N C SHAW AND CO BEVERAGES PRIVATE LIMITED,KOLKATA vs. ADDL. COMMISSIONER OF INCOME TAX (TDS), RANGE-2, KOLKATA, KOLKATA

आयकर अपीलीय अधिकरण कोलकाता 'ए' पीठ, कोलकाता में IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘A’ BENCH, KOLKATA श्री प्रदीप कुमार चौबे, न्याधयक सदस्य एवं श्री राकेश धमश्रा, लेखा सदस्य के समक्ष Before SRI PRADIP KUMAR CHOUBEY, JUDICIAL MEMBER & SRI RAKESH MISHRA, ACCOUNTANT MEMBER I.T.A. No.: 1925/KOL/2024 Assessment Year: 2015-16 N C Shaw and Co Beverages Income Tax Officer, TDS Private Limited Vs. Circle-2(2), Kolkata (Appellant) (Respondent) PAN: AABCN8699N I.T.A. No.: 1947/KOL/2024 Assessment Year: 2015-16 N C Shaw and Co Beverages Addl. Commissioner of Private Limited Income Tax (TDS), Range-2, Vs. Kolkata (Appellant) (Respondent) PAN: AABCN8699N Appearances: Assessee represented by :Khirendra Mohan Gupta, AR & Vaarun Jain, AR. Department represented by : Pradip Kumar Biswas, Add. CIT. Date of concluding the hearing : November 12th, 2024 Date of pronouncing the order : December 27th, 2024 ORDER PER RAKESH MISHRA, ACCOUNTANT MEMBER:

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2.2. Rival contentions were heard and the submissions made have been examined. We will first take up the appeal in ITA No. 1925/KOL/2024. I. ITA No. 1925/KOL/2024: 3. Ground no. 1 being general in nature does not require any separate adjudication. 3.1. Ground nos. 2 & 3 relate to holding the ‘assessee in default’ u/s 201(1) of the Act for non-deduction of tax at source on Rs.10,26,18,968/- being the amount credited to distributors as post- sale trade discounts and thereby erroneously creating demand u/s 201 of the Act which is disputed in ground no. 3.1 that the Ld. CIT(A) grossly erred in alleging that the trade discounts were in the nature of commission and thereby subject to TDS u/s 194H of the Act without appreciating that the appellant was engaged in selling liquor to its distributors on a principal-to-principal basis, and the trade discount under various schemes aggregating to INR 10,26,18,968/- could not partake the character of ‘commission’ or ‘brokerage’ for the purpose of Section 194H of the Act and Ground No. 3.2 is that he has grossly erred in applying the provisions of Section 28(iv) and clause (iv) of Explanation to Section 194H of the Act, without appreciating that in the absence of a principal-agent relationship in respect of payments in question, hence the same cannot be held as Commission or Brokerage within the meaning of Section 194H of the Act. Page 4 of 22

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3.4. It was further stated that reliance placed by the Ld. AO/CIT(A) on clause (iv) under explanation to Section 194H of the Act is incorrect and the submission in this regard is as under: 26. At this juncture, it is pertinent to mention that the Ld.AO/CIT(A) have placed reliance on the clause (iv) under the explanation to section 194H and held that the Appellant was required to withheld taxes. They both have mentioned that clause (iv) covers income credited to any account whether called suspense account or other income in the books of the Appellant and it has paid the said income (incentives/discounts) to its customers through various schemes. The relevant extract of clause iv is stated below (iv) where any income is credited to any account, whether called "Suspense account" or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly.]” Further, the Ld. AO/CIT(A) has placed reliance on the section 28(iv) of the Act to derive the meaning of income. The relevant extract of the section is stated below: “the value of any benefit or perquisite arising from business or the exercise of a profession, whether— (a) convertible into money or not; or in cash or in kind or partly in cash and partly in kind;]” (b) Placing reliance on the definition of income as per section 28(iv) of the Act they have held that incentive/discounts partakes the character of income under the head profits and gains of business and profession in the hands of recipient and Page 16 of 22

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Assistant Registrar ITAT, Kolkata Benches Kolkata

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