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The Tax Publishers ITO v. Unichem Laboratories Ltd. [ITA Nos. 5991 & 5992/Mum/2014, 22-Apr-2016] : 2016 TaxPub(DT) 2199 (Mum-Trib) TDS on distributor/stockist discount and on directors sitting fees for period prior to 1-7-2012 *Facts:* Assessee in the business of manufacturing of bulk drugs and trading of formulations. They were selling their products through stockists, distributors and consignment agents. Since being drugs the products were subject to price controls. So assessee established MRP for products below which no sale is possible. To accommodate the stockists, distributors margins sale was accounted for on net basis after discounting the distributor, stockist margin. Assessing Officer gave it a reading that TDS is applicable on such margins of distributors, stockists under section 194-H as commission. Barring the above margin commission was applicable to agents on which TDS was done under section 194-H. On dealer discount schemes no TDS was done. There was clear bifurcation between commission agents, distributors, stockists. It was pleaded that goods were sold to stockists, distributors on principal-to-principal basis. Upon lapse of expiry dates, distributors, stockists returned the product back to the assessee. On payments to non-executive directors sitting fees no TDS was done. The assessee was held to be in default for non-deduction of TDS on both above points. Commissioner (Appeals) reversed the views of the assessing officer. On further appeal by the department to ITAT: Held by the ITAT in favour of the assessee that they were not in default on TDS. No TDS is applicable on product discounts. Amendment in section 194J(1) (ba) of the Act is w.e.f. 1-7-2012 and prospective thus assessee is not in default for non-deduction of TDS on directors sitting fees. The assessees own case on facts discussed in flash mailer 74 has also come up for hearing for assessment year 2010-11/2012-13 which was upheld in favour of the assessee. Refer - similar case and facts - ITO (TDS) v. Unichem Laboratories Ltd., I.T.A. No.4592 & 4593/Mum/2014/assessment year 2009-10 & 2010-11/Mum ITAT/Dated 29-1-2016

The Tax Publishers

ITO v. Unichem Laboratories Ltd. [ITA Nos. 5991 & 5992/Mum/2014, 22-Apr-2016] : 2016 TaxPub(DT) 2199 (Mum-Trib)

TDS on distributor/stockist discount and on directors sitting fees for period prior to 1-7-2012

Facts:

Assessee in the business of manufacturing of bulk drugs and trading of formulations. They were selling their products through stockists, distributors and consignment agents. Since being drugs the products were subject to price controls. So assessee established MRP for products below which no sale is possible. To accommodate the stockists, distributors margins sale was accounted for on net basis after discounting the distributor, stockist margin. Assessing Officer gave it a reading that TDS is applicable on such margins of distributors, stockists under section 194-H as commission. Barring the above margin commission was applicable to agents on which TDS was done under section 194-H. On dealer discount schemes no TDS was done. There was clear bifurcation between commission agents, distributors, stockists. It was pleaded that goods were sold to stockists, distributors on principal-to-principal basis. Upon lapse of expiry dates, distributors, stockists returned the product back to the assessee.

On payments to non-executive directors sitting fees no TDS was done.

The assessee was held to be in default for non-deduction of TDS on both above points. Commissioner (Appeals) reversed the views of the assessing officer. On further appeal by the department to ITAT:

Held by the ITAT in favour of the assessee that they were not in default on TDS.

No TDS is applicable on product discounts.

Amendment in section 194J(1) (ba) of the Act is w.e.f. 1-7-2012 and prospective thus assessee is not in default for non-deduction of TDS on directors sitting fees.

The assessees own case on facts discussed in flash mailer 74 has also come up for hearing for assessment year 2010-11/2012-13 which was upheld in favour of the assessee. Refer - similar case and facts - ITO (TDS) v. Unichem Laboratories Ltd., I.T.A. No.4592 & 4593/Mum/2014/assessment year 2009-10 & 2010-11/Mum ITAT/Dated 29-1-2016