The DCIT, Circle-3, Surat V. Shri Jigarbhai Thakorbhai Dave, Surat

ITA 3381/AHD/2010

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89307 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 4 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-04-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 15-04-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 23-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROOP CHAND
• Assessee Lawyers: M K PATEL
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD (BEFORE SHRI SHAILENDRA KR. YADAV, J.M. & SHRI ANIL CHATURVEDI, A.M.) I.T. A. NO. 3381/AHD/2010 (ASSESS MENT YEAR: 2007-08) THE D.C.I.T. CIRCLE-3, SURAT V/S SHRI JIGARBHAI THAKORBHAI DAVE 29-30, PRASHANT NAGAR, NR. PALANPUR JAKAT NAKA, SURAT (APPELLANT) (RESPONDENT) PAN: ADIPD9231F APPELLANT BY : SHRI ROOP CHAND, SR. D.R. RESPONDENT BY : SHRI M.K. PATEL, A.R. ( )/ ORDER DATE OF HEARING : 15-04-2015 DATE OF PRONOUNCEMENT : 24 -04-2015 PER SHRI ANIL CHATURVEDI,A.M. 1. THIS APPEAL FILED BY THE REVENUE IS AGAINST THE ORD ER OF CIT(A)-II, SURAT DATED 14.10.2010 FOR A.Y. 2007-08. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 3. ASSESSEE IS AN INDIVIDUAL STATED TO BE DERIVING INC OME FROM BANK LOAN COMMISSION AGENCY. ASSESSEE FILED HIS RETURN OF INC OME FOR A.Y. 2007-08 ON 31.10.2007 DECLARING TOTAL INCOME OF RS. 6,80,87 3/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED UNDER SECTION ITA NO 3381 /AHD/2010 . A.Y. 2007-08 2 143(3) VIDE ORDER DATED 30.11.2009 AND THE TOTAL IN COME WAS DETERMINED AT RS. 86,86,360/-. AGGRIEVED BY THE ORDER OF A.O., A SSESSEE CARRIED THE MATTER BEFORE LD. CIT(A) WHO VIDE ORDER DATED 14.10 .2010 GRANTED SUBSTANTIAL RELIEF TO THE ASSESSEE. AGGRIEVED BY TH E AFORESAID ORDER OF LD. CIT(A), REVENUE IS NOW IN APPEAL BEFORE US AND THE ONLY EFFECTIVE GROUND RAISED READS AS UNDER:- 1. ON THE FACTS AND CIRCUMSTANCE OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE U/S 40(A)(IA), AS THE ASSESSEE HIMSELF HAS PAID BROKERAGE/COMMISSION TO PERSONS WHO WERE ENGAGED BY HIM AS HIS SELLING AGENT. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A.O NO TICED THAT ASSESSEE HAD DEBITED RS. 64,40,724/- ON ACCOUNT OF COMMISSION/BR OKERAGE BUT ON THE AFORESAID EXPENSE, NO TDS WAS DEDUCTED BY THE ASSES SEE. A.O WAS OF THE VIEW THAT ASSESSEE WAS REQUIRED TO DEDUCT TDS U/S. 194H OF THE ACT ON THE COMMISSION/BROKERAGE PAYMENTS AND ON ACCOUNT OF NON DEDUCTION OF TDS, PROVISIONS OF SECTION 40(A)(IA) WERE APPLICABLE AND THEREFORE ON FAILURE TO DEDUCT TDS U/S. 194H, THE EXPENDITURE OF BROKERAGE/ COMMISSION WAS NOT ALLOWABLE. HE ACCORDINGLY DISALLOWED RS. 64,40,724 U/S. 40(A)(IA) OF THE ACT. AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED TH E MATTER BEFORE