M/s. Lotus Enterprises, Pune V. ACIT, Range-3, Pune

ITA 601/PUN/2010

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0830 (ITAT-PUNE)
• Duration Of Justice: 5 year(s) 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 14-09-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 19-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B C MALAKAR
• Assessee Lawyers: V L JAIN
• Keywords: Rule of consistency; Non-deduction of tax; Fair market value; Tax effect
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E , , !'#'' $ , % & BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM / ITA NO. 601/PN/2010 %' ( ')( / ASSESSMENT YEAR : 2005-06 M/S. LOTUS ENTERPRISES, ROHAN COMPLEX, 753, SADASHIV PETH, PUNE - 411030 ....... / APPELLANT PAN NO. AAAFL5665L ' / V/S. ADDL. CIT, RANGE-3, PUNE . / RESPONDENT ASSESSEE BY : SHRI V.L. JAIN REVENUE BY : SHRI B.C. MALAKAR / DATE OF HEARING : 05-10-2015 / DATE OF PRONOUNCEMENT : 30-11-2015 * / ORDER PER VIKAS AWASTHY, JM : THE APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE OR DER OF COMMISSIONER OF INCOME TAX (APPEALS)-II, PUNE DATED 26-02 -2010 FOR THE A.Y. 2005-06. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS IN THE APPEAL : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD.CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.29,20,000/-M ADE BY THE A.O. ON ACCOUNT OF DISALLOWANCE OF LOTTERY COMMISSION ON THE GROUND THAT IT IS UNREASONABLE. 2 ITA NO.601/PN/2010 A.Y. 2005-06 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE L D.CIT(A) HAS ERRED IN HOLDING THAT THE PAYMENT OF RS.29,20,000/- MADE BY THE APPELLANT TO SISTER CONCERN TO AVOID SIGNIFICANT TA X. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE L D.CIT(A) HAS ERRED IN NOT APPRECIATING THE CONTENTION OF THE APP ELLANT THAT THE PAYMENT MADE IS REASONABLE AND ALLOWED EARLIER IN T HE ASSESSMENT ORDER U/S.143(3). 4. WITHOUT PREJUDICED TO GROUND NO.1 TO 3 THE LD.CI T(A) HAS ERRED IN CONFIRMING A.O.S INFERENCE THAT THE PROVI SIONS OF TDS AND SEC. 40(A)(IA) IS APPLICABLE TO THE PAYMENT OF LOTT ERY COMMISSION EFFECTED BY THE APPELLANT. 3. THE ASSESSEE IS A PARTNERSHIP FIRM AND IS ENGAGED IN T HE BUSINESS OF TRADING IN LOTTERY TICKETS. THE ASSESSEE FILED IT S RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR ON 31-10-2005 DECLARING TOTAL INCOME OF RS.1,06,88,670/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY, ACCORDINGLY NOTICE U/S. 143(2) WAS IS SUED TO THE ASSESSEE ON 21-10-2006. IN SCRUTINY ASSESSMENT, THE ASSES SING OFFICER INTER ALIA MADE DISALLOWANCE OF RS.29,20,000/- PAID AS COMPENSATION TO M/S. LABHLAXMI ENTERPRISES U/S.40A(2)(A) OF T HE INCOME TAX ACT, 1961 (HEREINUNDER REFERRED TO AS THE A CT). THE ASSESSING OFFICER FURTHER DISALLOWED THE SAID AMOUNT UNDER T HE PROVISIONS OF SECTION 40(A)(IA) AS THE ASSESSEE HAD NOT DEDU CTED TAX AT SOURCE