The Urban Co-operative Bank Ltd., Shimoga V. Assistant Commissioner of Income-Tax, Shimoga

ITA 1664/BANG/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7267 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 1 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-11-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 14-08-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 19-09-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B R RAMESH
• Keywords: Non-deduction of tax

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI JASON P BOAZ, ACCOUNTANT MEMBER ITA NO.1664/BANG/2016 ASSESSMENT YEAR : 2012-13 M/S. THE URBAN CO- OPERATIVE BANK LTD., OLD SANTHE MAIDAN, SHIKARIPURA-577427, DIST. SHIMOGA. PAN : AAAAT3509N VS. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE -1, SHIMOGA. APPELLANT RESPONDENT ASSESSEE BY : SHRI.SANDEEP, CA REVENUE BY : SHRI. B. R. RAMESH, JCIT DATE OF HEARING : 0 8 . 11 .201 7 DATE OF PRONOUNCEMENT : 10.11.2017 O R D E R PER SUNIL KUMAR YADAV, JUDICIAL MEMBER THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST T HE ORDER OF CIT(A), INTERALIA , ON THE FOLLOWING GROUNDS: 1. THAT THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) IN SO FAR AS PREJUDICIAL TO THE INTERESTS OF THE APPEL LANT, IS BAD AND ERRONEOUS IN LAW AND AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) ERRED IN LAW AND IN FACTS IN DISALLOWING A SUM OF RS.4,63,563/- U/S. 40(A)(IA) OF THE ACT HAVING HELD THAT THE AMOUNT PAID TO THE PIGMY AGENTS IS NO T COMMISSION BUT SALARY AND IGNORING THE FACT AT DISALLOWANCE U/S. 40(A)(IA) IS NOT APPLICABLE FOR NON-DEDUCTION OF TAX AT SOURCE U/S. 192. ITA NO. 1664/BANG/2016 PAGE 2 OF 3 ADDITIONAL GROUND 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) OUGHT TO HAVE REDUCED THE SUM OF RS.85,375/- FROM THE INCOME SINC E THE SAME WAS ADDED AS INCOME FOR ASSESSMENT YEAR 2011-12 ON ACCRUAL BASIS. EACH OF THE ABOVE GROUND IS WITHOUT PREJUDICE TO ON E ANOTHER, THE APPELLANT CRAVES THE LEAVE OF THE HON'BLE INCOME TAX APPELLATE TRIBU NAL, BANGALORE TO ADD, DELETE, AMEND OR MODIFY OTHERWISE ALL OR ANY OF THE GROUNDS EITHER BEFORE OR AT THE TIME OF HEARING THIS APPEAL. 2. DURING THE COURSE OF HEARING, THE LEARNED COUNSEL F OR THE ASSESSEE HAS OPTED NOT TO PRESS THE ADDITIONAL GROUND RELATING TO REDUCTION O F RS.85,375/- FROM THE INCOME FROM 2011-12 ON ACCRUAL BASIS. ACCORDINGLY, THIS GROUND IS DISMISSED BEING NOT PRESSED. NOW THE SOLITARY GROUND IS WITH REGARD TO DISALLOWANCE OF R S.4,63,563/- UNDER SECTION 40(A)(IA) OF THE ACT. 3. THE BRIEF FACTS BORNE OUT FROM THE RECORD ARE TH AT THE AO HAS NOTICED THAT ASSESSEE HAS NOT DEDUCTED TAX AT SOURCE ON THE PIGMY COMMISSION PAID TO PIGMY DEPOSIT COLLECTORS AS ACCORDING TO IT TAX IS NOT DEDUCTABLE. AGAINST THE DISALLOWANCE, ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) AND PLACED RELIANCE UPON THE CBDT S CIRCULAR BUT HE DID NOT FIND FAVOUR WITH THE CIT(A) AND THE CIT(A) CONFIRMED THE DISALL OWANCE. NOW THE ASSESSEE IS BEFORE THE TRIBUNAL AND PLACED RELIANCE UPON THE CLARIFICATION ISSUED BY THE CBDT VIDE ITS LETTER DATED 03.03.2008 AND ALSO LETTER DATED 01.12.2011, IN SUP PORT OF HIS CONTENTION THAT THE COMMISSION PAID TO PIGMY DEPOSIT COLLECTORS SHOULD BE TREATED AS SALARY IN PLACE OF COMMISSION, THEREFORE ON ITS PAYMENT, TDS IS NOT REQUIRED TO BE DEDUCTED. THE LEARNED DR PLACED RELIANCE UPON THE ORDER OF TH E CIT(A). 4. HAVING CAREFULLY EXAMINED THE ORDER OF THE LOWER AUTHORITIES IN THE LIGHT OF RIVAL SUBMISSIONS, WE FIND THAT ASSESSMENT YEAR INVOLVED IS 2012-13 AND VIDE LETTER DATED ITA NO. 1664/BANG/2016 PAGE 3 OF 3 03.03.2008, THE CBDT HAS CLARIFIED THE SCOPE OF EAR LIER LETTER DATED 12.12.2007 TREATING THE REMUNERATION (COMMISSION) EARNED BY THE PIGMY DEPOS IT COLLECTORS AS SALARY AND SUBJECT IT TO TDS UNDER SECTION 192 OF THE IT ACT. IT IS FOR THE PURPOSE OF INCOME TAX AND NO WAY EXTENDS THE SCOPE OF IT LAWS. THIS CLARIFICATION WAS REITE RATED VIDE LETTER DATED 01.12.2011 BY STATING THEREIN THAT THE APPLICABILITY OF RELEVANT PROVISIO NS OF DEDUCTION OF TAX AT SOURCE, REMUNERATION (COMMISSION) EARNED BY PIGMY DEPOSIT C OLLECTORS WILL BE TREATED AS SALARY AND SUBJECT TO TDS UNDER SECTION 192 OF THE IT ACT. IN THE LIGHT OF THESE CIRCULARS, THE PAYMENT BY THE ASSESSEE TO THE PIGMY COLLECTORS CANNOT BE TERMED TO BE THE PAYMENT OF COMMISSION FOR MAKING DISALLOWANCE UNDER SECTION 40(A)(IA) FOR NON DEDUCTION OF TDS UNDER SECTION 194H OF THE ACT. IN THE LIGHT OF THESE LEGAL POSIT IONS, WE FIND NO MERIT IN THE ORDER OF THE LOWER AUTHORITIES FOR MAKING DISALLOWANCE FOR NON D EDUCTION OF TDS UNDER SECTION 194H OF THE ACT. ACCORDINGLY, ORDER OF THE CIT(A) IS SET A SIDE AND ADDITION IS DELETED. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 10 TH NOVEMBER, 2017. SD/- SD/- (JASON P BOAZ) (SUNIL KUMAR YA DAV) ACCOUNTANT MEMBER JUDICIAL MEMBER PLACE : BANGALORE DATED : 10/11/2017 /NSHYLU/* COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A)-II BANGALORE 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER SR. PRIVATE SECRETARY, ITAT, BANGALORE.