V RAJAGOPAL, TRICHY V. DCIT CIRCLE 3 (1), TRICHY

ITA 1744/CHNY/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6079 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 23-05-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MRS SRI SHANMUKAPRIYA
• Assessee Lawyers: KEERTHIRAJAN
• Keywords: Salary income
• Section: 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: CHENNAI . . . , !' # $ , % $& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ./ ITA NO.1744/CHNY/2018 ' (' /ASSESSMENT YEAR: 2008-09 SHRI V. RAJA GOPAL, 100, 4 TH CROSS, BHELPUR, THIRUVERAMBUR, TRICHY 620 013. VS. DY. COMMISSIONER OF INCOME TAX, CIRCLE-3(1), TRICHY. [PAN: ADYPR 3188B] ( )* /APPELLANT) ( +,)* /RESPONDENT) )* - . / APPELLANT BY : SHRI KEERTHIRAJAN, C.A +,)* - . /RESPONDENT BY : MRS. SRI SHANMUKAPRIYA, JCIT / - 0% /DATE OF HEARING : 11.12.2018 12( - 0% /DATE OF PRONOUNCEMENT : 09.01.2019 / O R D E R PER INTURI RAMA RAO, ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED A GAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-1, TIRU CHIRAPPALLI (CIT(A) FOR SHORT) DATED 12.04.2018 FOR THE ASSESSMENT YEAR (AY) 2008-09. 2. THE BRIEF FACTS OF THE CASE ARE AS UNDER: THE APPELLANT IS AN INDIVIDUAL DERIVING INCOME UND ER HEAD SALARY AND BUSINESS AND FILED HIS RETURN OF INCOME ON 05. 02.2009 FOR THE AY 2008-09 DECLARING TOTAL INCOME OF RS.36,06,356/-. A GAINST THE SAID RETURN ITA NO.1744/CHNY/2018 (AY: 2008-09) SHRI V. RAJA GOPAL :- 2 -: OF INCOME, THERE WAS NO SCRUTINY ASSESSMENT. HOWEVE R, SUBSEQUENTLY THE ASSESSING OFFICER (AO) NOTICED THAT THE APPELLA NT DERIVED SALARY INCOME AS WELL AS THE COMMISSION INCOME FROM M/S. G EECO ENERCO (P.) LTD. AND THE PROFESSIONAL INCOME WAS SHOWN UNDER HE AD INCOME FROM BUSINESS AGAINST WHICH EXPENDITURE TO THE EXTENT OF RS. 18,10,422/- WAS CLAIMED. ACCORDING TO THE AO, THE COMMISSION INCOME SHOULD BE ASSESSED UNDER HEAD INCOME FROM SALARIES THEREFORE, ISSUED A NOTICE U/S. 148 OF THE INCOME TAX ACT, 1961 (FOR SHORT TH E ACT) ON 23.02.2015 PROPOSING TO REASSESS THE TOTAL INCOME. IN RESPECT OF SAID NOTICE U/S. 148 OF THE ACT, THE APPELLANT SUBMITTED VIDE HIS LETTER DATED 02.03.2015 THAT THE ORIGINAL RETURN OF INCOME FILED, BE TREATED AS RETURN IN RESPONSE TO NOTICE U/S. 148 OF THE ACT. AGAINST THE SAID RETUR N OF INCOME, THE ASSESSMENT WAS COMPLETED BY THE DY. CIT, CIRCLE-3(1 ), TRICHY VIDE ORDER DATED 31.03.2016 DISALLOWING THE EXPENDITURE CLAIME D AGAINST COMMISSION RECEIPT BROUGHT TO TAX THE COMMISSION IN COME AND DISALLOWED THE CLAIM FOR ALLOWANCE OF EXPENDITURE. 3. BEING AGGRIEVED, AN APPEAL WAS PREFERRED BEFORE LD. CIT(A), WHO HAD CONFIRMED THE ACTION OF AO, AS NO EVIDENCE WAS PRODUCED BEFORE HIM IN SUPPORT OF THE EXPENDITURE CLAIM AGAINST THE PROFESSION RECEIPTS. HE FURTHER HELD THAT THE INCOME, SHOULD HAVE BEEN R ECEIVED IN THE FORM OF SALARY OR DISTRIBUTION OF DIVIDEND WAS TAKEN IN THE FORM OF PROFESSIONAL ITA NO.1744/CHNY/2018 (AY: 2008-09) SHRI V. RAJA GOPAL :- 3 -: CHARGES. BEING AGGRIEVED, THE APPELLANT IS IN APPE AL BEFORE US IN THE PRESENT APPEAL. 