# THE DIRECTOR, PRASAR BHARATI v. COMMISSIONER OF INCOME TAX, THIRUVANTHAPURAM

- **Citation:** [2018] 3 S.C.R. 287
- **Court:** Supreme Court of India
- **Decided:** 2018-04-03
- **Case number:** Civil Appeal Nos. 3496-3497 of 2018
- **Bench:** R. K. Agrawal, Abhay Manohar Sapre
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/the-director-prasar-bharati-v-commissioner-of-income-tax-thiruvanthapuram-32736
- **Pages:** 37

## Headnote

Income Tax Act, 1961: s. 194H Explanation - Payment of
Commission or brokerage - Applicability of s. 194H - Appellantassessee entering into an agreement with several advertising
agencies - Payment made by appellant to the agencies, towards
commission in terms of agreement - Assessment order by the
Assessing Officer that provisions of s. 194H are applicable to the
payments made by the appellant to the Agencies and since the
appellant failed to deduct the "tax at source" from the amount paid
to the agencies, the appellant committed default thereby attracting
the rigor of s. 201(1) - Said order upheld by CIT(Appeals), however,
set aside by the tribunal - In appeal, the High Court upheld the
order of CIT(Appeals) and AO - On appeal, held: Provisions of s.
194H are applicable to the appellant because the payments made
by appellant pursuant to the agreement were in the nature of payment
made by way of "commission" - In view thereof, the appellant was
under statutory obligation to deduct the income tax at the time of
credit or/and payment to the advertisement agencies - Noncompliance of s.194H by the assessee attracts the rigor of s. 201
which provides for consequences of failure to deduct or pay the tax
as provided u/s. 194H - Thus, the provisions of s. 201 rightly invoked
against the appellant by the assessing authority.
Dismissing the appeals, the Court
HELD: 1.1 Section 194H of the Income Tax Act, 1961
provides that any person other than individual or HUF,
responsible for paying any income by way of "commission" (not
being insurance commission as specified in Section 194D) or
"brokerage" to any person shall at the time of credit of such
income to the account of payee or at the time of payment of such
income in cash or by cheque or draft or any other mode will deduct
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income tax thereon at the rate of 5%. The first proviso specifies
the limit. The second proviso makes the individual or HUF liable
to deduct the income tax, if they exceed the limit specified therein.
The third proviso exempts payment of commission or brokerage
when made to BSNL and MTNL to their public call office
franchisees. The Explanation appended to s.194H defines the
expression "commission or brokerage". It is an inclusive
definition and includes therein any payment received or
receivable, directly or indirectly by a person acting on behalf of
another person for services rendered (not being professional
services) or for any services in the course of buying or selling of
goods or in relation to any transaction relating to assets, valuable
article or thing not being securities. Clause (ii) defines
professional services; clause (iii) defines securities; and clause
(iv) provides a deeming fiction for treating any income so as to
attract the rigor of the Section for ensuring its compliance.[Paras
27-28] [295-F-G, H; 296-A-B]
1.2 The reasoning and the conclusion arrived at by the AO,
CIT (Appeals) and the High Court appears to be just and proper
and does not call for any interference. The High Court was right
in holding that the provisions of Section 194H are applicable to
the appellant because the payments made by the appellant
pursuant to the agreement in question were in the nature of
payment made by way of "commission" and, therefore, the
appellant was under statutory obligation to deduct the income
tax at the time of credit or/and payment to the payee. [Paras 29,
30] [296-C-D]
1.3 The conclusion of the High Court is clear from the
undisputed facts emerging from the record of the case because
the agreement itself has used the expression "commission" in
all relevant clauses; Second, there is no ambiguity in any clause
and no complaint was made to this effect by the appellant; Third,
the terms of the agreement indicate that both the parties intended
that the amount paid by the appellant to the agencies should be
paid by way of "commission" and it was for this reason, the parties
used the expression "comm

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[2018] 3 S.C.R. 287
287
THE DIRECTOR, PRASAR BHARATI
v.
COMMISSIONER OF INCOME TAX, THIRUVANTHAPURAM
(Civil Appeal Nos. 3496-3497 of 2018)
APRIL 03, 2018
[R. K. AGRAWAL AND ABHAY MANOHAR SAPRE, JJ.]
Income Tax Act, 1961: s. 194H Explanation - Payment of
Commission or brokerage - Applicability of s. 194H - Appellantassessee entering into an agreement with several advertising
agencies - Payment made by appellant to the agencies, towards
commission in terms of agreement - Assessment order by the
Assessing Officer that provisions of s. 194H are applicable to the
payments made by the appellant to the Agencies and since the
appellant failed to deduct the "tax at source" from the amount paid
to the agencies, the appellant committed default thereby attracting
the rigor of s. 201(1) - Said order upheld by CIT(Appeals), however,
set aside by the tribunal - In appeal, the High Court upheld the
order of CIT(Appeals) and AO - On appeal, held: Provisions of s.