LD. CIT(A) WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE DELETED THE ADDITION BY HOLDING AS UNDER:- 4.1 THE FIRST GROUND OF APPEAL IS AGAINST THE ADDITION OF RS. 64,40,724/- U/S. 40(A)(IA) OF THE ACT, ON GROUNDS OF NON-DEDUCTION OF TDS. THE AS SESSING OFFICER HAS HELD THAT THE APPELLANT HAS MADE PAYMENT OF COMMISSION/BROKERAGE OF THE ABOVE AMOUNT ON WHICH TDS WAS LIABLE TO BE DEDUCTED U/S. 194H OF TH E ACT. THE APPELLANT'S CONTENTION IS THAT THOUGH THE ABOVE AMOUNT FOR THE SAKE OF CONVENIENCE HAS BEEN DEBITED UNDER THE HEAD 'COMMISSION/BROKERAGE' IN TH E P&L A/C, IT IS ACTUALLY NOT PAYMENT OF COMMISSION /BROKERAGE, BUT SHARING OF RE VENUE /INCOME RECEIVED FROM ITA NO 3381 /AHD/2010 . A.Y. 2007-08 3 THE ICICI BANK OF WHICH HE IS A DIRECT SELLING AGEN T (DSA), WITH HIS ASSOCIATE BUSINESS PARTNERS, WHO ARE ALSO GETTING BUSINESS FO R THE BANK, BUT THEY NOT BEING THE DSA, THE ENTIRE BUSINESS BROUGHT BY THEM IS REFLECT ED IN BANK'S BOOKS AGAINST THE NAME OF THE APPELLANT AND ACCORDINGLY, COMMISSION/B ROKERAGE ON THE BUSINESS BROUGHT BY THEM IS PAID BY THE BANK TO THE APPELLAN T, AFTER DEDUCTION OF TDS AND THE APPELLANT IN TURN, MAKES THE PAYMENT TO THE ASSOCIA TE PARTNERS OF THEIR SHARE OF COMMISSION/BROKERAGE . THE ARGUMENT OF THE APPELLAN T, THEREFORE, IS THAT SINCE HE HAS NOT KEPT AGENTS FOR HIS WORK AND THERE IS NO CO NTRACT BETWEEN HIM AND THE ASSOCIATES PARTNERS, THE PAYMENT MADE TO THEM ARE N OT IN THE NATURE OF COMMISSION/ BROKERAGE AND ,THEREFORE, NOR COVERED BY SECTION 19 4H OF THE ACT. THE APPELLANT HAS ALSO RELIED UPON VARIOUS DECISIONS CITED IN HIS REP LY REPRODUCED ABOVE. 4.2 I HAVE DULY CONSIDERED THE REPLY OF THE APPELLANT A ND THE DISCUSSION MADE IN THE ASSESSMENT ORDER AND FIND THAT THE ASSESSING OFFICE R HAS NOT DISPUTED THAT THE APPELLANT HAS FROM THE COMMISSION/BROKERAGE RECEIVED FROM THE ICICI BANK M ADE PAYMENT TO SOME PERSONS. HE HAS ALSO NOT DISPUTED T HE FACT THAT THE PERSONS TO WHOM APPELLANT HAS PAID COMMISSION/BROKERAGE HAVE BROUGH T CUSTOMERS FOR CAR FINANCING. FURTHER, IT IS NOT A MATTER OF DISPUTE THAT THE APP ELLANT IS HIMSELF NOT FINANCING CAR LOANS, BUT IT IS DONE BY THE ICICI BANK. IN OTHER W ORDS, DISBURSEMENT OF CAR LOANS/FINANCE TO THE CUSTOMERS BROUGHT BY THE PERSO NS TO WHOM THE APPELLANT HAS PAID COMMISSION/BROKERAGE HAS BEEN MADE BY THE ICIC I BANK AND NOT THE APPELLANT. THUS, THE PERSONS TO WHOM THE APPELLANT HAS MADE PA YMENT OF COMMISSION/BROKERAGE HAVE NOT DONE ANY BUSINESS OR WORK FOR THE APPELLANT. IT IS FOR THIS REASON THAT THE APPELLANT IS MAKING PAYMENT OF COMMISSION / BROKERAGE OUT OF COMMISSION/BROKERAGE RECEIVED FROM THE ICICI BANK, AND THEREFORE DEBITED THE AMOUNT PAID TO THE AFORESAID PERSONS UNDER THE HEAD 'COMMISSION/BROKERAGE EXPENSES', AND