2019 (11) TMI 89

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ssues are that:- (i) The Ld. CIT (A) has erred in upholding the order of the Ld. AO who had disallowed salary expenditure incurred for Rs. 47,50,000/- by treating it as commission paid for selling goods invoking the provisions of section 194H and 40(a)(ia) of the Act. (ii) The Ld. CIT (A) has erred in upholding the order of the Ld. AO who had disallowed accounting charges incurred for Rs. 2,40,000/- invoking the provisions of section 194J and 40(a)(ia) of the Act. 3. The brief facts of the case are that the assessee is an individual engaged in wholesale trade of oil and lubricants filed its return of income for the AY 2013-14 on 30.9.2019 admitting taxable income of Rs. 17,02,490/-. The case was selected for scrutiny an....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....of section 194H and 40(a)(ia) of the Act and thereby disallowed the expenditure of Rs. 47,50,000. On appeal, the Ld. CIT (A) confirmed the order Ld. AO by agreeing with his view. 5. Before us, the Ld. AR submitted that the amount of Rs. 47,50,000 was paid to employees who were selling the products marketed by the assessee. It was further submitted that all these employee's estimated income was below taxable limit and therefore, deduction of Tax U/s. 192 of the Act is not applicable. It was further argued that in any case the provisions of section 194H of the Act would not be applicable in the case of the assessee because the payments were made in the form of salary to the employees of the assessee who were assigned with the task of marke....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... the facts. Therefore, we hereby direct the Ld. AO to delete the addition made for Rs. 47,50,000 invoking the provisions of section 194H and 40(a)(ia) of the Act. Expenditure incurred for Rs. 2,40,000/-: 7. During the course of scrutiny assessment proceedings, it was observed by the Ld. AO that the assessee has debited in his P & L Account an amount of Rs. 2,40,000 towards Accounting Charges. On query, it was explained by the assessee that the outstanding amount of Rs. 2,40,000 was towards salary due to his Accountant Sri Devaraju, Accountant for the previous year 2012-13 which was subsequently paid in the previous year 2013-14. On verifying the payment vouchers, it was observed by the Ld.AO that the payments were made in cash exceedi....