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TMI Blog2015 (7) TMI 518X X X X Extracts X X X X X X X X Extracts X X X X ..... claim. What is material for examination was the copies of the ledger accounts of the concerned proprietary concerns viz. M/s. Traces and M/s. Sanforce vis-a-vis the financial statements of both these concerns from which it will become clear as to whether there is a difference in the extent of expenditure claimed as per the profit and loss account and the ledgers of the parties in the books of account. These have been produced before the authorities below in appellate and remand proceedings and it is clear from the categorical finding of the learned CIT(A) that there is no difference at all. - Decided against revenue. Disallowance under Section 40(a)(ia) - Non deduction of TDS on collection commission and sales commission - Held that:- The learned Authorised Representative contends that the assessee has paid the amounts and that nothing is outstanding / payable as on the last day of the year under consideration. However, since this averment of the assessee is not discernible from the impugned order, we set aside this issue to the file of the Assessing Officer. The Assessing Officer shall ascertain whether the assessee has paid the amounts or not. In case it is found that the paym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isallow ₹ 30,62,689 in respect of collection commission and disallowance of ₹ 35,75,500 in respect of sales commission for failure to deduct tax at source thereon. Thus, the Assessing Officer completed the order of assessment for Assessment Year 2008-09 under Section 143(3) of the Act vide order dt.20.12.2010 determining the income of the assessee at ₹ 96,88,145 as against the returned income ofRs.14,36,988 in view of the following additions/disallowances :- i) Excess claim of collection commission : ₹ 12,46,968. ii) Excess claim of sales commission : ₹ 3,66,000. iii) Disallowance u/s. 40(a)(ia) : ₹ 66,38,189. 2.2 Aggrieved by the order of assessment dt.20.12.2010 for Assessment Year 2008- 09, the assessee preferred an appeal before the CIT (Appeals), LTU, Bangalore. The learned CIT(A) disposed off the assessee's appeal vide order dt.16.4.2014 allowing the assessee partial relief. The learned CIT(A) deleted the entire disallowance made by the Assessing Officer towards the excess claim of collection commission expenditure of ₹ 12,46,968 and in respect of the disallowance of ₹ 3,66,200 made towards excess claim of ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s account and the books of account produced before the Assessing Officer. It was submitted that, on appeal before the learned CIT(A), the assessee contended that the Assessing Officer had only partially considered/examined the books of account as he had not verified the entire claim with regard to two proprietary concerns of the assessee viz. M/s. Sanforce and M/s.Tracers. On the basis of this submission made by the assessee, the learned CIT(A) called for a remand report from the Assessing Officer after verification of the assessee's claim. The learned Departmental Representative submitted that in remand proceedings, the assessee did not produce the entire books of account before the Assessing Officer for verification of the above claim and contended that in these circumstances, the deletion of these disallowances by the CIT (Appeals) was erroneous. In this regard, the learned Departmental Representative referred to the remand report of the Assessing Officer dt.18.2.2014 where this fact of non-production of books of account is recorded at para 2 on page 1 thereof. 6.2 Per contra, the learned Authorised Representative of the assessee supported and relied on the finding in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 9.11.2010 and during remand proceedings the extract of ledger accounts were once again filed. A ledger is clearly included in the definition of books of account. The A.O. s remarks, therefore, do not convey an intention to arrive at factual accuracy and appear to be dilatory in nature. 3.3 The evidences in the form of audited financial statements of the two proprietorship concerns and the ledger extracts clearly indicate that as far as collection commission is concerned the figure adopted by the Assessing Officer is incomplete and has missed out the entries of March, 2008 for M/s. Sanforce and for the entire year for M/s. Tracers. If these amounts are taken into account, there is no difference as pointed out by the Assessing Officer. The addition towards collection commission is, therefore, directed to be deleted. 