ITO TDS 3(3), MUMBAI v. SUPER RELIGARE LABORATORIS LTD, NEW DELHI

ITA 4579/MUM/2014 | 2008-2009
Pronouncement Date: 30-09-2016 | Result: Dismissed

Appeal Details

RSA Number 457919914 RSA 2014
Assessee PAN AAACS2809J
Bench Mumbai
Appeal Number ITA 4579/MUM/2014
Duration Of Justice 2 year(s) 2 month(s) 27 day(s)
Appellant ITO TDS 3(3), MUMBAI
Respondent SUPER RELIGARE LABORATORIS LTD, NEW DELHI
Appeal Type Income Tax Appeal
Pronouncement Date 30-09-2016
Appeal Filed By Department
Order Result Dismissed
Bench Allotted E
Tribunal Order Date 30-09-2016
Assessment Year 2008-2009
Appeal Filed On 03-07-2014
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL E B ENCH MUMBAI BEFORE SHRI RAJENDRA ACCOUNTANT MEMBER AND SHRI C.N. PRASAD JUDICIAL MEMBER / I .TA NOS. 4579 & 4580/MUM/2014 ( / ASSESSMENT YEARS:2008-09 & 2009-10 THE ITO TDS - 3(3) SMT. K.G. MITTAL AYURVEDIC HOSPITAL BLDG. CHARNI ROAD (W) MUMBAI-400 002 / VS. M/S. SUPER RELIGARE LABORATORIES LTD. PLOT NO. D-3 A WING 2 ND FLOOR DISTYRICT CENTRE SAKET NEW DELHI-110 017 ./ ./ PAN/GIR NO. AAACS 2809J ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY: SHRI KAILASH GAIKWAD / RESPONDENT BY: SHRI YOGESH THAR / DATE OF HEARING :18.07.2016 ! / DATE OF PRONOUNCEMENT : 30.09.2016 / O R D E R PER C.N. PRASAD JM: THESE TWO APPEALS ARE FILED BY THE REVENUE AGAINST THE COMMON ORDERS OF THE LD. CIT(A)-13 MUMBAI DATED 11 .04.2014 PERTAINING TO ASSESSMENT YEARS 2008-09 & 2009-10. 2. THE REVENUE HAS RAISED FOLLOWING COMMON GROUNDS IN ITS APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE RELATIONSHIP BETWEEN THE ASSESSEE AND COLLECTION CENTRES IS IN THE NATURE OF PRINCIPAL TO PRINCIPAL AND NOT THAT OF PRINCIPAL TO AGENT AND HELD THAT THE ASSESSEE C OMPANY WAS ITA NOS. 4579 & 4580/M/2014 2 NOT LIABLE TO DEDUCT TDS U/S. 194H OF THE I.T. ACT A ND THEREBY ERRED IN DELETING THE NON DEDUCTION/SHORT DEDUCTION U/S. 201(1 ) AND INTEREST U/S. 201(1A). 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE ASSESSEE COMPANY WAS NOT LIABLE TO DEDUCT TDS U/S. 194H OF THE I.T. ACT AND THEREBY ERRE D IN DELETING THE NON DEDUCTION/SHORT DEDUCTION U/S. 201(1) AND INTERE ST U/S. 201(1A) WITHOUT APPRECIATING THAT ALL THE COLLECTION CENTRES ARE WORKING AS AGENTS OF THE ASSESSEE COMPANY ON THE BASIS OF COMMIS SION ONLY AND HENCE THE DISCOUNTS GIVEN TO COLLECTION CENTRES WERE IN THE NATURE OF COMMISSION WITHIN THE MEANING OF SECTION 194H OF THE ACT. 3. AT THE OUTSET THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT AN IDENTICAL ISSUE AROSE IN ASSESSEES OWN CASE FOR TH E ASSESSMENT YEARS 2006-07 AND 2008-09 AND THE TRIBUNAL HELD THAT THE DISCOUNTS ALLOWED BY THE ASSESSEE TO COLLECTION CENTRES WILL NOT ATTRACT THE PROVISIONS OF SEC. 194H BECAUSE THERE WAS NO PRINCI PAL AGENT RELATIONSHIP BETWEEN ASSESSEE AND COLLECTION CENTRE S HENCE PROVISIONS OF SEC. 194H HAVE NO APPLICATION. COPIE S OF THE DECISION REPORTED AS SRL RANBAXY LTD VS. ACIT (50 SOT 173) AND ACIT VS SRL RANBAXY LTD (42 ITR (TRIB) 676 ARE SUBMITTED BEFORE US. THE LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMITS THAT THE N AME OF THE ASSESSEE SRL RANBAXY LTD. WAS CHANGED TO SUPER REL IGARE LABORATORIES LTD. ON 28 TH AUGUST 2008 AND THIS WAS LATER ON CHANGED TO SRL LTD. ON 6.7.2012. COPIES OF FRESH CERTIFIC ATE OF INCORPORATION CONSEQUENT UPON THE CHANGE OF NAME ARE FURNISHED BE FORE US. THEREFORE THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT THE ISSUE IN APPEAL IS SQUARELY COVERED BY THE DECISIONS REPORT ED (SUPRA). 4. THE LD. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY S UPPORTS THE ORDER OF THE ASSESSING OFFICER IN HOLDING THAT THE ASSESSEE IS DEFAULTER U/S. 201(1) AND 201(1A) FOR NON DEDUCTION OF TDS U/S. ITA NOS. 4579 & 4580/M/2014 3 194H OF THE ACT ON THE DISCOUNTS ALLOWED BY THE ASS ESSEE TO THE COLLECTION CENTRES. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND THE DECISIONS RELIED ON. THE ASSESSEE IS ENGAGED IN PROVIDING LABORATORY AND TESTING SERVICE S TO THE CUSTOMERS THROUGH OWN COLLECTION CENTRES AND ALSO T HROUGH COLLECTION CENTRES COMPRISING OF HOSPITALS NURSING HOMES CLINICS OTHER LABORATORIES ETC. THE ASSESSEE ALLOWED DISCO UNTS TO THE COLLECTION CENTRES OTHER THAN ITS OWN CENTRES. THE ASSESSING OFFICER TREATED SUCH DISCOUNTS AS COMMISSION PAID TO COLLEC TION CENTRES AND SINCE THE ASSESSEE DID NOT DEDUCT TDS U/S. 194H OF THE ACT HE PASSED ORDER U/S. 201(1) AND 201(1A) TREATING THE ASSESSEE AS DEFAULTER. WE FIND THAT AN IDENTICAL ISSUE HAS BEEN DECIDED IN AS SESSEES OWN CASE WHICH IS REPORTED AS SRL RANBAXY LTD. VS ACIT (SUPR A) FOR ASSESSMENT YEAR 2006-07 WHEREIN IT WAS HELD THAT TH E DISCOUNTS ALLOWED BY THE ASSESSEE LABORATORY TO THE COLLECTIO N CENTRES IS NOT COMMISSION AND NOT ATTRACTED BY THE PROVISIONS OF S EC. 194H FOR THE REASON THAT THERE IS NO PRINCIPAL AGENT RELATIONSHI P BETWEEN THE ASSESSEE AND THE COLLECTION CENTRE AND THE RELATION SHIP BETWEEN ASSESSEE AND COLLECTION CENTRES IS ONLY PRINCIPAL T O PRINCIPAL RELATIONSHIP THEREFORE THE PROVISIONS OF SEC. 194H HAVE NO APPLICATION. IN HOLDING SO THE TRIBUNAL OBSERVED A S UNDER: 7. WE HAVE HEARD THE PARTIES AND HAVE PERUSED THE MATERIAL ON RECORD. THE ISSUE BEFORE US IS THE INTE RPRETATION OF SECTION 194 H OF THE I.T. ACT AS TO WHETHER IT IS APPLICABLE TO THE FACTS OF THE PRESENT CASE OR NOT. AT THE OUTSET IT WOULD BE APPROPRIATE TO REPRODUCE THE PROVISIONS OF SECTION 194 H:- ITA NOS. 4579 & 4580/M/2014 4 194H. COMMISSION OR BROKERAGE. ANY PERSON NOT BEING AN INDIVIDUAL OR A HINDU UNDI VIDED FAMILY WHO IS RESPONSIBLE FOR PAYING ON OR AFTER THE 1ST DAY OF JUNE 2001 TO A RESIDENT ANY INCOME BY WAY OF COMMISSIO N (NOT BEING INSURANCE COMMISSION REFERRED TO IN SECTION 194D ) OR BROKERAGE SHALL AT THE TIME OF CREDIT OF SUCH INCOME TO THE ACCOUNT OF THE PAYEE OR AT THE TIME OF PAYMENT OF SUCH INCOME IN C ASH OR BY THE ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE WH ICHEVER IS EARLIER DEDUCT INCOME-TAX THEREON AT THE RATE OF T EN PER CENT : PROVIDED THAT NO DEDUCTION SHALL BE MADE UNDER THIS SECTION IN A CASE WHERE THE AMOUNT OF SUCH INCOME OR AS THE CAS E MAY BE THE AGGREGATE OF THE AMOUNTS OF SUCH INCOME CREDITED OR PAID OR LIKELY TO BE CREDITED OR PAID DURING THE FINANCIAL YEAR TO THE ACCOUNT OF OR TO THE PAYEE DOES NOT EXCEED FIVE THOUSAND RUPEES : PROVIDED FURTHER THAT AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY WHOSE TOTAL SALES GROSS RECEIPTS OR TURNOV ER FROM THE BUSINESS OR PROFESSION CARRIED ON BY HIM EXCEED THE MONETARY LIMITS SPECIFIED UNDER CLAUSE (A) OR CLAUSE (B) OF SECTION 44AB DURING THE FINANCIAL YEAR IMMEDIATELY PRECEDING THE FINANCIALYEAR IN WHICH SUCH COMMISSION OR BROKERAGE IS CREDITED OR PAID SHALL BE LIABLE TO DEDUCT INCOME-TAX UNDER THIS SECTION: PROVIDED ALSO THAT NO DEDUCTION SHALL BE MADE UNDER THIS SECTION ON ANY COMMISSION OR BROKERAGE PAYABLE BY B HARAT SANCHAR NIGAM LIMITED OR MAHANAGAR TELEPHONE NIGAM LIMITED TO THEIR PUBLIC CALL OFFICE FRANCHISEES. EXPLANATION.FOR THE PURPOSES OF THIS SECTION (I) COMMISSION OR BROKERAGE INCLUDES ANY PAYMENT RECEIVED OR RECEIVABLE DIRECTLY OR INDIRECTLY BY A PERSON ACT ING ON BEHALF OF ANOTHER PERSON FOR SERVICES RENDERED (NOT BEING PRO FESSIONAL SERVICES)OR FOR ANY SERVICES IN THE COURSE OF BUYIN G OR SELLING OF GOODS OR IN RELATION TO ANY TRANSACTION RELATING TO ANY ASSET VALUABLE ARTICLE OR THING NOT BEING SECURITIES; (II) THE EXPRESSION PROFESSIONAL SERVICES MEANS S ERVICES RENDERED BY A PERSON IN THE COURSE OF CARRYING ON A LEGAL ITA NOS. 4579 & 4580/M/2014 5 MEDICAL ENGINEERING OR ARCHITECTURAL PROFESSION OR THE PROFESSION OF ACCOUNTANCY OR TECHNICAL CONSULTANCY OR INTERIOR DECORATION OR SUCH OTHER PROFESSION AS IS NOTIFIED BY THE BOARD FOR THE PURPOSES OF SECTION 44AA ; (III) THE EXPRESSION SECURITIES SHALL HAVE THE ME ANING ASSIGNED TO IT IN CLAUSE (H) OF SECTION 2 OF THE SECURITIES CONTRACTS (REGULATION) ACT 1956 (42 OF 1956 ; (IV) WHERE ANY INCOME IS CREDITED TO ANY ACCOUNT W HETHER CALLED SUSPENSE ACCOUNT OR BY ANY OTHER NAME IN THE BOO KS OF ACCOUNT OF THE PERSON LIABLE TO PAY SUCH INCOME SUCH CREDI TING SHALL BE DEEMED TOBE CREDIT OF SUCH INCOME TO THE ACCOUNT OF THE PAYEE AND THE PROVISIONS OF THIS SECTION SHALL APPLY ACCO RDINGLY. 8. THUS SECTION 194 H BROUGHT IN FROM 1.6.2001 P ROVIDES THAT ANY PERSON OTHER THAN AN INDIVIDUAL OR A HINDU UND IVIDED FAMILY RESPONSIBLE FOR PAYING COMMISSION OR BROKER AGE TO A RESIDENT SHALL DEDUCT TAX AT SOURCE; AND THAT THE TAX SHALL BE DEDUCTED AT THE TIME OF CREDIT OF SUCH INCOME TO TH E ACCOUNT OF THE PAYEE OR AT THE TIME OF PAYMENT OF SUCH INCOME OR BY ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE WHICHEVER I S EARLIER. TO FALL WITHIN THE PROVISIONS OF SECTION 194 H THE PA YMENT RECEIVED OR RECEIVABLE DIRECTLY OR INDIRECTLY IS TO BE BY A PERSON ACTING ON BEHALF OF ANOTHER PERSON (I) FOR SERVICES RENDERED NOT BEING PROFESSIONAL SERVICES OR (II) FOR ANY SERVICES IN THE COURSE OF BUYING OR SELLING OF GOODS OR (III) IN RELATION TO ANY TRANSACTION RELATING TO ANY ASSET VALUABLE ARTICLE OR THING. T HE ELEMENT OF AGENCY IS NECESSARILY TO BE THERE IN CASES OF ALL T HE SERVICES OR THE TRANSACTIONS CONTEMPLATED BY THE SECTION AS HELD I N MOTHER DAIRY INDIA LTD. V. ITO 28 SOT 42 (DEL) DELHI M ILK SCHEME V. CIT 173 TAXMANN 54 (DEL) AND ABP PVT. LTD. V. C IT 23 SOT 28 (KOLKATA). 