ON THE PAYMENT OF SAID COMMISSION/COMPENSATION. AGGRIEVED BY THE ASSESSMENT ORDER DATED 17-12-2007, T HE ASSESSEE PREFERRED AN APPEAL BEFORE THE COMMISSIONER OF I NCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) VIDE IMPUGNED ORDER CONFIRMED THE DISALLOWANCE OF THE AFORESAID AMOUNT UPHOLDING THE FINDINGS OF THE ASSESSING OFFICER. NOW, T HE ASSESSEE IS IN SECOND APPEAL ASSAILING THE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS). 3 ITA NO.601/PN/2010 A.Y. 2005-06 4. SHRI V.L. JAIN APPEARING ON BEHALF OF THE ASSESSEE SUBMIT TED THAT DURING THE SCRUTINY ASSESSMENT PROCEEDINGS THE AO HAS ERRED IN OBSERVING THAT THIS IS THE FIRST YEAR WHEN THE ASSESSE E HAS PAID HUGE COMMISSION/COMPENSATION OF RS.29,20,000/- TO ITS SISTER CONCERN. THE ASSESSING OFFICER HAS ERRED IN HOLDING THAT THE SAID COMMISSION HAS BEEN ALLEGEDLY PAID TO REDUCE THE TAX LIABILIT Y OF THE ASSESSEE, AS M/S. LABHLAXMI ENTERPRISES WAS A LOSS MAKING CONCERN. THE AO HAS FAILED TO TAKE INTO CONSIDERATION THE FACT THAT THE ASSESSEE HAS BEEN PAYING COMMISSION. M/S. LABHLAXMI ENTERPRISES IN THE EARLIER ASSESSMENT ORDERS AS WELL. TH E ASSESSMENT YEAR UNDER APPEAL IS NOT THE FIRST YEAR WHER E THE PAYMENTS ARE MADE. THE COMMISSIONER OF INCOME TAX (APPE ALS) AFTER EXAMINATION OF RECORDS HAS GIVEN THE CORRECT FINDING OF FACT THAT THE ASSESSEE HAS PAID COMMISSION IN PRECEDING ASSE SSMENT YEARS AS WELL. ALTHOUGH IN THE PRECEDING TWO ASSESSMENT YEARS M/S. LABHLAXMI ENTERPRISES HAD SUFFERED LOSS AND THERE WAS NO TAX EFFECT IN THE HANDS OF THE SAID FIRM EVEN AFTER PAYMENT OF S UCH COMMISSION. 5. THE LD. AR CONTENDED THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE DISALLOWANCE BY APPLYIN G THE REVERSE LOGIC OF THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. INDO SAUDI SERVICES TRAVEL P VT. LTD. REPORTED AS 310 ITR 306 (BOM.). IN THE SAID CASE THE HO NBLE HIGH COURT HAD DISMISSED THE APPEAL OF THE REVENUE ON THE GR OUND THAT THE DEPARTMENT WAS NOT ABLE TO SHOW THAT THE PAYMENT OF COMMISSION TO SISTER CONCERN WAS AT A HIGHER RATE AND HAS RESULTED IN TAX EVASION. IN THE PRESENT CASE, THE COMMISSIONER O F INCOME TAX (APPEALS) HELD THAT TAX BENEFIT HAS BEEN DERIVED BY T HE ASSESSEE 4 ITA NO.601/PN/2010 A.Y. 2005-06 BY MAKING PAYMENT TO LOSS MAKING SISTER CONCERN AND HEN CE THE DISALLOWANCE IS JUSTIFIED. NEITHER THE ASSESSING OFFICER NOR TH E COMMISSIONER OF INCOME TAX (APPEALS) HAS BEEN ABLE TO SHO W UNREASONABLENESS OR EXCESSIVENESS OF THE PAYMENT MADE WITH REGARD TO THE FAIR MARKET VALUE OF SERVICES. THE LD. AR R EFERRED TO CBDT CIRCLE NO.6P DATED 06-07-1968 TO SUBMIT THAT FOR MA KING DISALLOWANCE U/S. 40A(2) REASONABLENESS OF ANY EXPENDITURE IS TO BE JUDGED WITH REGARD TO THE FAIR MARKET VALUE OF THE SERVIC ES FOR WHICH THE PAYMENT IS MADE, THE LEGITIMATE NEEDS OF THE BUSINESS AND THE BENEFIT DERIVED BY THE ASSESSEE. IN