2023 (8) TMI 381 - AT - Income Tax

TDS u/s 194H - assessee has paid commission through banking channel as well as in the form of transfer of shares - AR stated that the turnover of the assessee was below the taxable limit and therefore section 194H regarding deduction of tax at source is not applicable - revenue authorities have disallowed the same since the assessee failed to establish that it was genuine expenditure and it is also held that the assessee failed to comply with the TDS provisions u/s. 194H - HELD THAT - We think it fit to remit the matter to the file of the AO for fresh consideration in the light of additional evidence. Needless to say that the assessee may be reasonable opportunity of being heard by the AO before making fresh assessment as per law. The assessee is directed to produce all the relevant documents to substantiate its claim and avoid seeking unnecessary adjournment for early disposal of the case. The issue being common on identical facts, both the appeals are remitted to the file of Assessing Officer in the above terms. Appeals allowed for statistical purposes.

Summary

Issues involved:
The judgment deals with the disallowance of commission expenses as not genuine and non-deduction of tax at source u/s. 194H for the assessment years 2015-16 and 2016-17.

Issue 1: Disallowance of commission expenses
The assessee, engaged in share trading and related business, claimed commission expenses in kind by transfer of shares of Cipla Ltd. The Assessing Officer (AO) noted the business activities of the assessee involving tracing old shares, resolving related problems, and obtaining commission in the form of shares. The AO observed substantial business activity and investments by the assessee in earlier years. The AO disallowed the commission expenses for not deducting tax at source u/s. 194H, citing lack of evidence of nexus between commission and income earning activity. The CIT(Appeals) upheld the AO's decision. The Tribunal admitted additional evidence submitted by the assessee, noting that it impacts the issues involved. The Tribunal remitted the matter to the AO for fresh consideration in light of the additional evidence, providing the assessee with a reasonable opportunity to substantiate its claim.

Issue 2: Non-deduction of tax at source
The AO observed that the assessee failed to comply with TDS provisions u/s. 194H for commission payments made in cash and kind. The AO disallowed a significant amount due to non-deduction of tax at source. The CIT(Appeals) affirmed the AO's decision. The Tribunal, after considering the arguments of both parties and the additional evidence submitted by the assessee, remitted the matter to the AO for fresh assessment. The Tribunal directed the assessee to produce all relevant documents to support its claim and emphasized the importance of early disposal of the case.

Separate Judgment:
The Tribunal allowed both appeals for statistical purposes, remitting the matters to the Assessing Officer for fresh consideration in light of the additional evidence. Grounds related to non-pressing issues were dismissed, and general/consequential grounds required no adjudication. The common order was pronounced on August 4th, 2023.