FOR THE SAME REASONS THE AMOUNT ON W HICH TDS HAS ALREADY BEEN MADE BY THE BANK, NO FURTHER TDS IS REQUIRED TO BE MADE. I, ACCORDINGLY, HOLD THAT SECTION 194H IS NOT APPLICABLE ON SUCH PAYMENTS. I ALSO FIND THAT THE RATIO OF DECISIONS IN THE CASE OF ABP(P) V/S ACIT, ITAT CAL CUTTA BENCH (SUPRA) AND ITO V/S, BHASIN MOTORS INDIA (P) LTD, ITAT I BENCH DELHI (SUPRA), APPLICABLE TO THE FACTS OF APPELLANT'S CASE. I, THEREFORE, ALLOW THE FIRST GROUND OF APPEAL. ITA NO 3381 /AHD/2010 . A.Y. 2007-08 4 5. AGGRIEVED BY THE AFORESAID ORDER OF LD. CIT(A), REV ENUE IS NOW IN APPEAL BEFORE US. 6. BEFORE US, LD. D.R SUPPORTED THE ORDER OF A.O AND F URTHER SUBMITTED THAT WHILE DECIDING THE ISSUE IN FAVOUR OF THE ASSESSEE, LD. CIT(A) DID NOT APPRECIATE THAT THE VARIOUS PERSONS TO WHOM COMMISS ION WAS PAID BY THE ASSESSEE WERE EMPLOYED BY HIM AND NOT BY THE BANK A ND THEREFORE A.O WAS FULLY JUSTIFIED IN MAKING THE ADDITION. LD. A.R. ON THE OTHER HAND REITERATED THE SUBMISSIONS MADE BEFORE A.O AND LD. CIT(A) AND FURTHER SUBMITTED THAT ASSESSEE HAS PAID SIMILAR COMMISSION/BROKERAGE IN E ARLIER YEARS AND SUBSEQUENT YEARS BUT NO DISALLOWANCE U/S. 40(A)(IA) HAS BEEN MADE BY THE A.O AND THEREFORE EVEN ON THE PRINCIPLE OF CONSISTE NCY, NO DISALLOWANCE OF EXPENSES WAS REQUIRED IN THE PRESENT CASE. HE THUS SUPPORTED THE ORDER OF LD. CIT(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT LD. CIT(A) WHILE DELETED THE ADDITION HAS NOTED THAT PROVISIONS OF SECTION 194H ARE NOT APPLICABLE TO THE PAYMENTS MAD E BY THE ASSESSEE AND FURTHER HAD RELIED ON THE DECISION IN THE CASE OF A BP(P) VS. ACIT 23 SOT 28 (DEL) AND DECISION IN THE CASE OF ITO VS. BHASIN MO TORS INDIA (P) LTD. 16 SOT 319 (DEL). BEFORE US, REVENUE HAS NOT BROUGHT ANY MATERIAL ON RECORD TO POINT OUT ANY DISTINGUISHABLE FEATURES IN THE DE CISIONS RELIED UPON BY LD. CIT(A) NOR HAS BROUGHT ON RECORD ANY CONTRARY BINDI NG DECISIONS IN ITS SUPPORT. BEFORE US, IT IS ALSO LD. A.RS SUBMISSION THAT ON SIMILAR PAYMENTS MADE BY THE ASSESSEE IN EARLIER AND SUBSEQUENT YEAR S, NO DISALLOWANCE U/S 40(A)(IA) WAS MADE BY REVENUE. BEFORE US, REVENUE H AS NOT BROUGHT ANY ITA NO 3381 /AHD/2010 . A.Y. 2007-08 5 MATERIAL ON RECORD TO CONTROVERT THE AFORESAID SUBM ISSIONS OF LD. A.R. IN VIEW OF THE AFORESAID FACTS, WE ARE OF THE VIEW THA T IN THE ABSENCE OF ANY MATERIAL LEADING TO DIFFERENT CONCLUSION, REVENUE C ANNOT TAKE A DIFFERENT STAND IN THE PRESENT CASE VIS--VIS OTHER YEARS. WE THEREFORE FIND NO REASON TO INTERFERE WITH THE ORDER OF LD. CIT(A) AND THUS THE GROUND OF REVENUE IS DISMISSED. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN OPEN COURT ON 24 - 04 - 2015. SD/- SD/- (SHAILENDRA KR. YADAV) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR S ITAT, AHMEDABAD