2019 (1) TMI 343 - AT - Income Tax

Tribunal allows appeal, directs deletion of disallowance under Income Tax Act

Shri Rahul Singhal Versus Income Tax Officer Ward- Tonk.

The Tribunal allowed the appeal, directing the deletion of the disallowance under Section 40(a)(ia) of the Income Tax Act, 1961. It held that the ... TDS u/s 194H - assessee is deriving income from distributorship of Idea Cellular Limited for sale of SIM cards and mobile recharge coupons - AO held that the payment of commission of the retailers/dealers was liable to TDS U/s 194H - Held that:- It is not in dispute that the said commission amount was subjected to TDS as the Idea Cellular Limited has already deducted TDS at the time of payment of the said commission. It is not a commission payment by the assessee in the capacity of principal to the retailers/dealers as an agent of the assessee but the commission is originally paid by the Idea Cellular Limited who is acting as a principal and all other parties being distributor, dealers and retailers are receiving the commission from Idea Cellular Limited. It is only for the sake of completeness of the entries in the books, the commission is rooted through the assessee’s books of account. Appellant is not liable to deduct the tax at source. - Decided in favour of assessee. Issues Involved:1. Disallowance of commission under Section 40(a)(ia) of the Income Tax Act, 1961.2. Ex parte dismissal of appeal by the ld. CIT(A) due to non-appearance of the assessee.Issue 1: Disallowance of Commission under Section 40(a)(ia) of the Income Tax Act, 1961:The appellant, an individual and proprietor of a firm, received commission income from a principal, Idea Cellular Limited, and shared a portion of this commission with retailers/dealers. The Assessing Officer disallowed a sum of &8377; 7,04,430 under Section 40(a)(ia) for failure to deduct TDS on the payment to retailers/dealers. The ld. CIT(A) dismissed the appeal ex parte. The appellant argued that the commission received was already subjected to TDS by Idea Cellular Limited, and the ld. CIT(A) had previously deleted similar additions for the appellant in earlier assessment years. The Tribunal noted that the commission was paid by Idea Cellular Limited, not the appellant, and TDS was already deducted by the principal. Citing precedents and case laws, the Tribunal held that the appellant was not liable to deduct TDS on this amount, directing the Assessing Officer to delete the disallowance.Issue 2: Ex Parte Dismissal of Appeal by the ld. CIT(A):The appellant contended that the ld. CIT(A) dismissed the appeal ex parte due to alleged non-receipt of notices as the address had changed. The appellant argued that the ld. CIT(A) had issued notices to the old address despite the updated information provided in Form No. 35. The appellant also highlighted that in previous years, the ld. CIT(A) had ruled in favor of the appellant in similar cases. The Tribunal noted the appellant's submissions and held that since the issue was already decided in favor of the appellant in earlier assessment years, the ld. CIT(A) should have taken a consistent view. Consequently, the Tribunal allowed the appeal, directing the deletion of the disallowance made by the Assessing Officer under Section 40(a)(ia) of the Act.In conclusion, the Tribunal allowed the appeal of the assessee, directing the deletion of the disallowance made under Section 40(a)(ia) of the Income Tax Act, 1961. The Tribunal emphasized that since the commission was paid by the principal and TDS was already deducted, the appellant was not obligated to deduct TDS on the amount shared with retailers/dealers. Additionally, the Tribunal criticized the ex parte dismissal of the appeal by the ld. CIT(A) and ruled in favor of the appellant based on consistent decisions in earlier assessment years.