Income Tax Officer, Chandigarh V. Sh.Sunil Aggarwal, Chandigarh

ITA 698/CHANDI/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80931 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 15-10-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 06-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Additional evidence; Assessment record

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R. SOOD, ACCOUNTANT MEMBER ITA NO. 698/CHD/2014 ASSESSMENT YEAR: 2008-09 THE ITO VS. SH. SUNIL AGGARWAL W-5 (1) PROP. SUNIL & COMPANY CHANDIGARH SECTOR-26 CHANDIGARH PAN NO.AANP9904G (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MANJIT SINGH RESPONDENT BY : SHRI. TEJ MOHAN SINGH DATE OF HEARING : 15/10/2014 DATE OF PRONOUNCEMENT : 17/10/2014 ORDER PER T.R.SOOD, A.M. THE APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE LD. CIT(APPEALS) CHANDIGARH ON 30.05.2014. 2. IN THIS APPEAL REVENUE HAS RAISED THE FOLLOWING GROUNDS : I. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) HAS ERRED IN DELETING THE ADDITION U/S 40(A)(IA) OF RS. 20,73,166 BY HOLDING THAT THE PAYMENTS MADE BY THE ASSESSEE ARE NOT PAYMENTS OF COMMISSION AND THEREFORE PROVISION OF S.194H DOES NOT APPLY ON THESE PAYMENTS WHEREAS AS PER CBDT CIRCULAR NO. 619 2 ISSUED ON 04.12.1991 ON THE SUBJECT HAS PRESCRIBED THAT TAX HAS TO BE DEDUCTED U/S 194H ON ALL SUCH PAYMENTS. II. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) HAS ERRED IN DELETING THE ADDITION U/S 40(A)(IA) OF RS. 20,73,166 BY HOLDING THT THE PAYMENTS MADE BY THE ASSESSEE ARE NOT PAYMENTS OF COMMISSION AND THEREFORE PROVISION OF S. 194H DOES NOT APPLY ON THESE PAYMENTS WHEREAS HONBLE HIGH COURTS IN THE CASES OF COMMISSIONER OF INCOME TAX VS. IDEA CELLULAR LTD. (2010) 325 ITR 148 (DEL) AND VODAFONE ESSAR CELLULAR LTD VS. ASSISTANT COMMISSIONER OF INCOME TAX(2010) 235 CTR 393 (KER) HAS LAID DOWN THE RATIONALE THAT SUCH PAYMENTS ARE NOT SALES BUT THE COMMISSION AND ARE THEREFORE LIABLE TO DEDUCTION OF TAX U/S 194H. III. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE FINDINGS OF THE LD. CIT(A) IN DELETING THE ADDITION U/S 40(A)(IA) OF RS. 20,73,166 ARE PERVERS E AS THERE IS NO MATERIAL ON THE ASSESSMENT RECORD ON THE BASIS OF WHICH IT COULD BE SAID THAT THE PAYMENTS ARE REBATE AND NOT COMMISSION AND ALSO THAT PAYMENTS MADE TO EACH OF THE RETAILER IS LESS THAN RS. 2500/- AND AS PER APPELLATE ORDER NEITHER ANY FURTHER INQUIRY HAS BEEN MADE OR GOT MADE BY THE LD. CIT(A) NOR ANY ADDITIONAL EVIDENCE HAS BEEN ADMITTED UNDER RULE 46A BY THE LDF. CIT(A). 