Commissioner Of Income Tax Tds-2 v. Unichem Laboratories Ltd

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.199 OF 2017WITHINCOME TAX APPEAL NO.220 OF 2017 Commissioner of Income Tax TDS-2 .... Appellant versus Unichem Laboratories Ltd. ….... ... Respondent Mr.Suresh Kumar, Advocate for Appellant.Mr.Suresh Kumar, Advocate for Appellant. Mr.Percy Pardiwalla, Senior Counsel a/w Mr.Nitesh Joshi a/wMr.Ashok Boghani i/b. Mr.Ashok Boghani & Co. Advocate for Respondent.Mr.Percy Pardiwalla, Senior Counsel a/w Mr.Nitesh Joshi a/wMr.Ashok Boghani i/b. Mr.Ashok Boghani & Co. Advocate for Respondent. CORAM : AKIL KURESHI & SARANG V. KOTWAL, JJ.: 15[th] APRIL, 2019. DATE P.C. : 1. These Appeals are filed by the revenue to challenge thejudgment of Income Tax Appellate Tribunal. The issues beingcommon, they are decided by this common order. We mayrecord facts from Income Tax Appeal No.199/17. Followingquestion is presented for our consideration; “Whether on the facts and in the circumstances of thecase and in law, the Hon'ble ITAT is correct in holdingthat the relationship between the assessee anddistributors is in the nature of Principal to Principal andnot that of Principal to Agent and held that the assesseecompany was not liable to deduct TDS u/s. 194H of theI.T. Act?” 2. The Respondent-Assessee is a Pharmaceutical companymanufacturing various drugs. The assessee filed the return forthe assessment year 2010-2011. The Assessing Officer raised anissue of non-deduction of tax source by the assessee whilemaking payment to its distributors. The assessee contended thatthe relationship between the assessee and the distributors wasnot one of principal and agent. The distributors were thecustomers of the assessee and therefore there was norequirement to deduct tax at source in terms of section 194H ofthe Income Tax Act, 1961 (for short 'the Act'). The AssessingOfficer however rejected the said contention and the issuereached to CIT (Appeals) who allowed the appeal. In furtherappeal by the revenue the tribunal confirmed the view of CIT(Appeals). 3 / 4 17-ITXA-199-17.odt 3. The tribunal in the impugned judgment has come tothe conclusion that the assessee company would sale the goodsto its distributors on principal to principal basis. Thus, theproperty in case would transfer to distributors with all its risksand rewards. The distributor was thus customer of the assessee-company. The tribunal also took into account the fact that incertain situations, the assessee accepted the expired drugs andreturned the sale price to the said distributor. However, in theopinion of the tribunal this would not change the character ofthe relationship between the assessee and its distributors. 4. Perusal of the judgment of tribunal would show thatthe tribunal has taken all material factors into consideration inorder to come to the conclusion that the transaction between theassessee and its distributor was one of the purchase and sale ofgoods simplicitor. There was no agency element. The tribunalhas also examined the point of time when the title in goodswould pass. 4 / 4 17-ITXA-199-17.odt 5. We are broadly in agreement with the view of the tribunal. No question of law arises. Income Tax Appeals aredismissed. (SARANG V. KOTWAL, J.) (AKIL KURESHI, J.)