1. Discount on bulk purchase of stamps – Whether transaction is sale – Applicability of Section 194H of Income-tax Act. (Para 1 , 2 )
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2012 Supreme(SC) 945
SUPREME COURT OF INDIA
S.H. KAPADIA, CJI., MADAN B. LOKUR J.
Commissioner of Income Tax and Others – Appellants
Vs.
Ahmedabad Stamp Vendors Association – Respondent
Civil Appeal No. 10270 of 2003
Decided On : 6.9.2012
Advocate Appeared:
For Appellant:R.P. Bhatt, Senior Advocate, Rupesh Kumar, Ms. N. Annapoorani, Ms. Anil Katiyar and B.V. Balram Das Advocates.
For Respondent:Huzefa Ahmadi, Ejaz Maqbool and Mrigank Prabhakar, Advocates.
For Appellant:R.P. Bhatt, Senior Advocate, Rupesh Kumar, Ms. N. Annapoorani, Ms. Anil Katiyar and B.V. Balram Das Advocates.
For Respondent:Huzefa Ahmadi, Ejaz Maqbool and Mrigank Prabhakar, Advocates.
Discounts granted to vendors for bulk purchases are considered cash discounts in a sale transaction and are not taxable as commission under Section 194H of the Income-tax Act, 1961.
Headnote:(A) Income-tax Act, 1961 - Section 194H - Discount given to stamp vendors for bulk purchase - Nature of discount - Discount of 0.50 per cent. to 4 per cent. granted for purchasing stamps in bulk is in the nature of a cash discount - Transaction constitutes a sale - Section 194H has no application. (Paras 2, 3)
Facts of the case:
Licensed stamp vendors were provided a discount ranging from 0.50 per cent. to 4 per cent. for purchasing stamps in bulk quantity.
Findings of Court:
The court concurred with the impugned judgment that the transaction is a sale and the discount provided to the vendors is a cash discount.
Issues: Whether the discount provided to licensed stamp vendors for bulk purchases attracts the provisions of Section 194H of the Income-tax Act, 1961.
Ratio Decidendi: A discount granted for the purchase of items in bulk quantity is characterized as a cash discount associated with a sale transaction, and consequently, such a transaction does not fall within the purview of Section 194H of the Income-tax Act, 1961.
Result: Civil appeal dismissed.
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Table of Contents
2. Discount for bulk purchase is cash discount, not commission. (Para 2 )
3. Discount for bulk purchase is cash discount, making transaction a sale; Section 194H inapplicable. (Para 2 , 3 )
4. Department's appeal dismissed with no order as to costs. (Para 3 )
5. Is the discount given to stamp vendors for bulk purchase subject to TDS under Section 194H?
No, because the discount is cash discount for sale, not commission; transaction is sale, not agency. (Para 2 , 3 )
ORDER :
1. Heard learned counsel on both sides The Respondent in this civil appeal is the Ahmedabad Stamp Vendors Association and the members of the said association are licensed stamp vendors.
2. We are satisfied that 0.50 per cent. to 4 per cent. discount given to the stamp vendors is for purchasing the stamps in bulk quantity and the said discount is in the nature of cash discount.
3. In the circumstances, we concur with the impugned judgment that the impugned transaction is a sale. Consequently, Section 194H of the Income-tax Act, 1961, has no application. The civil appeal filed by the Department is dismissed with no order as to costs.
