The Tax Publishers2020 TaxPub(DT) 4335 (Del-Trib)

INCOME TAX ACT, 1961

Section 194H

Discount which was offered to distributors by assessee-company engaged in the business of trading and manufacturing of mobile handsets, spare parts and accessories was for promotion of sales and since agreement between assessee and distributors was on principal to principal basis, discount offered could not be treated as commission and, therefore, no TDS was called for under section 194H.

Tax deduction at source - Under section 194H - Incentive given to distributors by assessee engaged in the business of trading and manufacturing of mobile handsets, spare parts and accessories -

Assessee-company engaged in the business of trading and manufacturing of mobile handsets, spare parts and accessories offered trade incentives to distributors. HCL Infosystems Ltd. as well as other distributors. AO disallowed deduction holding that amounts paid were in the nature of commission and, therefore, assessee was liable to deduct tax under section 194H.Held: In terms of agreement for suply of Cellular Mobile Phones' between HCL and assessee, relationship between assessee and HCL was that of principal to principal and not that of principal to agent. The discount which was offered to distributors was given for promotion of sales. This element could not be treated as commission and, therefore, no TDS was called for under section 194H.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2008-09 & 2012-13

INCOME TAX ACT, 1961

section 37(1)

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