9. WHERE THE DEALING BETWEEN THE PARTIES IS NOT ON A PRINCIPAL TO AGENT BASIS SECTION 194 H DOES NOT GE T ATTRACTED AS HELD IN AHMEDABAD STAMP VENDOR ASSOCIATION V. UNIO N OF INDIA 257 ITR 202 (GUJ) KERALA STAMP VENDORS ASSOCIATIO N 282 ITR 7(KER) AND ACIT V. SAMAJ 77 ITD 358(CUTTACK). 10. IN THE PRESENT CASE THE BUSINESS WORKING OF TH E ASSESSEE IS THAT IT SIGNS AGREEMENTS WITH THE COLLE CTION CENTRES ON A NON-EXCLUSIVE BASIS. IT IS UNDER THESE AGREEME NTS THAT THE ITA NOS. 4579 & 4580/M/2014 6 COLLECTION CENTRES AVAIL THE PROFESSIONAL SERVICES OF THE ASSESSEE REGARDING TESTING OF SAMPLES. THESE CENTRES OPERATE AS AUTHORIZED COLLECTORS FOR COLLECTING THE SAMPLES. N OW THESE COLLECTION CENTRES ARE WORKING IN THIS MANNER WITH VARIOUS CONCERNS OF WHICH THE ASSESSEE IS ONE. THE COLLEC TION CENTRE IS UNDER NO OBLIGATION TO ALWAYS FORWARD THESE SAMPLES TO THE ASSESSEE. IT IS ONLY IN CASE THE PATIENT/CUSTOMER I NSISTS THAT THE LABORATORY TESTING BE DONE BY THE ASSESSEE THAT TH E COLLECTION CENTRE FORWARDS THE SAMPLE OF SUCH A PATIENT TO THE ASSESSEE FOR TESTING. THE COLLECTION CENTRE ALSO FILLS UP THE NE CESSARY TEST REQUISITION FORMS TO BE SENT ALONG WITH THE SAMPLE. THE ASSESSEE CONDUCTS THE TEST/TESTS AND ISSUES THE REPORT WITH REGARD THERETO TO THE COLLECTION CENTRE. THE COLLECTION CENTRE ISS UES ITS OWN BILL/INVOICE TO THE PATIENT/CUSTOMER. THE FEES FOR THE TESTING IS COLLECTED BY THE COLLECTION CENTRE AND THE RECEIPT IS ALSO ISSUED BY THE COLLECTION CENTRE. THE ASSESSEE RAISES ITS PERI ODICAL INVOICES ON THE COLLECTION CENTRES. THE COLLECTION CENTRE MA KES THE PAYMENT TO THE ASSESSEE AFTER TDS U/S 194 J OF THE ACT. UNDER THE AGREEMENT THE SERVICES ARE RENDERED BY THE ASSESSE E IN THE FORM OF LABORATORY TESTING AT A DISCOUNTED PRICE FROM TH E PRICE GIVEN IN THE STANDARD PRICE LIST. THIS DISCOUNT HAS BEEN CON SIDERED BY THE AUTHORITIES BELOW AS COMMISSION AND THEY HAVE HELD THAT TAX WAS REQUIRED TO BE DEDUCTED THEREON U/S 194 H OF THE AC T. 11. NOW IT HAS NOT BEEN SHOWN THAT THESE FACTS AS CANVASSED ON BEHALF OF THE ASSESSEE ARE NOT THE CORRECT FACTS. IT HAS NOT BEEN SHOWN THAT THE RATES CHARGED BY THE COLLECTION CENT RE FROM ITS CUSTOMERS ARE NOT DECIDED BY THE COLLECTION CENTRE BUT BY THE ASSESSEE. IT HAS NOT BEEN SHOWN THAT THE COLLECTION CENTRE IS UNDER ANY OBLIGATION TO FORWARD THE SAMPLES FOR TES TING ONLY AND ONLY BY THE ASSESSEE AND NOT BY OTHER LABORATORIES AS WELL. THE SET- UPS OF THE COLLECTION CENTRES ARE ALSO ENTIREL Y DIFFERENT FROM THAT OF THE ASSESSEE. THEIR EXPENDITURE HAS ALSO NO T BEEN SHOWN TO BE INTERLACING WITH THAT OF THE ASSESSEE. THE ST AFF OF THE TWO ARE ALSO DISTINCT AND SEPARATE. THE ACCOUNTS ARE NO T EITHER INTER- MIXED OR INTER-TWINED. ON THE OTHER HAND THERE EXI STS A PRIVITY OF CONTRACT BETWEEN THE COLLECTION CENTRES AND THEIR C USTOMERS. OUT OF THE PAYMENT MADE TO THE ASSESSEE TAX IS DEDUCTE D AT SOURCE FOR PROFESSIONAL SERVICES RENDERED U/S 194 J OF TH E ACT. THE RECEIPT BY THE COLLECTION CENTRES IS NOT ESTABLISHE D TO BE ON BEHALF OF THE ASSESSEE. THE RECEIPT OF THE COLLECTION CENT RES AS SUCH IS THE INCOME OF THE COLLECTION CENTRES THEMSELVES AND NOT THAT OF ITA NOS. 4579 & 4580/M/2014 7 THE ASSESSEE. TO BRING HOME THIS POINT IT IS ENOUG H TO CONSIDER THAT THE AMOUNT ALLEGED TO HAVE BEEN PAID BY THE A SSESSEE TO THE COLLECTION CENTRES HAS NOT BEEN CONSIDERED TO BE D EDUCTIBLE EXPENDITURE. 12. IN CIT V. JAI DRINKS PVT. LTD. 211 TIOL-52 -HC-DEL-IT UNDER SIMILAR CIRCUMSTANCES SIMILAR PAYMENTS MADE BY JAI DRINKS TO ITS DISTRIBUTOR WERE HELD TO BE INCENT IVES AND DISCOUNTS AND NOT COMMISSION. THE DISTRIBUTOR HAD B EEN PERMITTED TO SELL ITS PRODUCT IN A SPECIFIED AREA E XCLUSIVELY. IT WAS AS PER THE AGREEMENT THAT THE DISTRIBUTOR WAS TO PU RCHASE THE PRODUCTS OF JAI DRINKS AND WAS TO BE ALLOWED DISCOU NT PER CASE ON THE PRINTED MAXIMUM RETAIL PRICE. THE BREAKAGE LEA KAGE ETC. WAS THE LIABILITY OF THE DISTRIBUTOR AND NOT THAT O F JAI DRINKS. ALL THE APPROVALS CONSENTS REGISTRATION LICENCE ETC . REQUIRED FROM DEPARTMENTS OR AUTHORITIES WERE TO BE OBTAINED BY T HE DISTRIBUTOR. THE PURCHASE OF THE PRODUCTS BY THE DI STRIBUTOR FROM JAI DRINKS WAS AGAINST ONE HUNDRED PER CENT ADVANCE PAYMENT OR AT TIMES ON CREDIT AT THE DISCRETION OF JAI D RINKS. NO ELEMENT OF PRINCIPAL AGENT RELATIONSHIP WAS FOUND TO EXIS T AS IS THE CASE HEREIN. 