THE PRESENT CASE, T HE REVENUE AUTHORITIES HAVE NOT BEEN ABLE TO SHOW FROM RECORDS THA T THE COMMISSION PAID WAS EXCESSIVE OR IT WAS NOT NECESSARY TO BE PAID OR THE FACT THAT THE ASSESSEE HAS NOT DERIVED ANY BENEFIT FROM THE PAYMENT OF SUCH COMMISSION. THE EXCESSIVE/UNREASONABLE PAYMENT HAS TO BE ESTABLISHED BY THE ASSESSING OFFICER BE FORE MAKING ANY DISALLOWANCE. IN SUPPORT OF HIS SUBMISSIONS THE LD. AR PLACED RELIANCE ON THE DECISION OF HONBLE MADRAS HIGH COUR T IN THE CASE OF CIT VS. COMPUTER GRAPHICS LTD. REPORTED AS 285 ITR 84. 5.1 IN RESPECT OF DISALLOWANCE U/S. 40(A)(IA) THE LD. AR SUBMIT TED THAT EXPLANATION TO SECTION 40(A)(IA) CLEARLY STATES THAT FO R THE PURPOSE OF SUB CLAUSE (IA) COMMISSION OR BROKERAGE SHALL H AVE THE SAME MEANING AS IN CLAUSE (I) OF THE EXPLANATION TO SECTION 194H. THE PROVISIONS RELATING TO TDS ON COMMISSION PAID ON LOTTER Y ARE CONTAINED IN SECTION 194F. THEREFORE, THE PROVISIONS OF SEC TION 40(A)(IA) ARE NOT APPLICABLE AND HENCE NO DISALLOWANCE CAN BE MADE U/S.40(A)(IA) OF THE ACT. THE LD. AR FURTHER SUBMITTED THAT IN THE EARLIER ASSESSMENT YEARS NO DISALLOWANCE WAS MADE ON PAY MENT OF SUCH COMMISSION/COMPENSATION. THE RULE OF CONSISTENCY HAS TO BE 5 ITA NO.601/PN/2010 A.Y. 2005-06 FOLLOWED IN ALLOWING THE EXPENDITURE. TO BUTTRESS HIS CONTEN TIONS THE LD. AR PLACED RELIANCE ON THE DECISION OF HONBLE SUPRE ME COURT OF INDIA IN THE CASE OF RADHASOAMI SATSANG VS. CIT REPORTED AS 193 ITR 321 (SC). 6. ON THE OTHER HAND SHRI B.C. MALAKAR REPRESENTING THE DEPARTMENT VEHEMENTLY SUPPORTED THE FINDING OF THE COM MISSIONER OF INCOME TAX (APPEALS). THE LD. DR SUBMITTED THAT THE A SSESSEE HAS NOT PLACED ON RECORD ANY AGREEMENT UNDER WHICH TH E COMMISSION HAS BEEN PAID. NO DETAILS OF THE COMMISSION PAID B Y THE ASSESSEE HAVE BEEN FURNISHED. THE COMMISSION HAS BE EN PAID BY THE ASSESSEE TO ITS LOSS MAKING SISTER CONCERN TO RE DUCE THE TAX LIABILITY. THE LD. DR FURTHER SUBMITTED THAT THE AUTHORITIES BELOW HAVE RIGHTLY HELD THAT THE COMMISSION PAID BY THE ASSESS EE IS TO BE DISALLOWED U/S.40(A)(IA) AS NO TDS WAS EVER DEDUCTED ON SUCH PAYMENTS. THE PROVISIONS OF SECTION 40(A)(IA) ARE APPLICABLE ON ENTIRE CHAPTER VIIIB OF THE ACT AND NOT ON SECTION 194 H ALONE. THE COMMISSION OR BROKERAGE DEFINED IN EXPLANATION TO SUB-CLA USE (IA) IS WITH RESPECT TO THE COMMISSIONS ON WHICH TDS HAS TO B E DEDUCTED UNDER THE PROVISIONS OF SECTION 194H BUT THIS D OES NOT PRECLUDE THE PAYMENT OF COMMISSION ON SALE OF LOTTERY WHICH ARE CONTAINED IN SECTION 194G OF THE ACT. 7. WE HAVE HEARD THE SUBMISSIONS MADE BY REPRESENTATIV ES OF BOTH THE SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIES BE LOW. FROM THE PERUSAL OF THE DOCUMENTS ON RECORD IT IS EVIDE NT THAT THE ASSESSEE HAS BEEN PAYING COMMISSION/COMPENSATION TO ITS SISTER CONCERN M/S. LABHLAXMI ENTERPRISES IN THE PRECEDING ASSE