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Income Tax Appellate Tribunal, DELHI BENCH ‘G’, NEW DELHI
Before: MS. SUSHMA CHOWLA & DR. B.R.R. KUMAR
आदेश / ORDER PER SUSHMA CHOWLA, VP These two appeals filed the assessee are against the order of Ld. CIT(A)- 11, New Delhi, dated 21/10/2016 and 20/10/2016 for the assessment year & Ors. Assessment Year 2013-14 2010-11 and 2011-12 respectively under section 143(3)/147 of the Income Tax Act, 1961 (in short “the Act”).
2. The assessee has filed following grounds of appeal in ITA No.6323/Del/2016:-
“1. In sustaining the disallowance of genuine expenses of Rs.57,11,102/- disallowed by the Assessing Officer.
2. In sustaining the addition of Rs.57,11,102/- u/s 40(a)(ia) r/w section 194H of the Act taking it as alleged commission paid by the assessee to the various dealers in context with recharge coupons of Reliance Mobiles which is factually not a commission covered u/s 194H of IT Act.
In not following the various judicial decisions terming the above expenses as not being commission paid by the appellant and thus not covered by the provisions of section 194H of the Act.”
4. In applying the decision of Delhi High Court in the case of CIT V. Idea Cellular Ltd. (2010) 325 ITR 148 when the facts of the appellant’s are different and distinguishable.
In ignoring our submissions and confirmation from M/s Reliance Communication Ltd. that the payments made to the retailers by the appellant are determined/instructed by the principal company and paid on its behalf which means that the appellant has not paid any payment to the retailer on its own behalf to which section 194H can apply.”
Despite service of notice, none appeared on behalf of the assessee, since the present issue is covered, we proceed to deice the same after hearing the Ld. DR for the Revenue.
3. The only issue raised in both appeals is against the disallowance of alleged commission paid by the assessee and whether the same was exigible to tax deduction at source under section 194H of the Act.
Briefly in the facts of the case, the assessee was a distributor of Reliance Mobile recharge coupons and Parle Biscuits in wholesale trading. & Ors. Assessment Year 2013-14 The assessee had declared the income under the head “income from business”. The assessee had claimed commission expenses of Rs.57,11,102/-.
The assessee had not deducted any tax at source out of such commission payments. The Assessing Officer was of the view that the assessee was liable to deduct tax at source out of such payments. However, the assessee failed to file any details before the Assessing Officer, hence, the said expenses were disallowed as non-genuine and also disallowed under section 40(a)(ia) of the Act.
5. Before the CIT(A), the Ld. AR for the assessee pointed out that the assessee was engaged in sale of recharge coupons and the same were sold to sub-distributors on principle to principle basis, hence, there was no requirement to deduct tax at source under section 194H of the Act. Reliance was placed on several decisions in this regard. The Ld. CIT(A) relying on the ratio laid down by the Hon’ble Delhi High Court in the case of CIT vs Idea Cellular Ltd. (2010) 325 ITR 148 (Del.) held that the expenditure incurred by the assessee is exigible to tax deduction at source under section 194H of the Act.. Since, the assessee had failed to deduct tax at source under section 194H of the Act, the said amount was to be disallowed in the hands of the assessee.
The assessee is in appeal against the order of the CIT(A).
The notice of hearing was sent to the assessee for 17/10/2019 and also for 07/01/2020, however, the notice of hearing has been returned by the & Ors. Assessment Year 2013-14 postal authority with the remark ‘Left’. No alternate address is available on record, hence, the appeal is decided ex-parte qua the assessee.
On perusal of the record and after hearing the Ld. DR for the Revenue, we find that the said issue stand covered by the ratio laid down by the Hon’ble jurisdictional High Court in CIT vs Idea Cellular Ltd. (2010) 325 ITR 148 (Del.). The said principle has been applied by the CIT(A), while deciding the said issue against the assessee. Since, the assessee had failed to deduct tax at source out of payments made to different parties under section 194H of the Act.
Following the ratio laid down by the Hon’ble Delhi High Court in CIT vs Idea Cellular Ltd. (supra), we hold that there was liability on the assessee to deduct tax at source on the recharge coupons sold by the assessee and as the assessee has failed to deduct tax at source, the said expenditure is not allowable under section 40(a)(ia) of the Act. Hence, the grounds of appeal raised by the assessee are dismissed.
In the result, both the appeals of the assessee are dismissed.
Order pronounced in the open court on 30th January 2020.