M/s Beckons Industries Limited, Mohali V. DCIT, Chandigarh

ITA 1069/CHANDI/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57593 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 08-11-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S KHEMWAL
• Keywords: Business income; Non compliance; Commercial expediency

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B CHANDIGARH BEFORE SHRI H.L.KARWA, VICE PRESIDENT AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO. 1067/CHD/2011 ASSESSMENT YEAR: 2008-09 DCIT, V BECKONS INDUSTRIES LTD.,CIRCLE 6(1) D-118, MOHALI. INDUSTRIAL AREA PHASE- VII, MOH ALI. PAN: AABCCA-2425K & ITA NO. 1069/CHD/2011 ASSESSMENT YEAR: 2007-08 BECKONS INDUSTRIES LTD., V DCIT, CIRCLE 6(1), D-118, MOHALI. INDUSTRIAL AREA PHASE-VII, MOHALI. PAN: AABCCA-2425K (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI TEJ MOHAN SINGH DEPARTMENT BY : SHRI S.KHEMWAL DATE OF HEARING : 05.01.2012 DATE OF PRONOUNCEMENT : 10.01.2012 ORDER PER MEHAR SINGH, AM THE PRESENT CROSS APPEALS FILED BY THE REVENUE AND THE ASSESSEE RESPECTIVELY, ARE DIRECTED AGAINST THE ORD ER DATED 28.06.2011 PASSED BY THE LD. COMMISSIONER OF INCOME -TAX U/S 250(6) OF THE INCOME-TAX ACT,1961 (IN SHORT 'TH E ACT'). WE FIND IT CONVENIENT TO DISPOSE OF BOTH THE APPEAL S BY A CONSOLIDATED ORDER. 2 2. IN REVENUES APPEAL, THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING APPEAL OF THE ASSESSEE WITHOUT APPRECIATING THE FACTS OF THE CASE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.2021752/- MADE ON ACCOUNT OF DISALLOWANCE OF INTEREST AND ADDITION OF RS.273360/- MADE U/S 40(A)(IA). 3. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY GROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD OR IS DISPOSED OFF. 3. GROUND NOS. 1, 3 & 4 ARE GENERAL IN NATURE AND N EED NO SEPARATE ADJUDICATION. 4. IN GROUND NO.2, THE REVENUE CONTENDED THAT THE C IT(A) ERRED IN DELETING THE ADDITION OF RS.20,21,752/- MA DE ON ACCOUNT OF DISALLOWANCE OF INTEREST AND ADDITION OF RS.2,73,360/- MADE U/S 40(A)(IA) OF THE ACT. 5. IN THE COURSE OF PRESENT APPELLATE PROCEEDINGS, IT WAS STATED BY THE LD. 'AR' THAT AS FAR AS ADDITION OF RS.20,21,752/- IS CONCERNED, THE SAME IS COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE IN VIEW OF THE DECISION OF THE ITAT CHANDIGARH IN ITA NO.993/CHD/2 010 ASSESSMENT YEAR 2006-06, DATED 13.05.2011 IN ASSESS EE'S OWN CASE, AS INCORPORATED AT PAGE 41-47, PARTICULAR LY PARA 13 OF THE SAID ORDER. A PERUSAL OF THE SAID ORDER DATED 13.05.2011 REVEALS THAT THE ISSUE IS COVERED BY PAR A 13 OF 3 THE SAID ORDER IN FAVOUR OF THE ASSESSEE. THE RELE VANT PART OF THE DECISION IS REPRODUCED HEREUNDER : 13. AS REGARDS THE AMOUNT OUTSTANDING IN THE NAME OF PUNJAB BIOTEHNOLOGY PARK, THE FACTS