SSMENT YEARS AS WELL. THIS FACT HAS BEEN STATED BY THE COMMISS IONER OF INCOME TAX (APPEALS) IN THE IMPUGNED ORDER. THEREFORE, THE 6 ITA NO.601/PN/2010 A.Y. 2005-06 PAYMENT OF COMPENSATION/COMMISSION IN THE IMPUGNED ASSESSMENT YEAR IS NOT THE FIRST TIME WHEN SUCH PAYMENT IS MADE BY THE ASSESSEE TO ITS SISTER CONCERN. THE COMMISSIONER OF INCO ME TAX (APPEALS) HAS PLACED RELIANCE ON THE DECISION OF HONBLE BOMB AY HIGH COURT IN THE CASE OF INDO SAUDI SERVICES TRAVEL PVT. LTD. (SUPRA) FOR MAKING DISALLOWANCE U/S.40A(2). IN THE SAID CASE, THE ASSESSEE EARNED COMMISSION FROM SAUDI ARABIAN AIRLINES ON THE SALE/BOOKING OF THE TICKETS. THE ASS ESSEE APPOINTED SEVERAL AGENTS INCLUDING ITS SISTER CONCERN AND PAID INCENTIVE COMMISSION TO SUCH AGENTS BY WAY OF HANDLING CHA RGES. THE ASSESSEE PAID COMMISSION TO ITS SISTER CONCERN % MO RE THAN THE COMMISSION PAID TO OTHER SUB-AGENTS. THE ASSESSING OFFICER INVOKED THE PROVISIONS OF SECTION 40A(2) AND MADE DISALLOWAN CE OF THE EXCESS COMMISSION PAID BY THE ASSESSEE TO ITS SISTER CONCERN. IN FIRST APPEAL. THE COMMISSIONER OF INCOME TAX (APPEALS) CONFIRM ED THE DISALLOWANCE. THE TRIBUNAL REVERSED THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) AND ACCEPTED THE CONTENTIONS OF THE ASSESSEE BY ALLOWING THE INCENTIVE/COMM ISSION PAID TO ITS SISTER CONCERN WHICH WAS % MORE THAN THE O THER SUB- AGENTS. THE DEPARTMENT CARRIED THE MATTER IN APPEAL BE FORE THE HONBLE HIGH COURT. THE HONBLE HIGH COURT AFTER CONSIDE RING CBDT CIRCULAR NO.06P OF 1968 UPHELD THE FINDING OF TRIBUNAL. T HE HONBLE HIGH COURT HELD THAT THERE IS NOTHING ON RECORD TO SHOW THAT THE ASSESSEE EVADED PAYMENT OF TAX BY ALLEGED PAY MENT OF HIGHER COMMISSION TO ITS SISTER CONCERN WHERE THE SISTER CONCERN WAS ALSO PAYING TAX AT HIGHER RATE. 8. IN THE PRESENT CASE, THE ASSEESSEE HAS PAID COMMIS SION TO ITS SISTER CONCERN, HOWEVER, NOTHING HAS BEEN BROUGHT ON R ECORD BY THE 7 ITA NO.601/PN/2010 A.Y. 2005-06 DEPARTMENT TO SHOW THAT THE COMMISSION/COMPENSATION PAID BY THE ASSESSEE IS UNREASONABLE HAVING REGARD TO THE FAIR MARKE T VALUE OF THE SERVICES PROVIDED OR THE COMMISSION PAID WAS NOT IN R ESPECT OF THE LEGITIMATE NEEDS OF THE BUSINESS OF THE ASSESSEE. TH E REASONABLENESS OF THE EXPENDITURE FOR THE PURPOSE OF THE BUSINESS HAS TO BE ASCERTAINED FROM THE VIEW POINT OF THE BUSINESS MAN AND NOT THAT OF THE REVENUE. THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. COMPUTER GRAPHICS LTD. (SUPRA) WHILE DEALING WITH T HE ISSUE RELATING TO DISALLOWANCE U/S. 40A(2) HAS HELD AS UNDER : . . . . . . . .THE REASONABLENESS OF THE EXPENDITU RE FOR THE OF BUSINESS HAD TO BE ADJUDGED FROM THE VIEW POINT OF A BUSINES SMAN AND NOT THAT OF THE REVENUE, EVEN WHILE INVOKING S. 40A(2). THE TRIBUNAL HAD GIVEN A FINDING THAT THE EXPENDITURE INCURRED WAS R EASONABLE EXPENSES TOWARDS ITS SOLE SELLING AGENCY