2021 (7) TMI 450 - AT - Income Tax

TDS u/s 194H - 'Commission and Shipping Charges' - Disallowing the expenses related to commission and shipping charges - HELD THAT - We have gone through the record before us and find that the confusion arose owing to the deduction of TDS by the assessee u/s. 194H and dissimilar approaches taken by the assessee in recording the fact and the interpretation of the same by the revenue. We hold that the interest of justice would be well served if the matter is remanded back to the file of the AO with direction to the assessee to file proper reconciliation statements. AO would go through the same and deal with it in accordance with the approved accounting standards and provisions of the Income Tax Act. - Appeal of the assessee is allowed for statistical purposes.

Summary

Issues:
Disallowed expenses related to commission and shipping charges.

Analysis:
The appeal was filed against the order of the Ld. CIT(A)-12, New Delhi disallowing expenses related to commission and shipping charges. The assessee, a sole proprietor of M/s. Zacco India, sells items through e-commerce websites like Amazon, Flipkart, and Snapdeal. The e-commerce operators provide various services such as marketing, packaging, logistics, and collection of payments. The operators charge fees for these services, and the assessee deducted TDS on the entire invoice value under 'Commission and Shipping Charges.'

The AO sought confirmation from the e-commerce operators regarding the nature and value of transactions with the assessee. Snapdeal provided incomplete information, while Flipkart detailed the fees charged. However, there was a discrepancy in the amount mentioned by Flipkart and claimed by the assessee. Amazon Seller Services mentioned difficulties in collating information based on the PAN provided.

The Ld. CIT(A) held that the assessee failed to substantiate the genuineness of the expenses. The Tribunal observed a confusion due to TDS deduction by the assessee and different recording approaches. The matter was remanded to the AO with directions for the assessee to file proper reconciliation statements to be dealt with in accordance with accounting standards and Income Tax Act provisions. The appeal was allowed for statistical purposes.

This judgment highlights the importance of proper documentation and reconciliation in claiming expenses. The discrepancy in the amounts mentioned by the e-commerce operators and claimed by the assessee led to the need for a detailed reconciliation process. The Tribunal emphasized adherence to accounting standards and tax provisions for a just resolution.