AS AVAILABLE ON RECORD INDICATE THAT THE SAID SUM OF MONEY WAS GIVEN BY THE ASSESSEE-COMPANY OUT OF BUSINESS EXPEDIENCY. PUNJAB BIOTEHNOLOGY PARK, A S UBSIDIARY OF THE ASSESSEE-COMPANY AND THEREFORE, THE ASSESSEE IS DEE PLY INTERESTED IN THE WORKING OF THE SAID COMPANY. BESIDES, THE S UBSIDIARY COMPANY HAS BEEN SET IN PURSUANCE OF JOINT COLLABO RATION AGREEMENT TO WHICH THE ASSESSEE IS A PARTY FOR THE DEVELOPMENT OF BIOTECHNOLOGY PARK. THE SUBSIDIARY COMPANY IS REQU IRED TO ACT AS A FACILITATOR FOR DEVELOPMENT OF THE BIOTECHNOLOGY PA RK IN WHICH THE ASSESSEE IS ALSO INTERESTED. ON THE FACTS OF THE C ASE, WE ARE SATISFIED THAT THE LOAN STANDING IN THE NAME OF PUN JAB BIO- TEHNOLOGY PARK IS GUIDED BY BUSINESS EXPEDIENCY. T HE AO IS DIRECTED NOT TO DISALLOW ANY INTEREST ATTRIBUTABLE TO THE LOANS GIVEN BY THE ASSESSEE- COMPANY TO THE SAID SUBSIDIARY COM PANY. 6. RESPECTFULLY FOLLOWING THE DECISION OF THE ITAT IN ASSESSEE'S OWN CASE, THE ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 7. HOWEVER, AS FAR AS DISALLOWANCE OF RS.27,360/- M ADE U/S 40A(IA) IS CONCERNED, THE CIT(A) HAS DELETED TH E IMPUGNED ADDITION VIDE PARA 4.2.4 OF THE ORDER DATE D 26.08.2011 AND THE RELEVANT PART OF THE ORDER IS RE PRODUCED HEREUNDER : 4.2.4 REGARDING PACKING MATERIAL, THE APPELLANT CONTENDED THAT IT IS FOR PURCHASE OF PACKING MATERIAL, WHICH DOES NOT ATTRACT THE PROVISIONS OF TDS. THE CONTENTION OF THE APPELLANT IS CORRECT BECAUSE THE AO HAS ALSO MENTIONED IT AS PAYMENT FOR PACKING MATERIAL. AS TDS WAS NOT 4 DEDUCTIBLE ON THE PACKING MATERIAL, PROVISIONS OF SECTION 40(A)(IA) ARE NOT ATTRACTED. HENCE, THE ADDITION MADE OF RS.2,73,360/- U/S 40(A)(IA) ON ACCOUNT OF PACKING MATERIAL IS DELETED. 8. THE IMPUGNED DISALLOWANCE U/S 40A(IA) PERTAINS T O THE PURCHASE OF PACKING MATERIAL AND NON COMPLIANCE WIT H THE TDS PROVISIONS. THE LD. CIT(A) HAS CATEGORICALLY R ECORDED A FINDING THAT TDS IS NOT DEDUCTIBLE ON SUCH PACKING MATERIAL. THEREFORE, PROVISIONS OF SECTION 40(A)(IA) ARE NOT ATTRACTED. WE ARE IN AGREEMENT WITH THE FINDINGS OF THE CIT(A) . THUS, THIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. 10. NOW, WE TAKE UP THE APPEAL OF THE ASSESSEE (ITA NO. 1069 /CHD/2011, A.Y. 2008-09). IN THIS APPEAL, THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL : 11. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOL LOWING GROUNDS OF APPEAL: 1. THAT THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS IN UPHOLDING THE ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF INTEREST PAID TREATING THE AMOUNT PAID TO SHRI A.S.BHATIA TO BE AN ALLEGED INTEREST FREE ADVANCE WITHOUT COMMERCIAL EXPEDIENCY WHICH IS ARBITRARY AND UNJUSTIFIED. 