194H are applicable to the appellant because the payments made
by appellant pursuant to the agreement were in the nature of payment
made by way of "commission" - In view thereof, the appellant was
under statutory obligation to deduct the income tax at the time of
credit or/and payment to the advertisement agencies - Noncompliance of s.194H by the assessee attracts the rigor of s. 201
which provides for consequences of failure to deduct or pay the tax
as provided u/s. 194H - Thus, the provisions of s. 201 rightly invoked
against the appellant by the assessing authority.
Dismissing the appeals, the Court
HELD: 1.1 Section 194H of the Income Tax Act, 1961
provides that any person other than individual or HUF,
responsible for paying any income by way of "commission" (not
being insurance commission as specified in Section 194D) or
"brokerage" to any person shall at the time of credit of such
income to the account of payee or at the time of payment of such
income in cash or by cheque or draft or any other mode will deduct
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income tax thereon at the rate of 5%. The first proviso specifies
the limit. The second proviso makes the individual or HUF liable
to deduct the income tax, if they exceed the limit specified therein.
The third proviso exempts payment of commission or brokerage
when made to BSNL and MTNL to their public call office
franchisees. The Explanation appended to s.194H defines the
expression "commission or brokerage". It is an inclusive
definition and includes therein any payment received or
receivable, directly or indirectly by a person acting on behalf of
another person for services rendered (not being professional
services) or for any services in the course of buying or selling of
goods or in relation to any transaction relating to assets, valuable
article or thing not being securities. Clause (ii) defines
professional services; clause (iii) defines securities; and clause
(iv) provides a deeming fiction for treating any income so as to
attract the rigor of the Section for ensuring its compliance.[Paras
27-28] [295-F-G, H; 296-A-B]
1.2 The reasoning and the conclusion arrived at by the AO,
CIT (Appeals) and the High Court appears to be just and proper
and does not call for any interference. The High Court was right
in holding that the provisions of Section 194H are applicable to
the appellant because the payments made by the appellant
pursuant to the agreement in question were in the nature of
payment made by way of "commission" and, therefore, the
appellant was under statutory obligation to deduct the income
tax at the time of credit or/and payment to the payee. [Paras 29,
30] [296-C-D]
1.3 The conclusion of the High Court is clear from the
undisputed facts emerging from the record of the case because
the agreement itself has used the expression "commission" in
all relevant clauses; Second, there is no ambiguity in any clause
and no complaint was made to this effect by the appellant; Third,
the terms of the agreement indicate that both the parties intended
that the amount paid by the appellant to the agencies should be
paid by way of "commission" and it was for this reason, the parties
used the expression "commission" in the agreement; Fourth,
keeping in view the tenure and the nature of transaction, it is
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clear that the appellant was paying 15% to the agencies by way of
"commission" but not under any other head; Fifth, the transaction
in question did not show that the relationship between the
appellant and the accredited agencies was principal to principal
rather it was principal and Agent; Sixth, it was also clear that
payment of 15% was being made by the appellant to the agencies
after collecting money from them and it was for securing more
advertisements for them and to earn more business from the
advertisement agencies; Seventh, there was a clause in the
agreement that the tax shall be deducted at source on payment
of trade discount; and lastly, the definition of expression
"commission" in the Explanation appended to Section 194H being
an inclusive definition giving wide meaning to the expression
"commission", the transaction in question did fall under the
definition of expression "commission" for the purpose of
attracting rigor of s. 194 H. [Para 31] [296-E-H; 297-A]
1.4 There is no difference in holding that the payment was
in the nature of "commission" paid by the appellant to the
advertisement agencies to secure more business for the
appellant. Once it is held that the provisions of Section 194H
apply to the transactions in question, it is obligatory upon the
appellant to have deducted the income tax while making payment
to the advertisement agencies. The non-compliance of Section
194H by the assessee attracts the rigor of Section 201 which
provides for consequences of failure to deduct or pay the tax as
provided under Section 194H of the Act. Therefore, the
provisions of Section 201 were rightly invoked against the
appellant by the assessing authority once having held that the
appellant failed to comply with the provisions of Section 194H of
the Act. [Paras 32, 33, 34] [297-B-D]
Jagran Prakashan Ltd v. Deputy Commissioner of
Income Tax (TDS) (2012) 345 ITR 288 - referred to.
Case Law Reference
(2012) 345 ITR 288
referred to
Para 34
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 34963497 of 2018.
THE DIRECTOR, PRASAR BHARATI v. COMMISSIONER OF
INCOME TAX, THIRUVANTHAPURAM
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From the Judgment and Order dated 20.11.2009 of the High Court
of Kerala at Ernakulam in Income Tax Appeal No. 27 of 2009 and Income
Tax Appeal No. 62 of 2009.
