TaxTMI 
TaxTMI 
2026 (9) TMI 1970
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....he order u/s. 263 of the Act without appreciating / considering the explanations / details furnished by the appellant company in its submission dated 18.03.2025 in response to notice issued u/s. 263 of the Act. 3. In law and in the facts and circumstances of the Appellant's case, the Hon'ble PCIT has erred in setting aside the assessment order passed u/s. 143(3) r.w.s. 144(B) of the Act dated 28.12.2022 and directing the Ld. Assessing Officer to pass a fresh assessment order in accordance with law and after duly examining the facts of the case of the appellant company. 4. In law and in the facts and circumstances of the Appellant's case, the Hon'ble PCIT has failed to appreciate that the twin conditions for assuming jurisdiction u/s. 263 of the Act are not satisfied in the case of appellant company as issues which have been relied upon for passing the order u/s. 263 does not show any error in the assessment order or prejudice to the interest of the revenue. 5. In law and in the facts and circumstances of the Appellant's case, the Hon'ble PCIT has erred in contending that the appellant has not provided discount on sales, rather, it ....
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.... amount TDS deducted Rs. 18,42,123/-] constitutes two portion, i.e. Rs. 7,000/- on which provisions of section 40(a)(ia) of the Act is applicable and balance of Rs. 1,57,53,898/- being discount on which TDS is not deductible. For the discount, the assessee explained that difference between gross sales recorded and the net consideration received from franchise holder is accounted for as discount. Hence, the actual nature of transaction is not commission but discount provided by the assessee-the assessee further explained. 3.2 On the issue of income under section 41(1) of the Act, the assessee has explained that a sum of Rs. 6,55,060/- has already been credited to the profit and loss account. The resultant profit/loss before tax has been considered for the purpose of the determination the income/loss. Since the amount has already been considered in the profit and loss account, the adjustment in the computation of income has no vital impact. 3.3 The Ld. PCIT accepted the explanation of the Assessee on account of the second issue, i.e., cessation of liability u/s 41(1) of the Act, however, on the issue of TDS on commission, it was observed that the Assessee was paid less after de....
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....unt as commission expense is purely an accounting nomenclature and the practice followed by the assessee company on year-on-year basis. It does not alter the true nature of the transaction. 4.1.1 In essence, it was submitted that the said amount passed on to the franchisee by the Assessee is not a commission, but a discount provided by the company to the franchisee. 4.2 The Ld. AR has placed reliance upon the following judgments: (a) Torrent Pharmaceuticals Ltd. vs. DCIT rendered in ITA No. 164/Ahd/2018 dated 08.08.2018. (b) New Delhi Television Ltd. vs. Deputy Commissioner of Income Tax in Civil Appeal No. 1008 of 2020 dated 03.04.2020. (c) CIT vs. Krishna Capbox (P.) Ltd. reported in [2015] 60 taxmann.com 243 (Allahabad). (d) CIT Vs. R.K. Construction Co. reported in [2008] 313 ITR 65 (Guj.). (e) Cadila Healthcare Ltd. vs. CIT reported in 51 taxmann.com 255 (Ahmedabad Tribunla). 5. Per contra, Mr. Kiran Unavekar, Ld. CIT-DR, supported the order of the Ld. PCIT. He submits that the Assessee itself in the return has specified the sale amounting to Rs. 18,42,123/- as commission or brokerage, however, no TDS has been deducted on t....
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....ng commission and brokerage of Rs. 1,84,03,021/-. It is also true that the assessee furnished details in response thereto. However, mere calling for and furnishing of information does not, by itself, establish that the AO had examined the specific issue which subsequently became the subject matter of revision u/s 263 of the Act. In the present case, the material on record discloses certain features which required specific examination by the AO. The assessee's own tax audit report, reported commission/brokerage u/s 194H at Rs. 18,42,123/-, with TDS of Rs. 69,086/-. At the same time, Note-22 to the financial statements disclosed commission and brokerage expenditure of Rs. 1,84,03,021/- for the year ended 31.03.2021, as against only Rs. 30,283/- in the immediately preceding year. Thus, there was a substantial increase in the expenditure booked under the head of commission and brokerage during the year. Such substantial increase in the expenditure, coupled with the fact that the amount reported as commission/brokerage in the financial statements was significantly different from the amount reflected in the tax audit report, warranted a specific and meaningful inquiry. The AO, howeve....
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....Rs. 1,84,03,021/- iii) Legal & professional charges Rs. 19,25,698/- iv) Advertisement & publications Rs. 47,90,173/- v) Contract labor charges Rs. 1,17,15,189/- vi) Auditors remuneration of Rs. 6,50,000/- The required details were duly submitted as an Annexure-8 of the submission dated 15.12.2022 by the assessee company. Relevant extract of the said submission is given as under for ready reference: 7. Vide point no 17, your goodselves has asked the assessee company to provide whether TDS made in the following payments and to furnish the details with documentary evidence. i) Short term rent Rs. 42,59,683/- ii) Commission and brokerage Rs. 1,84,03,021/- iii) Legal & professional charges Rs. 19,25,698/- iv) Advertisement & publications Rs. 47,90,173/- v) Contract labor charges Rs. 1,17,15,189/- vi) Auditors remuneration of Rs. 6,50,000/- 7.1 In this regard, the assessee company submits ledger accounts for above expenses with details such as vendor name, posting date, description, grossamount and TDS deducted vide Annexure-8. 7.2 In this regard, the assessee com....
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....eous in so far as it is prejudicial to the interests of the Revenue if, in the opinion of the Principal Commissioner or Commissioner, the order is passed without making inquiries or verification which should have been made, or if relief is allowed without inquiring into the claim. The provision was applicable to the assessment year under consideration. The jurisdiction u/s 263 requires satisfaction of the twin conditions that the order of the AO is erroneous and that such error is prejudicial to the interests of the Revenue. In the present case, the failure to undertake the necessary inquiry into the nature of the substantial commission/brokerage expenditure and the corresponding TDS liability resulted in the assessment order being passed without proper verification of a material issue. The potential consequence of non-examination of the applicability of section 40(a)(ia) gives rise to prejudice to the interests of the Revenue. 13. Also, the Assessee itself, in its reply before the Ld. PCIT, had raised an alternative argument. The said alternative argument appearing at Para 3.2 (Page 3 of the paper book) reads as under: "3.2 In this regard, at the outset, it is submitte....