The Gujarat High Court in the matter pertaining to revenue held that commission agents who are introducing potential consumers will be regarded as ‘Service’ therefore the claim of the commission is eligible for deduction under the law of the land.
In the case of Principal Commissioner of Income Tax vs. Vishal Engineering and Galvanisers, the respondent undertook a business wherein the clients were introduced by the commission agents to the assessee company. The contention of the appellant was that the practice of introducing clients must not be covered under the ambit of the word ‘service’. And as a consequence, the respondent undertaking can not claim the deduction in the tax paid.
Wherefore, the prominent issue which the Gujarat High Court addressed was whether introducing a client to the company is covered within the ambit of ‘service’ or not?
The division bench of Gujarat High Court comprised of Hon’ble Mr. Justice J.P. Pardiwala and Hon’ble Mr. Justice Bhargav D. Karia in the order dated January 13, 2020, dismissed the petition filed by the Principal Commissioner of Income Tax on the grounds that the respondent undertaking is engaged in the business where the clients are introduced by the commission agent to the respondent company i.e. the assessee, and this practice or work is done by the commission agents for the Vishal Engineering and Galvanisers (respondent) is covered under the ambit of ‘services’. Therefore, the respondent company is eligible for the deduction which can be claimed under the law of the land.
The significant subject matter of the case revolves around the concept of service as to which actions of the person will be counted under the ambit of Service and the introduction of clients by the commission agents to the company will be considered as service and thus the deduction can be claimed.
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