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TMI Blog2016 (8) TMI 646X X X X Extracts X X X X X X X X Extracts X X X X ..... O had not brought on record that the reimbursement had income element embedded in it. It was pure and simple case of reimbursing the expenditure incurred by the sub-agents. We find that the FAA had clearly brought out the distinction between the commission received from the principal and the reimbursement received by the assessee, in his order. He has specifically held that provisions of section 194H of the Act would be applicable for the commission payment. In our opinion, his order does not suffer from any legal or factual infirmity. Therefore, upholding his order we decide the effective ground of appeal against the AO. - ITA/2602/Mum/2013 - - - Dated:- 12-8-2016 - Shri Rajendra, Accountant Member And C. N. Prasad, Judicial Member Revenue by : Shri Kailash Gaikwad-DR Assessee by : Shri Arvind Sonde Shri Mathrudev Vasudevan ORDER Per Rajendra, AM Challenging the order, dtd. 28. 01. 2013, of the CIT(A)-27, Mumbai, the Assessing Officer(AO)has filed the present appeal. Assessee, an individual, is engaged in the business of distribution and marketing of liquor products, filed her return of income on 24. 09. 2009, declaring income of ₹ 9. 05 lakhs. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by her towards commission payment was liable to be disallowed u/s. 40(a)(ia)of the Act. Accordingly, a sum of ₹ 61. 82 lakhs, paid as commission, was added back to her income. 3. Aggrieved by the order of the AO, the assessee preferred an appeal before the First Appellate Authority(FAA). Before him, she submitted that as per the clause 11 of the agreement with M/s. ABD Pvt. Ltd. (ABDPL), It was agreed upon between the assessee and the company that on submitting the monthly travel bills of the field formation/agents employed by her travel expenses would be reimbursed to a maximum amount being ₹ 43. 50 per case of liquor sold, that the agreement provided that reimbursement would not attract any service tax or would not be liable for TDS, that it was the primary responsibility of ABDPL to reimbursed the expenses to the sub-agents, that only for the sake of convenience the amounts were routed through the account of the assessee, that she had also entered into similar agreement with her agents according to which ABDPL was responsible for reimbursing expenses incurred by the agents, that the reimbursements were made against the actual bill for expenses submitted by the age ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r rendering the services to her principle the assessee had received a commission of ₹ 38. 35 lakhs and reimbursement of expenses incurred by the subagents of ₹ 55. 45 lakhs from ABDPL for the year under consideration, that she had, in turn, paid a commission of ₹ 6. 27 lakhs to the subagents for the services rendered by them that further she passed on the amount of ₹ 55. 45 lakhs received towards the reimbursement of expenses incurred, that the amount of ₹ 55. 45 lakhs was paid by the principal towards reimbursement of expenses incurred by the agents of the assessee, that the said fact was confirmed by way of a letter dated 30/06/2009 issued by the Asst. VP of the sales division of ABDPL. The FAA further held that the AO had made enquiries by issuing notices u/s. 133 (6) of the Act, that in response to the notices three parties had admitted of receiving reimbursement from the assessee, that the AO had not taken the confirmation filed by the three parties into consideration while determining the tax library of the assessee, that the service agreements entered by the assessee with the principal and the subagents specifically mentioned that the services w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. Finally, he held that the payment of ₹ 55. 45 lakhs, made towards reimbursement of expenses to the subagents, was not liable for deduction of tax u/s. 194H of the act capitalise that, that the payment of ₹ 6. 37 lakhs towards payment of commission was liable for deduction, that assessee had not deducted tax on the payment of ₹ 6, 37, 363/-, that the AO had rightly disallowed the said amount u/s. 40(a)(ia). Thus, he deleted the disallowance of ₹ 55. 45 lakhs and confirmed the disallowance of ₹ 6. 37 lakhs. 4. During the course of hearing before us the Departmental Representative(DR) stated that the payment in question was not reimbursement, that it was commissions payment, that the AO had rightly invoked the provisions of section 194H of the Act. The Authorised Representative(AR) referred to the pages 2, 5, 11 13 of the paper book. He relied upon the cases of Modicon Network(P) Ltd. (14 SOT 204), Willmar Schwabe India (P) Ltd. (95 TTJ 53), Nathpa Jhakri Joint Venture (37 SOT 160), Lazard India (P) Ltd. (41 SOT 72), Siemens Aktiongesellschaft (177 Taxman 81), M/s. J. B. Boda Brothers Pvt. Ltd. (ITA/No. 4252/Mum/2009 dt. 21. 05. 2010 AY. 2006-0 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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