The Tax Publishers2020 TaxPub(DT) 3947 (Mum-Trib) : (2020) 208 TTJ 0194

INCOME TAX ACT, 1961

Section 194H

Assessee engaged in providing Direct to Home Services (DTH) was not required to deduct tax under section 194H on discount allowed to distributors on sale of Set Top Box and hardware, recharge coupons vouchers because transaction between assessee company and distributor was on principal-to-principal basis and all the risk, loss, damages were transferred to distributor on delivery and also assessee filed sample copy of invoices for sale of Set Top Box (STB) and other recharge coupons to prove that it was a sale but not service to come within the ambit of definition of commission as defined under section 194H.

Tax deduction at source - Under section 194H - Discount on sale of Set-Top Boxes and Recharge Coupon Vouchers -

Assessee engaged in providing Direct to Home Services (DTH), extended discount on sale of Set-top Boxes and Recharge Coupon Vouchers, which was referred to as a primary discount. As a part of its sale promotion, assessee also provided additional discounts like a festival discount, quantity discount, etc. to distributors to encourage them to purchase and in turn, sell higher quantities of products. This additional discount was referred to as a secondary discount. AO treated primary discount and secondary discount as in the nature of commission liable to TDS under section 194H. Held: Transaction between assessee company and distributor was on principal to principal basis and all the risk, loss, damages were transferred to distributor on delivery. Further, distributors were free to sale at any price below maximum retail price. In this regard, assessee filed sample copy of invoices for sale of Set Top Box (STB) and other recharge coupons to prove that it was a sale but not service to come within the ambit of definition of commission as defined under section 194H. Therefore, assessee was not required to deduct TDS on discount allowed on sale of Set Top Box and hardware, as also on recharge coupons vouchers.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2009-10 & 2010-11


INCOME TAX ACT, 1961

Section 40(a)(ia)

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