The Supreme Court (SC) has decided to look into whether Mother Dairy
Food Processing was liable to deduct TDS on payments to its
agents/concessionaires, who sold its milk and other products from the
latter's booths.
The Delhi High Court, in a judgment in January 2012, held that Mother
Dairy was not liable to deduct TDS on such payments.
On a couple of appeals filed by the income-tax department, the SC also
issued notice to Mother Diary, which acts as selling agent and
undertakes activities in connection with procurement, processing,
storage and marketing, including retail sale of milk and other
products.
The I-T department argued that the HC had erred in holding that the
relationship between Mother Diary and its concessionaries was that of
principal-to-principal and not principal-to-agent, thus the payment
made by the dairy to its concessionaries for selling milk, milch
products and vegetables was not commission and therefore, the assessee
was not liable to deduct TDS u/s 194-H of the I-T Act.
According to the revenue authorities, the HC failed to appreciate that
the asseesee had a right to enter the milk booth and take charge
thereof any time without assigning any reason or without any
intimation to the concessionaires. Further, the concessionaires were
not paying any rent to the assessee, they added.
The department had treated the difference between the bill value and
the MRP fixed by Mother Dairy as commission paid to the agents and
accordingly treated the assessee as a defaulter and charged it to tax
and interest.
While the CIT (Appeals) had affirmed the assessing officer's order,
the sectoral tribunal concluded that that the relationship between the
assessee and the concessionaires was that of principal-to-principal
and the difference between the price at which the assessee sold the
milk and other products to the concessionaires and the MRP at which
the concessionaires were to sell them to consumers was not liable to
be treated as commission for tax purposes. The HC decision had also
favoured the assessee.
http://www.financialexpress.com/news/sc-to-look-into-mother-dairy-tds-disput
e/1077959/0-
Food Processing was liable to deduct TDS on payments to its
agents/concessionaires, who sold its milk and other products from the
latter's booths.
The Delhi High Court, in a judgment in January 2012, held that Mother
Dairy was not liable to deduct TDS on such payments.
On a couple of appeals filed by the income-tax department, the SC also
issued notice to Mother Diary, which acts as selling agent and
undertakes activities in connection with procurement, processing,
storage and marketing, including retail sale of milk and other
products.
The I-T department argued that the HC had erred in holding that the
relationship between Mother Diary and its concessionaries was that of
principal-to-principal and not principal-to-agent, thus the payment
made by the dairy to its concessionaries for selling milk, milch
products and vegetables was not commission and therefore, the assessee
was not liable to deduct TDS u/s 194-H of the I-T Act.
According to the revenue authorities, the HC failed to appreciate that
the asseesee had a right to enter the milk booth and take charge
thereof any time without assigning any reason or without any
intimation to the concessionaires. Further, the concessionaires were
not paying any rent to the assessee, they added.
The department had treated the difference between the bill value and
the MRP fixed by Mother Dairy as commission paid to the agents and
accordingly treated the assessee as a defaulter and charged it to tax
and interest.
While the CIT (Appeals) had affirmed the assessing officer's order,
the sectoral tribunal concluded that that the relationship between the
assessee and the concessionaires was that of principal-to-principal
and the difference between the price at which the assessee sold the
milk and other products to the concessionaires and the MRP at which
the concessionaires were to sell them to consumers was not liable to
be treated as commission for tax purposes. The HC decision had also
favoured the assessee.
http://www.financialexpress.com/news/sc-to-look-into-mother-dairy-tds-disput
e/1077959/0-
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