2017 (6) TMI 562

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....year 2006-07. Shri Subash Agarwal, Ld. Advocate appeared on behalf of assessee and Shri Rajat Kumar Kureel, Ld. Departmental Representative represented on behalf of Revenue. 2. Ground No.1 to 4 are inter-related and therefore being taken up together to pass a consolidate order. The issue raised by assessee is that Ld. CIT(A) erred in confirming the order of Assessing Officer by sustaining the disallowance of Rs.24,35,564/- on account of short reporting of income. 3. Briefly stated facts are that assessee, a private limited company is a C & F agent of Cipla Ltd. The assessee on behalf of Cipla Ltd. is receiving goods, storing and distributing the goods and earning income from such activities. The assessee in the year under consideration ha....

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....l income of assessee. 4. Aggrieved, assessee preferred an appeal before Ld. CIT(A). The assessee before Ld. CIT(A) submitted that Cipla Ltd., has reimbursed a sum of Rs.11,03,562/- on which the TDS was deducted by Cipla Ltd. The assessee further submitted that balance amount of Rs.14,28,730/- was representing the service tax on which also Cipla Ltd. deducted the TDS. As such, Cipla Ltd was not liable to deduct the TDS on the aforesaid amount. However, Ld. CIT(A) disregarded the contention of assessee and confirmed the order of AO by observing as under:- "I have carefully considered the submissions put forward on behalf of the appellant along with the supporting documents/details furnished, perused the fact of the case including the findi....

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....h is to be adjusted with the expenses and therefore there is no question of any income on account of reimbursement. Even as per agreement with CIPLA, it is seen that there is only mentioning of commission payments. No tax is required to be deducted by the payer on reimbursement of expenses to the payee and therefore the contention of the appellant that it has received reimbursement of expenses in the garb of commission cannot be accepted. The TDS certificate clearly show that tax was deducted at source u/s. 194H on commission payments by CIPLA and the appellant cannot divert the issue by not reflecting the entire commission by taking the plea of reimbursement. If at all, any reimbursement has been made, it is for the expenses incurred by....

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.... a sum of Rs. 11,03,562/- was received by the assessee towards reimbursement of expenses on which TDS was deducted by the payer but the same cannot be considered as income of the assessee. 3. For that the Ld. CIT failed to appreciate that out of total receipts, a sum of Rs. 14,28,730/- was relating to service tax component on which TDs was deducted by the payer but the same cannot be considered as the income of the assessee. 4. That the appellant craves leave to add, alter or delete all or any of the grounds of appeal." 5. Ld. AR for the assessee filed paper book which is running pages from 1 to 40 and submitted that Cipla Ltd. has confirmed the amount of commission paid to the assessee in response to the notice issued u/s. 133(6) o....