TaxTMI 
TaxTMI 
2020 (10) TMI 130
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....als) [hereinafter referred to as "the CIT(A)"] erred in upholding the action of assessing officer [hereinafter referred to as "the AO"] in disallowing expenditure in the nature of discount amounting to Rs. 56,48,42,447/- under section 40(a)(ia) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') for non-deduction of tax. The reasons given by him for doing so are wrong, contrary to the facts of the case and against the provision of law. 2. The A.O/CIT(A) failed to appreciate the expenditure of Rs. 56,48,42,447/- was in the nature of discount given to its distributors working on a principal to principal basis, for early/advance payment and not in the nature of commission for provision of any service and therefore, did not war....
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....ein on similar issues, the Hon'ble ITAT held in favour of appellant. 7. The above grounds/sub-grounds are without prejudice to each other. The grounds raised by the revenue read as under: - 1. Whether on the facts and circumstances of the case and in law, the Hon'ble ITAT is justified in confirming the order of Ld. CIT(A) of deleting the disallowance u/s. 40(a)(ia) rws 194J in respect of 'Customer Support Charges' and also that of 'CAS, Middleware and SMS Charges' without even deciding the section under which the tax was supposed to be deducted as per law and merely restricting itself over the issue of short deduction of tax? 2. Whether on the facts and circumstances of the case and in law, the Hon'ble ITAT is justified i....
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....AYs 2010-2011 to 2012-13, 2014-15 & 2015-16. The copy of the orders has been placed on record. The Ld. DR could neither controvert the same nor demonstrated any distinguishing facts. In the light of aforesaid submissions, our adjudication to the subject matter of appeal would be as given in succeeding paragraphs. 3.1 Facts on record would reveal that the assessee being resident corporate assessee was assessed for year under consideration u/s 143(3) on 15/03/2016 wherein the assessee was saddled with disallowance of Rs. 6783.90 Lacs on account of customer support charges and another disallowance of Rs. 5648.42 Lacs on account of commission charges. Both these disallowances are the subject matter of cross-appeals before us. During the year, ....
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....ng commission payment, it was observed that the assessee did not deduct any TDS on commission of Rs. 5648.42 Lacs stated to be paid to various distributors during the year. The assessee, in its submissions dated 15/03/2016, explained that distributors paid lump sum payment in advance as advance subscription. To incentivize the same, cash discount was offered by the assessee and the amount would actually represent cash discount and not commission on sales. The distributors did not render any service to the assessee and hence, the same would not require any TDS u/s 194H. However, Ld. AO, inter-alia, opined that there was principal-to-agent relationship between the assessee and the distributor and the provisions of Sec 194H were applicable to ....
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....-12 & 2012-13. A copy of the same is on record. We concur with the submission of Ld. AR that this issue is squarely covered in assessee's favor by the order of the Tribunal for AYs 2011-12 & 2012-13 wherein at para-16 of the common order dated 10/10/2017, the coordinate bench found no infirmity or illegality in the order of the CIT(A) in holding that provisions of Section 40(a)(ia) will not be applicable in the case of the assessee as there was nothing in the section to treat the assessee as defaulter where there is shortfall in deduction of TDS. In fact, this decision has subsequently been followed by the co-ordinate bench of this Tribunal in assessee's own case for AY 2010-11 (ITA Nos. 3739 & 3383/Mum/2016 order dated 08/06/2018). There....
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....transaction whether the transaction entered into between the assessee and the distributor relates to discount or commission. The TDS provisions are applicable under section 194H in case it is held that the nature of the transaction entered into between the assessee and the distributor is that of commission but in case if it is decided that the nature of transaction is not commission but discount given on sales it cannot be regarded to be commission which is hit by the provisions of Section 194H of the Income Tax Act. We, therefore, in the interest of justice and fair play to both the parties set aside this issue and restore it to the file of the AO with the direction that the AO shall redecide this issue afresh in accordance with law after ....