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TMI Blog2018 (10) TMI 1165X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the credit notes. As discussed above regarding the sample we note that a trip to Thailand offered to one person on achieving sale of 75 boxes or 2700 pieces and in our opinion, it is not a commission and is additional benefit given to the C&F agents. Case of COMMISSIONER OF INCOME-TAX (TDS) VERSUS UNITED BREWERIES LTD. (SUCCESSOR TO UNITED MILLENIUM BREWERIES) [2016 (11) TMI 718 - TELANGANA AND ANDHRA PRADESH HIGH COURT] followed. - Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... C & F agents which are in nature of reimbursement i.e. 50% of the expenses incurred by the C & F agents and reiterated the submissions made before CIT(A) that it does not attract the provisions of sec 194H of the Act. 7. It is further submitted that the assessee had made a total payment of ₹ 70,63,956.50 partly direct to the C & F agents, partly to the distributors through the C & F agents and also partly direct to the distributors. The payments were under various heads and were basically in the nature of reimbursement of the expenses incurred by the C & F agents. A statements showing the different categories of the sales promotion is placed at page 19 of the Paper Book and the said reimbursement was based on a pre-determined rate. 8. It is further submitted that the assessee has given incentives to the C & F agents and distributors for boosting the sales. The ITAT, Kolkata in the case of M/s. Kan Tech Solutions (P) Ltd ITA No.1004/Kol/2012 order dated 08.07.2015 has held that no TDS is deductable on the payments that are in nature of incentives and referred to para 6 in page No.7 of the Paper Book containing case laws. Further, the assessee during the year, had floated var ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a total amount of ₹ 11,41,600/- towards the payment made to the show room staffs of end customers/LPG Distributors. The assessee awarded ₹ 10/- per pc to the showroom staff in Punjab and Haryana market for the boost in the sales. This payment was directly made to the show room staff so that they get incentive to push sales of assessee's products to the ultimate consumers. A list showing the payment made to the individual staff is annexed herewith and marked as Annexure: 'I'. It is further submitted that the payment to the individual staff was a very small amount with an average around of ₹ 3,600/-. (d) Telephone and staff expenses: The assessee used to bear the 50% of the expenses incurred towards the telephone and staff expenses who were deputed at the place of C & F Agent. The assessee incurred a total of ₹ 3,16,090/- towards the reimbursement of the abovementioned expenses to C & F agent. Copy of the credit note relating to the said expenses is annexed herewith and marked as Annexure: 'J'. (e) Convention: The assessee has incurred an amount of ₹ 4,96,719/- under the head convention. During the year, the assessee itself org ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the expenditure incurred by the agents on behalf of the assessee cannot form part of income in their hands and no tax will be deductible at source therefrom, under the provisions of Chapter XVII-B of the Act and no tax will be deductible at source at the time of payment or reimbursement of the aforesaid expenses by the payer or the tax-deductor to the payee or taxdeductee and placed reliance on the order of Kolkata Tribunal in the case of Satyendra Jhujhunwalla vs ITO, ITA No.1988/K/2009, order dated 11.11.2011 (Kol.) placed at pages 09 to 13 in the Paper Book. 11. Heard rival submissions and perused the material available on record. The CIT(A) found the entire impugned amount is in the nature of reimbursement or incentive and held that the AO is wrong treating the entire expenditure as commission. It is noted from the record, that the assessee deducted TDS on the fixed amounts paid to C & F agents towards commission u/s 194H of the Act and there is no dispute regarding this aspect and the details of which were placed at page No.18 wherein it is clear that TDS of ₹ 37,37,934/- was deducted on commission amount of ₹ 3,73,96,154/-. It is seen from the order of CIT(A) t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee that it was paid to showroom staff directly to boost the sale at an average of ₹ 3,600/-. The contention of Ld.AR was that no deduction of TDS is required on the reimbursement of expenses on sales promotion. The ld.AR placed on record a decision of Hon'ble High Court of Andhra Pradesh & Telangana in the case of United Breweries Ltd. reported in 387 ITR 150 which held that discounts offered by the Andhra Pradesh Beverages Corporation Ltd.(in short "APBCL") to the retailer could only be treated as sales promotion expenses, and not as commission and the relevant portion at para No.9 is reproduced hereunder below:- 9. "From the facts noted by the Tribunal, in the order under appeal, it is evident that beer was sold by the respondent-assessee to the APBCL, and the APBCL had, in turn, sold the beer, purchased by them from the respondent-assessee, to retail dealers. Both these transactions were independent of each other, and were on a principal to principal basis. No services were rendered by the retail dealer to the respondent-assessee, and the incentive given by the respondent-assessee, to the retailers as trade discount, was only to promote their sales. The Tribunal rightl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... individual case was more than ₹ 50,000/-. I have considered the submission of the A.R. and finding of the AO I agree with the A.O. that as per Sec. 194H any payment over and above ₹ 2,500/- the payer has to deduct TDS. The A.O. has given his findings that in the profit and loss account the total amount of payment of Rs., 76,48, 727/- has been shown under the head commission and incentive. Even in the audit report this amount has been shown under one head i.e. commission and incentive. Therefore, I find that AO's action of making disallowances of ₹ 48,37,898/- u/d 40(a)(ia) for non-deduction of TDS is justified. Hence, appeal on this ground is dismissed. Aggrieved assessee preferred second appeal before Tribunal. 7. We have heard the rival contentions and gone through the facts and circumstances of the case. Before us the assessee contended that during the year commission was paid to the parties and incentive was also paid to several persons, who physically collect the money from different places as per the direction of the team employed. According to the assessee, this is not commission but incentive on collection of money from different places by various p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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