2. THAT THE LD. CIT(A) HAS FAILED TO APPRECIATE THE FACT THAT THE ASSESSEE COMPANY HAD ENTERED INTO A LEASE AGREEMENT WITH LANDLORD SHRI A.S.BHATIA ON WHICH A BUILDING WAS CONSTRUCTED BY THE ASSESSEE COMPANY AND IT WAS ONLY WHEN THE ASSESSEE COMPANY SHIFTED TO ITS OWN 5 PREMISES, THE AMOUNT SPENT ON CONSTRUCTION WAS TO BE RETURNED BY SHRI A.S.BHATIA. THUS, WITHOUT CONSIDERING THE FACTUAL MATRIX, THE IMPUGNED ORDER HAS BEEN PASSED WHICH IS ARBITRARY AND UNJUSTIFIED. 3. THAT THE LD. CIT(A) HAS FURTHER ERRED IN UPHOLDING THE ADDITION OF RS.97293/- ON ACCOUNT OF PAYMENTS MADE TOWARDS FREIGHT AND RS.21191/- MADE ON ACCOUNT OF SALES COMMISSION APPLYING THE PROVISIONS OF SECTION 40(A)(IA) WHICH IS ARBITRARY AND UNJUSTIFIED. 4. THAT THE ORDER OF THE LD. CIT(A) IS ERRONEOUS, ARBITRARY, OPPOSED TO LAW AND FACTS OF THE CASE AND IS, THUS, UNTENABLE. 12. IN GROUND NO. 1 & 2, THE LD. 'AR', WHILE PLEADI NG THE CASE CONTENDED, THAT THE ISSUE RAISED IS COVERED AG AINST THE ASSESSEE AND IN FAVOUR OF THE REVENUE. HE REFERRED TO PARA 12 OF THE ORDER OF THE ITAT, CHANDIGARH IN ITA NO.993/CHD/2010, ASSESSMENT YEAR 2006-07. 13. WE HAVE CAREFULLY PERUSED THE ISSUES, FACTS IN THE ASSESSEE'S APPEAL BEFORE THE TRIBUNAL IN ITA NO.993/CHD/2010 (SUPRA) AND FOUND THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE REVENUE AND AGAIN ST THE ASSESSEE. THE RELEVANT PART OF THE IMPUGNED ORDER I S REPRODUCED HEREUNDER : 6. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY CON SIDERED THEIR SUBMISSIONS. PERUSAL OF BALANCE SHEET TOGETHER WIT H ITS SCHEDULE APPENDED THERETO SHOWS THAT A SUM OF RS. 49,38,930/ - HAS BEEN TREATED BY THE ASSESSEE-COMPANY ITSELF AS LOAN AND ADVANCE GIVEN TO SHRI A.S. BHATIA, MATERNAL UNCLE OF MANAGING DIRECT OR OF THE ASSESSEE- COMPANY AND THAT A FURTHER SUM OF RS. 2,19,82,821/- HAS BEEN SHOWN 6 AS UNSECURED LOAN RECOVERED FROM PUNJAB BIOTEHNOLOG Y PARK, A SUBSIDIARY COMPANY OF THE ASSESSEE. 7. IN PARA 4 OF THEIR REPORT, THE AUDITORS HAVE COM MENTED UPON THE AFORESAID LOANS AND ADVANCES AS UNDER: THE COMPANY HAS GIVEN UNSECURED LOAN TO FIRMS OR O THER PARTIES LISTED IN REGISTER MAINTAINED U/S 301 OF THE COMPANIES ACT , 1956. NO OF PARTIES 4 (FOUR) AMOUNT RS. 311.23 LACS OUT OF THIS RS. 219.83 (159.18) HAS BEING TO SUBSIDIARY COMPANY. THE LOANS ARE WIT HOUT ANY STIPULATION REGARDING REPAYMENT OF PRINCIPAL AMOUNT OF LOAN AND INTEREST. WHERE LOAN OUTSTANDING AMOUNT IS MORE TH AN RS. ONE LACS THE COMPANY NEEDS TO TAKE STEPS TO RECOVER THE AMOU NT. THE LOANS ARE PRIMA FACIE PREJUDICIAL TO THE INTEREST OF COMP ANY AS NO INTEREST IS BEING CHARGED. 8. IT IS QUITE OBVIOUS THAT THE AFORESAID LOANS AND ADVANCES HAVE BEEN TREATED AS UNSECURED LOANS GIVEN BY THE ASSESS EE WITHOUT ANY STIPULATION REGARDING THEIR RE-PAYMENT AND INTEREST . IT IS ALSO CLEAR THAT THE AUDITORS OF THE ASSESSEE-COMPANY HAVE CONS IDERED THE AFORESAID LOANS AS PREJUDICIAL TO THE INTEREST OF T HE ASSESSEE-COMPANY AS NO INTEREST IS BEING CHARGED ON THEM. THE STATU TORY REPORT GIVEN BY THE AUDITORS CARRIES HIGH EVIDENTIARY VALUE AS REGA RDS THE NATURE OF TRANSACTION RECORDED BY THE ASSESSEE-COMPANY IN ITS BOOKS AND ITS EFFECT ON THE FINANCIAL HEALTH OF THE ASSESSEE-COMP ANY. 9. AS REGARDS THE AMOUNT SHOWN AS UNSECURED LOAN IN THE NAME OF SHRI A.S. BHATIA, THE ADMITTED POSITION IS THAT SHR I A.S. BHATIA IS MATERNAL UNCLE OF THE MANAGING DIRECTOR OF THE ASSE SSEE-COMPANY. THE ASSESSEE-COMPANY ITSELF HAS TREATED THE AMOUNT STANDING IN HIS NAME AS LOAN GIVEN BY THE ASSESSEE TO HIM. THE AUD ITORS OF THE ASSESSEE-COMPANY ARE WELL-VERSED IN THESE MATTERS. THEY HAVE ALSO TREATED THE AFORESAID LOAN. AS PREJUDICIAL TO THE I NTEREST OF THE ASSESSEE. IN OTHER WORDS, THEY WERE OF THE OPINION THAT THE ACTION OF ASSESSEE IN GIVING INTEREST-FREE LOANS TO SHRI A.S. BHATIA WAS NOT GUIDED BY ANY BUSINESS CONSIDERATION. THE SUBMISSI ON OF THE ASSESSEE THAT THE AMOUNT STANDING IN THE NAME OF SHRI A.S. B HATIA REPRESENTS THE RECOVERABLE AMOUNT ON SALE OF PROPERTY BY THE A SSESSEE, DOES NOT MAKE ANY DIFFERENCE. THE AMOUNT RECOVERABLE FROM SH RI A.S. BHATIA ON 7 SALE OF PROPERTY WAS NOT RECOVERED. A CONSCIOUS DE CISION WAS TAKEN BY THE ASSESSEE TO TREAT THE SAME AS LOAN GIVEN TO HIM . INSTEAD OF RECOVERING THE AFORESAID AMOUNT FROM SHRI A.S. BHAT IA, THE ASSESSEE HAS ALLOWED THE AMOUNT OF SALE PROCEEDS TO BE RETA INED BY HIM AS LOAN FROM THE ASSESSEE-COMPANY WITHOUT CHARGING ANY INTEREST AND WITHOUT ANY STIPULATION AS TO REPAYMENT OF THE SAID AMOUNT. IN OUR VIEW THE AFORESAID SEQUENCE OF EVENTS FIRMLY ESTAB LISH THE FACT THAT THE FUNDS, WHICH SHOULD HAVE BEEN AVAILABLE WITH TH E ASSESSEE- COMPANY, WERE ALLOWED TO BE DIVERTED OR RETAINED BY SHRI A.S. BHATIA OUT OF NON BUSINESS CONSIDERATION AND NOT OUT OF BU SINESS EXPEDIENCY. WE, THEREFORE, HOLD THAT THE AMOUNT STANDING IN THE NAME OF SHRI A.S. BHATIA IS IN THE NATURE OF LOAN ADVANCED BY THE ASS ESSEE TO HIM WITHOUT ANY COMMERCIAL EXPEDIENCY. 10. IT WAS SUBMITTED ON BEHALF OF THE ASSESSEE THAT THE AFORESAID AMOUNT WOULD BE FULLY COVERED BY INTERNAL ACCRUALS AND INTEREST-FREE FUNDS AVAILABLE WITH THE ASSESSEE. SIMILAR ARGUMEN T WAS MADE BEFORE AND REJECTED BY THE HON'BLE JURISDICTIONAL HIGH COU RT IN CIT V. ABHISHEK INDUSTRIES LTD, 261 ITR 1 (PH). RELEVANT OBSERVATIONS MADE BY THE HON'BLE HIGH COURT READ AS UNDER:- THE ENTIRE MONEY IN A BUSINESS ENTITY COMES IN A C OMMON KITTY. THE MONIES RECEIVED AS SHARE CAPITAL, AS TERM LOANS, AS WORKING CAPITAL LOAN, AS SALE PROCEEDS ETC. DO NOT HAVE ANY DIFFERE NT COLOUR. WHATEVER ARE THE RECEIPTS IN THE BUSINESS THEY HAVE THE COLO UR OF BUSINESS