Rajeev Sharma, Adv. for the Appellant.
Rupesh Kumar, A. K. Srivastava, Ravi Shankar Kumar, Mrs. Anil
Katiyar, Advs. for the Respondent.
The Judgment of the Court was delivered by
ABHAY MANOHAR SAPRE, J. 1. Delay condoned.
2. Leave granted.
3. These appeals are directed against the final judgment and order
dated 20.11.2009 passed by the High Court of Kerala at Ernakulam in
Income Tax Appeal No.27 of 2009 and Income Tax Appeal No.62 of
2009 whereby the High Court allowed the appeals preferred by the
respondent herein and reversed the order dated 28.03.2007 passed by
the Income Tax Appellate Tribunal, Cochin Bench in Income Tax Appeal
Nos. 926 & 927/COCH/2005 for the Assessment Years 2002-2003 and
2003-2004 and restored the order dated 04.03.2005 passed by the
Commissioner of Income Tax(Appeals)-II, Thiruvananthapuram and the
order dated 22.09.2003 passed by the Assessing Officer.
4. In order to appreciate the issue involved in these appeals, it is
necessary to set out the facts hereinbelow.
5. The appellant is known as "Prasar Bharati Doordarshan
Kendra". It functions under the Ministry of Information and Broadcasting,
Government of India. The dispute in this case relates to the appellant's
Regional Branch at Trivandrum.
6. The appellant, in the course of their business activities, which
include the running of the TV channel called "Doordarshan", has been
regularly telecasting advertisements of several consumer companies.
7. With a view to have a better regulation of the practice of
advertising and to secure the best advertising services for the advertisers,
the appellant entered into an agreement with several advertising agencies
(Annexure-P-12).
8. In terms of the agreement, the advertising agency (hereinafter
referred to as "the Agency") was required to make an application to the
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appellant to get the "accredited status" for their Agency so as to enable
them to do business with the appellant of telecasting the advertisements
of several consumer products manufactured by several companies on
the appellant's Doordarshan TV Channel.
9. The agreement, inter alia, provided that the appellant would
pay 15% by way of commission to the Agency. The Agency was to
retain the commission/remuneration earned and not to part the same
either directly or indirectly with any other person, advertiser or
representative of any advertiser for whom it may be acting or has acted
as an advertising agency. The agreement also provided the manner, mode
and the time within which the payment was to be made by the Agency
to the appellant. The failure to make the payment was to result in losing
the accredited status by the Agency. The Agency was to give minimum
annual business of Rs.6 Lakhs to the appellant in a financial year failing
which their accredited status was liable to be withdrawn. The Agency
was to furnish a bank guarantee for a sum of Rs.3 Lakhs. There are
other clauses also in the agreement but they are not relevant for the
purpose of disposal of these appeals.
10. The appellant is an assessee under the Income Tax Act
(hereinafter referred to as "the Act"). In the assessment year 20022003(01.06.2001 to 31.03.2002) and 2003-2004 (01.04.2002 to
31.03.2003), the appellant paid a sum of Rs.2,56,75,165/- and
Rs.2,29,65,922/- to various accredited Agencies, with whom they had
entered into the aforementioned agreement for telecasting the
advertisements given by these Agencies relating to products manufactured
by several consumer companies. The amount was paid by the appellant
to the Agencies towards the commission in terms of the agreement.
11. The question arose before the Assessing Officer (AO) in the
assessment proceedings as to whether the provisions of Section 194H
of the Act, which came into force with effect from 01.06.2001, are
applicable to the payments in question made by the appellant to the
Agencies and, if so, whether the appellant deducted "tax at source" as
provided under Section 194H of the Act from the amount paid by the
appellant to the Agencies.
12. The AO made the assessment vide its order dated 22.09.2003.
Insofar as the aforementioned question was concerned, the AO was of
the view that the provisions of Section 194H of the Act are applicable to
the payments made by the appellant to the Agencies because the
THE DIRECTOR, PRASAR BHARATI v. COMNR. OF I. T.,
THIRUVANTHAPURAM [ABHAY MANOHAR SAPRE, J.]
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payments were made in the nature of "commission" as defined in
Explanation appended to Section 194H of the Act. The AO held that the
appellant, therefore, committed default thereby attracting the rigor of
Section 201(1) of the Act because they failed to deduct the "tax at source"
from the amount paid to various advertising agencies during the
Assessment Years in question as provided under Section 194A of the
Act.
13. On quantification, the AO found that during the Assessment
Year 2002-2003, the appellant had paid a sum of Rs.2,56,75,165/- towards
the commission to the Agencies and on this sum, they were required to
deduct tax amount to Rs.16,34,283/- and a sum of Rs.3,80,611/- towards
interest for delayed payment under Section 201(1-A) of the Act and
during the Assessment Year 2003-2004, the appellant had paid a sum of
Rs.2,29,65,922/- towards the commission to the Agencies and on this
sum, they were required to deduct tax amounting to Rs.11,15,944/- and
a sum of Rs.1,54,050/- towards interest for delayed payment under Section
201(1-A) of the Act.
