ITO Non Corporate Ward 15(2), CHENNAI V. Gayatri Ramani, CHENNAI

ITA 2243/CHNY/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4341 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2007-2008
• Appeal Filed On: 27-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS S VIJAYA PRABHA
• Assessee Lawyers: N DEVANATHAN
• Keywords: Non-deduction of tax; TDS
• Section: 143(3); 40(a)(ia)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , D BENCH, CHENNAI . , . , BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ I.T.A.NO.2243/CHNY/2018 / ASSESSMENT YEAR: 2007-08) THE INCOME TAX OFFICER, NON CORPORATE WARD 15(2), CHENNAI. VS SMT. GAYATRI RAMANI, NO.18/3, 2 ND MAIN ROAD, NEHRU NAGAR, ADYAR, CHENNAI 600 020. PAN: AABPR6439B ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MRS. S. VIJAYAPRABHA, JCIT / RESPONDENT BY : MR. N. DEVANATHAN, ADVOCATE /DATE OF HEARING : 03.01.2019 /DATE OF PRONOUNCEMENT : 11.02.2019 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-15, CHENNAI, DATED 27.04.2018 IN ITA NO.304/2016-17/CIT(A)-15 FOR THE ASSESSMENT YEAR 2007-08 PASSED U/S.250(6) R.W.S. 143(3) & 254 OF THE ACT. 2 ITA NO.2243/CHNY/2018 2. THE REVENUE HAS RAISED THREE GROUNDS IN ITS APPEAL HOWEVER THE CRUX OF THE ISSUE IS THAT THE LD.CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE MADE BY THE LD.AO AMOUNTING TO RS.52,03,410/- INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT TOWARDS NON-DEDUCTION OF TAX ON THE DISCOUNT OFFERED TO THE CLIENTS OF THE ASSESSEE FOR SALE OF AIRLINE TICKETS WHICH IS IN THE NATURE OF COMMISSION. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND PROPRIETOR OF M/S. TRAVEL SERVICES ENGAGED IN THE BUSINESS OF AIR TRAVEL TICKET BOOKING AGENT, FILED HER RETURN OF INCOME FOR THE ASSESSMENT YEAR 2007-08 ON 31.10.2007 ADMITTING TOTAL INCOME OF RS.5,38,190/-. INITIALLY THE RETURN WAS PROCESSED U/S.143(1) OF THE ACT. SUBSEQUENTLY THE CASE WAS REOPENED AND ASSESSMENT ORDER U/S.143(3) R.W.S. 147 OF THE ACT WAS PASSED ON 14.03.2013 WHEREIN THE LD.AO DISALLOWED RS.52,03,410/- INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT TOWARDS NON-DEDUCTION OF TAX ON THE DISCOUNT OFFERED TO THE CLIENTS OF THE ASSESSEE FOR SALE OF AIRLINE TICKETS. ON APPEAL, THE LD.CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE, THEREAFTER THE REVENUE WENT ON APPEAL BEFORE THE 3 ITA NO.2243/CHNY/2018 TRIBUNAL AND THE TRIBUNAL HAD REMITTED THE ISSUE BACK TO THE FILE OF THE LD.AO FOR FRESH CONSIDERATION. EVEN IN THE SECOND ROUND, THE LD.AO DISALLOWED THE AMOUNT OF RS.52,03,410/- BY TAKING A DIFFERENT VIEW THAT IN THE CASE OF THE ASSESSEE, THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF MERYLIN SHIPPING & TRANSPORT VS. ADDL. CIT REPORTED IN 16 ITR (TRIB) 1 (SB) (2012) IS NOT APPLICABLE TO THE CASE OF THE ASSESSEE. HOWEVER ON APPEAL THE LD.CIT(A) ONCE AGAIN HELD THE ISSUE IN FAVOUR OF THE ASSESSEE BY STATING THAT THE DISCOUNT OFFERED BY THE ASSESSEE TO HER CLIENTS IN HER TRAVEL AGENCY BUSINESS CANNOT BE REGARDED AS PAYMENT ATTRACTING TDS PROVISION. NOW ONCE AGAIN THE REVENUE IS IN APPEAL BEFORE US. 4. THE LD.AR SUBMITTED BEFORE US THAT THE ASSESSEE IS IN THE BUSINESS OF SELLING AIRLINE TICKETS TO HER CLIENTS TOWARDS WHICH SHE RECEIVES COMMISSION FROM THE AIRLINES. IN TURN THE ASSESSEE PASSES ON CERTAIN PORTION OF THE COMMISSION EARNED TO HER CLIENTS BY OFFERING DISCOUNT ON THE SALE OF AIRLINE TICKET. ACCORDINGLY THE