13. THE LD. CIT(A) HAS OBSERVED THAT THE SUBMISSION OF THE ASSESSEE THAT IT PROVIDED PROFESSIONAL SERVICES IN THE FORM OF MEDICAL DIAGNOSTIC SERVICES TO THE COLLECTION CENTR ES WAS NOT ACCEPTABLE. FOR ARRIVING AT THIS OBSERVATION THE L EARNED CIT(A) NOTED THAT THE ASSESSEE PROVIDES PROFESSIONAL SERVI CES TO THE PATIENTS AND NOT TO THE COLLECTION CENTRES WHICH W ORK ON BEHALF OF THE ASSESSEE TO COLLECT SAMPLES FROM PATIENTS. I N THIS REGARD IT IS SEEN AS NOTED HEREINABOVE THAT THE ASSESSEE HA D APPOINTED COLLECTION CENTRES UNDER NON-EXCLUSIVE AGREEMENTS T O COLLECT SAMPLES AND TO FORWARD THEM FOR TESTING TO THE ASSE SSEE. THE PROFESSIONAL SERVICES IN THE FORM OF MEDICAL DIAGNO STIC SERVICES WERE PROVIDED TO THE COLLECTION CENTRES AND NOT TO THE PATIENTS/CUSTOMERS OF THE CENTRES. THE COLLECTION C ENTRES AND THE PATIENTS/CUSTOMERS ARE THE ONES WHICH HAVE PRIVITY OF CONTRACT INTER SE. THE COLLECTION CENTRES DEDUCTED TAX AT SO URCE FROM THE PAYMENT MADE TO THE ASSESSEE FOR PROFESSIONAL SERV ICES U/S 194 J OF THE ACT ESTABLISHING THAT THE COLLECTION CENTRE S WERE NOT THE AGENTS OF THE ASSESSEE. WERE IT OTHERWISE THE ENTI RE RECEIPT WOULD HAVE BEEN COLLECTED ON BEHALF OF THE ASSESSEE BY THE COLLECTION CENTRES. IT HAS NOT BEEN SHOWN TO BE SO. MOREOVER THE ITA NOS. 4579 & 4580/M/2014 8 AMOUNT RETAINED BY THE COLLECTION CENTRES WAS NOT R EGARDED AS THE INCOME OF THE ASSESSEE AND THE COMMISSION ALLEG EDLY PAID BY THE ASSESSEE TO THE COLLECTION CENTRES WAS NOT TREA TED AS THE DEDUCTIBLE EXPENDITURE. 14. THE ASSESSEES CONTENTION THAT THE COLLECTION C ENTRES HAVE THE OPTION TO CONDUCT THE TESTS THEMSELVES OR TO OUT-SO URCE THEIR MEDICAL SERVICES TO OTHER LABORATORIES HAS BEEN SI MPLY BRUSHED ASIDE BY THE LD. CIT(A) STATING IT TO BE OF NO SIGN IFICANCE. THIS HOWEVER TO OUR MIND IS NOT CORRECT. FIRSTLY THIS CONTENTION HAS NOT BEEN DISPROVED. IT IS BORNE OUT FROM THE AGREEM ENTS. THEN IF THIS AVERMENT ON BEHALF OF THE ASSESSSEE IS CORRECT THE ELEMENT OF AGENCY IN THE RELATIONSHIP BETWEEN THE ASSESSEE AND THE COLLECTION CENTRES GOES AWAY. TRUE THE COLLECTION CENTRES HAVE TO FOLLOW THE TERMS OF THE CONTRACT ENTERED INTO BY THEM WITH THE ASSESSEE. HOWEVER NO VIOLATION OF THE TERMS OF THE SE AGREEMENTS HAS BEEN SHOWN. THE LD. CIT(A) HAS CONCLUDED THAT T HE ASSESSEES CONTENTION THAT THE CENTRES CAN OUT-SOURCE THEIR SE RVICES TO OTHER LABORATORIES IS FACTUALLY INCORRECT. THIS IS BASED ON THE RECITAL IN THE AGREEMENT THAT THE COLLECTION CENTRES CANNOT CO LLABORATE WITH THE COMPETITORS EVEN ON THE TERMINATION OF TH E AGREEMENT. THE ASSESSEES STAND IN THIS REGARD HAS BEEN THAT S UCH A RESTRICTION WAS IMPOSED SIMPLY TO PREVENT THE COLLE CTION CENTRES FROM DIVULGING THE ASSESSEES SPECIFIC AND CONFIDEN TIAL KNOW-HOW WHICH MAY HAVE COME TO THEIR NOTICE DURING THEIR EN GAGEMENT WITH THE ASSESSEE TO THE COMPETITORS OF THE ASSESS EE. THIS CONTENTION HAS NEITHER BEEN REBUTTED NOR CAN BE TH ROWN OUT NECK AND CROP. THIS IS A PERFECTLY PLAUSIBLE EXPLAN ATION. PRUDENCE DEMANDS THE IMPOSITION OF SUCH-LIKE RESTRICTIONS IN THE AGREEMENT SO AS TO SAFE-GUARD THE ASSESSEES INTER ESTS. FURTHER AS CONTENDED IT HAS NOT BEEN SHOWN THAT THERE IS A NY RESTRICTION ON THE COLLECTION CENTRES FROM CONTINUING TO ACT AS SUCH COLLECTION CENTRES. THE ASSESSEE HAS ONLY SOUGHT TO PREVENT THE COLLECTION CENTRES FROM COLLABORATING WITH THE COMP ETITORS OF THE ASSESSEE. IN THE EVENT OF ABSENCE OF SUCH A COVENAN T IN THE AGREEMENT THERE WOULD BE NO SAFE-GUARD AGAINST THE CENTRES DIVULGING THE ASSESSEES CONFIDENTIAL SPECIFIC KNOW -HOW TO ITS COMPETITORS THEREBY PREJUDICING THE ASSESSEES BUS INESS. AND NOT ONLY THIS THE MERE EXISTENCE OF SUCH ALLEGED RESTR ICTION DOES NOT BY ITSELF ESTABLISH A PRINCIPAL AGENT RELATIONSH IP BETWEEN THE ASSESSEE AND THE COLLECTION CENTRES. IN THIS REGARD IN BHOPAL SUGAR INDUSTRIES V. STO AIR 1977 (SC)1275 IT HAS BEEN ITA NOS. 4579 & 4580/M/2014 9 OBSERVED INTER ALIA THAT THE CONCEPT OF A SALE HA S UNDER-GONE A REVOLUTIONARY CHANGE HAVING REGARD TO THE COMPLEXI TIES OF THE MODERN TIMES AND THE EXPANDING NEEDS OF THE SOCIETY WHICH HAS MADE A DEPARTURE