The Delhi bench of Income Tax Appellate Tribunal (ITAT) has held that it is not possible to deduct TDS on discount/commission offered to newspaper distributors.
The bench of Vikas Awasthy (Judicial Member) and S.Rifaur Rahman (Accountant Member) has observed that it is normal practice in this line of business to give discounts which includes commission to the distributors. What is relevant is that the assessee is actually realizing the amount at the time of sale and not the MRP, therefore, the assessee is not in a position to deduct the TDS on this peculiar type of transactions.
The appellant/assessee is running a proprietary firm engaged in the business of publication and distribution of newspaper in the name and style of ‘Freedom Fighter’ and ‘Engineers Institute Hindi Daily and Weekly Newspaper’. The assessee has submitted the return of income along with financial statements as per the Profit and Loss account submitted by the assessee along with monthly sale of newspaper and journal submitted before AO.
The AO has accepted the sales declared by the assessee in its Profit and Loss account and he observed that assessee has claimed salesman commission of Rs.1,08,66,681/-.
The assessee submitted that the regular practice in this line of business of newspaper, it is normal practice to sell the newspaper at MRP. However, they actually realize the net amount i.e. MRP minus discount/commission offered to the distributors.
The assessee has submitted month-wise sale of copies at the MRP and also submitted actual realization after discount offered to the distributors.
The AO has disallowed the sales commission observing that TDS provisions are attracted in this case and since the assessee has not followed the provisions, he disallowed the same.
The tribunal allowed the discount claimed by the assessee and directed the AO accordingly.
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Case Details
Case Title: Digvijay Singh Versus ITO
Case No.: ITA No.1844/DEL/2015
Date: 23.12.2024
Counsel For Appellant: None
Counsel For Respondent: Vivek Kumar Upadhyay
