Tribunal allows appeal due to family bereavement delay & rules in favor of assessee on commission expenses

The Tribunal condoned the delay of 38 days in filing the appeal due to family bereavement. Regarding the disallowance of commission expenses under section 40(a)(ia) for not deducting tax at source, the Tribunal ruled in favor of the assessee. It held that since the assessee was not directly involved in paying the commission and did not have discretion over the discount percentage, they were not obligated to deduct tax at source. The disallowance made by the AO was deemed unjustified, leading to the appeal being allowed and the disallowance deleted.

---

---

Issues:
1. Condonation of delay in filing the appeal.
2. Disallowance of commission expenses under section 40(a)(ia) for not deducting tax at source.

Issue 1: Condonation of Delay
The appeal by the assessee was filed with a delay of 38 days, citing reasons related to a family bereavement. The assessee submitted a petition for condonation of delay, supported by an affidavit. The ld. AR argued that the delay was due to unavoidable circumstances beyond the assessee's control. After considering the submissions and the affidavit, the Tribunal found a reasonable cause for the delay and decided to condone the delay of 38 days in the interest of justice.

Issue 2: Disallowance of Commission Expenses
The primary issue raised in the appeal was the disallowance of commission expenses by the AO under section 40(a)(ia) for not deducting tax at source. The assessee, a partnership firm engaged in distributorship, debited expenses for discount on online schemes. The AO disallowed a specific amount as commission expenses for not deducting tax as per section 194H. The assessee contended that the discount was allowed by the service provider directly to the retailers, and the assessee had no role in the payment process. The ld. CIT(A) upheld the disallowance.

Before the Tribunal, the assessee reiterated that they had no discretion in fixing the discount percentage, as it was solely determined by the service provider. The assessee argued that since they were not directly involved in paying the commission or fixing the discount, they were not obligated to deduct tax at source. The ld. DR, however, argued that the auditor confirmed the commission payment and that the provisions of section 194H were applicable. The Tribunal analyzed the role of the assessee as an intermediary in the sale of recharge coupons and concluded that the assessee, not being the party responsible for paying the commission, was not liable for TDS deduction under section 194H. The Tribunal referenced relevant court decisions and held that the disallowance made by the AO under section 40(a)(ia) was unjustified, ultimately allowing the appeal of the assessee.

In conclusion, the Tribunal decided in favor of the assessee, allowing the appeal and deleting the disallowance made by the AO under section 40(a)(ia) for not deducting tax at source on commission expenses.

---