FROM THE DOCTRINE OF LAISSEZ FAIRE BY INCLUDING A TRANSACTION WITHIN THE FOLD OF A SALE EVEN THOUG H THE SELLER MAY BY VIRTUE OF AN AGREEMENT IMPOSE A NUMBER OF RESTRICTIONS ON THE BUYER E.G. FIXATION OF PRICE SUBMISSION O F ACCOUNTS SELLING IN A PARTICULAR AREA OR TERRITORY AND SO ON; AND TH AT THESE RESTRICTIONS PER SE WOULD NOT CONVERT A CONTRACT OF SALE INTO ONE OF AGENCY BECAUSE IN SPITE OF THESE RESTRICTIONS THE TRANSACTION WOULD STILL BE A SALE AND SUBJECT TO ALL THE INCIDE NTS OF A SALE. 15. IT HAS FURTHER BEEN THE OBSERVATION OF THE LD. CIT(A) THAT THERE WERE GEOGRAPHICAL RESTRICTIONS IMPOSED ON THE COLLE CTION CENTRES. HOWEVER AS RIGHTLY CONTENDED IT HAS NOT BEEN SHOWN THAT ANY SUCH RESTRICTIONS WERE EVER IMPOSED ON THE COLLECTION CENTRES. RATHER NO RESTRICTIONS HAVE BEEN SHOWN TO HAVE BEEN IMPOSED ON THE COLLECTION CENTRES FROM REFERRING TH E TESTS TO LABORATORIES OTHER THAN THE ASSESSEE. IT HAS BEEN C ONTENDED ON BEHALF OF THE ASSESSEE THAT ALL THROUGH I.E. IN T HE PAST AS WELL AS IN THE PRESENT THE COLLECTION CENTRES HAVE BEEN AN D ARE ENGAGING THE SERVICES OF OTHER LABORATORIES. THIS HAS NOT BE EN DISPUTED. 16. THE LD. CIT(A) HAS ALSO OBJECTED THAT IT IS NOT TRUE TO CONTEND AS DONE ON BEHALF OF THE ASSESSEE THAT THE COLLECT ION CENTRES ARE FREE TO CHARGE A RATE AS DESIRED BY THEM FROM THEIR PATIENTS; THAT THE ADVERTISEMENT CLEARLY SPECIFIES THE RATE WHICH IS TO BE CHARGED BY THE COLLECTION CENTRES; AND THAT FROM TH IS IT IS CLEAR THAT THE ASSESSEE HAS CONTROL OVER THE PRICING OF T HE TEST. 17. IN THIS REGARD THE CONTENTION ON BEHALF OF THE ASSESSEE HAS BEEN THAT THE FINDINGS OF THE LD. CIT(A) IS INCORRE CT. IT HAS BEEN REITERATED THAT THE COLLECTION CENTRES ARE FREE TO CHARGE THE DESIRED RATES FROM THE CUSTOMERS/PATIENTS. IT HAS B EEN SUBMITTED THAT THOUGH IN THE ADVERTISEMENT ATTACHED AS ANNEXU RE-A TO THE CIT(A)S ORDER THE RATES HAVE BEEN SPECIFIED THE COLLECTION CENTRES CHARGE THE RATES FIXED BY THE COLLECTION CE NTRES THEMSELVES AND NOT AT THOSE DECIDED BY THE ASSESSEE ; THAT IN CERTAIN CASES THE COLLECTION CENTRES HAVE CHARGED OVER AND ABOVE THE STANDARD PRICE LIST PROVIDED BY THE ASSES SEE TO THE COLLECTION CENTRES. IN THIS REGARD ATTENTION HAS B EEN DRAWN TO PAGES 96 TO 98 AND 99 TO 102 OF THE ASSESSEES PAPE R BOOK. ITA NOS. 4579 & 4580/M/2014 10 18. APROPOS THIS ISSUE IT IS SEEN THAT APB 96 SHOW S THAT SAPRA DIAGNOSTIC CENTRE A COLLECTION CENTRE BEARING COD E NO. P 00000075/ IS CHARGING RS. 975/-AGAINST SRL DOS PRI CE OF RS. 915/-. APB 97 IS A COPY OF RECEIPT ISSUED BY SA PRA DIAGNOSTIC CENTRE TO WHOM KHANNA RENU FOR PAYMENT OF RS. 975/ - FOR VARIOUS MEDICAL TESTS. THEN APB 98 CONTAINS THE CO PY OF PRICE LIST (SYSTEMS)OF THE ASSESSEE AS ON 17.12.09. THIS LIST READS AS FOLLOWS:- TEST CODE TEST NAME SRL TES T PRICE(RS.) 5111 CBC+PS+ESR 285 1302H FASTING BLOOD SUGAR 60 1302 GLUCOSE PP 60 1209AD CORONARY RISK PROFILE SERUM 390 1310H URIC ACID SERUM 120 TOTAL 915 19. FURTHER APB 99 TO 102 CONTAIN THE RELEVANT EXT RACTS OF THE STANDARD PRICELIST OF THE ASSESSEE. ALL THESE DOCUM ENTS WERE PLACED BEFORE THE AUTHORITIES BELOW. IN THE IMPUGNE D ORDER HOWEVER THE LD. CIT(A) HAS NOT TAKEN THOSE INTO CO NSIDERATION. IN FACT NO REFERENCE WHATSOEVER HAS BEEN MADE TO THIS DOCUMENTARY EVIDENCE. THEREFORE THE CONTENTION OF THE ASSESSEE REGARDING THE COLLECTION CENTRE FREE TO CHARGE THE RATES AS DESIRED BY THEM FROM THE CUSTOMERS/PATIENTS DOES NO T STAND REBUTTED AND THE LD. CIT(A) HAS WRONGLY BASED HIS F INDING IN THIS REGARD MERELY ON THE ADVERTISEMENT ATTACHED WITH TH E IMPUGNED ORDER AS ANNEXURE-A. THE RATES CONTAINED IN THE SAI D ADVERTISEMENT ARE NO DOUBT THE SPECIFIED RATES B UT THE ASSESSEE HAS BEEN ABLE TO SHOW THAT THE COLLECTION CENTRES D O THE CHARGE RATES OVER AND ABOVE SUCH SPECIFIED RATES AS DESIR ED BY THEM. THE OBSERVATION OF THE LD. CIT(A) AGAINST THE ASSESSEE IN THIS REGARD IS THEREFORE NOT CORRECT. 20. THE LD. CIT(A) HAS ALSO OBSERVED THAT THE ASSES SEE IS BOUND TO THE COLLECTION CENTRES IN TERMS OF THE REPORT ISSUE D IN RESPECT OF SAMPLES REFERRED BY THE CENTRES TO THE ASSESSEE AND TESTED BY THE ASSESSEE. HOWEVER IT HAS NOT BEEN SHOWN AS TO HOW THIS ACTS DETRIMENTALLY TO THE ASSESSEE. NO PRINCIPAL AGENT RELATIONSHIP STANDS ESTABLISHED BY THIS SOLE FACT. OBVIOUSLY SI NCE THE ASSESSEE RENDERS PROFESSIONAL SERVICES AND THAT TOO PROFES SIONAL SERVICES ITA NOS. 4579 & 4580/M/2014 11 BY WAY OF MEDICAL TESTING THERE IS A STRICT PROFES SIONAL CONDUCT WHICH HAS TO BE ABIDED BY THE ASSESSEE. THE ASSESSE E IS UNDER A STRICT OBLIGATION. IF THERE IS ANY NEGLIGENCE OR DE FICIENCY ON THE PART OF THE ASSESSEE IT IS THE ASSESSEE WHO IS ANS WERABLE. 