit P-4 13. The above observations also meet the claim of the CIT(DR) before us that provisions such as 194H which are aimed at collecting tax at source have to be strictly completed with. The Section has to be complied with only when it is workable and both the character of the payment as well the precise amount thereof are known to both the parties. However, if either of them is ambiguous or vague or unworkable, the section cannot be implemented. Where there is uncertainly as to what would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r if it had been agreed between the parties that the agent shall disclose to the assessee the price for which the ticket was actually sold. But in the present case even if the agent is able to sell the ticket at ₹ 1 lac, what the assessee is entitled to is only the net fare of ₹ 60,000, it is not entitled to received the excess which is collected by the travel agent. As already noted, whatever excess is collected by the travel agent is solely due to his efforts and the excess belongs to him in his own right. over which the assessee company can have no claim. Thus, when the assessee company has no right to receive the excess over the net fare, it cannot be said that the theory of constructive payment would apply and it should be assumed as if the assessee received the excess payment from the agent and paid it back to him. Further, there is no material in record to which our attention was drawn to show that the travel agent shall disclose, at the time of the sale of the ticket, to the assessee company the price for which the ticket was actually sold. 17. Once noteworthy feature in the present case is that the department has assumed that in all the cases the travel agen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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