HAVING ITS OWN WORKING FORCE AND ALSO OUTLETS AS AGENTS THROUGHOUT INDIA, WHICH HAD UNDOUBTEDLY RESULTED IN THE ASSESSEES GAINING BUSI NESS AND ON A CONSIDERATION OF ALL THE FACTS IT WAS HELD THAT THE DISALLOWANCE MADE BY THE AO WAS UNJUSTIFIED. ALSO, THERE WAS NO PROO F OF EXCESSIVE UNREASONABLE PAYMENT AND HENCE, NO DISALLOWANCE COU LD BE MADE UNDER S. 40A(2) OF THE ACT. THE REASONS RECORDED B Y THE TRIBUNAL ARE BASED ON MATERIAL EVIDENCE AND DOES NOT REQUIRE INT ERFERENCE. 9. AS POINTED OUT EARLIER THAT IT IS NOT THE FIRST YEAR W HEN THE ASSESSEE HAD PAID COMMISSION TO ITS SISTER CONCERN. THE ASSESSEE HAS ALSO PAID COMMISSION/COMPENSATION IN A.Y. 2003-04 RS.58,40,000/-AND IN A.Y. 2004-05 RS.58,56,000/-. IN BOTH T HE AFORESAID ASSESSMENT YEARS THE SISTER CONCERN OF THE AS SESSEE, M/S. LABHLAXMI ENTERPRISES HAD SHOWN LOSS OF RS.36,91,325/- AND RS.35,31,634/-, RESPECTIVELY. THE DEPARTMENT IN SCRUTINY ASSESSMENT PROCEEDINGS IN THE SAID ASSESSMENT YEARS H AD ACCEPTED THE CLAIM OF THE ASSESSEE. THUS, KEEPING IN VIEW THE PRINCIP LES OF CONSISTENCY THE AFORESAID EXPENDITURE HAS TO BE ALLOWED. 10. ANOTHER REASON FOR DISALLOWING THE PAYMENT OF COMPENSATION/COMMISSION OF RS.29,20,000/- IS THAT NO TAX AT 8 ITA NO.601/PN/2010 A.Y. 2005-06 SOURCE WAS DEDUCTED ON THE PAYMENT OF SAID COMMISSION. THE AO INVOKED THE PROVISIONS OF SECTION 40(A)(IA) TO DISALLOW THE SAME . THE CONTENTION OF THE LD. AR IS THAT THE TDS ON PAYMENT OF COMMISSION ETC ON SALE OF LOTTERY TICKETS ARE COVERED UNDER SECTIO N 194G OF THE ACT, WHEREAS THE PROVISIONS OF SECTION 40(A)(IA) ARE NOT APPLIC ABLE ON PAYMENT OF SUCH COMMISSION. 11. BEFORE PROCEEDING FURTHER ON THE ISSUE, IT WOULD BE RE LEVANT TO RECAPITULATE THE PROVISIONS OF SECTION 40(A)(IA). THE SAME ARE REPRODUCED HEREUNDER : SECTION 40 NOTWITHSTANDING ANYTHING TO THE CONTRARY IN SECTIONS 30 TO [38], THE FOLLOWING AMOUNTS SHALL NOT BE DEDUCTED IN COMP UTING THE INCOME CHARGEABLE UNDER THE HEAD PROFITS AND GAINS OF BUS INESS OR PROFESSION : (A) X X X X X X X X X X (IA) [ANY INTEREST, COMMISSION OR BROKERAGE, [RENT , ROYALTY,] FEES FOR PROFESSIONAL SERVICES OR FEES FOR TECHNICAL SERVICE S PAYABLE TO A RESIDENT, OR AMOUNTS PAYABLE TO A CONTRACTOR OR SUB-CONTRACTOR, BEING RESIDENT, FOR CARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYI NG OUT ANY WORK)], ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII-B AN D SUCH TAX HAS NOT BEEN DEDUCTED OR, AFTER DEDUCTION, [HAS NOT BEEN PAID O N OR BEFORE THE DUE DATE SPECIFIED IN SUB-SECTION (1) OF SECTION 139] [PROVIDED THAT WHERE IN RESPECT OF ANY SUCH SUM, TA X HAS BEEN DEDUCTED IN ANY SUBSEQUENT YEAR, OR HAS BEEN DEDUCTED DURING THE PR EVIOUS YEAR BUT PAID AFTER THE DUE DATE SPECIFIED IN SUB-SECTION (1) OF SECTIO N 139, [THIRTY PER CENT OF] SUCH SUM SHALL BE ALLOWED AS A DEDUCTION IN COMPUTING TH E INCOME OF THE PREVIOUS