M/s Kan tech Solutions(P) Ltd, Kolkata V. ITO, Ward-12(1), Kolkata, Kolkata

ITA 1004/KOL/2012

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0540 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2015
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 27-06-2012
• Court: TRIBUNAL
• Department Lawyers: PIJUSH MUKHERJEE
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH A , KOLKATA [BEFORE SHRI P.K.BANSAL, AM & SHRI MAHAVIR SINGH, JM ] ITA NO . 1004/KOL/2012 ASSESSMENT YEAR : 2009 - 10 ( A PPELLANT ) (RESPONDENT) M/S.KAN TECH SOL UTIONS PVT.LTD. - VERSUS - I.T.O., WARD - 12(1) KOLKATA KOLKATA (PAN: AADCK 2180 P) FOR THE APPELLANT: SHRI SOUMITRA CHOUDHURY,ADVOCATE FOR THE RESPONDENT: SHRI PIJUSH MUKHERJEE, SR.DR DATE OF HEARING : 08.07. 2015. DATE OF PRONOUNCEMENT : 08.07.2015. ORDER PER SHRI MAHAVIR SINGH, JM THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST ORDER OF THE CIT(A) - XII, KOLKATA KOLKATA IN APPEAL NO . 362 / XII/12(1)/2011 - 12 DATED 23.05.2012. . ASSESSMENT WAS FRAMED BY I.T.O., WARD - 12(1) , KOLKATA U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REF ERRED TO AS THE ACT ) FOR A.YR . 2009 - 10 VIDE ITS ORDER DATED 26.12.2011. 2. THE FIRST ISSUE IN THIS APPEAL OF ASSESSEE IS AGAINST ORDER OF CIT(A) IN CONFIRMING THE DISALLOWANCE OF DE DUCTION OF COMMISSION PAYMENT FOR NON DEDUCTION OF TDS U/S 194H OF THE ACT THEREBY INVOKING THE PROVISION OF SECTION 40(A)(IA). FOR THIS THE ASESSEE HAS RAISED THE FOLLOWING ADDITIONAL GROUND : - 1. FOR THAT ON THE FACTS OF THE CASE, THE LD. CIT(A) WAS WRO NG IN CONFIRMING THE DISALLOWANCE U/S 40(A)(IA) OF THE I.T.ACT AMOUNTING TO RS.14,21,729/ - WHEREIN THE APPELLANT COMPANY HAS PAID THE T.D.S. BEFORE FILING OF THE RETURN U/S 139(1), THEREFORE, THE DISALLOWANCE AMOUNTING TO RS.14,21,729/ - SHOULD BE DIRECTED TO BE DELETED. 3. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE DURING THE RELEVANT FINANCIAL YEAR 2008 - 09 RELEVANT TO THIS ASSESSMENT YEAR 2009 - 10 PAID COMMISSION TO VARIOUS PARTIES AND ITA NO . 1004/KOL/2012 M/S.KAN TECH SOLUTINS PVT.LTD. A.YR. 2009 - 10 2 DEDUCTED TDS BUT PAID TDS AFTER 31 ST MARCH, 2009 BUT BEFORE THE DUE DAT E OF FILING OF RETURN U/S 139(1) OF THE ACT. AS REGARDS TO THE DISALLOWANCE OF COMMISSION OF RS.14,21,729/ - THE ASSESSEE HAS DEDUCTED TDS AND DEPOSITED TO THE GOVERNMENT ACCOUNT ON 14.07.2009 AS RECORDED BY THE AO AT PAGE 4 WHICH READS AS UNDER : - FURTHER MORE, AS DISCUSSED ABOVE, WHILE EXAMINING THE TDS DEPOSITS TO GOVT. ACCOUNTS WITH RESPECT TO COMMISSION PAYMENT OF RS.28,37,898/ - IN AGGREGATE, ON PART OF THE PAYMENTS IT IS NOTED THAT IN SEVERAL CASES THE ASSESSEE HAS DEDUCTED TAXES AT SOURCE UPTO THE MON TH OF FEBRUARY, 2009 WHICH SHOULD HAVE BEEN DEPOSITED BY MARCH 2009 IN THE GOVT. ACCOUNT FOR QUALIFYING AS DEDUCTION IN TERMS OF PROVISIONS OF SECTION 40(A)(IA) OF THE I.T.ACT, 1961 BUT THE ASSESSEE HAS DEPOSITED THOSE TAXES ON 14/07/2009 AND HENCE, THOSE PAYMENTS WITH RESPECT TO WHICH TDS WAS DEPOSITED BEYOND MARCH, 2009, LIABLE TO BE DISALLOWED. ACCORDING TO AO , THE AMOUNT WERE DEDUCTED UPTO THE MONTH OF FEBRUARY, 2009 AND THE SAME SHOULD HAVE BEEN DEPOSITED BY MARCH, 2009 BUT ASSESSEE HAS DEPOSITED ONL Y ON 14.07.2009. ACCORDINGLY AO DISALLOWED THE COMMISSION OF RS.14,21,729/ - . AGGRIEVED ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO HAS NOT ADJUDICATED THIS ISSUE AS IS CLEAR FROM THE ORDER OF CIT(A) AND CONFIRMED THE ADDITION. AGGRIEVED NOW ASSESSEE IS I N APPEAL BEFORE TRIBUNAL. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THIS ISSUE NOW STANDS COVERED IN FAVOUR OF ASSESSEE AND AGAINST THE REVENUE BY THE DECISION OF THE HON BLE JURISDICTION AL HIGH COURT IN THE CASE OF CIT VS VIRGIN CREATIONS IN ITAT NO.302 OF 2011, GA NO.3200/2011 DATED 23 RD NOVEMBER, 2011IN VIEW OF THE SIMILAR FACTS OF THE CASE WHEREIN IT HAS BEEN HELD AS UNDER : - THE LEARNED TRIBUNAL ON FACT FOUND THAT THE ASSESSEE HAD DE DUCTED TAX AT SOURCE FROM THE PAID CHARGES BETWEEN THE PERIOD APRIL 1, 2005 AND APRIL 28, 2006 AND THE SAME WERE PAID BY THE ASSESSEE IN JULY AND AUGUST 2006, I . E. WELL BEFORE THE DUE DATE OF FILING OF THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATI ON . THIS FACTUAL POSITION WAS UNDISPUTED . MOREOVER, THE SUPREME COURT , AS HAS BEEN RECORDED BY THE LEARNED TRIBUNAL, IN THE CASE OF ALLIED MOTORS PVT . LTD . AND ALSO IN THE CASE OF ALOM EXTRUSIONS LTD . , HAS ALREADY DECIDED THAT THE AFORESAID PROVISION HA S RETROSPECTIVE APPLICATION. AGAIN, IN THE CASE REPORTED IN 82 ITR 570 , THE SUPREME COURT HELD THAT THE PROVISION, WHICH HAS INSERTED THE REMEDY TO MAKE THE PROVISION WORKABLE, REQUIRES TO BE TREATED WITH RETROSPECTIVE OPERATION SO THAT REASONABLE DEDUCT ION CAN BE GIVEN TO THE SECTION AS WELL . IN VIEW OF THE AUTHORITATIVE PRONOUNCEMENT OF THE SUPREME COURT, THIS COURT CANNOT DECIDE OTHERWISE. HENCE WE D I SMISS THE APPEAL WITHOUT ANY ORDER AS TO COSTS . ITA NO . 1004/KOL/2012 M/S.KAN TECH SOLUTINS PVT.LTD. A.YR. 2009 - 10 3 A S THE ISSUE STANDS COVERED IN FAVOUR OF THE ASSES SEE AND AGAINST THE REVENUE WE DIRECT THE AO TO ALLOW THE DEDUCTION OF COMMISSION PAYMENTS BECAUSE THE ASSESSEE HAS PAID THE TDS AND DEPOSITED TO THE GOVT. ACCOUNT BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME U/S 139(1) OF THE ACT I.E. ON 14.07.2009. A CCORDINGLY THIS ISSUE OF ASSESSEE S APPEAL IS ALLOWED. 5. THE NEXT ISSUE IN THIS APPEAL OF THE ASSESSEE IS AGAINST ORDER OF CIT(A) IN CONFIRMING THE DISALLOWANCE OF DEDUCTION OF COMMISSION FOR NON DEDUCTION OF TDS U/S 194H AT RS.48,38,898/ - BY INVOKING THE PROVISION OF SECTION 40(A)(IA) OF THE ACT. FOR THIS THE ASSESSEE HAS RAISED THE FOLLOWING TWO GROUNDS : - 1. FOR THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED BOTH IN LAW AND IN FACT BY CONFIRMING ADDITION TO THE EXTENT RS.48,38,898/ - FOR NON DEDUCTION OF T.D.S. US/ 40(A)(IA) WITHOUT APPRECIATING THE ACTUAL FACTS OF THE CASE. 2. FOR THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED BOTH IN LAW AND IN FACT BY TREATING THE AMOUNT OF INCENTIVE INCLUDING INCIDENTAL CHARGES WHICH INCLUDES T.A . ETC. FOR COLLECTION OF OUTSTANDING BILLS FROM DIFFERENT PERSONS AS COMMISSION, HENCE T.D.S. U/S 194H SHOULD HAVE BEEN DEDUCTED WITHOUT ANY BASIS AND/OR SANCTION OF LAW. 6. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN RENDERING SEVER AL COMMERCIAL SERVICES LIKE COLLECTING DUES FROM MARKET ON BEHALF OF PRINCIPAL COMPANY MAINTAINING OFFICE STAFF OF THE PRINCIPAL COMPANY IN LIEU OF COMMISSION AND INCENTIVE. GENERALLY THE COMMISSION WAS PAID FOR RENDERING SERVICES BUT THE FACILITIES ARE EX TENDED IN A PARTICULAR AREA BUT TO RENDER SERVICES IN REMOTE AREAS FOR FEW COLLECTIONS AS INCENTIVE WORK EVEN. THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTED SUCH INCENTIVE