D.C.I.T Cir - 1,kolkata, Kolkata V. M/s Eldyne Electro Systems Pvt Ltd, Kolkata

ITA 1353/KOL/2013

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3118 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 17-05-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL

Judgement Text

I.T.A. NO. 1353/KOL./2013 ASSESSMENT YEAR: 2009-2010 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA B BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NO. 1353/KOL/ 2013 ASSESSMENT YEAR: 2009-2010 DEPUTY COMMISSIONER OF INCOME TAX,................. ................APPELLANT CIRCLE-1, KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 -VS.- M/S. ELDYNE ELECTRO SYSTEMS PVT. LIMITED, ......... ...............RESPONDENT 3, MADAN STREET, BOWBAZAR, KOLKATA-700 072 [PAN : AAACE 7357 H] APPEARANCES BY: SHRI SANJOY MUKHERJEE, JCIT, SR. D.R., FOR THE DEPARTMENT N O N E, FOR THE ASSESSEE DATE OF CONCLUDING THE HEARING : FEBRUARY 08, 2016 DATE OF PRONOUNCING THE ORDER : FEBRUARY 10, 2016 O R D E R PER SHRI P.M. JAGTAP :- THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-XXIV, KOLKATA DATED 18.02.2013 FOR THE ASSESSMENT YEAR 2009-10 AND IN THE SOLITARY GROUND RAISED THEREIN, THE REVENUE HAS CHALLENGED THE ACTION OF T HE LD. CIT(APPEALS) IN DELETING THE DISALLOWANCE OF RS.1,50,00,000/- MADE BY THE ASSESSING OFFICER UNDER SECTION 40(A)(IA) ON ACCOUNT OF COMMI SSION PAID BY THE ASSESSEE-COMPANY TO ITS DIRECTOR. 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY, W HICH IS ENGAGED IN THE BUSINESS OF EXECUTING RAILWAYS CONTRACTS. THE R ETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY IT ON 27. 09.2009 DECLARING TOTAL I.T.A. NO. 1353/KOL./2013 ASSESSMENT YEAR: 2009-2010 PAGE 2 OF 4 INCOME OF RS.5,00,33,483/-. DURING THE COURSE OF AS SESSMENT PROCEEDINGS, IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE AS SESSEE HAS PAID COMMISSION OF RS.1,50,00,000/- TO ITS MANAGING DIRE CTOR MR. SANTANU BASU WITHOUT MAKING DEDUCTION ON ACCOUNT OF TAX AT SOURCE AS REQUIRED BY THE PROVISION OF SECTION 194H. HE, THEREFORE, INVOK ED THE PROVISION OF SECTION 40(A)(IA) AND DISALLOWED THE COMMISSION PAI D BY THE ASSESSEE- COMPANY TO ITS DIRECTOR. 3. THE DISALLOWANCE MADE BY THE ASSESSING OFFICER U NDER SECTION 40(A)(IA) ON ACCOUNT OF PAYMENT OF COMMISSION MADE TO ITS DIRECTOR WAS CHALLENGED BY THE ASSESSEE-COMPANY IN AN APPEAL FIL ED BEFORE THE LD. CIT(APPEALS). DURING THE COURSE OF APPELLATE PROCEE DINGS BEFORE THE LD. CIT(APPEALS), IT WAS SUBMITTED BY THE ASSESSEE THAT THE COMMISSION OF RS.1.50 CRORES PAID TO THE CONCERNED DIRECTOR WAS P ART OF HIS SALARY AND ACCORDINGLY TAX AT SOURCE AT A HIGHER RATE OF 30% W AS DEDUCTED FROM THE SAID PAYMENT AS PER THE PROVISION OF SECTION 192. N ECESSARY DOCUMENTARY EVIDENCE TO SHOW SUCH DEDUCTION OF TAX FROM THE PAY MENT OF SALARY WAS ALSO FILED BY THE ASSESSEE AND KEEPING IN VIEW THE SAME, THE LD. CIT(APPEALS) DELETED THE DISALLOWANCE MADE BY THE A SSESSING OFFICER UNDER SECTION 40(A)(IA) FOR THE FOLLOWING REASONS G IVEN IN PARAGRAPH NO. 3.3 OF HIS IMPUGNED ORDER:- 3.3. I HAVE CAREFULLY CONSIDERED THE OBSERVATION OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER AND ALSO THE SUBMIS SION OF THE LD. A/R. DURING THE COURSE OF THE APPELLATE PROCEEDINGS , THE LD. A/ R HAS EXPLAINED THAT THE COMMISSION AMOUNTING TO RS.L,50, 00,000/- WAS PAID TO AN EMPLOYEE DIRECTOR AS A PART OF HIS SALAR Y AND THE TAX WAS DEDUCTED AT SOURCE AT THE TIME OF DISBURSEMENT OF H IS SALARY. THE LD. A/R HAS EXPLAINED THAT TDS U/S.192 INSTEAD OF SECTI ON 194H HAS BEEN DEDUCTED FROM THE COMMISSION PAYMENT OF RS.1,,50,00 ,000/- TO THE DIRECTOR. THE LD. A/R HAS ALSO EXPLAINED THAT THE T DS U/S.192 HAS BEEN DEDUCTED AT THE RATE OF 30% FROM THE ABOVE COM MISSION AND PAID TO THE CREDIT OF THE CENTRAL GOVERNMENT WHEREA S THE PRESCRIBED RATE FOR TDS U/ S.194H IS ONLY 5%. CONSIDERING THE FACTS OF THE CASE, THE A.O. IS DIRECTED TO DELETE THE ADDITION OF RS.1 ,,50,00,000/- U/S.40(A)(IA) AS THE TDS U/S. 192 HAS ALREADY BEEN DEDUCTED FROM THE AFORESAID COMMISSION OF RS.1,50,00,000/- PAID TO TH E DIRECTOR. THIS GROUND OF APPEAL IS ALLOWED. I.T.A. NO. 1353/KOL./2013 ASSESSMENT YEAR: 2009-2010 PAGE 3 OF 4 AGGRIEVED BY THE ORDER OF THE LD. CIT(APPEALS), THE REVENUE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 4. AT THE TIME OF HEARING BEFORE US, NONE HAS APPEA RED ON BEHALF OF THE ASSESESE. THIS APPEAL OF THE REVENUE IS, THEREFORE, BEING DISPOSED OF EX- PARTE QUA THE RESPONDENT-ASSESSEE AFTER HEARING THE ARGUMENT S OF THE LD. D.R. AND PERUSING THE RELEVANT MATERIAL AVAILABLE O N RECORD. THE LD. D.R. HAS NOT DISPUTED IN PRINCIPLE THE DECISION OF THE L D. CIT(APPEALS) THAT THE ASSESSEE-COMPANY HAVING DEDUCTED TAX AT SOURCE FROM THE PAYMENT OF COMMISSION MADE TO ITS DIRECTOR AS PER SECTION 192 TREATING THE SAME AS PART OF SALARY, THE DISALLOWANCE MADE BY THE ASSESS ING OFFICER ON ACCOUNT OF SUCH COMMISSION BY INVOKING THE PROVISIONS OF SE CTION 40(A)(IA) CANNOT BE SUSTAINED. HE, HOWEVER, RAISED A LIMITED CONTENT ION THAT NO OPPORTUNITY WAS GIVEN BY THE LD. CIT(APPEALS) TO TH E ASSESSING OFFICER TO VERIFY THIS STAND TAKEN BY THE ASSESSEE FOR THE FIR ST TIME BEFORE HIM. WE FIND MERIT IN THE CONTENTION OF THE LD. D.R. ACCORD INGLY THIS ISSUE IS RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR T HE LIMITED PURPOSE OF VERIFYING THE CLAIM OF THE ASSESSEE OF HAVING DEDUC TED TAX AT SOURCE FROM THE PAYMENT OF COMMISSION MADE TO THE CONCERNED DIR ECTOR AS PER THE PROVISION OF SECTION 192. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS TREA TED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON FEBRUARY 10, 2016. SD/- SD/- (S.S. VISWANETHRA RAVI) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER KOLKATA, THE 10 TH DAY OF FEBRUARY, 2016 COPIES TO : (1) DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1, KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 I.T.A. NO. 1353/KOL./2013 ASSESSMENT YEAR: 2009-2010 PAGE 4 OF 4 (2) M/S. ELDYNE ELECTRO SYSTEMS PVT. LIMITED, 3, MADAN STREET, BOWBAZAR, KOLKATA-700 072 (3) COMMISSIONER OF INCOME-TAX (APPEALS)-XXIV, KOL KATA (4) COMMISSIONER OF INCOME TAX, KOLKATA (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.