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

PDF · subscribers
ITA 727/KOL/2018Status: DisposedITAT Kolkata31 January 2019AY 2010-112 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that Section 40(a)(ia) is not applicable to reimbursements of expenses made on a cost-to-cost basis, especially when there is no income component in the hands of the payees. Therefore, the disallowance made by the lower authorities was deleted.

What were the facts?

The assessee, a garments and fabrics trader, acted as an agent for its principal, M/s Reid and Talor Suiting & Shirting. The assessee incurred advertisement expenses on behalf of the principal and reimbursed these to the payees on a cost-to-cost basis.

What were the issues?

Whether disallowance under Section 40(a)(ia) is applicable on reimbursement of expenses made on a cost-to-cost basis without any income component in the payee's hands.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, KOLKATA BENCH “SMC” KOLKATA

Before: Shri S.S, Godara

This assessee’s appeal for assessment year 2010-11, arises against the Commissioner of Income-tax (Appeals)-13, Kolkata’s order dated 18.12.2017 passed in case No. 413/CIT(A)-13/Cir-45/Kol/2014-15 involving proceedings u/s. 143(3) of the Income Tax Act, 1961; in short ‘the Act’. Heard both the sides. Case file perused.

2.

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.

3.

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

2.

""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 ।

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 →