ACCRECENT WAY MARKETING (P) LTD.,GUWAHATI vs. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-3, GUWAHATI

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ITA 359/GTY/2018Status: DisposedITAT Guwahati10 October 2019AY 2010-112 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the salary paid to the employed advocate was not a professional service requiring TDS deduction under Section 194J. It also reduced the ad hoc disallowance to ₹1 lac, stating it should not be treated as a precedent.

What were the facts?

The assessee challenged the disallowance of salary payment of ₹2 lac for non-deduction of TDS and an ad hoc disallowance of ₹5 lac. The salary was paid to an advocate employed by the company.

What were the issues?

Whether salary paid to an employed advocate is subject to TDS under Section 194J, and the validity of ad hoc disallowances without proper comparative charts or evidence.

Which sections of the Income-tax Act were involved?

Section 194J,Section 40(a)(ia),Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, GUWAHATI BENCH “SMC” GUWAHATI

Before: Shri S.S, Godara

This assessee’s appeal for assessment year 2012-13, arises against the Commissioner of Income-tax (Appeals)-2, Guwahati’s order dated 31.07.2018 passed in case No.Guwa-592/2014-15/94 involving proceedings u/s. 143(3) of the Income Tax Act, 1961; in short ‘the Act’. Heard both the parties. Case file perused.

2.

The assessee’s former substantive ground pleaded in the instant appeal challenges both the lower authorities action disallowing its salary payment of ₹2 lac on account of non-deduction of TDS u/s194J r.w.s. 40(a)(ia). Learned departmental representative vehemently contended that since the assessee had recorded the impugned expenditure of remuneration for legal matters, the same has been rightly treated as professional services requiring TDS deduction u/s 194J of the Act. I find no merit in Revenue’s instant argument. Case file suggest that the assessee had employed an advocate, Mr Pradip Tarafdar for salary of ₹25,000/- per month from July, 2011 to ITA No.359/Gau/2018 A.Y. 2012-13 Accrecente Way marketing Pvt. Ltd. Vs. DCIT, Cir-3, Guwa Page 2 March, 2012. This clinching aspect has nowhere rebutted either of the lower proceedings. I observe in these facts and circumstances that both the lower authorities have erred in treating the salary payment as professional service requiring TDS deduction. The Assessing Officer is accordingly direct to delete the impugned disallowance.

3.

Next comes the latter issue of ad hoc disallowance of ₹5 lac made in both the lower proceedings. I find that neither both the lower authorities have drawn any comparative chart of assessee’s corresponding expenses claims including direct expense, salary, wages, travel and sales promotion heads, in earlier and latter assessment years. Nor the assessee has proved the same by filing necessary cogent evidence. I therefore deem it appropriate that a lump sum disallowance of ₹1 lac would meet the ends of justice with a rider that same shall not be treated as a precedent in any other assessment year.

4.

This assessee’s appeal is partly allowed in above terms. Order pronounced in accordance with Rule 34(3) of the ITAT Rules by putting on Notice Board 10 /10/2019 (S.S. Godara) Judicial Member Guwahati, *Dkp/Sr.PS "दनांकः- 10/10/2019 आदेश क" ""त"ल"प अ"े"षत / Copy of Order Forwarded to:- 1. अपीलाथ"/Appellant-Accrecent Way Marketing Pvt. Ltd. House No.10, Bye Lane No.1, Amtala Path, Rehabari, Guwahati-781008

2.

""यथ"/Respondent-DCIT, Cir-3, Aaykar Bhawan, G.S. Road, Christian Basti, Guwahati-781005 3. संबं&धत आयकर आयु'त गृवाहाठ, / Concerned CIT Guwahati 4. आयकर आयु'त- अपील / CIT (A) 5. -वभागीय "/त/न&ध, आयकर अपील"य अ&धकरण गृवाहाठ, / DR, ITAT, Guwahati 6. गाड1 फाइल / Guard file. By order/आदेश से, // Sr. Private Secretary (on Tour) आयकर अपील"य अ&धकरण, गूवाहाठ" ।

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