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2015 (7) TMI 518 - AT - Income TaxDis allowances of of commission on collection and commission on sales - CIT(A) deleted the addition - Held that - Originally these disallowances were made on the ground that there were differences between the amounts claimed in the profit and loss account and the relevant ledger accounts produced in the course of assessment proceedings. The explanation put forth by the assessee before the learned CIT(A) was that there were two concerns operated by the assessee and if the expenditure claimed in both these concerns were taken together and for the entire period under consideration, there will be no difference at all. That this claim has been examined by the learned CIT(A) and found to be correct is not in doubt as is evident from the impugned order. We find no merit in the plea raised by Revenue that the disallowance has to be sustained since the entire books of account were not produced in remand proceedings. The production of the entire books of accounts, in our view, was not required in so far as examining the veracity of the assessee s claim. What is material for examination was the copies of the ledger accounts of the concerned proprietary concerns viz. M/s. Traces and M/s. Sanforce vis-a-vis the financial statements of both these concerns from which it will become clear as to whether there is a difference in the extent of expenditure claimed as per the profit and loss account and the ledgers of the parties in the books of account. These have been produced before the authorities below in appellate and remand proceedings and it is clear from the categorical finding of the learned CIT(A) that there is no difference at all. - Decided against revenue. Disallowance under Section 40(a)(ia) - Non deduction of TDS on collection commission and sales commission - Held that - The learned Authorised Representative contends that the assessee has paid the amounts and that nothing is outstanding / payable as on the last day of the year under consideration. However, since this averment of the assessee is not discernible from the impugned order, we set aside this issue to the file of the Assessing Officer. The Assessing Officer shall ascertain whether the assessee has paid the amounts or not. In case it is found that the payments have already been made as contended by the assessee i.e. on or before 31st March, 2008, then the Assessing Officer shall examine the issue in the light of the order of the co-ordinate bench in the case of Ananda Markala (2014 (12) TMI 613 - ITAT BANGALORE) as extracted. - Decided in favour of assessee for statistical purposes.
Issues Involved:
1. Excess claim of collection commission. 2. Excess claim of sales commission. 3. Disallowance under Section 40(a)(ia) of the Income Tax Act, 1961. Detailed Analysis: 1. Excess Claim of Collection Commission: The Assessing Officer (AO) disallowed Rs. 12,46,968 due to discrepancies between the amount claimed in the profit and loss account and the books of account. The Commissioner of Income Tax (Appeals) [CIT(A)] deleted this disallowance, noting that the AO had only partially examined the books and missed entries from March 2008 for M/s. Sanforce and the entire year for M/s. Tracers. The CIT(A) found that if these amounts were considered, there was no discrepancy. The Tribunal upheld the CIT(A)'s decision, stating that the deletion of the disallowance was justified as the AO's partial examination led to an incomplete assessment. 2. Excess Claim of Sales Commission: The AO disallowed Rs. 3,66,000 due to similar discrepancies. The CIT(A) sustained only Rs. 500 of this disallowance, noting that the AO had not considered the entire claim for both proprietary concerns. The Tribunal upheld the CIT(A)'s decision, agreeing that the AO's partial examination was insufficient and the CIT(A)'s findings were correct. 3. Disallowance under Section 40(a)(ia): The AO disallowed Rs. 30,62,689 for collection commission and Rs. 35,75,500 for sales commission due to the assessee's failure to deduct tax at source. The CIT(A) sustained these disallowances. The assessee argued that these amounts were not payable at the end of the year and cited decisions from co-ordinate benches of the Tribunal supporting this view. The Tribunal noted the conflicting judicial opinions on whether Section 40(a)(ia) applies to amounts paid during the year. Following the decision of the Allahabad High Court in Vector Shipping Services Pvt. Ltd., which supports the assessee's view, the Tribunal set aside the issue to the AO to verify if the amounts were paid before 31st March 2008. If so, the AO should reconsider the disallowance in light of the Tribunal's decision in Ananda Markala. Conclusion: - The Tribunal upheld the CIT(A)'s deletion of the disallowances for excess claims of collection and sales commissions. - The Tribunal remanded the issue of disallowance under Section 40(a)(ia) to the AO for verification and reconsideration based on judicial precedents. The detailed analysis reflects the Tribunal's thorough examination of the facts, adherence to judicial precedents, and the application of relevant legal principles.
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