2016 (4) TMI 28 - AT - Income Tax

Rectification of mistake in the order (ROM) - TDS on interest paid to Head Office (HO) and branches and commission paid to branches - disalllowance u/s 40(a)(ia) - Held that - Some merit in the assessee s claim that the tribunal, even if it does not consider the claim for commission to correspondents as at par with that allowed to HO/branches, should state its reason/s for upholding the disallowance, i.e., adjudicate the same. There is no positive or clear finding in the matter, informing as to why it considers the assessee s claim as exigible for disallowance u/s. 40(a)(ia). The claim cannot simply be brushed aside, even if, as apparent, it has not been considered as payment to self. The order should explicitly state as to why the claim does not qualify for deduction, stating its reason/s, even if, as it appears, it is for the reason of non-deduction of tax at source, which is admitted. To this extent, we find the assessee s claim for non-adjudication as valid. The impugned order is, accordingly, recalled for adjudicating the assessee s Ground in-so-far as it relates to the assessee s claim toward commission paid/allowed to correspondents. We may, it may be emphasized, not be construed as having issued any opinion in the matter; the hearing before us being limited to the mistake attending the impugned order. Before parting, we may add that there has been clearly also an omission to include the word commission along with the word interest at para 15 of the impugned order, so that the word interest therein would require being read as interest/commission . - Decided in favour of assessee

Summary

Issues:
Disposal of Ground 7 of the appeal regarding deduction of interest and commission under section 40(a)(ia) of the Income Tax Act, 1961.

Analysis:

1. The appellant raised an objection against the Tribunal's order regarding the deduction of interest and commission paid to Head Office and branches. The Tribunal allowed the claim for interest expenditure but did not consider the commission expenditure. The Tribunal directed the Assessing Officer to grant a deduction of the correct amount of interest disallowed, which was INR 21,51,539 instead of the claimed INR 33,55,026. The appellant argued that the Tribunal overlooked the commission expenditure included in the total sum. The Tribunal's decision was based on the interest paid to Head Office and branches, but it did not explicitly address the commission paid to correspondents. The Tribunal's order was recalled to adjudicate the claim for commission paid to correspondents separately.

2. The Tribunal's decision was consistent with its previous rulings and the Income Tax Act provisions. The appellant's claim for commission paid to correspondents was not explicitly considered, leading to the recall of the order for further adjudication. The Tribunal acknowledged the need to clarify the reasons for disallowing the commission claim under section 40(a)(ia) and directed a separate evaluation of this aspect. The Tribunal's decision was based on a thorough analysis of the appellant's claims and the relevant legal provisions, ensuring a fair and comprehensive assessment of the case.

3. The Tribunal's order highlighted the omission of including the word 'commission' along with 'interest' in the decision, necessitating a clarification in the final judgment. The Tribunal's approach demonstrated a commitment to addressing all aspects of the appellant's claims and ensuring a just and transparent resolution. By recalling the order for further examination of the commission claim, the Tribunal aimed to provide a detailed and reasoned decision on the disputed deduction. The Tribunal's thorough review of the case reflected a diligent and meticulous approach to resolving complex tax matters in accordance with the law.

4. In conclusion, the Tribunal's decision to recall the order for a detailed assessment of the commission claim underscored its commitment to a fair and thorough evaluation of the appellant's appeal. By acknowledging the need for clarity on the commission expenditure and directing a separate adjudication, the Tribunal upheld the principles of justice and legal scrutiny in tax matters. The Tribunal's comprehensive analysis and attention to detail in addressing the appellant's claims exemplified a judicious and principled approach to resolving tax disputes effectively.