4. THE LD. COUNSEL SUBMITTED THAT THE ISSUE IN THE APPEAL WAS COVERED IN HIS FAVOUR BY THE ORDER OF THIS TRIBUNAL IN THE AY 2006-07 & 2007-08 IN ITA NOS. 2044 & 2045/MDS/2015 DATED 19.04.2016. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTATIVE PLACED RELIANCE ON THE ORDERS OF LOWER AUTHORITIES. 5. WE HEARD THE RIVAL SUBMISSION AND PERUSED THE MA TERIAL ON RECORD. THE ONLY ISSUE IN THE PRESENT CASE IS WHETHER THE R EMUNERATION RECEIVED BY THE APPELLANT FROM HIS COMPANY IN THE FORM OF CO MMISSION IS PURSUANT TO CONTRACT FOR SERVICES ENTERED BY HIM AND THE COM PANY NAMELY M/S. GEECO ENERCON (P.) LTD. OR CONTRACT OF SERVICE. THE COMPANY HAD DEDUCTED TAX AT SOURCE ON THE PAYMENT OF COMMISSION UNDER THE PROVISIONS OF S. 194H OF THE ACT AND ISSUED SEPARAT E CERTIFICATE FOR TAX DEDUCTION AT SOURCE BY THE SAID COMPANY. NO DOUBT, THE TERM SALARY HAS BEEN DEFINED TO INCLUDE THE COMMISSION RECEIVED FROM THE EMPLOYER. BUT, IT DOES NOT MEAN THAT AN ASSESSEE IS PRECLUDED FROM RECEIVING COMMISSION INCOME PURSUANT TO A CONTRACT FOR SERVIC ES ENTERED INTO BETWEEN HIM AND THE COMPANY. THERE IS NOTHING BROU GHT ON RECORD BY THE REVENUE TO SAY THAT THE SERVICES RENDERED IN RE SPECT OF WHICH THE ITA NO.1744/CHNY/2018 (AY: 2008-09) SHRI V. RAJA GOPAL :- 4 -: APPELLANT RECEIVED THE REMUNERATION IN THE FORM OF THE COMMISSION IS IN THE NATURE OF CONTRACT OF SERVICE. EVEN, THE AO HA D NOT REFERRED TO ANY TERMS OF AGREEMENT ENTERED BETWEEN THE APPELLANT AN D THE COMPANY INDICATING THAT THE TERMS OF CONTRACT ARE IN THE NA TURE OF A CONTRACT OF SERVICE. IN THESE CIRCUMSTANCES, WE DO NOT FIND ANY REASON TO HOLD THAT THE COMMISSION RECEIPT PAR TAKES THE CHARACTER OF T HE SALARY. THEREFORE, AO IS NOT JUSTIFIED IN BRINGING TO TAX COMMISSION R ECEIPTS UNDER HEAD INCOME FROM SALARY. HOWEVER, THE ONUS OF PROVING THE EXPENDITURE INCURRED FOR EARNING THE COMMISSION RECEIPTS LIES W ITH THE ASSESSEE, SINCE, NO PROOF IN SUPPORT OF THE EXPENDITURE INCUR RED FOR EARNING THE COMMISSION INCOME WAS FURNISHED BEFORE THE LOWER AU THORITIES. EVEN BEFORE US, NO EVIDENCE WAS LED IN ACCORDANCE WITH T HE PROCEDURE KNOWN TO THE LAW. THEREFORE, WE HOLD THAT THE ASSESSING O FFICER WAS JUSTIFIED IN DISALLOWING THE CLAIM FOR ALLOWANCE OF EXPENDITURE 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON THE 09 TH DAY OF JANUARY, 2019 IN CHENNAI. SD/- SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( !' # $ ) (INTURI RAMA RAO) % /ACCOUNTANT MEMBER /CHENNAI, 3 /DATED: 09 TH JANUARY, 2019. EDN, SR. P.S ITA NO.1744/CHNY/2018 (AY: 2008-09) SHRI V. RAJA GOPAL :- 5 -: - +045 65(0 /COPY TO: 1. )* /APPELLANT 4. / 70 /CIT 2. +,)* /RESPONDENT 5. 58 +0 /DR 3. / 70 ( )/CIT(A) 6. 9' : /GF