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| The Tax Publishers2019 TaxPub(DT) 4535 (Mum-Trib) : (2019) 177 ITD 0699 : (2019) 202 TTJ 0052 INCOME TAX ACT, 1961
Section 194C
Payments made to dealers for providing services to ultimate customers in lieu of free service coupons surrendered by them were not in the nature of reimbursement of expenditure incurred by dealers but in the nature of payment of consideration pursuant to a contract, as per which dealer provided such services to ultimate customers, accordingly, assessee was obligated to have deducted tax under section 194C from payments towards service coupons to its dealers.
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Tax deduction at source - Under section 194C - Payment made to dealers for providing services to ultimate customers in lieu of free service coupons surrendered by them - Assessee engaged in manufacturing of automobiles
Assessee company engaged in manufacturing of automobile vehicles, tractors, etc., sold its vehicles through a wide network of dealers spread across the country and made payments to its dealers for providing free services in lieu of free service. AO held the payment as liable for TDS under section 194C. Assessee pleaded the payment to be in the nature of reimbursement of expenditure incurred by free such dealers. Held: Payments made to dealers for providing services to ultimate customers in lieu of free service coupons surrendered by them were not in the nature of reimbursement of expenditure incurred by free dealers but in the nature of payment of consideration pursuant to a contract, as per which dealer provided such services to ultimate customers, accordingly, assessee was obligated to have deducted tax under section 194C from payments towards service coupons to its dealers.
Followed:Mahindra & Mahindra Automobiles Ltd. v. DCIT [ITA No. 3324 & 4645/Mum/2013, dt. 13-5-2016]
REFERRED :
FAVOUR : Against the assessee.
A.Y. : 2007-08
INCOME TAX ACT, 1961
Section 40(a)(ia)
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