AT RS.48,10,829/ - AND DISALLOWED THE CLAIM OF INCENTIVE FOR NON DEDUCTION OF TDS U/S 194H OF THE ACT BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. AGGRIEVED ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO CONFIRMED THE ACTION OF AO BY OBSERVING IN PARA 4 AS UNDER : - 4. I HAVE CONSIDERED THE FINDING OF THE AO AND SU BMISSION MADE BY THE A.R. DURING APPELLATE PROCEEDING. THE FIRST AND SECOND GROUND OF APPEAL ARE REGARDING ADDITION BY DISALLOWANCE OF COMMISSION PAID U/S 40(A)(IA). THE FACTS OF THE CASE IS THE ASSESSEE MADE PAYMENT ON ACCOUNT OF COMMISSION AND INCENTIVE TO VARIOUS AGENTS TO THE TUNE OF RS.76,48,727/ - OUT OF THIS AMOUNT, THE ASSESSEE DEDUCTED TDS U/S 194H ON PAYMENTS OF RS.28,37,898/ - BUT ASSESSEE DID NOT DEDUCT ANY TDS ON THE AMOUNT OF RS.48,37,898/ - . THE AO DISALLOWED THE AMOUNT OF RS.48,37,898/ - U/S 40( A)(IA). DURING APPELLATE PROCEEDING THE A.R. SUBMITTED THAT THE PAYMENT WAS MADE TO VARIOUS COLLECTING AGENTS AS INCENTIVES AND NO PAYMENT IN ANY INDIVIDUAL CASE WAS MORE THAN RS.50,000/ - . I HAVE ITA NO . 1004/KOL/2012 M/S.KAN TECH SOLUTINS PVT.LTD. A.YR. 2009 - 10 4 CONSIDERED THE SUBMISSION OF THE A.R. AND FINDING OF THE AO I AGREE WITH THE A.O. THAT AS PER SEC. 194H ANY PAYMENT OVER AND ABOVE RS.2,500/ - THE PAYER HAS TO DEDUCT TDS. THE A.O. HAS GIVEN HIS FINDINGS THAT IN THE PROFIT AND LOSS ACCOUNT THE TOTAL AMOUNT OF PAYMENT OF RS.,76,48,727/ - HAS BEEN SHOWN UNDER THE HEAD COMMISSION AND INCENTIVE. EVEN IN THE AUDIT REPORT THIS AMOUNT HAS BEEN SHOWN UNDER ONE HEAD I.E. COMMISSION AND INCENTIVE. THEREFORE, I FIND THAT AO S ACTION OF MAKING DISALLOWANCES OF RS.48,37,898/ - U/S 40(A)(IA) FOR NON - DEDUCTION OF TDS IS JUSTIFIED. HE NCE, APPEAL ON THIS GROUND IS DISMISSED. AGGRIEVED ASSESSEE PREFERRED SECOND APPEAL BEFORE TRIBUNAL. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. BEFORE US THE ASSESSEE CONTENDED THAT DURING THE YEAR C OMMISSION WAS PAID TO THE PARTIES AND INCENTIVE WAS ALSO PAID TO SEVERAL PERSONS, WHO PHYSICALLY COLLECT THE MONEY FROM DIFFERENT PLACES AS PER THE DIRECTION OF THE TEAM EMPLOYED. ACCORDING TO THE ASSESSEE , THIS IS NOT COMMISSION BUT INCENTIVE ON COLLEC TION OF MONEY FROM DIFFERENT PLACES BY VARIOUS PERSONS AS PER THE DIRECTION OF THE TEAM EMPLOYED BY THE ASSESSEE CO MPANY. THIS INCENTIVE INCLUDES T RAVELLING ALLOWANCE ALSO. WE FIND THAT THIS INCENTIVE IS NOT GIVEN AT A FIXED RATE FOR PAYMENTS WHICH IS KNOW N IN THE TRADE AS INCENTIVE FOR ACTUAL COLLECTION AND THIS INCENTIVE IS IN THE NATURE OF DISCOUNT AND NOT COMMISSION. ONCE THIS IS IN THE NATURE OF DISCOUNT OR CAN BE CALLED AS INCENTIVE BUT NOT COMMISSION THEN THE ASSESSEE IS NOT LIABLE TO DEDUCT TDS ON T HIS AND ACCORDINGLY WE DIRECT THE AO TO DELETE THE DISALLOWANCE. THIS ISSUE OF THE ASSESSEE S APPEAL IS ALLOWED. 8 . IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNC ED IN TH E COURT. SD/ - SD/ - [ P.K.BANSAL ] [ MAHAVIR SINGH ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 8 TH JULY, 2015. R.G.(.P.S.) ITA NO . 1004/KOL/2012 M/S.KAN TECH SOLUTINS PVT.LTD. A.YR. 2009 - 10 5 COPY OF THE ORDER FORWAR DED TO : 1 . M/S.KAN TECH SOLUTION PVT.LTD., 8/38, FERN ROAD, KOLKATA - 700019. 2 THE I.T.O., WARD - 12(1), KOLKATA 3 . THE CIT, 4. THE CIT(A) - XII, KOLKATA 5 . C.I.T.( DR ) , KOLKATA BENCHES, KOLKATA TRUE CO PY , BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES