EMPEE SUGARS AND CHEMICALS LTD.,CHENNAI vs. ACIT, CHENNAI

We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. By reiterating the submissions as made before the ld. CIT(A), the ld. Counsel for the assessee has submitted that 50% disallowance is very high and prayed for nominal disallowance. Admittedly, the assessee has not furnished any evidence in support of the miscellaneous expenses of ₹.6,55,643/- either before the Assessing Officer or before the ld. CIT(A) or even before the Tribunal. However, in the line of business of the assessee, instead of disallowing the entire expenses claimed without any supporting evidence and incurring of miscellaneous expenses is inevitable, the Assessing Officer allowed the expenses to the extent of 50% of the claim, which was confirmed by the ld. CIT(A). In view of the above, we find no infirmity in the order passed by the ld. CIT(A) and thus, the ground raised by the assessee stands dismissed.

With regard to the disallowance of ₹.1,50,000/- under section 40(a)(ia) of the Act towards professional charges, the Assessing Officer disallowed the same since the assessee failed to deduct TDS from the payments made to the CEO under the head consultation charges. On appeal, the ld. CIT(A) confirmed the disallowance made under section 40(a)(ia) of the Act, against which, the assessee is in appeal.

We have heard the rival contentions. Against the disallowance professional charges paid without deducting TDS, the reliance placed by the AR of the assesse before the ld. CIT(A) in the case of Merilyn Shipping and Transports v. Addl. CIT 16 ITR (Trib)1 (Vizag) (SB), the ld. CIT(A) has observed the said case law has no application in view of various High Court’s decision and confirmed the disallowance. Admittedly, the assessee has not deducted TDS on amount paid as professional charges. The said case law relied on before the ld. CIT(A) has no legs to stand in view of the judgement of the Hon’ble Supreme Court in the case of Palam Gas Services v. CIT 394 ITR 300 reversing the decision of Hon’ble Allahabad High Court in the case of CIT v. Vector Shipping Services (P) Ltd. (supra) and overruled the said decision, in which, the decision in the case of Merilyn Shipping and Transports v. Addl. CIT (supra) has been followed and now the said Special Bench decision become bad in law. Under the above facts and circumstances and respectfully following the above judgement of the Hon’ble Supreme Court, we find no infirmity in the order passed by the ld. CIT(A) and thus, the ground raised by the assessee stands dismissed.

The next ground relates to confirmation of disallowance of commission payment of ₹.2,94,000/- under section 40(a)(ia) of the Act. In the profit and loss account, the assessee has claimed ₹.2,94,000/- under the head commission paid. The assessee was asked to furnish the details of TDS on this commission payment, which was not produced. Hence, the Assessing Officer disallowed the commission payment in the absence of non deduction of TDS and brought to tax. On appeal, the ld. CIT(A) confirmed the disallowance made under section 40(a)(ia) of the Act, against which, the assessee preferred further appeal before the Tribunal.

We have heard the rival contentions perused the materials available on record and gone through the orders of authorities below. The assessee has claimed commission payment without deducting TDS and thereby the Assessing Officer disallowed the same and brought to tax. TDS is mandated while making commission payment. Since the assessee has not deducted the TDS, the disallowance of commission payment under section 40(a)(ia) of the Act was rightly confirmed by the ld. CIT(A). Thus, the ground raised by the assessee stands dismissed.

In the result, the appeal filed by the assessee is dismissed.