14. The appellant felt aggrieved and filed appeals before the
Commissioner of Income Tax (Appeals)-II, Thiruvanathapuram. By
order dated 04.03.2005, the Commissioner concurred with the reasoning
and conclusion arrived at by AO and accordingly dismissed the appeals.
15. The appellant felt aggrieved and filed appeals before the
Tribunal. By order dated 28.03.2007, the Tribunal following its earlier
order allowed the appeals and set aside the orders passed by AO and
CIT (Appeals).
16. The Revenue (Income Tax Department), felt aggrieved by
the order passed by the Tribunal, filed appeals under Section 260-A of
the Act in the High Court. By impugned judgment, the High Court allowed
the appeals and while setting aside the Tribunal's order restored the
order of CIT (Appeals) and AO.
17. The High Court was of the opinion that the provisions of
Section 194H are applicable to the payments made by the appellant to
the Agencies during the period in question because the payments made
were in the nature of "commission" paid to the Agencies as defined in
Explanation appended to Section 194H of the Act and since the appellant
failed to deduct the "tax at source" while making these payments to the
Agencies in terms of the agreement in question, they committed default
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of non-compliance of Section 194H resulting in attracting the provisions
of Section 201 of the Act.
18. The appellant (assessee) felt aggrieved and filed these appeals
by way of special leave in this Court.
19. Heard Mr. Rajeev Sharma, learned counsel for the appellant
and Mr. Rupesh Kumar, learned counsel for the respondent.
20. Submissions of learned counsel for the appellant (assesse)
were two-fold. In the first place, he argued that the payments made by
the appellant to the accredited agencies during the assessment years in
question were not in the nature of commission. According to learned
counsel, the relationship between the appellant and the accredited
Agencies was not that of principal and the agent but it was in the nature
of principal-to-principal. In other words, the submission was that the
accredited agencies were not working as agent of the appellant and nor
the appellant was paying them any amount by way of commission.
21. Referring to the terms of the agreement, learned counsel tried
to point out that the Agencies, in terms of the agreement, purchased the
air time from the appellant and then sold it in the market for advertisement
to their customer after retaining 15% commission given to them by the
appellant. It was, therefore, his submission that such transaction cannot
be regarded as being between the principal and agent and nor the
payment can be regarded as having been made by way of commission
so as to attract the rigor of Section 194H and Section 201 of the Act.
22. Learned counsel also submitted that by mistake some other
format of the agreement was placed by the appellant before the High
Court and, therefore, the appellant suffered adverse order in question
(see averments made in Paras 4 and 5 of the application seeking
permission to file additional documents at page 134/135). Learned counsel
then took us to the relevant provisions of the proper agreement filed in
this Court as Annexure P-12 and contended that having regard to the
nature of the agreement and its terms, the submission urged deserves
acceptance.
23. In reply, learned counsel for the respondent (Revenue)
supported the impugned judgment and contended that the order passed
by the AO, CIT (Appeals) and the impugned judgment deserve to be
upheld as all the three orders are based on proper reasoning calling no
interference.
THE DIRECTOR, PRASAR BHARATI v. COMNR. OF I. T.,
THIRUVANTHAPURAM [ABHAY MANOHAR SAPRE, J.]
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24. Having heard the learned counsel for the parties and on perusal
of the record of the case, we find no merit in these appeals.
25. Section 194H, which is relevant for the disposal of these appeals
reads as under:
"194H. Commission or brokerage-Any person not being
an individual or a Hindu undivided family, who is responsible
for paying, on or after the 1st day of June, 2001, to a resident,
any income by way of commission (not being insurance
commission referred to in section 194D) or brokerage,
shall, at the time of credit of such income to the account of
the payee or at the time of payment of such income in cash
or by the issue of a cheque or draft or by any other mode,
whichever is earlier, deduct income-tax thereon at the rate
of five per cent.
 Provided that no deduction shall be made under this
section in a case where the amount of such income or, as
the case may be, the aggregate of the amounts of such
income credited or paid or likely to be credited or paid
during the financial year to the account of, or to, the payee,
does not exceed fifteen thousand rupees.
 Provided further that an individual or a Hindu undivided
family, whose total sales, gross receipts or turnover from
the business or profession carried on by him exceed the
monetary limits specified under clause (a) or clause (b) of
section 44AB during the financial year immediately
preceding the financial year in which such commission or
brokerage is credited or paid, shall be liable to deduct
income-tax under this section.
 Provided also that no deduction shall be made under
this section on any commission or brokerage payable by
Bharat Sanchar Nigam Limited or Mahanagar Telephone
Nigam Limited to their public all office franchisees.
