2010 (5) TMI 950 - AT - Income Tax

Tribunal upholds CIT(A) order, limits income to commission, grants TDS credit. Revenue can challenge expenditure separately.

The Tribunal dismissed the appeal against the CIT(A) order, upholding the deletion of additions made on a protective basis in the assessee's hands. The ... - Issues involved: Appeal against CIT(Appeals) order regarding additions made in the hands of the assessee on protective basis and credit of TDS, pertaining to assessment year 2006-07.Additions made on protective basis:The appeal challenged the deletion of additions made in the assessee's hands while substantive additions in M/s PACL India Ltd.'s hands were pending. The statement of the assessee revealed lack of knowledge and involvement in any transactions with the company. The revenue argued that no expenditure was incurred in earning the income, making the entire amount received taxable u/s 56 of the Act. However, the Tribunal referred to a similar case where only commission for lending the name was taxable, not the entire sum received. The Tribunal held that the income of the assessee was only to the extent of receiving commission, not the full amount.Credit of TDS:The appeal also contested the direction to give credit of TDS to the assessee despite the tax not actually being received by the assessee. The Tribunal ruled that since the income had been assessed and tax deducted, the assessee was entitled to credit for the tax deducted at source. The Tribunal found no infirmity in the CIT(A) order regarding the credit for TDS.Conclusion:After considering the facts and submissions, the Tribunal found that the assessee acted as a name-lender and his income may not exceed 8% of the amount received. Referring to a previous case, the Tribunal held that the income was only taxable to the extent of receiving commission. The appeal was dismissed, subject to the revenue's right to independently argue the expenditure claimed by PACL (I) Ltd. as bogus.