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TMI Blog2017 (3) TMI 258X X X X Extracts X X X X X X X X Extracts X X X X ..... 94H/194J of the Act. Since, we have already deleted the additions made by the A.O. u/s 201(1) & 201(1A) of the Act, consequent penalty levied u/s 271C of the Act for failure to deduct TDS cannot sustain in the eyes of law. Therefore, we direct the A.O. to delete penalty levied u/s 271C of the Act. - Decided in favour of assessee - I.T.A.Nos.299 & 300/Vizag/2016 - - - Dated:- 3-3-2017 - SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER For The Appellant : Shri Shri G. Gurusamy, DR For The Respondent : Shri Laxminiwas Sharma,AR ORDER PER Shri G. Manjunatha, Accountant Member: These two appeals filed by the revenue are directed against separate orders of the Commissioner of Income Tax (A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NMDC is seller and MMTC is buyer. The transaction between the assessee and the MMTC is on principal to principal basis and M/s. NMDC has not incurred any expenditure in the nature of commission or brokerage, therefore, the question of deduction of tax at source does not arise. The assessee further submitted that the issue has been already considered by the jurisdictional ITAT, in assessee s own case for the earlier year, wherein the Hon ble ITAT categorically held that transaction between the assessee and M/s. MMTC is on principal to principal basis and the question of deduction of tax at source does not arise. The CIT(A) after considering the assessee s explanations and also by following the decision of ITAT, Visakhapatnam in assessee s o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yee necessarily be of a principal and agent. Since, the assessee itself has admitted before the A.O. that it had paid commission to M/s. MMTC on fixed percentage basis towards export sales, the assessee is liable to deduct TDS u/s 194H/194J of the Act. Since, the assessee failed to deduct TDS, the A.O. has rightly invoked the provisions of section 201(1) 201(1A) of the Act and his order should be upheld. 5. The Ld. A.R. for the assessee, on the other hand strongly supporting the order of the CIT(A) submitted that the issue is squarely covered by the decision of ITAT, Visakhapatnam in assessee s own case for the assessment years 2003-04 to 2005-06 in ITA Nos.145, 146 147/Vizag/2006, wherein the ITAT categorically held that the transac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n principal to principal basis and hence the assessee is not liable to deduct TDS u/s 194H of the Act. The relevant portion of the order is extracted below: 4.4 It is very pertinent to note that the Ld. CIT(A) has noted the fact that the assessee has routed the transaction of export through MMTC only because the assessee was not allowed to effect the export on account of Government regulations. It is the most striking feature in the impugned transactions which was not at all considered by the tax authorities. It is well settled law that in any agency agreement, an agent can act on behalf of the principal only in respect of those transactions which the principal is entitled to carry on directly without the assistance/help of the agent, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apatnam decided the issue in favour of the assessee. The relevant portion of the order is extracted below: Respectfully following the decision, we hold that since the assessee is not entitled to export directly and export by the MMTC was on principal-principal basis, there can be no commission payment to MMTC, as such the question of sustaining the order of the Assessing Officer in estimating the commission and disallowing the same under S.40(a)(ia) does not arise. In fact there is no claim of commission by assessee. So question of deduction of tax does not arise and M/s. NMDC Limited, Hyderabad consequently disallowance u/s 40(a)(ia). Accordingly, the order of the CIT(A) is upheld and Revenue s ground on this issue is rejected. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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