Explanation- For the purposes of this section,-
(i) "commission or brokerage" includes any payment
received or receivable, directly or indirectly, by a person
acting on behalf of another person for services rendered
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(not being professional services) or for any services in the
course of buying or selling of goods or in relation to any
transaction relating to any asset, valuable article or thing,
not being securities;
(ii) the expression "professional services" means services
rendered by a person in the course of carrying on a legal,
medical, engineering or architectural profession or the
profession of accountancy or technical consultancy or
interior decoration or such other profession as is notified
by the Board for the purposes of section 44AA;
(iii) the expression "securities" shall have the meaning
assigned to it in clause (h) of section 2 of the Securities
Contracts (Regulation) Act, 1956 (42 of 1956);
(iv) where any income is credited to any account, whether
called "suspense account' or by any other name, in the
books of account of the person liable to pay such income,
such crediting shall be deemed to be credit of such income
to the account of the payee and the provisions of this section
shall apply accordingly."
26. The aforementioned Section was inserted in the Act with effect
from 01.06.2001 by replacing the earlier Section 194H. This Section
deals with the payment of "commission or brokerage".
27. It provides that any person other than individual or HUF,
responsible for paying any income by way of "commission" (not being
insurance commission as specified in Section 194D) or "brokerage" to
any person shall at the time of credit of such income to the account of
payee or at the time of payment of such income in cash or by cheque or
draft or any other mode will deduct income tax thereon at the rate of
five percent. The first proviso specifies the limit. The second proviso
makes the individual or HUF liable to deduct the income tax, if they
exceed the limit specified therein. The third proviso exempts payment of
commission or brokerage when made to BSNL and MTNL to their public
call office franchisees.
28. The Explanation appended to Section 194H defines the
expression "commission or brokerage". It is an inclusive definition and
includes therein any payment received or receivable, directly or indirectly
by a person acting on behalf of another person for services rendered
THE DIRECTOR, PRASAR BHARATI v. COMNR. OF I. T.,
THIRUVANTHAPURAM [ABHAY MANOHAR SAPRE, J.]
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(not being professional services) or for any services in the course of
buying or selling of goods or in relation to any transaction relating to
assets, valuable article or thing not being securities. Clause (ii) defines
professional services; clause (iii) defines securities; and clause (iv)
provides a deeming fiction for treating any income so as to attract the
rigor of the Section for ensuring its compliance.
29. Keeping in mind the requirements of Section 194H when we
examine the transaction in question, we are of the considered view that
the reasoning and the conclusion arrived at by the AO, CIT (Appeals)
and the High Court appears to be just and proper and does not call for
any interference.
30. In other words, in our considered view, the High Court was
right in holding that the provisions of Section 194H are applicable to the
appellant because the payments made by the appellant pursuant to the
agreement in question were in the nature of payment made by way of
"commission" and, therefore, the appellant was under statutory obligation
to deduct the income tax at the time of credit or/and payment to the
payee.
31. The aforementioned conclusion of the High Court is clear
from the undisputed facts emerging from the record of the case because
we notice that the agreement itself has used the expression "commission"
in all relevant clauses; Second, there is no ambiguity in any clause and
no complaint was made to this effect by the appellant; Third, the terms
of the agreement indicate that both the parties intended that the amount
paid by the appellant to the agencies should be paid by way of
"commission" and it was for this reason, the parties used the expression
"commission" in the agreement; Fourth, keeping in view the tenure and
the nature of transaction, it is clear that the appellant was paying 15% to
the agencies by way of "commission" but not under any other head;
Fifth, the transaction in question did not show that the relationship
between the appellant and the accredited agencies was principal to
principal rather it was principal and Agent; Sixth, it was also clear that
payment of 15% was being made by the appellant to the agencies after
collecting money from them and it was for securing more advertisements
for them and to earn more business from the advertisement agencies;
Seventh, there was a clause in the agreement that the tax shall be deducted
at source on payment of trade discount; and lastly, the definition of
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expression "commission" in the Explanation appended to Section 194H
being an inclusive definition giving wide meaning to the expression
"commission", the transaction in question did fall under the definition of
expression "commission" for the purpose of attracting rigor of Section
194H of the Act.
32. For all these reasons, we find no difficulty in holding that the
payment in question was in the nature of "commission" paid by the
appellant to the advertisement agencies to secure more business for the
appellant.
33. Once it is held that the provisions of Section 194H apply to the
transactions in question, it is obligatory upon the appellant to have
deducted the income tax while making payment to the advertisement
agencies. The non-compliance of Section 194H by the assessee attracts
the rigor of Section 201 which provides for consequences of failure to
deduct or pay the tax as provided under Section 194H of the Act.
