COMMISSIONER OF INCOME TAX Vs. SARA INTERNATIONAL LTD

JUDGEMENT

(1.) THE Revenue has filed this appeal under Section 260A of the Income Tax Act, 1961 (for short as "Act") against the impugned order dated 2nd December, 2005 passed by the Income Tax Appellate Tribunal, Delhi Bench "A" in ITA T.D.S. No. 212/Del/2003 for the assessment year 2001 -02 vide which the appeal filed by the assessed was allowed.

(2.) BRIEF facts of this case are that the assessed filed TDS return on Form No. 26 -C and the same was selected for scrutiny by the Assessing Officer. During the course of the proceedings, it was seen as per the details and copies of Ledger Account that the assessed had shown expenses of Rs. 87,27,705/ - as commission under the head "Salary Expenses". Out of these expenses, a sum of Rs. 62,60,705/ - was paid to M/s. PEC Ltd, Rs. 1,64,000/ - to M/s. Bhura Export Ltd. and Rs. 23,03,000/ - to M/s. Ayusa International. The assessed had submitted documents as far as M/s. Bhura Export Ltd. and M/s. Ayusa International were concerned but no agency agreement with M/s. PEC Ltd. was filed. The assessed explained that commission was paid to M/s. PEC Ltd. for export of wheat. The Assessing Officer asked the assessed to furnish evidence in support of its Explanation. The assessed filed copy of agreement dated 10th February, 2001. After examining the agreement, Assessing Officer came to the conclusion that the payment made by the assessed was covered within the meaning of fee for technical services and it was not a case of payment of commission and as such assessed was liable to deduct tax at source under Section 194J of the Act and since the assessed has failed to make the deduction, it was assessed in default within the meaning of Section 201(1) of the Act and also liable to pay interest.

(3.) IT has been contended by learned Counsel for the Revenue that the relevant clauses of the agreement clearly show that there was no relationship of Principal and agent between the assessed and M/s. PEC Ltd. Further, no commission was received by M/s. PEC Ltd. and the services rendered by it were professional and technical in nature.