TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
When case Id is present, search is done only for this
of 
of 
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of of 
All Case Laws
of of All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of <h1>Commission paid to employees on activated connections deemed part of salary under section 17(1)(iv)</h1> <h3>Income Tax Officer Versus M/s. Sky Teleservices.</h3> Income Tax Officer Versus M/s. Sky Teleservices. - TMI Issues:1. Whether commission paid by the assessee should be treated as salary.2. Whether provisions of section 194 H and section 40(a)(ia) of the Act are applicable in this case.Detailed Analysis:Issue 1:The Department appealed against the order of the ld. CIT(A) for the assessment year 2006-07, arguing that the commission paid by the assessee should not be treated as salary, as contended by the CIT(A). The assessee firm was involved in trading mobile and fixed phone connections on a commission basis. The AO disallowed commission expenses of Rs. 10,33,985/- without tax deduction under section 40(a)(ia) of the Act, stating that the commission was actually paid to sales agents, who were considered employees. However, the ld. CIT(A) deleted the addition/disallowance, leading to the Department's appeal.Issue 2:The Department challenged the CIT(A)'s decision, claiming that the provisions of section 194 H of the Act should apply, and the commission payment should not be treated as salary. The Department argued that the commission payment was reflected as such in the books of account, and section 194 H should be considered. On the other hand, the assessee's counsel argued that the payment was made to employees based on activated connections, as per the appointment letters, and should not be considered as commission. The counsel also cited a relevant decision of the Special Bench of the Tribunal.Judgment:The Tribunal analyzed the facts and determined that the payment made to employees was in accordance with the specific conditions mentioned in the appointment letters, based on the activation of connections. The Tribunal found that the payments were part of the employees' salary, as per section 17(1)(iv) of the Act, and not subject to section 194 H. The Tribunal upheld the CIT(A)'s decision, concluding that the payments fell within the definition of 'salary' and dismissed the Department's appeal, deeming it without merit. The appeal filed by the Department was ultimately dismissed by the Tribunal.
TaxTMI 