34. In our view, the provisions of Section 201 were, therefore,
rightly invoked in this case against the appellant by the assessing authority
once having held that the appellant failed to comply with the provisions
of Section 194H of the Act.
35. Learned counsel for the appellant (assessee) placed reliance
on the decision of the Allahabad High Court in Jagran Prakashan Ltd
vs. Deputy Commissioner of Income Tax(TDS), (2012)345 ITR
288 in support of his submission.
36. On perusal of the said judgment, we find that the law laid
down by the Allahabad High Court is not applicable to the facts of the
case at hand and the learned Judges rightly distinguished the case at
hand with the facts involved in the Allahabad case. The learned Judges
of the Allahabad High Court in Paras 61 and 62 of the judgment dealt
with the impugned judgment with which we are concerned in these
appeals and distinguished it in the following words:
"61. Now we come to the judgment of the Kerala High Court
in the case of CIT vs. Director, Prasar Bharti reported in
(2010) 325 ITR 205(ker.) on which much reliance has been
placed by the assessing authority. The Prasar Bharati is
fully owned Government of India undertaking engaged in
telecast of news, various sports, entertainments, cinemas
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THIRUVANTHAPURAM [ABHAY MANOHAR SAPRE, J.]
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and other programmes. The advertisements were
canvassed through agents under the agreement with them.
The advertising agencies and the Director, Prasar Bharati
were principal and agent as per the agreement and the
Doordarshan provided 15% discount on the basis of which
it was contended that no deduction at source was required.
The Tribunal held that there was no liability for deduction
of tax at source under Section 194H which judgment was
reversed by the Kerala High Court. From the facts of the
aforesaid case, it is clear that Doordarshan had appointed
agents i.e. advertising agencies and there was agreement
entered between them. In the aforesaid circumstances, 15%
advertisement charges collected and remitted was held to
be in the form of commission payable to the agent by
Doordarshan. There was explicit agreement between the
agency and the Doordarshan where both understood that
payment made to the agency was liable to tax deduction. It
is useful to quote the following observations of the
judgment of Kerala High Court:-
................................................................................................................................................
From the above, it is very clear that parties have understood
their relationship as Principal and Agent and what is paid
to the agent by Doordarshan is 15% of advertisement
charges collected and remitted to it by the agent which is
in the form of commission payable to the Agent by
Doordarshan. Counsel for the respondent referred to one
of the agreements where the commission is referred to as
standard discount and contended that the arrangement
between respondent and advertising agency is not agency
but is a Principal to Principal arrangement of sharing
advertisement charges. We are unable to accept this
contention because advertisement contract entered into
between the customer and the agency is for telecasting
advertisement in Doordarshan channels. The agent
canvasses advertisement on behalf of Doordarshan under
agreement between them and the advertisement charges
recovered from the customers are also in accordance with
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tariff prescribed by Doordarshan which is incorporated in
the agreement. Further it is specifically stated in the
agreement that advertisement material should also conform
to the discipline introduced by Doordarshan which is
nothing but a Government agency which cannot telecast all
what is desired to be telecast by advertising agencies. In
fact, Doordarshan is bound by advertisement contract
canvassed by advertising agencies and it is their duty under
the agreement between them and the advertising agencies
to telecast advertisement material in terms of the contract
which the agency signs with the customer. In our view, the
transaction is a pure agency arrangement between the
respondent and the advertising agencies because one acts
for the other and the act of the agent binds the respondent
in their capacity as Principal of the agent. It is pertinent to
note that commission or brokerage defined under
explanation (i) to Section 194H has a wide meaning and it
covers any payment received or receivable directly or
indirectly by a person acting on behalf of another person
for services rendered. In this case, no one can doubt that
15% commission paid to advertising agencies by the
Doordarshan is for canvassing advertisements on behalf of
the respondent. So much so, the payment of 15%, by
whatever name called, whether discount or commission,
falls within the definition of "commission" as defined under
Explanation (i) to Section 194H of the Act.
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It is very clear from the above provision that the advertising
agency clearly understood the agreement as an agency
arrangement and the commission payable by the respondent
to such agency is subject to tax deduction at source under
the Income Tax Act and so much so the provision in the
agreement was for the agent after retaining 15% to give
cheque or demand draft for TDS amount which was
originally 5% until it was enhanced to 10% by Finance Act
2007 with effect from 1.6.2007.
62. In the aforesaid case, the relationship of principal and
agent was fully established since the advertising agency
THE DIRECTOR, PRASAR BHARATI v. COMNR. OF I. T.,
THIRUVANTHAPURAM [ABHAY MANOHAR SAPRE, J.]
