Case Law Details
CIT Vs Intervet India Pvt.Ltd. (Bombay High Court)
The Assessee had undertaken sales promotional scheme viz. Product discount scheme and Product campaign as discussed herein above under which the Assessee had offered an incentive on case to case basis to its stockists/dealers/agents. An amount of Rs.70,67,089/- was claimed as a deduction towards expenditure incurred under the said sales promotional scheme. The relationship between the Assessee and the distributor/stockists was that of principal to principal and in fact the distributors were the customers of the assessee to whom the sales were effected either directly or through the consignment agent. As the distributor/stockists were the persons to whom the product was sold, no services were offered by the assessee and what was offered by the distributor was a discount under the product distribution scheme or product campaign scheme to buy the assessee’s product. The distributors / stockists were not acting on behalf of the assessee and that most of the credit was by way of goods on meeting of sales target, and hence, it could not be said to be a commission payment within the meaning of explanation (i) to Section 194H of the Income Tax Act,1961. The contention of the Revenue in regard to the application of Explanation (i) below Section 194H being applicable to all categories of sales expenditure cannot be accepted. Such reading of Explanation (i) below Section 194H would amount to reading the said provision in abstract. The application of the provision is required to be considered to the relevant facts of every case. We are satisfied that in the facts of the present case that as regards sales promotional expenditure in question, the provisions of Explanation (i) below Section 194H of the Act are rightly held to be not applicable as the benefit which is availed of by the dealers / stockists of the Assessee is appropriately held to be not a payment of any commission in the concurrent findings as recorded by the CIT (Appeals) and the Tribunal.
FULL TEXT OF THE HIGH COURT ORDER / JUDGEMENT
1. Heard learned Counsel for the parties.
2. This appeal is preferred by the Revenue against the decision of Income Tax Appellate Tribunal, Pune Bench dated 13.5.2010 by which the appeal of Revenue against the order of the CIT (Appeals) has been rejected. The Assessment year is 2005-06.
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