2021 (1) TMI 778 - AT - Income Tax

Non deduction of TDS on expenditure on account of Advertisement Publicity expenses - HELD THAT - As amount of ₹ 42,340/- consists of an amount of ₹ 17,340/- paid on account of advertisement and since the amount is less than ₹ 20,000/-, the provisions of Section 194C are not attracted. Further, out of ₹ 42,340/- an amount of ₹ 25,000/- has been paid on account of car expenses and Section 194C does not impose a liability on the payer to deduct TDS as there is no contract between the assessee and recipient. Hence, the disallowance made by the AO is hereby directed to be deleted. Addition made under the head unverifiable sundry creditors - HELD THAT - Payment which is due to be paid to an entity namely, M/s Infotech Services is no more a liability owing to non-furnishing of details. We find from the record before us at page no. 102 of paper book, the confirmation and the copy of account filed by the assessee with regard to M/s Infotech Services. Since, it cannot be said that the liability has ceased, the addition made by the revenue is hereby deleted. Addition on account u/s 41(1) - HELD THAT - We find from the record that these receipts are in the nature of security deposit and also have been paid subsequently to all the three parties mentioned above. Hence, considering the entire factum and since the payment have already been made, no addition u/s 41(1) is called for. Appeal of the assessee is allowed.

Issues:
1. Disallowance of commission and brokerage expenses
2. Disallowance of advertisement and publicity expenses
3. Addition under unverifiable sundry creditors
4. Addition under Section 41(1) of the Income Tax Act

1. Disallowance of Commission and Brokerage Expenses:
The appeal challenged the disallowance of commission and brokerage expenses. The assessee argued that the disallowance was unjustified as the provisions of section 194G were inapplicable to the payment made. The contention was that no tax deduction was required for the amount under dispute. The Tribunal did not address this issue as it was not pressed by the assessee.

2. Disallowance of Advertisement and Publicity Expenses:
The dispute involved the disallowance of &8377;42,340 for advertisement and publicity expenses due to non-deduction of TDS. The Tribunal found that the disallowance was unwarranted as the amount paid was below the threshold for TDS deduction under Section 194C. Additionally, part of the amount was for car expenses, which did not require TDS deduction as there was no contractual obligation. Consequently, the disallowance was directed to be deleted.

3. Addition under Unverifiable Sundry Creditors:
The addition of &8377;59,000 under unverifiable sundry creditors was contested. The revenue claimed that the liability to M/s Infotech Services was no longer valid due to lack of details. However, the Tribunal reviewed the confirmation and account documents provided by the assessee, concluding that the liability had not ceased. Therefore, the addition was deleted.

4. Addition under Section 41(1) of the Income Tax Act:
The addition of &8377;12,85,348 under Section 41(1) was examined concerning payments to various parties. The CIT (A) upheld the addition due to the absence of confirmations and evidence. The Tribunal noted that the payments were security deposits subsequently paid to the parties mentioned. As the payments had already been made, no addition under Section 41(1) was deemed necessary. Consequently, the appeal of the assessee was allowed.

This judgment highlights the meticulous analysis of each issue raised by the assessee, focusing on the applicability of tax provisions and the substantiation of liabilities and payments. The Tribunal's decision reflects a thorough consideration of the legal framework and factual evidence presented, resulting in the allowance of the appeal based on the merit of each contention.

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