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SUPREME COURT REPORTS
[2018] 3 S.C.R.
was appointed as agent by written agreement and there was
specific clause that tax shall be deductible at source on
payment of trade discount. In the said circumstances, the
Kerala High Court held that Section 194H of the Income
Tax Act was applicable. In the present case, there is no
agreement between the petitioner and the advertising
agency and the advertising agency has never been appointed
as agent of the petitioner. Thus the above case of the Kerala
High Court is clearly inapplicable and the reliance on the
said judgment for fastening the liability of tax and interest
on the petitioner is wholly untenable. The judgment of the
Kerala High Court thus does not help the respondents in
the present case."
37. In our opinion, the Allahabad High Court very rightly noticed
the distinction between the facts in the case of Jagaran Prakashan
Ltd. (supra) and the case with which we are concerned in these appeals
and held that it depends upon the facts of each case to decide as to what
is the nature of payment made by the party concerned. Their Lordships
rightly noticed that the case before them (Jagaran Prakashan Ltd.)
did not have any agreement like the one in this case wherein in terms of
the agreement, it is unmistakably proved that the payment was being
made by the appellant (assessee) to the agencies by way of
"commission". In our view, therefore, the decision of the Allahabad High
Court is of no help to the case of the appellant for taking a different
view.
38. In the light of the foregoing discussion, we concur with the
reasoning and the conclusion arrived at by the High Court and find no
merit in these appeals. The appeals thus fail and are accordingly dismissed.
Nidhi Jain
 Appeals dismissed.
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SURESH KUMAR KOHLI
v.
RAKESH JAIN & ANR.
(Civil Appeal No. 3996 of 2018)
APRIL 19, 2018
[R. K. AGRAWAL AND ABHAY MANOHAR SAPRE, JJ]
Rent Control and Eviction: Tenancy - Joint tenancy or
tenancy-in-common - Appellant let out a premises to father and his
son-respondent no. 2 who started a family business - Respondent
no. 1-second son, inducted as partner in the family business -
Issuance of notice to respondent no. 2 and his father terminating
the tenancy - Subsequently, death of the father - Eviction petition
by appellant - Decreed by the Rent Controller - Said order upheld
by the High Court - Meanwhile, objections filed by respondent
no. 1 in the execution petition u/s. 47 O. XXI, r 26(1) claiming that
he was a necessary party - Additional Rent Controller rejected the
objection petition, however, the High Court allowed the petition -
On appeal, held: When original tenant dies, the legal heirs inherit
the tenancy as joint tenants and occupation of one of the tenant is
occupation of all the joint tenants - Landlord need not implead all
legal heirs of the deceased tenant, whether they are occupying the
property or not - It is sufficient for the landlord to implead either of
those persons who are occupying the property, as party - Eviction
petition against one of the joint tenant is sufficient against all the
joint tenants and all joint tenants are bound by the order of the
Rent Controller as joint tenancy is one tenancy and is not a tenancy
split into different legal heirs - Furthermore, filing of objections in
the execution petition at this belated stage, seems to be a deliberate
attempt to nullify the decree passed in favour of the appellant -
Thus, the order passed by the High Court set aside and that of the
Additional Rent Controller restored - Code of Civil Procedure, 1908
- s. 47 O. XXI, r 26(1).
Tenancy - Joint tenancy or tenancy in common - Concept
of - Difference between - Explained.
[2018] 3 S.C.R. 301
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Allowing the appeal, the Court
HELD: 1.1 The concepts of joint tenancy and tenancy-incommon are different and distinct in form and substance. The
incidents regarding the co-tenancy and joint tenancy are different:
joint tenants have unity of title, unity of commencement of title,
unity of interest, unity of equal shares in the joint estate, unity of
possession and right of survivorship. Tenancy-in-common is a
different concept. There is unity of possession but no unity of
title, i.e. the interests are differently held and each co-tenant has
different shares over the estate. Thus, the tenancy rights, being
proprietary rights, by applying the principle of inheritance, the
shares of heirs are different and ownership of leasehold rights
would be confined to the respective shares of each heir and none
will have title to the entire leasehold property. Therefore, the
estate shall be divided among the co-tenants and each tenant in
common has an estate in the whole of single tenancy.
Consequently, the privity exists between the landlord and the
tenant in common in respect of such estate.[Para 10, 11] [307-EH]
1.2 From a perusal of lease deed , it is found that the suit
premises was let out jointly to the father and his son. Thus, both
of them were joint tenants and upon the death of the father,
respondent No. 1 inherited the tenancy as joint tenant only. In
the light of H.C. Pandey case, the situation is very clear that when
original tenant dies, the legal heirs inherit the tenancy as joint
tenants and occupation of one of the tenant is occupation of all
the joint tenants. It is not necessary for landlord to implead all
legal heirs of the deceased tenant, whether they are occupying
the property or not. It is sufficient for the landlord to implead
either of those persons who are occupying the property, as party.
