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TMI Blog2018 (5) TMI 1394X X X X Extracts X X X X X X X X Extracts X X X X ..... r of the assessee - D.B. Income Tax Appeal No. 90/2018 - - - Dated:- 12-4-2018 - HON'BLE MR. JUSTICE K.S.JHAVERI AND HON'BLE MR. JUSTICE VIJAY KUMAR VYAS For the Appellant : Mr. K. D. Mathur with Mr. Prateek Kedawat on behalf of Mr. R. B. Mathur ORDER 1. By way of this appeal, the appellant has challenged the judgment and order of the Tribunal whereby the Tribunal has dismissed the appeal of Revenue and allowed the appeal of assessee. 2. Counsel for the appellant has framed the following questions of law:- Whether in the facts and circumstances of the case, the Tribunal was justified in holding that whether the assessee is liable to deduct TDS u/s. 194H of the IT Act, as the relation between assessee and di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Tribunal has travelled beyond the provisions of Section 194H where the condition precedent is that the payment is to be made by the assessee and thereafter he is to make payment. In spite of our specific query to the counsel for the department, it was not pointed out that any amount was paid by the assessee company. It was only the arrangement by which the amount which was to be received was reduced and no amount was paid as commission. 46. In that view of the matter, if we look at the provisions of Section 194H and even if explanation is taken into consideration, there is no occasion of invoking provisions of Section 194H, since the amount is not paid by the assessee. 47. Taking into account the conclusion which has been arrived ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide the relation-ship of Principal and Agent. (iii) The Distributor has all rights to reduce his margin. He can increase the margin of retailer and will reduce the margin from 10% to anything between 1% to 10%. There is no restriction by the assessee to give commission amount to the retailer. (iv) Regarding area of operation, it is the business policy of the assessee to give Distributor-ship for a particular area. Only on that basis, it will be erroneous to held that it is on Principal to Principal basis. For deciding the relation-ship on Principal to Principal basis, the criteria will not be of area of operation but agreement entered into between the parties. (v) Regarding the change in price it is always between the assessee or t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x- (2007) 288 ITR 1 (SC). (x) Regarding providing a vehicle it was very clear that by providing vehicle and getting list of expenses will not decide the relation-ship of Principal and Agent. 48. In our considered opinion, Section 194H pre-supposes the payment to be made to the third party namely, Distributor or the Agency and if on a close scrutiny of Section 182, Distributor is not an agent, therefore, in our considered opinion, the provisions of Section 194H have wrongly been invoked, and therefore, the first issue is answered in favour of assessee and against the Department. 49. The second issue which has been raised for our consideration, as discussed hereinabove, the Management Information System was not a part of their books ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istributor. Therefore, no TDS is required to be deducted. We also accept the contention raised by Mr. Jhanwar that even otherwise in view of divergent judicial views, one in favour of the assessee is required to be adopted as per settled law. Taking into consideration the above conclusion, the first issue is required to be answered in favour of assessee. 53. Regarding Section 194J of the Act, in view of the Kerala High Court decisions, the issue is answered in favour of assessee and third issue even as per the statutory definition, there is no service and Sections 201 and 194H would not apply in view of the agreement as referred hereinabove. Tata Teleservices 54. In view of agreement the issue regarding 194H and 194J as held in oth ..... X X X X Extracts X X X X X X X X Extracts X X X X
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