Case Law Details
Intas Pharmaceuticals Ltd. Vs ACIT (ITAT Ahmedabad)
Conclusion: Since assessee incurred expenses for providing facilities/services such as travel, accommodation and equipment to persons associated with it such as stockist, field staff, distributors and doctors and also incurred expenses towards distribution of various articles/gifts/other facilities to these persons, therefore, there did not exist any agency relationship between assessee and other persons i.e. stockist, dealers and field staff and there could not be any question of deducting the TDS under the provisions of Section 194H.
Held: Assessee-company was engaged in the business of manufacturing & trading of pharmaceuticals. It incurred expenses for providing facilities/services such as travel, accommodation and equipment to persons associated with it such as stockist, field staff, distributors and doctors. It also incurred expenses towards distribution of various articles/gifts/other facilities to these persons. AO was of the view that these expenses were in the nature of commission and liable to tax deduction @ 10 % under Section 194H but assessee had failed to do so. Accordingly, AO issued the show cause notice proposing assessee as assessee in default under Section 200(1); 201(1A) for non-deduction of TDS under section 194H. It was held that under Explanation (iv) to Section 194H where any income is credited to any account, whether called ‘suspense account’ or by any other name, in the books of account of the payer, such crediting shall be deemed to be credit of such income to the account of the payee for purposes of deduction of tax at source. The controversy arose in the given facts and circumstances whether the stakeholders were the payees as contemplated under Explanation (iv) to Section 194H. The answer stood in negative. Undisputedly, the payees were not the stakeholders but the other parties. Further, AO had not brought anything on record suggesting that there existed any agency relationship between assessee and other persons i.e. stockist, dealers and field staff. These expenses were incurred exclusively for purposes of business and product promotion. Thus, there could not be any question of deducting the TDS under the provisions of Section 194H.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
In this bunch of appeals three appeals have been filed by the Assessee and three appeals have been filed by the Revenue for A.Ys. 2011-12 to 2013- 14 which are arising from the separate orders of the ld. CIT(A)-7& 8, Ahmedabad dated 14.03.2017, 20.03.2017, 24.03.2017, in the assessment proceedings under section 201(1)/201(1A) of the Income Tax Act, 1961 (in short “the Act”).
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