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TMI Blog2012 (5) TMI 439X X X X Extracts X X X X X X X X Extracts X X X X ..... Kolkata dated 30.11.2009 u/s. 143(3) of the Income Tax Act, 1961(hereinafter referred to as "the Act"). For the sake of brevity and clarity, we dispose of both these appeals and cross objections by this consolidated order. 2. The only issue in these appeals of revenue and Cross Objections of assessee is against the order of CIT(A) in reversing the action of Assessing Officer in making the disallowance of commission payment by invoking the provisions of section 40(a)(ia) of the Act as the assessee has not deducted tax in terms of provisions of section 194H of the Act . The revenue has raised following common ground in both the years: "On the facts and in the circumstances of the case, Ld. CIT(A) has erred in deleting the add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he addition by treating the commission paid to directors as part of salary and held that the assessee has rightly applied the provisions of section 192 of the Act for deducting TDS under the head salary. The CIT(A) while deciding the issue has relied on the case of Hon'ble Apex Court in the case of Ram Prasad V, CIT (86) ITR 122 and also Gestetner Duplicators Pvt. Ltd. vs. CIT 117 ITR 1. 4. Before us, the Ld. Sr. DR argued that Assessing Officer in para 3(a) and 3(b) of assessment order clearly stated that under provisions of section 291 of Companies Act, where directors who only direct the affairs of the company and not in service or employment of the company in the capacity of either Secretary or Manager or Accountant or otherwise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edly, the assessee has deducted tax u/s. 192 of the Act under the head salary and this fact has not been denied by revenue. Revenue's contention is that this particular payment i.e. commission paid to directors was not part of salary and it is only commission, reason being there was no employer employee relationship between company and directors and further no contractual relationship existed there. Without going into this controversy, even though the issue is covered in favour of the assessee, we are of the view that the assessee has deducted tax in both years u/s. 192 of the Act under the head salary and in view of this, this issue is covered in favour of assessee by the decision of this Tribunal "B" Bench of Kolkata in the case of DCIT v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovision it is provided that where in respect of any sum, as referred in this section, tax has not been deducted or after deduction has not been paid on or before the due date specified in sub-section (1) of section 139 of the Act, such sum shall be disallowed as a deduction while computing the income of the assessee for the previous year relevant to AY under consideration. But in the present case before us, the assessee has deducted tax, although u/s. 194C(2) of the Act and it is not a case of non-deduction of tax or no deduction of tax as is the import of section 40a(ia) of the Act. Even otherwise if it is considered that this particular sum falls under section 194I of the Act, it may be considered as tax deducted at a lower rate and it c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee has deducted tax @ 1% u/s. 194C(2) of the Act as against the actual deduction to be made at 10% u/s. 194I of the Act, thereby lesser deduction of tax. The revenue has made out a case of lesser deduction of tax and that also under different head and accordingly disallowed the payments proportionately by invoking the provisions of section 40(a)(ia) of the Act. The Ld. CIT, DR also argued that there is no word like failure used in section 40(a)(ia) of the Act and it referred to only non-deduction of tax and disallowance of such payments. According to him, it does not refer to genuineness of the payment or otherwise but addition u/s. 40(a)(ia) can be made even though payments are genuine but tax is not deducted as required u/s. 40(a)(ia) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt. If there is any shortfall due to any difference of opinion as to the taxability of any item or the nature of payments falling under various TDS provisions, the assessee can be declared to be an assessee in default u/s. 201 of the Act and no disallowance can be made by invoking the provisions of section 40(a)(ia) of the Act." 6. After going through the facts and circumstances of the case, legal proposition discussed in the case law of S. K. Tekriwal (supra) of this Tribunal, we confirm the order of CIT(A) and these two appeals of revenue are dismissed. Since, we have dismissed revenue's appeal, the Cross Objections of the assessee being supportive to the order of CIT(A) needs no adjudication and dismiss as infructuous. 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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