ITAT, DELHI BENCH `D’: NEW DELHI
Mother Dairy India Ltd. v. ITO –
Appeal No. : ITA NO. 2975/DEL/08 ,
Date: DECEMBER 12, 2008
RELEVANT EXTRACTS:
6.We have considered the rival submissions. A perusal of the agreement entered into by the assessee to the concessionaires clearly shows that the concessionaires are duty bound to use the premises and the equipment as belonging to the assessee. The agreements also clearly show that the control over the shops is with the company. The tokens for the sale of the milk at the shops are to be purchased by the concessionaires from the assessee and the milk is sold on the basis of the said tokens, which are to be used for dispensing the requisite quantity of milk from the machines installed at the shops. The tokens are purchased by the consumers from the concessionaries and such tokens are used for obtaining the milk from the machines. The perusal of the agreement clearly shows that the concessionaires have to pay the consideration as per the delivery invoices at the time of delivery of the milk and any quantity of unsold milk is to be recorded within 15 minutes of the close of the scheduled vending time or before the supply of the milk is taken by the concessionaires from the assessee whichever is earlier. The agreement also clearly shows mat the assessee would not take back any portion of the unsold milk in any condition whatsoever. A ‘perusal of the customer detail trial balances found at pages 4E, F, G & H of the paperbook show that during a day the concessionaires takes two deliveries of milk. The quantity of milk that is purchased by the concessionaires varies, continuously ranging from a minimum of 40 liters to a maximum of 120 liters. For example on 3rd September the said concessionaries had taken 120 liters on the first purchase and on the second purchase 100 liters, on 4th September 2003, 60 liters on the first purchase and 90 liters on the second purchase. Obviously, mis when read with the clauses of the agreement would mean that at the end of the time of vending the balance milk as available with the concessionaires would be considered and considering the average milk required on a day, 1he concessionaires would buy the requisite quantity less the closing stock on the next purchase. The terms of the agreement also clearly show that the concessionaires have responsibility to keep the milk under the necessary refhgerated conditions. The terms of the agreement also clearly show that the milk once sold to me concessionaires would be the exclusive property of the concessionaires and me same would not be taken back under any condition. This would clearly mean that if the milk is spoiled, the loss on the same would be to the cost of the concessionaires. Liberty has been retained with the concessionaires to have the sample of the milk collected in the presence of the delivery staff and to test the same at its own cost or to get the same tested free of cost by the assessee’s laboratory. Similarly the assessee has also retained the right of inspection and collection of sample milk and checking its quality and quantity in regard to the concessionaires at any time. Any variation/deteriora tion in the quality or quantity of the milk sold by the concessionaires would result in termination of the agreement. A perusal of the invoice as raised on the concessionaires also clearly shows that sales tax has been collected by the assessee on the basic price. Obviously, sales tax is leviable on sales. The feet mat sales tax has been collected on the sales made to (he concessionaires clearly show that the intention of the assessee by raising the invoice-cum- delivery challan specifying the sales tax is to specify the sale of product. If the sale was on commission basis the details of the sales tax was not required to be shown in the invoice / delivery challan issued to the concessionaires. A perusal of the circulars which had been relied upon by the revenue which had been found in the course of survey also clearly show that it relates to the retailers/ distributors and transporters and not the concessionaires. This is because the invoice cum delivery challan in regard to the
concessionaires was also different from that issued to the retailers. Further on the specific query from the Bench as to whether the agreements as produced in the paperbook were the copies of the agreements found in the course of survey, it had been agreed that the same were the sample of the copies of the agreements found in the course of survey. The decision of the Hon’ble Jurisdictional High Court in the case of Delhi Milk Scheme confirming the decision of this Tribunal also clearly show that the feet in the case of Delhi Milk Scheme was completely different from the facts in the present case. The facts as recorded by the Tribunal in the case of Delhi Milk Scheme are as follows:-
9. Thus it was after considering the agreements found in the course of survey and the redrafted agreement, this Tribunal had come to a conclusion in the case of Delhi Milk Scheme that the transaction between Delhi Milk Scheme and its concessionaires was in fact one to which the provisions of section 194H attracted. In the present case it is found that there has been no redrafting of the agreements and the agreements as placed before us being the same as was found in the course of survey and as per the terms of the agreement which are identical even in 1993 as also in 2003, the discount as given by the assessee to its concessionaires are nothing but discount and do not have any characteristics of a commission. Consequently, we are of the view that the decision of the Hon’ble Jurisdiction High Court upholding the order of this Tribunal in the case of Delhi Milk Scheme would have no application to the assessee’s case in so far as the facts, as also the terms of the agreement are completely different. Further just because the assessee keeps a substantial control over the concessionaires it cannot be said that the relationship is one of principal and agent, as the control would have to be seen when these agreements were drafted. Obviously any body who gives his space, machinery and equipment to another would like to put substantial clauses which can be invoked to cancel such agreements if it is found that the person they are dealing with is not trustworthy or is doing anything to the detriment of the assessee. In such circumstances it cannot be said that the strict control clauses of the agreement makes the transaction between the assessee and the concessionaires to be one of principal and agent. If the actual functional and operational clauses of the agreements are seen it would clearly show that it is one between two principals to which the provisions of section 194H would not apply. In these circumstances, we are of the view that the provisions of section 194H would not be attracted on the discounts given by the assessee to its concessionaires and consequently the order of the Id Commissioner (Appeals) as also the Assessing Officer passed under section 201(1) and 201(1A) are set aside.
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