21. AS SEEN FROM THE ABOVE IT IS EVIDENT THAT THER E IS NO PRINCIPAL AGENT RELATIONSHIP EXISTING BETWEEN THE ASSESSEE AND THE COLLECTION CENTRES. THE FINDINGS OF THE LEARNED CIT (A) IN THIS REGARD ARE THEREFORE INCORRECT AND WE HOLD SO. 22. BESIDES THE ABOVE IT IS PATENT ON RECORD THAT THE ASSESSEE DOES NOT PAY OR CREDIT ANY AMOUNT TO THE ACCOUNT OF THE COLLECTION CENTRES EITHER DIRECTLY OR INDIRECTLY. THAT BEING SO THE PROVISIONS OF SECTION 194 H OF THE ACT DO NOT GET A TTRACTED ON THIS SCORE ALSO. IT IS OBVIOUS THAT THE OBLIGATION OF DE DUCTION OF TAX AT SOURCE U/S 194 H OF THE ACT COMES UP ONLY AT THE TI ME OF PAYMENT OR CREDIT OF THE AMOUNT IN THE BOOKS OF ACCOUNT OF THE PAYER WHICHEVER IS EARLIER. HEREIN THE AMOUNT RECEIVED B Y THE ASSESSEE HAS BEEN CREDITED IN ITS BOOKS OF ACCOUNT. THIS IS BASED ON THE INVOICES RAISED BY THE ASSESSEE ON THE COLLECTION C ENTRES. NO DEBIT IN THE BOOKS OF ACCOUNT OF THE ASSESSEE FOR ANY DIS COUNT AND/OR COMMISSION PAID TOWARDS THE COLLECTION CENTRES HAS BEEN SHOWN TO EXIST. ON THE CONTRARY THE ASSESSEE HAS BEEN TA XED ON THE GROSS RECEIPT OF ` 50.42 CRORES WHICH STANDS REFLECTED I N THE BOOKS OF ACCOUNT OF THE ASSESSEE. 23. THEN THE DISALLOWANCE IN TERMS OF SECTION 40(A )(IA) READ WITH SECTION 194H OF THE ACT CAN BE MADE ONLY IN RESPECT OF EXPENDITURE IN THE NATURE OF COMMISSION PAID/CREDIT ED TO THE ACCOUNT OF THE RECIPIENT OR TO ANY OTHER ACCOUNT. IN THE PRESENT CASE THE ASSESSEE RECEIVES THE AMOUNT OF THE INVOI CE RAISED NET OF DISCOUNT FROM THE COLLECTION CENTRES. THIS DISCOU NT INDISPUTABLY CANNOT IN ANY MANNER BE SAID TO BE EXPENDITURE INCURRED BY THE ASSESSEE AND SO SECTION 40(A)(IA) OF THE ACT IS NOT ATTRACTED. 24. IN UNITED EXPORTS V. CIT 330 ITR 549(DEL) IT WAS HELD WITH REFERENCE TO SECTION 40 A(2) (B) OF THE ACT THAT SINCE TRADE DISCOUNT OFFERED BY THE ASSESSEE COULD NOT BE SAID TO BE EXPENDITURE INCURRED THERE WAS NO QUESTION OF DISA LLOWANCE UNDER THE SAID SECTION. ITA NOS. 4579 & 4580/M/2014 12 25. FROM THIS ANGLE ALSO THE AUTHORITIES BELOW ERR ED IN DISALLOWING THE DISCOUNT OFFERED BY THE ASSESSEE B Y INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. 26. COMING TO THE CASE LAWS REFERRED TO ON BEHALF O F THE DEPARTMENT THESE ARE AS FOLLOWS:- 1. CIT V. SINGAPORE AIRLINES LTD. 319 ITR 29 (DE L); 2. CIT V. DIRECTOR PRASAR BHARTI 325 ITR 205(KE R); 3. DELHI MILK SCHEME V. CIT 301 ITR 373(DEL); 4. ACIT V. BHARTI CELLULAR LTD. 105 ITD 129(KOL) ; & 5. HINDUSTAN COCA COLA BEVERAGES V. ITO 97 ITD 1 05(JP). 27. APROPOS CIT V. SINGAPORE AIRLINES LTD. (SUPRA ) IT WAS OBSERVED INTER ALIA THAT IN THE AREA OF TRAVEL BU SINESS THE AIRLINE APPOINTS AGENTS WHO ARE ACCREDITED WITH IATA. THESE AGENTS MAINTAIN BLANK TICKET STOCK OF THE AIRLINE. THE AGE NTS ARE AUTHORIZED TO ISSUE TICKETS TO PASSENGERS AGAINST C OLLECTION OF CONSIDERATION. WHEN A TICKET IS ISSUED BY THE AGENT A CONTRACT COMES INTO EXISTENCE BETWEEN THE PASSENGER AND THE AIRLINE FOR CARRYING THE PASSENGER ON THE SCHEDULED FLIGHT(FOR WHICH THE TICKET IS BOOKED). THE AMOUNTS COLLECTED BY THE AGE NTS ARE CREDITED TO THE AIRLINES ON A FORTNIGHTLY BASIS. TH E AGENT RECEIVES A PRE-AGREED COMMISSION WHICH IS FIXED FOR THE IND USTRY AS A WHOLE AFTER DEDUCTING TAX AT SOURCE UNDER SECTION 194 H OF THE ACT. IN THAT VIEW OF THE MATTER THERE IS NO DISPUT E THAT THERE IS A PRINCIPAL AGENT RELATIONSHIP BETWEEN THE AIRLINE ON THE ONE HAND AND TRAVEL AGENT ON THE OTHER. 28. IN THE AFORESAID BACKGROUND OF FACTS THE QUEST ION AROSE WHETHER THE SUPPLEMENTARY COMMISSION RETAINED BY TH E TRAVEL AGENTS WAS IN THE NATURE OF COMMISSION FOR THE PU RPOSES OF SECTION 194 H OF THE ACT ON WHICH TAX WAS REQUIRE D TO BE WITHHELD OR IT WAS IN THE NATURE OF DISCOUNT. 29. IN THE UNDISPUTED POSITION THAT THE APPROVED AG ENT ACTED VIS- -VIS AIRLINE IN THE CAPACITY OF AN AGENT IT WAS H ELD THAT THE SUPPLEMENTARY COMMISSION RECEIVED FROM SALE OF TICK ETS WAS NO DIFFERENT FROM THE COMMISSION NORMALLY RECEIVED BY THE AGENT ON WHICH TAX WAS BEING DEDUCTED UNDER SECTION 194 H OF THE ACT. ITA NOS. 4579 & 4580/M/2014 13 30. IN THE PRESENT CASE HOWEVER THERE IS NO PRINC IPAL AGENT RELATIONSHIP THAT SUBSISTS BETWEEN THE ASSESSEE AND THE COLLECTION CENTRES. ON THE CONTRARY IT IS THE ASSESSEE WHICH RENDERS LAB TESTING SERVICES TO THE COLLECTION CENTRES ON WHIC H NECESSARY TAX IS DEDUCTED UNDER SECTION 194 J OF THE ACT. THEREFO RE SINGAPORE AIRLINES(SUPRA) IS CLEARLY NON-APPLICABLE HERETO. 