TaxTMI 
TaxTMI 
TaxTMI 
2018 (2) TMI 1373
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....ed in the respective Acts. iii) Whether in the facts and circumstances of the case, the ITAT was justified in holding that the employees' contribution to PF & ESI are governed by the provisions of Section 433 and not by section 36(1)(va) r.w.s. 2(24)(x) of the Income Tax Act." 3. The facts of the case are that the case of the assessee was picked up for scrutiny assessment and the assessment under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act) was framed vide order dated 10th March, 2014. While framing the assessment, the AO made additions in respect of disallowance on account of non deduction of tax under section 194H by invoking provisions of section 40(a)(ia) of the Act of Rs. 66,37,834/-, delayed payment of PF and ESI of Rs. 1,79,838/-, unrecognized liability lying in the shape of Suspense amount Rs. 10,02,378/-, interest on loan against property of Rs. 7,24,527/-, business promotion expenses of Rs. 1,03,750/-, disallowance on account of sales tax and income tax payment of Rs. 3,113/- and disallowance of telephone expenses of Rs. 33,159/-. Being aggrieved, the assessee preferred an appeal before ld. CIT (A), who after considering the submiss....
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....ls. The Assessing Officer had opined that the assessee is liable to prove that the expenses (interest on loan) were incurred wholly and exclusively for the purpose of the business, and in the absence of the same, has disallowed this expenditure. The authorized Representative has submitted that the books of account were produced during the assessment proceedings and the loan is still outstanding to an extent of Rs. 1,93,54,731/- and appearing in Schedule 2 of the audited balance sheet of M/s. Garment Crafts. While it is true that the details of this loan were not submitted during assessment proceedings but the same is appearing in the books of accounts which were produced an examined by the Assessing Officer. The Assessing Officer has not brought out any reason as to how he has concluded that the loan was not used for the purpose of business. Since, the loan as well as the interest amount is appearing in the audited books of account, there is nothing on record to show that the amounts were utilized for other than business purposes, the disallowance made by the Assessing Officer is deleted. This ground of appeal is allowed." The ld. D/R has not brought on record any contrary mater....
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....ained completely unverified and not subject to verification. Further all the news publishers nominate their news agencies in their network for receiving advertisement for which commission is paid. Being of similar nature of business, the assessee has adopted the same practice to avoid litigation of the Income tax provisions he has changed the nomenclature of the expenses and claimed to have been allowed alleged discount as against commission. Because on the payment of commission, TDS is required to be made as per rates prescribed under section 194H of I.T. Act and deposit the same into the Central Government account within prescribed time limit otherwise the same shall not be allowed as expenditures u/s 40(a)(ia) of the I.T. Act. Due to change of nomenclature, the nature of expenses can not be changed. Infact the discount claimed to have been given is commission & TDS on payment of such commission (alleged discount) should have been made but the assessee has failed to deduct the TDS & violated the provisions of section 194H thus the amount of Rs. 13197053/- is not allowed as expenditure in view of provisions of section 40(a)(ia) of the I.T. Act and added the same to the total incom....
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....Act. In view thereof, we see no infirmity in the order of the learned CIT(A) in holding that the provisions of Section 40(a)(ia) of the Act are not applicable and thereby deleting the disallowances. The order of the learned CIT(A) is upheld." 8. It is contended that the Tribunal has gone on entirely different basis therefore, the issue is required to be decided in favour of the department and the assessment made by the AO is required to be restored. 8.1. He has also strongly relied upon the decision of Kerala High Court in case of Commissioner of Income Tax vs. Director, Prasar Bharti reported in [2010] 325 ITR 205 (Ker.) wherein it has been held as under:- "2. Respondent is a fully owned Government of India undertaking engaged in telecast of news, various sports, entertainments, cinemas and other programmes. Advertisement income is a major source of revenue for all telecasting companies including the respondent. Advertisements are canvassed through agents appointed by the respondent under agreement with them. Advertising agencies recognised by the respondent are of two types, the unregistered agencies which are not entitled to any credit facility and the other type are re....
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....han Commercial Service has agreed to allow commission in respect of advertisements placed by any advertising agent and accredited by it. (2) By the agency : In consideration of the accreditation herein afforded and of the commission to which the agency will be entitled by reason of such accreditation. (c) the remuneration of the agency for placing advertisements in the commercial service shall be in the form of standard agency commission of 15 (fifteen) per cent to be paid by the Doordarshan Commercial Service. From the above it is very clear that parties have understood their relationship as principal and agent and what is paid to the agent by Doordarshan is 15 per cent of advertisement charges collected and remitted to it by the agent which is in the form of commission payable to the agent by Doordarshan. Counsel for the respondent referred to one of the agreements where the commission is referred to as standard discount and contended that the arrangement between respondent and advertising agency is not agency but is a principal to principal arrangement of sharing advertisement charges. We are unable to accept this contention because advertisement contract entered into b....
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....decided by this Court pertains to sale of lottery tickets to the agents at a discounted price. In both the cases, the purchasers, namely, stamp vendors and lottery agents purchased stamps and lottery tickets respectively at a discounted price andthey run the business at their risk. They will get the discount retained by the Government only if stamp paper or lottery ticket is sold and destruction of the stamp paper or lottery ticket before sale in their hands will be a complete loss to them. Therefore the transactions of purchase at discounted price and sale at face value were rightly treated as not agency transactions by the Courts. On the other hand, in this case, on facts and based on terms of agreements between parties, we find that the transaction is pure agency arrangement whereunder respondent allows the agents to canvass advertisement for them at tariff prescribed by the respondent on payment of commission of 15 per cent. We therefore allow the appeals reversing the orders of the Tribunal and restore the orders of assessment confirmed in first appeals. However it is for the respondent to invoke, if permissible, the indemnity clause and recover the levies from the agents." ....