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Tax Publishers TDS applicability on - a) ESOP's whether on provision being made for vesting of the ESOP entitlements b) Year end provisions made on estimated basis c) Dealer discounts recharacterizing as commission *Facts:* Assessee's was slapped with disallowance of expense for non-deduction of TDS on the above 3 points. Plea of the revenue was that - ESOP provisions made on vesting triggers TDS obligations - Assessee's counter was when the employees exercise the ESOP entitlements then the TDS is being made treating it as perquisites. Year end provisions were allegedly made based on vendor pending bills - it was assessee's plea that these were reversed on the 1st date of the subsequent year and then the TDS was effected on actual bookings. Revenue's allegations were that TDS ought to have been done on these as well. Dealer discounts for lubricant sales were nothing but commission and since no TDS was done the same were disallowable. Assessee's counter was the dealers were all on principal to principal basis and in B2B business it cannot be treated as commission and accordingly no TDS obligations arise on the same. CIT(A) upheld assessee's views on all the above 3 points. Revenue went in higher appeal to ITAT - Held in favour of the assessee/against the revenue - a) ESOP no TDS obligation arises on the vesting it is only on exercising the same is to be done as a perquisite as rightly following by the assessee. b) Dealer margin discounts is not commission - no TDS would apply on the same. Held against the assessee/favour of the revenue - c) Since year end provisions were made with vendor names behind them for supporting estimates - TDS was held to be applicable on these against the assessee. *Applied:* CIT v. Ahmedabad stamp vendors association (2012) 25 taxmann.com 201 (SC) : 2012 TaxPub(DT) 2662 (SC) Singapore Airlines limited (2022) 144 taxmann.com 221 (SC) : 2022 TaxPub(DT) 7477 (SC) Palam Gas Services (2017) 81 taxmann.com 43 (SC) : 2017 TaxPub(DT) 0914 (SC) *Case:* DCIT (OSD) v. Total Energies Marketing India (P) Ltd. 2023 TaxPub(DT) 5025 (Mum-Trib)

Tax Publishers

TDS applicability on -

a) ESOP's whether on provision being made for vesting of the ESOP entitlements

b) Year end provisions made on estimated basis

c) Dealer discounts recharacterizing as commission

Facts:

Assessee's was slapped with disallowance of expense for non-deduction of TDS on the above 3 points. Plea of the revenue was that -

ESOP provisions made on vesting triggers TDS obligations - Assessee's counter was when the employees exercise the ESOP entitlements then the TDS is being made treating it as perquisites.

Year end provisions were allegedly made based on vendor pending bills - it was assessee's plea that these were reversed on the 1st date of the subsequent year and then the TDS was effected on actual bookings. Revenue's allegations were that TDS ought to have been done on these as well.

Dealer discounts for lubricant sales were nothing but commission and since no TDS was done the same were disallowable. Assessee's counter was the dealers were all on principal to principal basis and in B2B business it cannot be treated as commission and accordingly no TDS obligations arise on the same.

CIT(A) upheld assessee's views on all the above 3 points. Revenue went in higher appeal to ITAT -

Held in favour of the assessee/against the revenue -

a) ESOP no TDS obligation arises on the vesting it is only on exercising the same is to be done as a perquisite as rightly following by the assessee.

b) Dealer margin discounts is not commission - no TDS would apply on the same.

Held against the assessee/favour of the revenue -

c) Since year end provisions were made with vendor names behind them for supporting estimates - TDS was held to be applicable on these against the assessee.

Applied:

CIT v. Ahmedabad stamp vendors association (2012) 25 taxmann.com 201 (SC) : 2012 TaxPub(DT) 2662 (SC)

Singapore Airlines limited (2022) 144 taxmann.com 221 (SC) : 2022 TaxPub(DT) 7477 (SC)

Palam Gas Services (2017) 81 taxmann.com 43 (SC) : 2017 TaxPub(DT) 0914 (SC)

Case: DCIT (OSD) v. Total Energies Marketing India (P) Ltd. 2023 TaxPub(DT) 5025 (Mum-Trib)