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Income Tax Appellate Tribunal, BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER
Before: SHRI KUL BHARAT
आदेश / O R D E R
This appeal by the Revenue is directed against order of the Commissioner of Income Tax Appeals [CIT(A)]-1, Indore dated 30.09.2019 pertaining to the assessment year 2012-13. The Revenue has raised following grounds of appeal:
“1. Whether on the facts and in the circumstances of the case the Ld. CIT(A) was justified in deleting the disallowance of Rs.4,03,600/- made u/s 40a(ia) of the income Tax Act even though the assessee has failed to make TDS on the said amount.”
Siraj Ul Hasan /ITANo.872/2019
Briefly stated facts are that the assessment u/s 143(3) of the Income Tax Act 1961(herein after referred as the Act) was made on 18.03.2015 assessing the total income at Rs.5,51,223/-. Subsequently, it was observed that the assessee had not deducted tax at source on the interest paid of Rs.4,03,600/- as per provisions of section 40a(ia) of the Act. Thereafter, assessment was reopened and the income was assessed u/s 144 r.w.s. 147 of the Act making addition of Rs.4,03,600/-. Hence, the income was assessed at Rs.7,54,823/-.
Aggrieved against this the assessee preferred an appeal before the ld. CIT(A) who after considering the submissions delete the addition.
Now the revenue is in appeal before this Tribunal. It is stated in the order u/s 253(2) of the Act that the case falls under para (c) of circular 3/2018 dated 11.07.2018 which is related to audit objection raised by RAP.
Siraj Ul Hasan /ITANo.872/2019
The only effective ground is against deletion of disallowance of Rs.4,03,600/-.
Ld. Departmental Representative (DR) vehemently argued and supported the order of the assessing officer.
Per contra, Ld. counsel for the assessee relied on the decision of the Ld. CIT(A) and further submitted that the assessing officer grossly erred in invoking the provision of section 40a(ia) of the Act. Moreover, as per the provision, the assessee was not required to deduct tax as his turnover was less than Rs.40 lacs. He further reiterated the submission as made in the written submissions as under:
With regards to the first ground in the appeal filed by the Ld. AO (hereinafter referred as "the Appellant"), the Respondent submits as under: 1. The Respondent being an individual is engaged in the business of Trading in grains in the capacity of Grain merchant (on his own account) and also earns commission income in the capacity of commission agent (Arathiya, for the sales done for third party). Thus the Appellant's Turnover includes both the receipts i.e.: a. receipts from Sale of the Grains and, b. The Commission received from sale made on behalf of others. 3
Siraj Ul Hasan /ITANo.872/2019 ii. The Respondent had duly considered the Income from both the source and filled his return of Income for the relevant A Y on 14/03/2013 declaring total income at Rs. 3,74,1701-. (IT return and Computation attached at Page no. 1 to 3 of Paper Book (hereinafter referred as "PB"). Audit report for AY 2012-13, uls 44AB of the Income Tax Act, 1961 (hereinafter referred as "the Act") is attached at Page no. 4 to Page no. 20 of the PB). Ill. At the outset, the Respondent most humbly wants to draw your honor's kind attention on the Proviso to Section 194A (l ):- (1) Any person, not being an individual or a Hindu undivided family, force. deduct income-tax thereon at the rates in [Provided that an individual or a Hindu undivided family, whose total sales, gross receipts or turnover from the business or profession carried on by him exceed the monetary limits specified under clause fa) or clause fb) of sect ion 44AB during the financial year immediately preceding the financial year in which such interest is credited or paid, shall be liable to deduct income-tax under this section.] IV. The relevant extract of section 44AB is reproduced as under: Every person,- a) carrying on business shall, if his total sales, turnover or gross receipts, as the case may be, in business exceed or exceeds [sixty lakh rupees] in any previous year [***]; or b) carrying on profession shall, if his gross receipts in profession exceed [fifteen lakh rupees] in any [previous year; or c)carrying on the business shall, if the profits ....................... . ...... .......................... ................. . [previous year; or}, d)carrying on the business shall ........................ ......................... .... . ................................................................................... ................... ............................................................................. the amount which is not chargeable to income-tax in any previous year,} maximum Thus, It is evident from the above that, the respondent being an individual would require to deduct TDS only when the total sales, turnover or gross
Siraj Ul Hasan /ITANo.872/2019 receipts from the business or profession carried on by him exceed the limit specified U/s 44AB ( i.e. Rs. 60 Lacs for the A Y 2011-] 2 preceding to the relevant Assessment Year being A Y 2012-13).
2. Further, It is most humbly submitted that the turnover of the Respondent for AY 2011-12 was only Rs.34,12,60SI- (including Adat and Muddat received), which comprises:- i) From Trading in grains as Grain Merchant (turnover in this respect of A Y 2011-12 is Rs. 29,23,332/-) ii) Commission received as an Agent (Arathiya) (turnover in this respect of A Y 2011- 12 is Rs 4,89,2761- which is nothing but the commission Adat & Muddat income earned. (Audit report for AY 2011-12 is attached at page no. 21 to 35 ofPB) Thus, it is clearly evident from the above, that the Respondent is an individual and his turnover is Rs. 34.12 Lacs for A Y 2011-12 and thus he does not fall under the proviso to Section 194A i.e. his turnover is below the limit specified in clause (a) and (b) of Section 44AB. Therefore it is most humbly requested to uphold the order passed by Hon'ble CIT(A) and reject the Appeal so filed by the Ld. AO.
I have heard the rival submissions, perused the materials available on records. I find that the Ld. CIT(A) has decided this issue in para 4 of his order as under: “Ground No.1 & 3 to 5: all the grounds of appeal have been raised against the addition of Rs.4,03,600/- made u/s 40a(ia) of the Income Tax Act 1961. It was observed by the AO that the appellant had not deducted TDS on interest amounting to Rs.4,03,600/-. Therefore, this amount was disallowed as expenditure. However, during the course of appeal proceedings, the appellant has brought to my notice that the turnover of the appellant during the relevant year was below Rs.10 lacs as such as per provision of section 194A(1) of the Act, the appellant was not required to deduct the taxes at source. The appellant has also brought to my notice that during the relevant 5
Siraj Ul Hasan /ITANo.872/2019 assessment year, the turnover of the appellant was below Rs.40 lacs. Therefore, in accordance with exception laid down u/s 44Ab of the Act the appellant was not required to deduct TDS from interest amount. After considering the facts and circumstances of the case and reply of the appellant, the AO has not been found justified in making addition of Rs.4,03,600/- u/s 40a(ia) of the Act. Therefore, the addition is deleted. All the grounds of appeal are allowed.”
8. I do not find any infirmity into the order of the Ld. CIT(A) as ex-facie as per section 194A(1) of the Act. The assessee was not required to deduct tax at source as its turnover for assessment year under consideration was below Rs.40 lacs. Hence, I do not see any infirmity into the order of Ld. CIT(A), same is hereby affirmed. Ground raised by the revenue is rejected.
In result, appeal filed by the revenue is dismissed.
Order was pronounced in the open court on 19.10.2020.