HEMRAJ AGARWAL,PASCHIM MEDINIPUR vs. DCIT, CIRCLE - 2, MEDINIPUR

PDF · subscribers
ITA 1825/KOL/2019Status: DisposedITAT Kolkata26 February 2020AY 2009-103 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the payments to transporters did not constitute 'commission or brokerage' as defined in Section 194H because the transporters were not acting on behalf of the assessee. Therefore, the disallowance under Section 40(a)(ia) was not justified.

What were the facts?

The assessee, a wholesale dealer, had payments to transporters disallowed under Section 40(a)(ia) for alleged violation of Section 194C. The CIT(A) agreed that Section 194C did not apply but confirmed the disallowance under Section 194H, treating the payments as commission.

What were the issues?

Whether payments to transporters for services rendered constitute 'commission or brokerage' under Section 194H, and if disallowance under Section 40(a)(ia) is valid in the absence of TDS.

Which sections of the Income-tax Act were involved?

Section 40(a)(ia),Section 194C,Section 194H

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, KOLKATA ‘SMC’ BENCH, KOLKATA

Before: Shri J. Sudhakar Reddy, Hon’ble]

order : February 26th, 2020 O R D E R Per J. Sudhakar Reddy, AM :- This appeal filed by the assessee is directed against the order of the Learned Commissioner of Income Tax (Appeals) – 11, Kolkata, (hereinafter the “ld.CIT(A)”), passed u/s. 250 of the Income Tax Act, 1961 (the ‘Act’), dt. 28/06/2019, for the Assessment Year 2009-10.

2.

The assessee is an individual and is engaged in the business of wholesale of pulses, M. Seeds etc. The Assessing Officer while passing an order u/s 143(3) of the Act on 16/12/2011, disallowed an amount u/s 40(a)(ia) of the Act, on the ground that the assessee violated the provisions of Section 194C of the Act, with respect to payment to transporters. The assessee carried the matter in appeal. The ld. First Appellate Authority, accepted the contention of the assessee that there is no contractual relationship between the assessee and truck drivers/transporters and hence the provisions of Section 194C of the Act, will not apply. While holding so, the ld. CIT(A) came to the conclusion that Section 194H of the Act, applies as the trucks were obtained on payment of commission. As no TDS u/s 194H of the Act, was made on these commission payments, he confirmed the disallowance u/s 40(a)(ia) of the Act.

3.

Aggrieved the assessee is in appeal before me.

1.

Assessment Year: 2009-10 Hemraj Agarwal 4. After hearing rival contentions, I find that the term “commission and ival contentions, I find that the term “commission and ival contentions, I find that the term “commission and brokerage” has been defined in Explanation (i) of Section 194H of the Act. This reads brokerage” has been defined in Explanation (i) of Section 194H of the Act. This reads brokerage” has been defined in Explanation (i) of Section 194H of the Act. This reads as follows:-

““commission or brokerage" includes any payment received or receivable, commission or brokerage" includes any payment received or receivable, commission or brokerage" includes any payment received or receivable, directly or indirectly, by a person acting on behalf of another person for by a person acting on behalf of another person for by a person acting on behalf of another person for services rendered (not being professional services) or for any services in services rendered (not being professional services) or for any services in services rendered (not being professional services) or for any services in the course of buying or selling of goods or in relation to any transaction the course of buying or selling of goods or in relation to any transaction the course of buying or selling of goods or in relation to any transaction relating to any asset, valuable article or thing, not b relating to any asset, valuable article or thing, not being securities; eing securities;”

4.1. In this case, the truck drivers or transporters In this case, the truck drivers or transporters were not acting on behalf of the were not acting on behalf of the assessee for services rendered. Thus, it cannot be held that the assessee has paid for services rendered. Thus, it cannot be held that the assessee has paid for services rendered. Thus, it cannot be held that the assessee has paid commission or brokerage as defined in Explanation (i) to Section 19 as defined in Explanation (i) to Section 19 as defined in Explanation (i) to Section 194H of the Act. Hence Section 194H of the Act, does not apply. Thus, the disallowance u/s 40(a)(ia) of Hence Section 194H of the Act, does not apply. Thus, the disallowance u/s 40(a)(ia) of Hence Section 194H of the Act, does not apply. Thus, the disallowance u/s 40(a)(ia) of the Act, is bad in law.

5.

Accordingly, Ground No. 2 to 7 are allowed. Accordingly, Ground No. 2 to 7 are allowed.

6.

Ground No. 8 is consequential in nature. Ground No. 8 is consequential in nature.

7.

Ground No. 9 is dismissed as not pre Ground No. 9 is dismissed as not pressed.

8.

Ground No. 1 and 10 are general in nature. Ground No. 1 and 10 are general in nature.

9.

In the result, appeal of the assessee is allowed in part. In the result, appeal of the assessee is allowed in part.

More judgments on Section 40(a)(ia)

All 7,300 judgments and leading authorities on Section 40(a)(ia) →

Recent GST High Court judgments

Search GST case law →