RECEIPTS AND HAVE NO SEPARATE IDENTIFICATION. SOUR CES HAVE NO CONCERN WHATSOEVER. THE ONLY THING SUFFICIENT TO DISALLOW THE INTEREST PAID ON THE BORROWINGS TO THE EXTENT THE AMOUNT IS LENT TO A SISTER CONCERN WITHOUT CARRYING ANY INTEREST FOR NON-BUSINESS PURP OSES WOULD BE THAT THE ASSESSEE HAS SOME LOANS OR OTHER INTEREST BEARI NG DEBTS TO BE REPAID. IN CASE THE ASSESSEE HAD SOME SURPLUS AMOU NT WHICH ACCORDING TO IT COULD NOT BE REPAID. IN CASE THE A SSESSEE HAS SOME SURPLUS AMOUNT WHICH ACCORDING TO IT, COULD NOT BE REPAID PREMATURELY TO ANY FINANCIAL INSTITUTION, STILL THE SAME IS EIT HER REQUIRED TO BE CIRCULATED AND UTILISED FOR THE PURPOSE OF BUSINESS OR TO BE INVESTED IN A MANNER IN WHICH IT GENERATES INCOME AND NOT THAT IT IS DIVERTED TOWARDS SISTER CONCERNS FREE OF INTEREST. THIS WOU LD RESULT IN NOT PRESENTING THE TRUE AND CORRECT PICTURE OF THE ACCO UNTS OF THE ASSESSEE 8 AS AT THE COST BEING INCURRED BY THE ASSESSEE, THE SISTER CONCERN WOULD BE ENJOYING THE BENEFITS THEREOF. IT CANNOT POSSIB LY BE HELD THAT THE FUNDS TO THE EXTENT DIVERTED TO SISTER CONCERNS OR OTHER PERSONS FREE OF INTEREST WERE REQUIRED BY THE ASSESSEE FOR THE PURP OSE OF ITS BUSINESS AND LOANS TO THAT EXTENT WERE REQUIRED TO BE RAISED . WE DO NOT SUBSCRIBE TO THE THEORY OF DIRECT NEXUIS OF THE FUN DS BETWEEN BORROWINGS OF THE FUNDS AND DIVERSION THEREOF FOR N ON-BUSINESS PURPOSES.. 11. IF THE ASSESSEE HAD NOT DIVERTED THE FUNDS TO S HRI A.S. BHATIA FOR NON-BUSINESS CONSIDERATION, THEY WOULD HAVE BEE N AVAILABLE WITH THE ASSESSEE-COMPANY FOR ITS BUSINESS PURPOSES AND TO THAT EXTENT IT MAY NOT HAVE BEEN NECESSARY TO BORROW FROM THE BANK S AND PAY INTEREST THEREON. IN CIT V. H.R. SUGAR FACTORY PVT LTD, 187 ITR 363, 370-371. WHICH HAS BEEN CITED WITH APPROVAL IN ABHI SHEK INDUSTRIES (SUPRA), THE HON'BLE ALLAHABAD HIGH COURT HAS HELD AS UNDER :- MAY BE THAT THE COMPANY BORROWS LARGE AMOUNTS FOR THE PURPOSE OF ITS BUSINESS EVERY DAY, BUT THAT DOES NOT EXPLAIN T HE HUGE ADVANCES TO THE DIRECTIONS/SHAREHOLDERS. HAD THIS MONEY BEEN NO T ADVANCED TO THE DIRECTORS, IT WOULD HAVE BEEN AVAILABLE TO THE ASSE SSEE FOR ITS BUSINESS PURPOSES AND TO THAT EXTENT IT MAY NOT HAVE BEEN NE CESSARY TO BORROW FROM THE BANKS. 12. IN VIEW OF THE FOREGOING, THE FACT THAT THE FUN DS TO THE EXTENT OF DIVERSION FOR NON-BUSINESS EXPEDIENCY WERE INTERNAL LY AVAILABLE WITH THE ASSESSEE-COMPANY, WOULD MAKE NO DIFFERENCE. TH E INTEREST ATTRIBUTABLE TO A SUM OF RS. 49,38,930/- BEING THE AMOUNT OF DIVERTED BY THE ASSESSEE-COMPANY FOR THE PERSONAL BENEFIT OF SHRI A.S. BHATIA IS THEREFORE LIABLE TO BE DISALLOWED. THE AO IS DIREC TED TO RE-COMPUTE THE DISALLOWANCE ACCORDINGLY. 