ASSESSEE HAD RECEIVED COMMISSIONS OF RS.73,20,532/- FROM THE AIRLINE COMPANIES DURING THE RELEVANT ASSESSMENT YEAR AND THE 4 ITA NO.2243/CHNY/2018 ASSESSEE HAD ALSO PASSED ON CERTAIN AMOUNT OF COMMISSION AS DISCOUNT ON SALE OF AIRLINE TICKET TO HER CLIENTS AMOUNTING TO RS.52,03,410/-. THUS THE NET INCOME EARNED BY HER DURING THE RELEVANT ASSESSMENT YEAR WAS ONLY RS.21,17,122/- (RS.73,20,532 RS.52,03,410). THE LD.AR FURTHER SUBMITTED THAT THE AIRLINE TICKETS ARE SOLD BY THE ASSESSEE TO HER CLIENTS ON CREDIT BASIS AND THE SALE PROCEEDS ARE RECEIVED FROM THEM SUBSEQUENTLY BY NETTING OFF THE DISCOUNT. THUS THE ASSESSEE DOES NOT PHYSICALLY PAY TO HER CLIENTS ANY DISCOUNT OR COMMISSION BUT ONLY THE NET SALE PROCEEDS VIZ., SALE VALUE MINUS THE DISCOUNT IS RECEIVED BY THE ASSESSEE FROM HER CLIENT. THE LD.AR FURTHER READ OUT THE PROVISIONS OF SECTION 194H OF THE ACT AS FOLLOWS: ANY PERSON, NOT BEING AN INDIVIDUAL OR A HUF, WHO IS RESPONSIBLE FOR PAYING ON OR AFTER THE FIRST DAY OF JUNE 2001 TO A RESIDENT, ANY INCOME BY WAY OF COMMISSION _____________ THE LD.AR FURTHER ARGUED STATING THAT IN THE CASE OF THE ASSESSEE, NO AMOUNT WAS PAID BY THE ASSESSEE TO HER CLIENTS AS COMMISSION BUT SHE HAS ONLY RECEIVED FROM HER CLIENT THE SALE 5 ITA NO.2243/CHNY/2018 PROCEEDS OF THE TICKET SOLD BY OFFERING CERTAIN DISCOUNT. IT WAS THEREFORE ARGUED THAT THE PROVISION OF SECTION 194H OF THE ACT IS NOT APPLICABLE IN THE CASE OF THE ASSESSEE. THE LD.DR ON THE OTHER HAND VEHEMENTLY ARGUED IN SUPPORT OF THE ORDER OF THE LD.AO ON BOTH THE OCCASIONS. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE MATERIALS ON RECORD. WE FIND MERIT IN THE SUBMISSION OF THE LD.AR. IN THE CASE OF THE ASSESSEE, THE ASSESSEE HAS ONLY RECEIVED LESSER SALE PROCEEDS FROM HER CLIENTS; THEREBY SHE HAD PASSED ON CERTAIN PORTION OF THE ELIGIBLE COMMISSION TO HER CLIENTS ON THE SALE OF AIRLINE TICKETS AS DISCOUNT. IN SUCH CIRCUMSTANCES, IT IS OBVIOUS THAT THE ASSESSEE HAS NOT PAID ANY COMMISSION TO HER CLIENTS IN ORDER TO ATTRACT THE PROVISIONS OF SECTION 194H OF THE ACT. PRECISELY THE ASSESSEE HAD ONLY RECEIVED CASH FROM HER CLIENTS FOR THE SALE OF AIRLINE TICKET AT REDUCED SALE CONSIDERATION. FURTHER IT CANNOT BE CONSTRUED THAT THE CLIENTS OF THE ASSESSEE HAS EARNED INCOME IN THE NATURE OF COMMISSION ON THE PURCHASE OF AIRLINE TICKET FROM THE ASSESSEE. COMMISSION IS NOTHING BUT REMUNERATION FOR SERVICE RENDERED. FROM THE FACTS OF THE CASE IT IS OBVIOUS THAT THE 6 ITA NO.2243/CHNY/2018 CLIENTS OF THE ASSESSEE HAVE NOT RENDERED ANY SERVICE TO THE ASSESSEE. THE ASSESSEE IS ALSO NOT RESPONSIBLE TO PAY ANY COMMISSION TO HER CLIENTS FOR THE SALE OF AIRLINE TICKETS BUT HAS ONLY GRANTED DISCOUNT ON THE SALE OF THE AIRLINE TICKET. MOREOVER THE DECISIONS RELIED BY THE REVENUE IS NOT APPLICABLE TO THE CASE OF THE ASSESSEE BECAUSE THE FACTS ARE NOT IDENTICAL. FOR THE ABOVE STATED REASONS WE DO NOT FIND IT NECESSARY TO INTERFERE WITH THE DECISION OF THE LD.CIT(A) WHO HAD DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY RELYING ON VARIOUS DECISIONS OF HIGHER JUDICIARY CITED IN HIS ORDER. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON THE 11 TH FEBRUARY, 2019 AT CHENNAI. SD/- SD/- ( ) (DUVVURU R.L REDDY) /JUDICIAL MEMBER ( . ) (A. MOHAN ALANKAMONY) / ACCOUNTANT MEMBER /CHENNAI, /DATED 11 TH FEBRUARY, 2019 RSR /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. ( )/CIT(A) 4. /CIT 5. /DR 6. /GF