JCIT Vs Wockhardt Limited (ITAT Mumbai)
The Income Tax Appellate Tribunal (ITAT), Mumbai, disposed of the Revenue’s appeals for Assessment Years 2011-12 and 2012-13 by a consolidated order, taking the appeal for Assessment Year 2011-12 as the lead case. The appeals challenged the Commissioner of Income Tax (Appeals)’s orders dated 09.03.2022 allowing the assessee’s appeals.
The first issue concerned whether the assessee was liable to be treated as an assessee in default under Sections 201(1) and 201(1A) for failure to deduct tax under Section 194H on discounts and bonus/incentives offered to stockists. The assessee, engaged in trading pharmaceutical products, was subjected to a survey under Section 133A(2A), following which the Assessing Officer alleged short deduction of tax at source on discounts and incentives allowed to stockists. The Assessing Officer rejected the assessee’s contention that its relationship with stockists was on a principal-to-principal basis and computed tax and interest demands under Sections 201(1) and 201(1A). The CIT(A) deleted the demand by following the Tribunal’s decision in the assessee’s own case for Assessment Year 2010-11.
Before the Tribunal, the Revenue contended that the company continued to bear liabilities relating to expired goods and product quality, indicating that stockists acted as its agents. It also argued that bonus and incentives granted after sale constituted commission covered by Section 194H. The assessee relied upon the Tribunal’s earlier decision in its own case.
