M/s. Sairam & Co., CHENNAI V. ITO, CHENNAI

ITA 3048/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7872 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2012-2013
• Appeal Filed On: 31-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V NANDA KUMAR
• Assessee Lawyers: S SRIDHAR
• Keywords: Non-deduction of tax

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI . . . , . . , BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./ ITA NO. 3048/MDS/2016 / ASSESSMENT YEAR : 2012 - 13 M/S. SAIRAM & CO., C/O S. SRIDHAR, ADVOCATE NEW NO.14, OLD NO.82, FLAT NO.5, 1 ST AVENUE, INDIRA NAGAR, ADYAR, CHENNAI PAN : ABFFS4269F V. THE INCOME TAX OFFICER, NON-CORPORATE WARD 6(3), CHENNAI ( /APPELLANT) ( !' /RESPONDENT) # /APPELLANT BY : SHRI S. SRIDHAR, ADVOCATE !' # /RESPONDENT BY : SHRI V. NANDAKUMAR, JCIT # /DATE OF HEARING : 27.12.2016 # /DATE OF PRONOUNCEMENT : 31.01.2017 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER : THIS APPEAL OF THE ASSESSEE IS FILED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-5, CHENNAI DAT ED 29.09.2016 AND PERTAINS TO THE ASSESSMENT YEAR 2012 -13. 2 I.T.A. NO. 3048/MDS/2016 2. SHRI S. SRIDHAR, THE LD. COUNSEL FOR THE ASSESSE E SUBMITTED THAT THE ASSESSEE IS A CONSIGNMENT SALE AGENT AND R ECEIVED COMMISSION ON SALE OF GOODS CONSIGNED TO THE ASSESS EE. IN FACT, THE ASSESSEE RECEIVED COMMISSION FROM OTHER PARTIES . THE ASSESSING OFFICER DISALLOWED 71,318/- UNDER SECTION 40(A)(IA) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT), FOR NON-DEDUCTION OF TAX. ACCORDING TO THE LD. COUNSEL IT IS NOT A CASE OF PAYMENT BY ASSESSEE, IT IS A CASE OF RECEIPT OF COMMISSION BY ASSESSEE. WHEN THE ASSESSEE RECEIVES COMMISSION, THERE IS NO QUEST ION OF DEDUCTION OF TAX. IT IS FOR THE OTHER PARTY TO DED UCT TAX. THEREFORE, ACCORDING TO THE LD. COUNSEL, THE CIT (APPEALS) IS NOT JUSTIFIED IN CONFIRMING ADDITION MADE BY THE ASSESSING OFFICER. 3. ON THE CONTRARY, SHRI V. NANDAKUMAR, THE LD. DEP ARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAS NOT DEDUCTED TAX IN RESPECT OF PAYMENT MADE BY M/S. SAI LAKSHMI PADMAVA TI DHALL MILL AND M/S. VENKATESWARA TRADERS. THE ASSESSEE EXPLAI NED BEFORE THE ASSESSING OFFICER THAT THE PAYMENT WAS MADE TO THE PARTIES WITH WHOM THE ASSESSEE ENGAGED AS CONSIGNMENT AGENT. TH E ASSESSING OFFICER FOUND THAT NO EVIDENCE WAS AVAILA BLE ON RECORD TO SUPPORT THAT THE ASSESSEE IS CONSIGNMENT AGENT FOR M/S. SAI 3 I.T.A. NO. 3048/MDS/2016 LAKSHMI PADMAVATI DHALL MILL AND M/S. VENKATESWARA TRADERS. THEREFORE, IT HAS TO BE CONSIDERED AS NORMAL SALES. ACCORDINGLY, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS TO DE DUCT TAX. THEREFORE, HE DISALLOWED THE CLAIM OF THE ASSESSEE TO THE EXTENT OF 71,318/-. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WHAT WAS DISALLOWED BY THE ASSESSING OFFICER IS THE CLAIM MADE BY THE ASSE SSEE UNDER THE NOMENCLATURE CONSIGNMENT SALES. WHEN THE ASSESSEE CLAIMS AS A CONSIGNMENT AGENT, THE GOODS OF THE 3 PARTIES ARE S OLD BY THE ASSESSEE AND AFTER RECOVERING THE SALE PROCEEDS FRO M THE PURCHASER WOULD DEDUCT ITS COMMISSION AND PAY THE R EST OF THE AMOUNT TO THE CONSIGNOR. EVEN IF IT IS ASSUMED THA T THERE WAS NO EVIDENCE FOR CONSIGNMENT SALE AND THE ASSESSEE ENGA GED AS A NORMAL SALES PERSON, STILL THE ASSESSEE IS SELLING THE GOODS AND COLLECTING THE SALE PROCEEDS. IN EITHER CASE, AMOU NT RECEIVED BY THE ASSESSEE AS SALE PROCEED OR COMMISSION IS NOT LIABL E FOR DEDUCTION OF TAX AT SOURCE AT THE HANDS OF THE ASSESSEE. IF THE ASSESSEE RECEIVES COMMISSION, IT IS FOR THE PAYER OF THE COM MISSION TO DEDUCT TAX AND NOT FOR THE ASSESSEE. UNDER NORMAL SALES, THE ASSESSEE 4 I.T.A. NO. 3048/MDS/2016 WOULD PURCHASE THE GOODS ON PAYMENT OR ON CREDIT AN D SELL THE SAME BY KEEPING A MARGIN OF PROFIT. IN SUCH A CASE ALSO, THERE IS NO QUESTION OF DEDUCTION OF TAX WOULD ARISE. THEREFOR E, THIS TRIBUNAL IS OF THE CONSIDERED OPINION, THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IS NOT JUSTIFIED. THEREFORE THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND ADDITION OF 71,318/- IS DELETED. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE STAND ALLOWED. ORDER PRONOUNCED ON 31 ST JANUARY, 2017 AT CHENNAI. SD/- SD/- ( . . ) ( . . . ) (D.S. SUNDER SINGH) (N.R.S. GANESAN) / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, /DATED, THE 31 ST JANUARY, 2017. JR. # ! $ % $ /COPY TO: 1. /APPELLANT 2. !' /RESPONDENT 3. &' ( )/CIT(A)-5, CHENNAI 4. &' /CIT 5. ! $ /DR 6. () /GF.