14. RESPECTFULLY FOLLOWING THE ORDER OF THE ITAT IN ASSESSEE'S OWN CASE, THE ISSUE RAISED IN THE PRESEN T APPEAL IS DECIDED ACCORDINGLY AND THE GROUNDS RAISED BY TH E ASSESSEE ARE DISMISSED. 9 15. IN GROUND NO.3, THE LD. 'AR' CONTENDED THAT THE LD. CIT(A) ERRED IN UPHOLDING THE ADDITION OF RS.97,293 /- ON ACCOUNT OF PAYMENTS MADE TOWARDS FREIGHT WHICH IS C OVERED BY THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V BHAGWATI STEELS, 326 ITR 108 (P&H). THE H EAD NOTES OF THE SAME ARE REPRODUCED HEREUNDER : DEDUCTION OF TAX AT SOURCE-FREIGHT CHARGES-NO MATERIAL TO SHOW PAYMENTS MADE IN PURSUANCE OF A CONTRACT FOR TRANSPORTATION OF GOODS FOR A SPECIFIC PERIOD, QUANTITY, PRICE OR THAT A SINGLE PAYMENT EXCEEDS RS.20,000/--FINDINGS OF FACT-FREIGHT EXPENSES INCURRED ADDED TO COST OF GOODS IN INVOICE RAISED-NO INFERENCE THAT ASSESSEE PAID ANY AMOUNT OF FREIGHT SEPARATELY-ASSESSEE NOT A DEFAULTER UNDE R SECTION 194C-INCOME-TAX ACT,1961 S.S. 40(A)(IA), 194C(3)(I). 16. FOLLOWING THE DECISION OF THE HON'BLE HIGH COUR T, THE ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE. 17. IN GROUND NO.3, ANOTHER ISSUE HAS BEEN RAISED B Y THE ASSESSEE THAT CIT(A) ERRED IN APPLYING THE PROVISIO NS OF SECTION 40(A)(IA) IN RESPECT OF SALES COMMISSION AN D UPHOLDING ADDITION OF RS.21,191/-. 18. WE HAVE CAREFULLY PERUSED THE RIVAL SUBMISSIONS , FACTS OF THE CASE AND FOUND THAT THE CIT(A) HAS UPHELD TH E IMPUGNED ADDITION BY UPHOLDING THAT CONTENTION OF T HE APPELLANT IS NOT CORRECT BECAUSE TDS IS TO BE DEDUC TED IF THE AMOUNT EXCEEDS RS.2500/- AS PER THE PROVISIONS OF S ECTION 194H OF THE ACT. THE RELEVANT AND OPERATIVE PART OF THE 10 DECISION OF THE CIT(A) IS REPRODUCED HEREUNDER : 4.2.3 REGARDING SALES COMMISSION, THE APPELLANT HAS CONTENDED THAT THE PAYMENT MADE WAS BELOW RS.20,000/- IN EACH CASE AND SO TDS WAS NOT DEDUCTIBLE. THIS CONTENTION OF THE APPELLANT IS NOT CORRECT BECAUSE TDS WAS TO BE DEDUCTED IF THE PAYMENT EXCEEDS RS.2500/- AS PER THE PROVISIONS OF SECTION 194H. THE AO WAS RIGHT IN DISALLOWING THE SALES COMMISSION OF RS.21,191/- U/S 40(A)(IA) AND THE SAME IS CONFIRMED. 19. HAVING REGARD TO THE FACTUAL SITUATION OF THE C ASE AND THE FINDINGS OF THE LD. CIT(A), WE DO NOT FIND ANY INFIRMITY IN THE FINDINGS OF THE LD. CIT(A) AND, HENCE, THE SAME ARE UPHELD. THE GROUND OF APPEAL RAISED BY THE ASSESSE E IS PARTLY ALLOWED. 20. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 21. RESULTANTLY, APPEAL OF THE REVENUE (ITA NO.1067/CHD/2011, A.Y. 2008-09) IS DISMISSED AND TH E APPEAL OF THE ASSESSEE (ITA NO. 1069/CHD/2011, A.Y. 2008- 09) IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH JAN.,2012. SD/- SD/- (H.L.KARWA) (MEHAR SINGH) VICE PRESIDENT ACCOUNTANT MEMBER DATED: 10 TH JAN.,2012. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT,DR ASSISTANT REGISTRAR, ITAT CHANDIGARH