2015 (12) TMI 383 - AT - Income Tax

TDS u/s 194H - disallowance under section 40 (a)(ia) - commission paid by the assessee to its agent in relation to any transaction relating to securities for procuring business for it - Held that - The impugned issue is squarely covered by various orders of the Tribunal in favour of the assessee. This Bench of the Tribunal has also taken a view in the case of ACIT vs. M/s Tandon & Mahendra (2014 (4) TMI 811 - ITAT LUCKNOW) that TDS is not required to be deducted on such payment of commission in relation to securities under section 194H of the Act. - Decided in favour of assessee

Summary

Issues:
Disallowance under section 40(a)(ia) of the Income-tax Act, 1961 for non-deduction of TDS on commission payment.

Analysis:
1. The Revenue appealed against the CIT(A)'s order, arguing that the disallowance of Rs. 35,56,116 under section 40(a)(ia) was wrongly deleted. The Assessing Officer believed that the assessee failed to deduct tax at source on commission payment to its agent for procuring business, which should have been done as per section 194H of the Act.

2. The assessee contended that no TDS was required on commission for procuring mutual fund business as it falls under the definition of Securities under the Securities Contract (Regulation) Act, 1956. The CIT(A) deleted the addition after considering the appellant's explanations, citing that the commission payment for mutual fund business did not attract section 194H provisions, as supported by case law and facts presented.

3. The Tribunal reviewed various orders and held that TDS was not required on commission payments related to securities, as per section 194H. The Tribunal cited precedents where similar issues were decided in favor of the assessee, emphasizing that no TDS was to be deducted on such payments. The Tribunal upheld the CIT(A)'s decision, confirming that the issue was covered in favor of the assessee by previous judgments.

4. The Tribunal found no merit in the Revenue's appeal, dismissing it and confirming the CIT(A)'s order. The decision was based on the consistent interpretation of the law regarding TDS on commission payments related to securities, as established by previous rulings.

This detailed analysis highlights the legal aspects and precedents considered in the judgment, ultimately leading to the dismissal of the Revenue's appeal.