3.4 With regard to sales commission, the amount debited in the Profit Loss Account of M/s. Traces under this head is ₹ 3,65,500 which has not been considered by the A.O. The total of the two proprietorship concerns under this head comes to ₹ 40,41,900 against which the assessee has debited ₹ 40,42,400. The difference, therefore, is only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee's appeal are as under :- 1. The orders of the authorities below in so far s they are against the appellant, are opposed to law, equity, weight of evidence, probabilities, facts and in the circumstances of the case. 2. The learned CIT (Appeals) is not justified in sustaining the disallowance of a sum of ₹ 30,62,689 under Section 40(a)(ia) of the Act, on collection commission under the facts and in the circumstances of the appellant s case. 3. The learned CIT (Appeals) is not justified in sustaining the disallowance of a sum of ₹ 35,75,500 under Section 40(a)(ia) of the Act, on sales commission under the facts and in the circumstances of the appellant s case. 4. The learned CIT (Appeals) is not justified in sustaining the aforesaid disallowances without noticing that the same was not payable and hence, the disallowances made were misconceived and hence, the same is liable to be deleted. 5. Without prejudice to the right to seek waiver with the Hon'ble CCIT / DG, the appellant denies himself liable to be charged to interest under Section 234A, 234B and 234C of the Act, which under the facts and in the circumstances of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bench of this Tribunal in the case of Ananda Markala (supra). 11.3.1 We have heard the rival submissions and perused and carefully considered the material on record. The co-ordinate bench of this Tribunal in its decision in the case of Ananda Markala (supra) has considered the applicability of the provisions of section 40(a)(ia) of the Act and followed the order of the Hon'ble Allahabad High Court in the vase of Vector Shipping Services Pvt. Ltd. in ITA No.122/2013 dt.9.7.2013, which upheld the finding of the Special Bench of the ITAT, Visakhapatnam in the case of Merilyn Shipping (2012) 16 ITR (Trib) 1, Visakhapatnam (SB). The relevant portion of the decision and observation of the co-ordinate bench in the case of Ananda Markala (supra) at paras 26 to 31 thereof are extracted hereunder :- 26. We are of the view that the reasoning of the Hon ble Supreme Court in the case of Alom Extrusions Ltd(supra) will equally to the amendment to Sec.40(a)(ia) of the Act whereby a second proviso was inserted in sub-clause (ia) of clause (a) of Section 40 by the Finance Act, 2012, w.e.f. 1-4-2013. The provisions are intended to remove hardship. It was argued on behalf of the revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated02/05/2013, the Hon ble Gujarat High Court held that in Merilyn Shipping 146 TTJ 1 (Viz) (SB,) the majority held that as the Finance Bill proposed the words amount credited or paid and as the Finance Act used the words amounts payable , s. 40(a)(ia) could only apply to amounts that are outstanding as of 31st March and not to amounts already paid during the year. This view is not correct for two reasons. Firstly, a strict reading of s. 40(a)(ia) shows that all that it requires is that there should be an amount payable of the nature described, which is such on which tax is deductible at source but such tax has not been deducted or if deducted not paid before the due date. The provision nowhere requires that the amount which is payable must remain so payable throughout during the year. If the assessee s interpretation is accepted, it would lead to a situation where the assessee who though was required to deduct the tax at source but no such deduction was made or more flagrantly deduction though made is not paid to the Government, would escape the consequence only because the amount was already paid over before the end of the year in contrast to another assessee who would otherw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mercator Lines Ltd., for M/s Vector Shipping Services, the assessee were sufficiently explained. It is to be noted that for disallowing expenses from business and profession on the ground that TDS has not been deducted, the amount should be payable and not which has been paid by the end of the year. We do not find that the Tribunal has committed any error in recording the finding on the facts, which were not controverted by the department and thus the question of law as framed does not arise for consideration in the appeal. The income tax appeal is dismissed. 30. Thus there are two views on the issue, one in favour of the assessee expressed by the Hon ble Allahabad High Court and the other against the assessee expressed by the Hon ble Gujarat Calcutta High Courts. Admittedly, there is no decision rendered by the jurisdictional High Court on this issue. In the given circumstances, following the decision of the Hon ble Supreme Court in the case of Vegetable Products Ltd. (supra), we hold that where two views are possible on an issue, the view in favour of the assessee has to be preferred. Following the decision of the Hon ble Allahabad High Court, we uphol ..... X X X X Extracts X X X X X X X X Extracts X X X X
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