31. THAT APART IT WAS HELD BY THE HONBLE BOMBAY H IGH COURT IN THE RECENT DECISION OF CIT V. QANTAS AIRWAYS 332 ITR 25(BOM) THAT THE DISCOUNT OFFERED BY THE AIRLINES TO TRAVEL AGENTS ON THE STANDARD PRICE OF TICKETS COULD NOT BE SAID TO BE I NCOME IN THE NATURE OF COMMISSION/BROKERAGE WARRANTING DEDUCTIO N OF TAX AT SOURCE UNDER SECTION 194 H OF THE ACT. 32. APROPOS CIT V. DIRECTOR PRASAR BHARTI (SUPR A) IT WAS HELD THAT UNDER THE ADVERTISING TRADE TOO THE ADVERTISI NG AGENCIES WHICH ARE ACCREDITED WITH ADVERTISING STANDARDS COU NCIL OF INDIA (ASCI) RELEASE ADVERTISEMENTS TO THE MEDIA (PRINT OR ELECTRONIC) AND ARE ENTITLED TO COMMISSION FROM THE MEDIA. THE ADVERTISING AGENCIES WHICH RECEIVE PAYMENT FROM THE ADVERTISERS RETAIN THECOMMISSION AND PASS ON THE BALANCE TO THE MEDIA. TAX IS DEDUCTED UNDER SECTION 194 H OF THE ACT ON THE AMOU NT OF COMMISSION RETAINED BY THE ADVERTISING AGENCY IN V IEW OF THE ADMITTED PRINCIPAL AGENT RELATIONSHIP BETWEEN THE MEDIA AND THE ADVERTISING AGENCY. 33. IN THE FACTS OF THE GIVEN CASE IT WAS OBSERVED THAT THE ADVERTISING AGENCY WAS AN AGENT FOR PRASHAR BHARTI CONSIDERING THAT THE AGENT WAS ENTRUSTED TO CANVASS ADVERTISEME NT ON BEHALF OF DOORDARSHAN THE ADVERTISEMENT CHARGES RECOVERED FROM THE CUSTOMERS WERE ALSO IN ACCORDANCE WITH THE TARIFF P RESCRIBED BY DOORDARSHAN WHICH WAS INCORPORATED IN THE AGREEMEN T THE ADVERTISEMENT MATERIAL HAD TO CONFORM TO THE DISCIP LINE INTRODUCED BY DOORDARSHAN DOORDARSHAN WAS BOUND BY ADVERTISEMENT CONTRACT CANVASSED BY ADVERTISING AGE NCIES AND IT WAS UNDER OBLIGATION TO TELECAST ADVERTISEMENTS IN TERMS OF THE CONTRACT WHICH THE AGENCY SIGNED WITH THE CUSTOMER. 34. ON THE AFORESAID FACTS IT WAS HELD THAT THE CO MMISSION OF 15% RETAINED BY THE AGENT OUT OF ADVERTISEMENT CHAR GES COLLECTED BY THE AGENT ON BEHALF OF DOORDARSHAN WAS SUBJECT TO DEDUCTION OF TAX AT SOURCE UNDER SECTION 194 H OF T HE ACT SINCE ITA NOS. 4579 & 4580/M/2014 14 THE TRANSACTION WAS A PURE AGENCY AGREEMENT BETWEEN DOORDARSHAN AND THE ADVERTISING AGENCY IN VIEW OF THE FACT THAT ONE ACTED FOR THE OTHER AND THE ACT OF THE AGENT BO UND DOORDARSHAN IN ITS CAPACITY AS PRINCIPAL OF THE AGE NT. IT WAS HELD THAT THE PARTIES UNDERSTOOD THEIR RELATIONSHIP AS T HAT OF PRINCIPAL AND AGENT AND WHAT WAS PAID TO THE AGENT BY DOORDAR SHAN WAS 15PER CENT OF THE ADVERTISEMENT CHARGES COLLECTED A ND REMITTED THE AGENT WHICH WAS IN THE FORM OF COMMISSION PAYAB LE TO THE AGENT BY DOORDARSHAN. FURTHER IT WAS FOUND ON FACT S THAT THE ADVERTISEMENT CONTRACT ENTERED INTO BETWEEN THE CUS TOMER AND THE AGENCY WAS FOR TELECASTING ADVERTISEMENT ON DOO RDARSHAN CHANNELS. 35. IN THE PRESENT CASE ON THE CONTRARY THE COLLE CTION CENTER HAS NO AUTHORITY TO BIND THE ASSESSEE IN ANY FORM. THE COLLECTION CENTERS ACTING IN THEIR OWN RIGHT ENGAGE THE ASSE SSEE FOR LAB TESTING SERVICES AND DO NOT IN ANY MANNER ACT AS AGENTS OF THE ASSESSEE. THAT BEING SO DIRECTOR PRASAR BHARTI (SUPRA) DOES NOT COME TO THE AID OF THE REVENUE. 36. IN DELHI MILK SCHEME (SUPRA) THE ASSESSEE AP POINTED A LARGE NUMBER OF AGENTS/CONCESSIONAIRES ALL OVER DEL HI TO SELL MILK/ MILK PRODUCTS OWNED BY THE ASSESSEE. THE ASSE SSEE DID NOT CHARGE ANY RENT FOR THE USE OF BOOTHS FROM THE CONC ESSIONAIRES. THE MILK BOOTHS WERE IN FACT OWNED BY THE ASSESSE E. THE ASSESEE HAD A RIGHT TO ENTER THE MILK BOOTH AND TAKE CHARGE THEREOF AT ANY TIME WITHOUT ASSIGNING ANY REASON OR WITHOUT A NY INTIMATION TO THE CONCESSIONAIRES. THE UNSOLD MILK WAS TAKEN BACK BY THE ASSESSEE FROM THE CONCESSIONAIRES. THE CASH COLLECTION WAS DAILY HANDED OVER TO THE ASSESSEE BY THE CONCESSIONAIRES. THE CONCESSIONAIRES ONLY RENDERED A SERVICE TO THE ASSESSEE FOR SELLING MILK TO THE CUSTOMERS AND THE OWNERSHIP OF THE GOODS DID NOT PASS FROM THE ASSESSEE TO THE CONCESSIONAIRES INASMUCH AS THERE WAS NO SALE OF T HE MILK/MILK PRODUCTS TO THE CONCESSIONAIRES. 