3. AFTER HEARING BOTH THE PARTIES WE FIND THAT DURI NG THE ASSESSMENT PROCEEDINGS IT WAS NOTICED THAT ASSESSEE HAS RECEIVED COMMISSION OF RS. 35,50,569/- FROM SALE OF SIM CARDS OF AIRTEL AND SPICE. THE ASSESSEE HAS SHOWN GROSS PROF IT OF RS. 14,77,403/- THIS MEANS THE ASSESSEE MUST HAVE PAID COMMISSION OF RS. 20,73,166/-, ON SUCH COMMISSION NO TAX WAS D EDUCTED U/S 194H. 3 4. ON AN ENQUIRY IT WAS SUBMITTED THAT THERE IS NO MENTION OF ANY COMMISSION PAYABLE IN THE AGREEMENT AND AS SUCH PUR CHASE TRANSACTION HAVE BEEN BOOKED AT DISTRIBUTORS RATE. THE ASSESSING OFFICER DID NOT ACCEPT THIS CONTENTION AND FOLLOWING THE DE CISION OF HONBLE DELHI HIGH COURT IN CASE OF CIT VS. IDEA CELLULAR S ERVICES 325 ITR 148, HELD THAT TAX WAS DEDUCTIBLE AND THEREFORE THIS EXP ENDITURE WAS NOT ALLOWABLE U/S 40(A)(IA). 5. ON APPEAL IT WAS MAINLY SUBMITTED THAT ASSESSEE HAD ALLOWED REBATE OF RS. 20,73,166/- TO THE RETAILERS. IT WAS FURTHER SUBMITTED THAT REBATE GIVEN TO THE SUCH RETAILER WAS LESS THAN RS . 2500/- AND THEREFORE PROVISION OF SECTION 194H IS NOT APPLICABLE. 6. THE LD. CIT AGREED WITH THIS CONTENTION AND DECI DES THE ISSUE IN FAVOUR OF THE ASSESSEE. 7. BEFORE US LD. DR STRONGLY SUPPORTED THE ORDER OF AO. 8. ON THE OTHER HAND LD. COUNSEL FOR THE ASSESSEE S TRONGLY SUPPORTED THE IMPUGNED ORDER AND ALSO REFERRED TO T HE LIST OF RETAILERS TO WHOM REBATE WAS GIVEN AND POINTED OUT THAT REBAT E GIVEN TO INDIVIDUAL RETAILER WAS LESS THAN RS. 2500/-. 9. AFTER CONSIDERING THE RIVAL SUBMISSION WE FIND T HAT THIS ISSUE HAS BEEN DECIDED BY THE LD. CIT(A) VIDE PARA 5 WHICH IS AS UNDER : I HAVE CONSIDERED THE FACTS OF THE CASE. IT IS CO RRECT THAT THE COMMISSION WAS ALLOWED TO THE DISTRIBUTOR BY THE SERVICE PROVIDER COMPANIES VIZ. AIRTEL AND SPICE AN D OUT OF THIS COMMISSION, REBATE WAS GIVEN TO RETAILERS AND SMALL SHOPKEEPERS. THE REBATE ALLOWED CANNOT BE TREATED A S COMMISSION U/S 194H AND SO TAX WAS NOT REQUIRED TO BE 4 DEDUCTED AT SOURCE ON THESE PAYMENTS. THEREFORE, PROVISIONS OF SECTION 40(A)(IA) WILL NOT BE APPLICA BLE TO THE IMPUGNED REBATE ALLOWED TO THE RETAILERS. EVEN OTHE RWISE ALSO, THE REBATE ALLOWED TO EACH OF THE RETAILERS I S LESS THAN RS. 2500/- AND SO THE PROVISIONS OF SECTION 194H WI LL NOT BE APPLICABLE. THE ADDITION MADE BY THE ASSESSING OFFI CER IS ACCORDINGLY DELETED. GROUNDS OF APPEAL TAKEN BY THE APPELLANT ARE ALLOWED. 10. IN OUR OPINION THE LD. CIT HAS CORRECTLY DECIDE D THE ISSUE. WE HAVE ALSO PERUSED THE LIST AND MAXIMUM REBATE ALLOW ED TO EACH OF THE SHOPKEEPERS WAS LESS THAN RS. 2500/- THEREFORE, SEC TION 194H WAS NOT APPLICABLE. ACCORDINGLY WE SET ASIDE THE ORDER OF L D. CIT AND DELETE THE ADDITION. 11. IN THE RESULT APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17/10/2014 SD/- SD/- (BHAVNESH SAINI) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 17 TH OCTOBER 2014 AG COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, TH E CIT(A), THE DR