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TMI Blog2014 (1) TMI 304X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the expenses incurred by the concerned party on behalf of the assessee – thus, the Revenue authority is not correct in taking such expenses as commission expenses - The finding of Revenue Authorities is on presumption basis, without considering the relevant agreement/documents and books of account maintained by the assessee - orders of Revenue Authorities set aside and the claim of the assessee is allowed - this is not a commission payment, thus, there is no question of deducting tax at source under Section 194H of the Act - the payment is not subject to tax deducted at source, provisions of Section 40(a)(ia) of the Act is not applicable – Decided in favour of Assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... e by the A.O. has been confirmed by the CIT(A) as under:- (Paragraph no.5, page nos.7 & 8) "5. I have carefully considered the assessment order as well as the written submission of the appellant company. I find that in the Assessment Year 2007-08, an identical issue was adjudicated upon by the CIT(A)-II, Agra wherein the following decisions has been given. "I have analyzed the matter and find that after going through the submissions made by the ld. AR it is abundantly clear that the expenses reimbursed have no co-relation with the expenses incurred by the consignee agents. This position is clear from the submissions made wherein it has been stated that on perusal of the copy of account and of the details of the expenses incurred by them ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in each transaction. (ii) As per OXFORD DICTIONARY Payment to an agent for selling goods or services. (iii) By FARLEX DICTIONARY A fee paid based on a percentage of the sale made by an employee or agent, as distinguished from regular payments of wages or salary. (iv) As per WEBSTER'S DICTIONARY The fee given an agent or sales person for his or her services. (v) As per Dictionary of CULTUIRAL LITERACY ECNOMICS A fee paid to a broker or other financial agents for negotiating a sale. The fee is based on percentage of sale price. 5.1 In the light of above dictionary meaning, if we see the facts of the case under consideration, we notice that the assessee claimed Rs.28,14,174/- as revenue expenses on consignment sales in profi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale at these places. The nature of expenses incurred by the consignee agents and reimbursed by the assessee company as per the agreement executed between them are :- (a) Unloading expenses on receipt of goods from the assessee company. (b) Loading expenses when the goods are sent by the consignee agents for sale to distributor/dealer/retailer. (c) Cartage paid on dispatch of goods/sale to distributor/dealer/retailer. (d) Traveling expenses of the staff kept by consignee agents or salary of the sales staff. The consignee agents sent the monthly details of sales on "Sale Patti. On the sale patti the consignee agent deducts their commission on sales and the expenses at the fixed cost rate structure as per Agreement. The assessee compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spect of sale of product of the assessee. In the case under consideration, the ld. Authorised Representative has demonstrated by filing various evidences and material of which copies have been placed in paper book. Copies of agreement, paper book page nos. 1 to 4, copies of Sale Patti page nos. 5 to 9 of the paper book, copies of ledger account of expenses page nos. 32 to 50. On perusal of agreement, we notice that as per clause-3 in addition to 3% sale, the agent is entitled to reimbursement of expenses. The relevant abstract of the agreement is reproduced as below :- "1.5 That on the receipt of goods by the consignee agents till the sales made by them, the consignee agents incur certain expenses on behalf of the assessee company which a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollected by them as there always remain outstanding balance. 1.8 That the Assessing Officer has treated the reimbursement of expenses as commission paid only on the ground that the expenses are reimbursed at fixed rate and therefore it is not in the nature of reimbursement of expenses but it was part and parcel of commission on which tax at source has not been deducted and consequently made addition u/s 40a(ia) of the Act." 5.3 The concerned parties have also furnished the sale Patti along with claim of the expenses on sale of consignment goods the claim of expenses given detail the expenses pertaining to the monthly selling expenses loading and unloading dealing with expenses. These expenses have been adjusted and accounted for in the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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