2024 (7) TMI 712 - AT - Income Tax

TDS u/s 194H or 192 - addition u/s 40(a)(ia) - Non deduction of TDS on payment of commission to the directors - appellant has considered this payment as salary and deducted TDS on the same u/s 192 - HELD THAT - We find that the issue is squarely covered by the assessee s own case in respect of Assessment Years 2014-15 to 2016-17 2023 (2) TMI 222 - ITAT MUMBAI wherein as find commission paid to the CMD has been shown as part of salary in Form-16 for Assessment Year 2010-2011. Total salary paid for the Financial Year 2009-2010 as it appears from the impugned order which includes commission paid by assessee in the Assessment Year in question. Section 192 of the said Act, unlike other TDS provisions require deduction of tax at source under the head Salary only at the time of payment and not otherwise. We also find that the quantum of accrual of expenses is not disputed by Revenue and Shri Sharma also stated the same. Since AR had in fairness stated that the quantum or accrual of expenses is not disputed, there cannot be any perversity in the order passed by CIT(A) or by ITAT in concurring with the findings of CIT (A). No infirmity in the order passed by the Learned CIT(A) in deleting the addition made by Learned AO under Section 40(a)(ia) - Decided against revenue.

Summary

Issues:
Appeal against deletion of addition under Section 40(a)(ia) of the Income Tax Act for Assessment Year 2021-22.

Analysis:
The appeal was filed by the Revenue against the deletion of an addition under Section 40(a)(ia) of the Income Tax Act for the Assessment Year 2021-22. The controversy arose from the disallowance of an amount under Section 40(a)(ia) by the Assessing Officer due to non-deduction of tax on commission payment to directors under Section 194H, while the appellant treated it as salary and deducted TDS under Section 192. The appellant argued that the issue was covered by their own case for Assessment Years 2014-15 to 2016-17, where the Tribunal ruled in their favor. The Tribunal noted that the commission payable to whole-time directors was considered "salary income" and subject to TDS under Section 192, not Section 194J. The Tribunal also referred to a similar case where the disallowance was deleted and upheld by the High Court. The Tribunal found no infirmity in the order of the Commissioner of Income Tax (Appeals) in deleting the addition, citing precedent from the Mumbai Bench and the High Court of Bombay.

The Tribunal emphasized that Section 192 requires tax deduction on salary only at the time of payment, not accrual. The Tribunal also highlighted the importance of consistency in tax treatment, as demonstrated by the Mumbai Bench and the High Court's decisions in favor of the assessee. The Tribunal dismissed the Revenue's appeal, finding it devoid of merit and upheld the order of the Commissioner of Income Tax (Appeals) in deleting the addition under Section 40(a)(ia) of the Act for the Assessment Year 2021-22. The judgment was pronounced in open court on 05/07/2024.