M/S. LAL FASHIONS ,KOLKATA vs. ACIT, CIRCLE - 45, KOLKATA , KOLKATA

The assessee’s sole substantive ground challenges correctness of both the lower authorities’ action invoking u/s. 40(a)(ia) r.w.s. 194C of the Act disallowance alleged contractual payment amounting to ₹3,69,834/- on account of non-deduction of TDS thereupon. There is no dispute that this assessee is a garments & fabrics trader / distributor of M/s Reid and Talor Suiting & Shirting. Paper books page 10 onwards reveals that the assessee has acted merely as an agent between the company and ITA No.727/Kol/2018 A.Y. 2010-11 M/s Lal Fashions Vs. ACIT, Cir-45, Kol. Page 2 payees on “cost to cost basis” for the purpose of reimbursement expenditure. the Revenue fails to indicate any income component element in issue in the hands of the payees. I therefore conclude that the assessee has received advertisement expenses from its principal and paid the same to the payees on “cost to cost basis”. I therefore hold that sec. 40(a)(ia) in such a case is not applicable on reimbursement of expenses on “cost to cost basis” in absence of income component therein in payee’s hands. The impugned disallowance is stand deleted in view of this clinching factual backdrop.

This assessee’s appeal is allowed. Order pronounced in open court on 31/01/2019 (S.S. Godara) Judicial Member Kolkata, *Dkp/Sr.PS "दनांकः- 31/01/2019 कोलकाता आदेश क" ""त"ल"प अ"े"षत / Copy of Order Forwarded to:- 1. अपीलाथ"/Appellant-M/s Lal Fashions, P-58, CIT Road, Scheme VIIM, Kolkata-54

""यथ"/Respondent-ACIT, Cir-45, 3, Govt. Place (West), Kolkata-001 3. संबं"धत आयकर आयु%त / Concerned CIT 4. आयकर आयु%त- अपील / CIT (A) 5. &वभागीय ")त)न"ध, आयकर अपील"य अ"धकरण कोलकाता / DR, ITAT, Kolkata 6. गाड+ फाइल / Guard file. By order/आदेश से, // उप/सहायक पंजीकार आयकर अपील"य अ"धकरण, कोलकाता ।