There may be a case where landlord is not aware of all the legal
heirs of deceased tenant and impleading only those heirs who
are in occupation of the property is sufficient for the purpose of
filing of eviction petition. An eviction petition against one of the
joint tenant is sufficient against all the joint tenants and all joint
tenants are bound by the order of the Rent Controller as joint
tenancy is one tenancy and is not a tenancy split into different
legal heirs. Thus, the plea of the tenants on this count must fail.
[Para 19, 20] [322-F, 323-B-C]
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1.3 Even otherwise, the intervention at this belated stage
of execution proceedings, in the fact and circumstances of the
case, seems to be a deliberate attempt to nullify the decree passed
in favour of the appellant as when respondent no.1 filed objections
under Section 47 Order XXI, r 26(1) of the Code, he claimed to
be in possession of the suit premises, however, he failed to
produce any evidence except two rent receipts that too when the
respondent no. 1 in his objection petition filed in the execution
proceedings of the eviction decree has himself admitted that the
there exists a dispute between him and Respondent No. 2 and
they had parted their ways. [Para 21] [323-D-E]
1.4 The judgment and order passed by the Single Judge of
the High Court is set aside. The judgment and order passed by
the Additional Rent Controller is restored. [Para 22] [323-F]
H.C. Pandey v. G.C. Paul (1989) 3 SCC 77 - relied on.
Mohd. Usman v. (Mst.) Surayya Begum (1990) 2 RCR
(Rent) 408; Mst. Surayya Begum v. Mohd. Usman and
Others (1991) 3 SCC 114; Harish Tandon v. Addl.
District Magistrate, Allahabad, U.P. and Others (1995)
1 SCC 537; Boddu Venkatakrishna Rao and Others v.
Smt. Boddu Satyavathi and Others AIR 1968 SC 751;
Gian Devi Anand v. Jeevan Kumar and Others (1985)
2 SCC 683; Uttam v. Saubhag Singh and Others (2016)
4 SCC 68 - referred to.
Case Law Reference
(1989) 3 SCC 77
relied on.
Para 7
(1990) 2 RCR (Rent) 408
referred to
Para 7
(1991) 3 SCC 114
referred to
Para 7
(1995) 1 SCC 537
referred to
Para 7
AIR 1968 SC 751
referred to
Para 9
(1985) 2 SCC 683
referred to
Para 9
(2016) 4 SCC 68
referred to
Para 9
SURESH KUMAR KOHLI v. RAKESH JAIN & ANR.
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CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3996
of 2018.
From the Judgment and Order dated 05.12.2013 of the High Court
of Delhi at New Delhi in CM(M) No. 880 of 2012.
Dhruv Mehta, Sr. Adv., Rajiv Raheja, Adv. for the Appellant.
Huzefa Ahmadi, Sr. Adv., Ms. Kaveeta Wadia, Shashank Tripathi,
Rahul Gupta, Advs. for the Respondents.
The Judgment of the Court was delivered by
R. K. AGRAWAL, J. 1. Leave granted.
2. The present appeal is directed against the final judgment and
order dated 05.12.2013 passed by the High Court of Delhi in CM (M)
No. 880 of 2012 whereby learned single Judge of the High Court allowed
the petition filed by the Respondent No. 1 herein against the judgment
and order dated 08.06.2012 passed by the Additional Rent Controller in
Ex Petition No. 51 of 2012 wherein the objections filed by the Respondent
No. 1 herein under Section 47 read with Order XXI Rule 26(1) of the
Code of Civil Procedure, 1908 (in short 'the Code') were rejected.
3. Brief facts:-
(a) Suresh Kumar Kohli-the appellant herein is the owner of shop
bearing No. 3, Building No. 2656, Ajmal Khan Road, Karol Bagh, New
Delhi (in short 'the suit premises'). On 15.11.1975, his father, along with
one another, let out the suit premises on a monthly rental of Rs. 450/- to
Late Shri Ishwar Chand Jain, father of Respondent No. 1 herein, and
Ramesh Chand Jain-Respondent No. 2 herein. The tenants started a
family business under the name and style of M/s Rakesh Wool Store.
Shri Rakesh Jain - Respondent No. 1 herein was inducted as a partner
in the family business on 02.04.1979.
(b) On 25.04.2009, the owner sent a legal notice to Respondent
No. 2 herein and his father Late Shri Ishwar Chand Jain terminating the
tenancy with effect from 31.05.2009. Shri Ishwar Chand Jain died on
08.03.2010.
(c) Since the tenant failed to vacate the suit premises, the appellant
herein filed Eviction Petition bearing No. E-304/2010 under Section
14(1)(e) read with Section 25-B of the Delhi Rent (Control) Act, 1958
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(hereinafter referred to as 'the Act') on the ground of bona fide need.
The Additional Rent Controller, New Delhi, vide judgment and order
dated 30.11.2011, decreed the eviction petition in favour of the appellant
herein.
(d) Being aggrieved by the decree in favour of the appellant herein,
Respondent No.