TaxTMI 
TaxTMI 
2018 (10) TMI 1165
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....redit notes on account of sales promotion expenses. For non-deduction of TDS, the AO added the said amount to the total income of the assessee, invoking provision u/s 40(a)(ia) of the Act vide his order dated 31.01.2015 passed u/s 143(3) of the Act. 4. The contention of the assessee before the CIT(A) in first appellate proceedings was that all the relevant details of incurring such sales promotion expenses filed in the assessment proceedings and the AO never doubled the genuineness of the expenditure relating to sales promotion. Further, the TDS was deducted on commission paid to C& F agents and no TDS is deductable on the reimbursement of expenses paid to C & F agents on sales promotion. The CIT(A) considering the remand report of the AO deleted the addition made by the AO. 5. Before us, the Ld.DR submits that the assessee was paying commission to agents without deducting TDS and referred to page No.2 of AO. A plea was taken before CIT(A that it is a reimbursement and argued that it is not a case of reimbursement and is an incentive and TDS is deductible. He ld.DR relied on the order of AO. 6. The Ld.AR submits that the assessee has appointed C & F agents, outside West Be....
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....n by the assessee as under: (a) "Scheme: The assessee has claimed Rs. 31,51,713/- towards the expenses incurred in respect of the scheme, which was launched to increase sales. Under this, the C & F agents used to incur the expenses and then a detailed statement was sent to the assessee against which the assessee used to reimburse the 50% of the expenses to the C & F agents. Sample copies of the statement showing the expenses incurred by the C & F agent alongwith with the credit note issued by the assessee is annexed herewith and marked as Annexure: 'F'. It is further submitted that C & F agents have provided a certificate which proves that the payment made to them by the assessee was in the nature of reimbursement towards the expenses incurred by them for the schemes opted by them. Sample copies of the same are annexed herewith and marked as Annexure: 'G'. It is further submitted that the beneficiary of these schemes are the distributors with whom the assessee has no relationship of principal and agent. The assessee does not pay any commission or any other incentives to these distributors. The assessee is in contact with the C & F agents only. Both....
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....onvention expenses incurred by the C & F agents which is included in the above amount. Copies of hotel bills and credit note given to the C & F agents is annexed herewith and marked as Annexure: 'K'. (f) Sampling: The assessee has incurred a total of Rs. 65,295/- under the head sampling. The assessee has basically reimbursed the claim, relating to the free sample distribution in cooking competition, to the C & F agents (through credit note). Copies of the same are annexed herewith and marked as Annexure: 'L'. (g) Travelling: The assessee has made a payment of Rs. 7,66,290/- to the travel agent Cox & King on behalf of the C & F agents. The said payment was made by the assessee for sales promotion and incentive to boost sales. Copy of the bills are annexed herewith and marked as Annexure: 'M'. (h) Hotel bills: This expense amounting to Rs. 8,249/- was incurred by the assessee towards the hotel booking of CEO of the company. The CEO of the company, Mr. Zayed Ahmed, went for the promotion of the business of the company and thus, the expense being incidental to the business are allowable. Copy of the bill is annexed herewith and marked ....
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....rred by the assessee, C & F agents alongwith credit notes and certificates considering the payments made by the assessee to the C & F agents. 12. It is also observed from sample copies of schemes at pages 22 to 24 which shows that the scheme of Annual Purchase Bonanza-2011 is being operated by the C&F agents/stockist of M/s Creative Technotex Pvt. Ltd. of respective region and they are responsible for timely distribution of scheme awards. It is seen from the page No.25 wherein the names of CNF agents are provided and amounts of their contribution is reflected against their names. Total contribution of C&F agents towards the above said scheme was Rs. 31,51,713/- as pointed out by the CIT(A) in his order at page No.7. Ld. AR pointed to the page No.26 as it is a LPG distributor scheme reimbursement form of AP Traders of Kanpur placed at Sl.No.1 in the list at page No.25 containing the names of oil companies, schemes entitled, quantity & cost of gift, total value scheme and their respective contributions. The said form shows total value of scheme is Rs. 1,05,000/- and half of it i.e. 50% is Rs. 52,500/- was born by the assessee and its contribution of Rs. 52,500/- was credited to le....
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....eated as sales promotion expenses, and not as commission, as no services were rendered by the retailers to the respondent-assessee." 14. Further, Ld.AR placed reliance on the order dated 08.07.2015 in the case of M/s Kan Tea Solutions Pvt.Ltd. at para 6, we noted that the AO disallowed the claim for non-deduction of TDS by invoking provision under section 40(a)(ia) of the Act. The CIT(A) confirmed the same. The Tribunal held that the said incentive is in the nature of discount and not commission and deleted the addition made by the AO and confirmed by the CIT(A). Relevant portion 6 to 7 is reproduced hereunder:- 6. "Briefly stated facts are that the assessee company is engaged in rendering several commercial services like collecting dues from market on behalf of principal company maintaining office staff of the principal company in lieu of commission and incentive. Generally the commission was paid for rendering services but the facilities are extended in a particular area but to render services in remote areas for few collections as incentive work even. The AO during the course of assessment proceedings noted such incentive at Rs. 48,10,829/- and disallowed the claim o....