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2019 (4) TMI 781 - AT - Income TaxTDS u/s 194H - Addition u/s 40(a)(ia) - assessee is only a distributor and an intermediary between the service provider and the retailer - deduction of TDS in respect of incentive/commission/discount to the retailers of re-charge vouchers/coupon - HELD THAT - The assessee made payment to that M/s. Adeeco Flexion. Considering the judicial decisions as cited above, we set aside the impugned order of CIT(A) and remand the issue back to AO and the AO is directed to verify the fact regarding the payment of the tax by the recipient and if the AO finds that the recipient has included the amount in the total income in its return of income and paid taxes thereon, then the disallowance made by the AO by invoking the provisions of section 40(a)(ia) be deleted. We confirm the order of CIT(A) and dismiss this ground of appeal of revenue. Disallowance u/s 40(a)(ia) on contractual payment - HELD THAT - The assessee made payment to that M/s. Adeeco Flexion. Considering the judicial decisions as cited above COMMISSIONER OF INCOME TAX-1 VERSUS ANSAL LAND MARK TOWNSHIP (P) LTD. 2015 (9) TMI 79 - DELHI HIGH COURT , we set aside the impugned order of Ld CIT(A) and remand the issue back to AO and the AO is directed to verify the fact regarding the payment of the tax by the recipient and if the AO finds that the recipient has included the amount in the total income in its return of income and paid taxes thereon, then the disallowance made by the AO by invoking the provisions of section 40(a)(ia) of the Act be deleted. Unexplained cash credit - advance money for purchase of goods - HELD THAT - Advance made by the payer in this relevant assessment year as well as the fact that the goods for the amount in question has been sold by the assessee and the entire amount was adjusted in the next assessment year has not been found to be false even though brought to the notice of the department the assessee has discharged the onus casted upon it u/s. 68 of the Act. The facts narrated above has been corroborated by the assessee by placing these documents before us by producing the ledger account of M/s. Trisita Cellular which has been found placed and ledger account of M/s. Trisita Cellular for AY 2013-14 along with copies of invoice raised by the assessee found placed which goes on to show that the assessee has squared up by adjusting the sales of the goods for the amount which it has received as advance, therefore, no addition u/s. 68 is warranted and the same is directed to be deleted. - Decided in favour of assessee.
Issues Involved:
1. Disallowance under Section 40(a)(ia) read with Section 194H of the Income-tax Act, 1961. 2. Disallowance under Section 40(a)(ia) for contractual payment to M/s. Adeeco Flexion. 3. Addition on account of unexplained cash credit. Issue-wise Detailed Analysis: 1. Disallowance under Section 40(a)(ia) read with Section 194H: The primary issue in this ground was the disallowance of ?36,66,441/- made by the Assessing Officer (AO) under Section 40(a)(ia) for the non-deduction of tax at source on payments termed as incentives to retailers. The AO considered these payments as commission, which required TDS under Section 194H. The assessee argued that these were not commission payments but incentives/discounts passed on from M/s. UWPL, where the assessee acted merely as an intermediary. The Tribunal noted that the role of the assessee was limited to distribution and did not involve paying commission to retailers. The Tribunal relied on similar cases from ITAT Jaipur and ITAT Cuttack, concluding that the obligation to deduct TDS under Section 194H did not apply to the assessee. Consequently, the disallowance was deleted, and this ground of appeal was allowed in favor of the assessee. 2. Disallowance under Section 40(a)(ia) for contractual payment to M/s. Adeeco Flexion: The second issue was the disallowance of ?4,52,170/- paid to M/s. Adeeco Flexion, which the AO treated as a contractual payment requiring TDS under Section 194C. The assessee contended that M/s. Adeeco Flexion had a certificate for non-deduction of TDS under Section 197. As an alternative, the assessee requested verification of whether the recipient had included the payment in its income and paid taxes accordingly, as per the amendment in the Finance Act, 2012. The Tribunal agreed with this alternative submission, noting that the insertion of the second proviso to Section 40(a)(ia) was curative and retrospective. The Tribunal directed the AO to verify if the recipient had declared the income and paid taxes; if so, the disallowance should be deleted. The matter was remanded back to the AO for fresh adjudication. 3. Addition on account of unexplained cash credit: The third issue involved the addition of ?2,78,825/- as unexplained cash credit. The AO noted that the assessee received this amount from M/s. Trishita Cellular, with ?1,52,000/- received in cash, and questioned the identity, genuineness, and creditworthiness of the lender. The assessee explained that this was a trade advance for goods to be purchased, which was adjusted in the next financial year. The Tribunal observed that the assessee provided the necessary details, including the address and identity of M/s. Trishita Cellular, and demonstrated that the amount was adjusted against sales in the subsequent year. The Tribunal found that the assessee had discharged its onus under Section 68 and directed the deletion of the addition, allowing this ground of appeal. Conclusion: The appeal was allowed in favor of the assessee on all grounds. The Tribunal ordered the deletion of the disallowances and the addition, with specific directions for verification by the AO where necessary. The judgment emphasized the importance of correctly interpreting the nature of transactions and the applicability of TDS provisions, as well as the retrospective application of curative amendments.
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