TaxTMI 
TaxTMI 
2020 (7) TMI 72
X X X X Extracts X X X X
X X X X Extracts X X X X
.... unsustainable in the eye of law since the same is passed without properly understanding the facts involved. 2. The CIT(A) grossly erred in not appreciating that the expenditure incurred was mainly towards business promotion and hence the same did not warrant deduction of tax at source and therefore, S.40(a)(ia) was not applicable. 3. The CIT(A) ought to have appreciated that the AO being Statutory authority, should have enlightened hapless Assessee as to the benefits/deductions/liabilities and made additions based on materials available on record instead of alleging that the appellant/its AR agreed for addition, which is against the spirits of the Act. 4. Without prejudice, the CIT(A) ought to have appreciated that most of the payments made did not warrant deduction of tax at source and ought to have deleted the disallowance made by the AO. 5. The appellant craves the leave of the court to amend, alter, modify, delete or withdraw any or all of the grounds before or during the arguments. 3. In the course of hearing, it was submitted by learned AR of the assessee that in para 7 of his identical orders, it is noted by learned CIT(A) that the gro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....'s statement of facts, written submissions, AO's observations I explanations and legal position have been duly considered. 8. The solitary issue to be adjudicated in the instant appeal concern disallowance of a sum of Rs. 1,31, 80,311/- u/s 40 (a)(ia) on account of non deduction of tax at source by appellant on payments made under the head Sales Promotion, Advertisement, Commission and Audit Fee. 9. In this context it may be noted that as per provisions of section 40 a) (ia), the appellant ought to have deducted tax at source on payments made against Sales Promotion, Advertisement, Commission and Audit Fee. It is to be noted that Explanation to sub clause (ia) of section 40(a) clearly indicates that an assessee ought to deduct tax at source on such payments. 10. In the instant appeal, it is noted that the appellant had no explanation to offer before AO. Even during appellate proceedings, appellant failed to explain reasons for its failure to deduct tax at source. 11. Therefore, in view of the facts narrated above, no interference in AO's order is called for since no infirmity arose." 5. We also reproduce relevant paras of the writt....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he payer. SUPPORTING STATEMENT The payee of the amounts has filed the return of income offering to tax the amounts received from the Assessee. The payee has also paid the taxes on its business profits. As the Company is complied with the requirement of the Income tax act, it is said to be company not in default for this purpose. The Assessee in support of the claim has produced the following documents and details. 1. Income Tax returns with statement of computation of income of Payee 2. Financial statements with schedules and notes of Payee 3. Ledger extract of the Assessee in the books of Payee 4. Declaration on tax payment on the business profits of Payee 5. The statement of amounts paid by the Assessee to the Company towards the marketing/commission As per the contract the Assessee has to pay the commission to the Company on customer entering into 'agreement to sale'. Based on this, Assessee has accounted/paid Rs. 69,92,235/- (Rs Sixty Nine Lacs Ninety Two thousand two hundred and thirty five) during F.Y 2010-11 and 2011-12. The detailed breakup of the amounts paid is provided in Annexure - ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and has filed his income tax return under section 139(1). The Tribunal held that in the circumstances, the proviso shall apply retrospectively_ The appeal was allowed." We submit that the assesse has provided all the proofs to claim the benefit of the Second proviso to Section 40(a) (ia), of the income tax act. We request you to grant the relief to the Assessee by allowing the so much of expenses stated above in its return of income. We want to draw your kind attention to the recent amendment to the section 40(a)(ia) restricting the disallowance to 30% from 100% disallowance on the expenses paid on which TDS is not deducted. We request you to consider Assessees request on this and grant any remedy if possible. The Assessee could not collect the information from the payee for the below amounts paid which are disallowed by the AO. Sales promotion INR 44,00,000 Advertisement INR 16,60,075 Audit Fee INR 1,28,000 TOTAL INR 61,88,075" 6. From the above paras of identical written submissions filed by the assessee before CIT(A) as reproduced above, we find that various submissions were made by the assessee bef....