37. IT WAS OBSERVED THAT LOOKING AT THE FACTS OF TH E CASE NAMELY THAT THE OWNERSHIP OF THE MILK BOOTH RESTS WITH THE ASSESSEE WHO DOES NOT CHARGE ANY RENT FOR THE USE OF THE BOOTHS FROM THE CONCESSIONAIRES; THE UNSOLD MILK IS TAKEN BACK BY T HE ASSESSEE FROM THE CONCESSIONAIRES WHO ARE PROHIBITED FROM SE LLING ANY OTHER PRODUCT OF ANY OTHER BRAND; THE SALE COLLECTI ONS OF THE ITA NOS. 4579 & 4580/M/2014 15 CONCESSIONAIRES ARE COLLECTED IN CASH BY THE ASSESS EE FROM CONCESSIONAIRES ON A DAILY BASIS THERE CAN BE NO D OUBT THAT THE CONCESSIONAIRES ARE SELLING MILK FOR AND ON BEHALF OF THE ASSESSEE AND WERE BEING PAID A COMMISSION FOR IT. 38. ON THE BASIS OF THE AFORESAID UNDISPUTED FACTS IT WAS HELD BY THE HONBLE HIGH COURT CONFIRMING THE DECISION OF THE TRIBUNAL THAT THE COMMISSION PAID TO THE AGENTS FOR THE GOOD S SOLD ATTRACTED THE MISCHIEF OF SECTION 194H OF THE ACT. 39. IN THE PRESENT CASE HOWEVER THE COLLECTION CE NTRE HAS ITS OWN PREMISES INFRASTRUCTURE STAFF AND NECESSARY LICEN SES/APPROVALS. THE COLLECTION CENTRE ACTS AS AN AUTHORIZED COLLECT OR FOR COLLECTING SAMPLES AND AVAILS THE PROFESSIONAL SERV ICES OF THE APPELLANT WITH RESPECT TO TESTING OF SAMPLES AND IS SUE OF NECESSARY REPORTS. THE ASSESSEE RAISES PERIODICAL I NVOICES ON THE COLLECTION CENTERS. THE AMOUNT COLLECTED BY THE COL LECTION CENTER FROM THE PATIENTS IS NOT ON ACCOUNT OF OR ON BEHALF OF THE ASSESSEE. THE COLLECTION CENTER IN TURN MAKES PAYMENT TO TH E ASSESSEE AFTER DEDUCTING TAX AT SOURCE U/S 194J OF THE ACT F OR THE PROFESSIONAL SERVICES RENDERED. THE COLLECTION CENT RE HAS THE FLEXIBILITY AND FREEDOM TO CHOOSE THE LABORATORY TO WHICH SAMPLES HAVE TO BE SENT FOR TESTING UNLESS THE SAME IS MAN DATED BY THE PATIENT/CUSTOMER. MOREOVER THE COLLECTION CENTRE C HARGES THE CUSTOMER RATES FIXED BY THE COLLECTION CENTRE (AND NOT DECIDED BY THE ASSESSEE) THOUGH AT THE SAME TIME KEEPING IN M IND THE AMOUNT THAT WOULD HAVE TO BE PAID BY THE COLLECTION CENTRE TO THE ASSESSEE OR TO ANY OTHER LABORATORY TO WHICH THE SA MPLES HAVE TO BE SENT FOR TESTING. IN FACT IN CERTAIN CASES THE COLLECTION CENTERS HAVE AS ALSO BROUGHT ON RECORD BEFORE US CHARGED OVER AND ABOVE THE STANDARD PRICE LIST PROVIDED BY THE ASSES SEE TO ALL COLLECTION CENTERS WHICH AVERMENT HAS GONE UNREBUT TED. HENCE DELHI MILK SCHEME(SUPRA) IS ALSO NOT OF ANY AVAIL TO THE DEPARTMENT. 40. IN BHARTI CELLULAR(SUPRA) THE ASSESSEE WAS PROVIDING CELLULAR MOBILE TELEPHONE SERVICES IN SPECIFIC AREA THROUGH DISTRIBUTORS BY PROVIDING SIM AND PRE-PAID CARDS AT FIXED RATES BELOW THE MARKET PRICE WHICH WERE FURTHER SOLD TO RETAILERS WHO ULTIMATELY SOLD THE SIM CARDS AND PRE-PAID CARDS TO CUSTOMERS. AS PER THE AGREEMENT BETWEEN THE ASSESSEE AND THE FRAN CHISEES THE RIGHTS TITLE OWNERSHIP AND PROPERTY RIGHTS IN THE PRE-PAID CARDS ITA NOS. 4579 & 4580/M/2014 16 AT ALL TIMES VESTED WITH THE ASSESSEE. THE FRANCHI SEES PRICE AND PAYMENT THEREOF WAS DECIDED BY THE ASSESSEE ITSELF WHICH SHOWED THAT THE DIFFERENCE BETWEEN PRICE CHARGED BY THE AS SESSEE AND THAT CHARGED BY THE FRANCHISEE WAS COMMISSION AND N OT DISCOUNT. 41. IN THE BACKGROUND OF THE AFORESAID FACTS TAKIN G INTO ACCOUNT THAT THERE WAS NO TRANSFER OF TITLE IN THE PROPERTY (SIM CARDS) BY THE ASSESSEE TO THE DISTRIBUTOR IT WAS HELD THAT T HE DISTRIBUTOR ACTED AS AN AGENT OF THE ASSESSEE AND THE RELATIONS HIP BETWEEN THE PARTIES WAS NOT ON A PRINCIPAL TO PRINCIPAL BAS IS. IT IS IN THESE CIRCUMSTANCES THAT THE KOLKATA BENCH OF THE TRIBUNA L HELD THE PROVISIONS OF SEC. 194H OF THE ACT TO BE APPLICABLE TO THE AMOUNT WHICH WAS REGARDED AS BEING IN THE NATURE OF COMMIS SION. 42. THE PRESENT CASE ON THE OTHER HAND IS NOT ONE OF SALE OF GOODS BUT ONE OF RENDERING OF SERVICES. THE ASSESS EE RENDERS DIAGNOSTICS SERVICES TO THE COLLECTIONS CENTERS AGA INST PAYMENT ON WHICH NECESSARY TAX IS DEDUCTED AT SOURCE U/S 19 4 J OF THE ACT. THERE IS NO ELEMENT OF AGENCY BETWEEN THE ASSESSEE AND THE COLLECTION CENTERS. BHARTI CELLULAR (SUPRA) THER EFORE HAS NO APPLICATION WHATSOEVER TO THE FACTS OF THE PRESENT CASE. SINCE FACTS AND CIRCUMSTANCES BEING IDENTICAL RES PECTFULLY FOLLOWING THE SAID DECISION WE HOLD THAT THE PROVI SIONS OF SEC. 194H HAVE NO APPLICATION FOR THE DISCOUNTS ALLOWED BY TH E ASSESSEE TO THE COLLECTION CENTRES. THUS WE SUSTAIN THE ORDER OF THE LD. CIT(A). 6. IN THE RESULT THE APPEALS FILED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH SEPTEMBER 2016. SD/- SD/- (RAJENDRA) (C.N. PRASAD ) ' / ACCOUNTANT MEMBER $ %' /JUDICIAL MEMBER MUMBAI; (' DATED 30 TH SEPTEMBER 2016 . % . ./ RJ SR. PS ITA NOS. 4579 & 4580/M/2014 17 !'#$#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ) ( ) / THE CIT(A)- 4. ) / CIT 5. *+ %%-. -.! / DR ITAT MUMBAI 6. /01 / GUARD FILE. / BY ORDER *% //TRUE COPY// / (DY./ASSTT. REGISTRAR) / ITAT MUMBAI