YEAR IN WHICH SUCH TAX HAS BEEN PAID] [PROVIDED FURTHER THAT WHERE AN ASSESSEE FAILS TO D EDUCT THE WHOLE OR ANY PART OF THE TAX IN ACCORDANCE WITH THE PROVISIONS OF CHA PTER XVII-B ON ANY SUCH SUM BUT IS NOT DEEMED TO BE AN ASSESSEE IN DEFAULT UNDE R THE FIRST PROVISO TO SUB- SECTION (1) OF SECTION 201, THEN, FOR THE PURPOSE O F THIS SUB-CLAUSE, IT SHALL BE DEEMED THAT THE ASSESSEE HAS DEDUCTED AND PAID THE TAX ON SUCH SUM ON THE DATE OF FURNISHING OF RETURN OF INCOME BY THE RESID ENT PAYEE REFERRED TO IN THE SAID PROVISO] EXPLANATION : FOR THE PURPOSES OF THIS SUB-CLAUSE, (I) COMMISSION OR BROKERAGE SHALL HAVE THE SAME M EANING AS IN CLAUSE (I) OF THE EXPLANATION TO SECTION 194H. 12. THE CONTENTION OF THE LD. AR IS THAT THE COMMISSION A ND BROKERAGE REFERRED TO IN SECTION 40(A)(IA) REFERS TO THE COM MISSION 9 ITA NO.601/PN/2010 A.Y. 2005-06 AND BROKERAGE DEFINED IN EXPLANATION TO SECTION 194H, THER EFORE, IT IS NOT APPLICABLE ON THE PAYMENT OF COMMISSION ETC. U/S.194G. 13. THE PROVISIONS OF SECTION 40(A)(IA) DEALS WITH PAYMENT OF A NY (I) INTEREST, (II) COMMISSION OR BROKERAGE, (III) RENT, (IV) ROYALTY, (V) FE E FOR PROFESSIONAL SERVICES, (VI) FEE FOR TECHNICAL SERVICES AND (VII) AMOUNT PAYABLE TO CONTRACTORS OR SUB-CONTRACTORS. ON THE AFORESAID ELEMENTS OF SECTION 40(A)(IA), THE TAX AT SOURCE IS TO BE DEDUCTED UNDER DIFFERENT SECTIONS OF CHAP TER XVIIB. THE SAME ARE TABULATED HERE-IN-UNDER: CHAPTER XVII-B RELEVANT SECTIONS : INTEREST COMMISSION OR BROKERAGE FEES FOR TECHNICAL SERVICES FEES FOR PROFESSIONAL SERVICES PAYMENT TO CONTRACTORS/SUB-CONTRACTORS RENT PAYMENT OF ROYALTY TO A RESIDENT 193 OR 194A 194H 194J 194J 194C 194-I 194J THUS, IN THE AFORESAID SUB-CLAUSE (IA) OF SECTION 40 THERE IS NO REFERENCE TO THE PAYMENT OF COMMISSION ETC. ON THE SALE O F LOTTERY TICKETS. THE TAX AT SOURCE IS TO BE DEDUCTED ON SUCH PAYMENTS U/S. 194G OF THE ACT. IN OUR CONSIDERED VIEW, NON-DEDUCTION OF TAX AT SOURCE ON PAYMENT OF COMMISSION, REMUNERATION ETC. ON SALE OF THE LOTTERY TICKETS DOES NOT FALL WITHIN THE AMBIT OF THE PROVISI ONS OF SECTION 40(A)(IA). WE FIND FORCE IN THE SUBMISSIONS OF THE LD. AR AND ACCORDINGLY ACCEPT THE SAME. 10 ITA NO.601/PN/2010 A.Y. 2005-06 14. IN VIEW OF OUR FINDINGS GIVEN ABOVE, WE ACCEPT THE AP PEAL OF THE ASSESSEE AND SET ASIDE THE FINDING OF THE COMMISSIONER OF INCOME TAX (APPEALS) ON THE ABOVE ISSUE. 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON MONDAY, THE 30 TH DAY OF NOVEMBER, 2015. SD/- SD/- (R.K. PANDA) (VIKAS AWASTHY) ACCOUNTANT MEMBER JUDICIAL MEMBER / PUNE; / DATED : 30 TH NOVEMBER, 2015 SATISH/RK *+,%-.#/#)- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. CIT(A)-II, PUNE 4. CIT-II, PUNE 5. !' ##$% , & $% , B '() , / DR, ITAT, B BENCH, PUNE. 6. '*+ ,- / GUARD FILE. // # // TRUE COPY// &. / BY ORDER, #/ $) / PRIVATE SECRETARY, & $% / ITAT, PUNE