TaxTMI 
TaxTMI 
2013 (7) TMI 138
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....as found discussed in the assessment order are that the assessee company declared an income of Rs.7,37,04,050/- by way of filing return of income on 31.10.2005. After being processed under sec. 143(1), the same was selected for scrutiny by way of issuance of notice under sec. 143(2) and 143(1) along with questionnaire. 2.1. The Assessing Officer took note of the fact that the assessee company was carrying on the business of General Sales Agents (GSA) for international airlines and domestic airlines in India for passenger and cargo warehouse management. Apart from that the assessee also had separate division operating ground handling at various airports in India for passenger flights and cargo warehouse management. 2.2. In the year the assessee had declared a total turnover of Rs.137.07 crores including other income in the form of interest, rental income, royalty, consultancy etc., apart from long term capital gain on purchase and sale of shares of Rs.2,58,088/- . The same was accepted in 143(3) proceedings. 2.3. Thereafter notice under sec. 154/155 of the Act dated 27.07.2010 was issued to the assessee as on scrutiny of assessment records, it was seen that the assessee com....
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....SA Commission from such airlines on the sale of cargo & passenger tickets. The appellant, being the GSA of the various Airlines, further appoints various agents all over the country and these agents deal with the appellant and not with the Airlines. Further, in respect to cargo sale, the accounting treatment followed by the appellant and its agent vis-a-vis the claim of the TDS is explained with the help of a flow chart attached as Annexure A and the same is further explained as under: The agent, appointed by the appellant, make the booking for the cargo sale of say Rs 100/- and after deducting its commission of Rs 5/- and TDS@ 2.24% U/S 194C of the IT. Act on the balance Rs. 95/-, remits Rs 92.87 to the appellant. But the appellant has to pay to the Airline, the entire sale amount of Rs.95/- (i.e. by adding the amount of TDS deducted by the agent) since the Airline has nothing to do with the TDS amount deducted by the agent. In effect, the appellant has to fund the TDS deducted by the agent. Thereafter, the appellant gets entitled to the Commission of Rs. 2.50 (2.5% of Rs. 100/-) from the Airline on which the Airline deducts TDS @ 5.6% u/s 194H of the IT. Act and remits t....
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....TDS to the firm by passing an Order U/S 154 of the 1 T. Act. In the said order, it was also held that the provisions of section 199 of the 1 T. Act is not applicable on the firm (copy of the order U/S 154 of the 1 T. Act is enclosed as Annexure B). Further, the same process of claiming the TDS credit has been followed by the appellant in the previous years also which was dully accepted by the A. O. in the previous years also. In view of the above facts & explanation, it is absolutely clear that TDS credit of Rs.2,75, 78,008/- is fully allowable to the appellant under the 1 T. Act and the A.O. is totally unjustified & unreasonable in disallowing the TDS credit of Rs.2.75 crores. Thus, we request your honour to direct the A.O. to allow the TDS credit of Rs.2,75,78,008/- to the appellant and oblige. " 5.3 It was further submitted on behalf of the appellant inter alia that "In continuation to our submissions dated 04.05.2011, kindly find attached the reconciliation of income as per books of account with the TDS certificates for the A. Y. 2004-05, A. Y. 2005-06 and A. Y. 2006- 07 as Annexure A. In all these three assessment years, the appellant's case was selected for scruti....
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....e appellant and oblige." 5. Considering the same the CIT(A) decided the issue in favour of the assessee vide Para 5.4 to 5.8 of the impugned order holding as under for ready-reference:- "5.4 I have carefully considered the submission made on behalf of the appellant, the findings of the Assessing Officer in the rectification order and material placed on record. It is an undisputed fact that the appellant is the GSA of many Airlines (both Domestic & International Airlines) for the sale of their cargo & passenger tickets and is entitled to GSA Commission from such airlines on the sale of cargo & passenger tickets. The appellant, being the GSA of various Airlines, further appoints various agents all over the country and these agents deal with the appellant and not with the Airlines. Further, in respect of cargo sale, the accounting treatment followed by the appellant arid its agent vis-a-vis the claim of the TDS is explained as under :- a) The agent, appointed by the appellant, make the booking for the cargo sale of say Rs 100/- and after deducting its commission of Rs.5/- and TDS @ 2.24% U/S 194C of the LT. Act on the balance Rs.95/-, remits Rs.92.87 to the appellant; b) B....
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....o the firm by passing an Order u/s 154 of the Act. In the said order, it was also held that the provisions of section 199 of the Act are not applicable to the firm. The same system of claiming credit for TDS has been followed by the appellant in the both in the preceding as well as in the succeeding assessment years and this has been all along accepted by the A.O. 5.7 It has been stated that the Agents have no choice but to deduct Tax at source as per the provisions of section 194C, otherwise they would be violating the law and would face serious consequences even though there is a mismatch between the income and gross receipt. It is a peculiar circumstance in this line of business. Considering the facts of the case in its entirety, it can be seen that there is no loss of revenue. It is not a case wherein any income has escaped assessment. The entire transaction is getting accounted for in the books of accounts and the corresponding income being fully reflected and declared in the return of income. Moreover, even if the Profit & Loss account of the appellant is recast in order to show the gross receipt from the customer as income, there would be a corresponding expense entry (wh....
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....the assessee and not with the airlines. The accounting treatment followed by the assessee and the agent vis-à-vis the claim of TDS is that on a booking hypothetically of Rs.100/- by the agent deduction of its commission of Rs.5/- is made and TDS at 2.24% u/s 194C on the balance amount of Rs.95/- is made and the agent remits Rs.92.87 to the assessee. In view of the fact that the assessee has to pay the airlines, the entire sale amount of Rs.95/- wherein the amount deducted by the agent is also included is paid by the assessee to the airline. As the airline is not interested in the TDS amount deducted by the agent thus in effect the assessee funds the TDS paid by the agent. Thereafter, the assessee is entitled to the commission of Rs.2.50 (2.5 % of Rs.100/-) from the airline on which the airline deducts TDS at 5.6 % u/s 194H of the Income Tax Act and remits the balance amount of Rs.2.36 to the assessee. Thus the assessee is entitled to TDS at 2.30 u/s 194C which is deducted by the agent and Rs.0.14 u/s 194H deducted by the airline. The TDS certificates are issued in the name of the assessee by the agent which are claimed by the assessee in its return and thus this money gets l....