TaxTMI 
TaxTMI 
2016 (7) TMI 106
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....3,735/- arising out of short accounting of receipts in the books of accounts vis-à-vis in the TDS certificates by upholding the applicability of section 40(a)(ia) of the Income Tax Act, 1961 for non deducting of tax at source. 3. Brief facts of the case are that the assessee filed return of income on 30.9.2009 declaring total income of Rs. 7,77,890/-. The case of the assessee was processed under section 143(1) of the Act, however, later on the case was selected for scrutiny and statutory notices under section 143(2) and 142(1) were issued and served upon the assessee. The assessee was a sole selling agent of M D Salauddin, Prop of S S Films and was engaged in the marketing of films procured by M/s S S Films. In the said arrangemen....
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.... that the assessee paid an amount of Rs. 60,33,735/- without deduction of TDS and therefore disallowed the same for want of non compliance of provisions of section 194J of the Act and therefore the assessee is not entitled to be allowed expenditure of the equal amount as per the provision of section 40(a) (ia) of the Act. Aggrieved by the order of the AO, the assessee has preferred an appeal before the ld. CIT(A), who after considering the detailed submissions of the assessee which has been incorporated in para 4 of the appellate order dismissed the appeal of the assessee by observing and holding as under (para 5): "5. I have carefully considered the facts related to the issue at hand as they emerge from the impugned assessment ord....
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.... has picked up the figure of gross receipts from 5 tax deductors in their form no.16A aggregating to Rs. 82,88,000 and after reducing the commission amount, he has added the difference as no TDS was deduced by the appellant on this amount. The appellant stated that the total sale value received by the appellant on behalf of his principals amount to Rs. 2,20,42,656/- fro 33 parties including the above referred 5 parties from whom the appellant had earned commission of Rs. 2,04,265/-. 5.1.1 The arguments of the appellant are duly considered and it is found that there is nothing on record to prove that the appellant had actually incurred the expenditure on behalf of the so-called exhibitors or onward distributors. The fact remains tha....
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....ue of business generated by him. A general submission has been made to the effect that there is a diversion of income at source, but to prove the veracity of this claim, no documentary evidence was placed on record. The appellant has himself admitted that after receiving films from the exhibitors/onwards distributors, he incurred the said expense for the process of films and that the expenditure was incurred on behalf of exhibitors / onward distributors. Thus the entire amount either being paid or received by the appellant is of the character of contractual receipts between the film exhibitors/ distributors and the appellant and is therefore subject to TDS. Even otherwise, such payments are disallowable as per the provisions of section 40(a....
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....ucted TDS of Rs. 7,99,383/- on the said amount which was also included in the gross payment collected by the assessee of Rs. 2,20,42,656/-. Thus, the appellant accounted for commission at the rate of 10% of Rs. 2,20,42,656/- i.e. Rs. 22,04,265/- and rightly claimed credit of TDS of Rs. 7,99,383/-. 6. The ld. AR drew our attention to page no.1 of the paper book which is an extract of income and expenditure statement is contained which shows the commission charges received at Rs. 22,04,265/-, net profit after deducting various expenses as per Sch.11,12 and 13 at Rs. 7,92,887/-. The ld. AR strongly argued that the assessee was acting as a sole selling agent of the principal and therefore the AO was wrong in arriving at the conclusion that t....
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....c of the films at the remuneration of 10% commission on the receipts collected from the parties on behalf of the principal. We further find that the assessee used to make payment to the principal of M/s S S Films after deducting various expenses which were of the nature of dubbing, mixing and recording etc including the publicity and his commission and after deducting the above expenses, the agent used to remit balance payment to the principal. 9. During the year, the assessee collected Rs. 2,20,42,656/- from 33 parties including the payment of Rs. 82.38 lakhs collected from five parties which after deducting TDS to the tune of Rs. 7,99,383/-. We further observed that as per the terms of payment, the sole selling agent was entitled to 10....