2019 (5) TMI 1257

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....n holding that the assessee was required to withhold tax u/s 194C of the Income-tax Act, 1961 [hereinafter referred to as 'the Act'] from the amount reimbursed towards advertisement expenditure incurred by the distributors and that the disallowance made u/s 40(a)(ia) of the Act was sustainable. 3. Other grievances have not been pressed before us. 4. Briefly stated, the facts of the case are that assessee company is engaged in trading of mobile hand-sets and manufacturing, trading, servicing and maintenance of computer hardware. The return of income was filed by the assessee on 29.09.2011 declaring total income of Rs. 71.28 crores. Thereafter, the return was revised on 27.09.2012 and revised income was 71.28 crores. 5. During th....

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.... by the distributor. Taking a leaf out of the decision of the Tribunal in A.Y 2009-10, the CIT(A) held as under: "3.5 The appellant is directed to produce before the AO proof/evidence to the effect that the parties to whom reimbursement had been made had actually deducted TDS while making payments to the final recipients. To the extent such verification is positive, the liability of deducting TDS cannot be fastened on the assessee. In this situation, there will be no disallowance under Section 40 (a)(ia). However, to the extent such verification is negative, it is held that appellant was liable for making TDS and therefore the provision of Section 40 (a)(ia) will be triggered and consequently such expenses will stand disallowed." ....

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....t the payment is reimbursement, then it needs to be verified whether the payee has paid the tax or not. 13. We have given thoughtful consideration to the orders of the authorities below. We have also gone through the relevant documentary evidence brought on record u/r 18(6) of the ITAT Rules. Exhibit 1 is the invoice raised by Delta Prime marketing Pvt Ltd, one of the regional distributor of the assessee which shows that it has raised certain claims in respect of advertisement and marketing. Exhibit 2 is the bill of Shubh Advertising and marketing Pvt Ltd which is raised in the name of Delta Prime marketing Pvt Ltd. Similarly, Exhibit 19 is the invoice of Tenet Agencies for Spice carry bag of Rs. 60,000/- and Exhibit 20 is the invoice ra....