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Before: Shri G.D. Agrawal & Shri Rajpal Yadav
ORDER Per Bench: The assessee and the Revenue are in cross appeal against the order of learned CIT(A) dated 20.05.2011 passed for the assessment year 2006-07.
As far as the appeal of the Revenue is concerned, we find that the learned First Appellate Authority has granted relief of Rs.10,27,153/- which ITA Nos. 3662 & 3789/Del./2011 2 was added by the Assessing Officer with the aid of section 69B and also deleted the disallowance of Rs.3,42,413/-. The tax effect on the additions deleted by the CIT(A) is less than Rs.10,00,000/- and therefore, the appeal of the Revenue is not maintainable in view of the Circular of CBDT No. 21 of 2015 dated 10.12.2015. Accordingly, the appeal of the Revenue is dismissed as non-maintainable.
As far as the appeal of the assessee is concerned, it emerges out that the assessee has filed its return of income on 01.10.2006 declaring total income of Rs.10,53,780/-. The assessee at the relevant time was engaged in the manufacturing and export of readymade garments. It has paid commission of Rs.6,02,141/- to M/s. Haus Mod, 403, Neel Kanth Building, East of Kailash. According to the Assessing Officer the Assessee did not deduct Tax at Source u/s. 194H of the Income-tax Act and, therefore, the expenditure claimed by the assessee deserves to be disallowed u/s. 40(a)(ia) of the Income-tax Act.
The appeal to the ld. CIT(A) did not bring any relief to the assessee.
The ld. Counsel for the assessee at the very outset submitted that out of the total claim, the assessee has made actual payment of Rs.3,70,345/- and ITA Nos. 3662 & 3789/Del./2011 3 balance amount of Rs.2,31,796/- was payable. This amount, which represents payable, ought to have been disallowed by the Assessing Officer. The ld. Counsel for the assessee did not dispute with regard to the taxability of the amount in the hands of the recipient as well as non-deduction of tax at source on such amount.
The ld. Departmental Representative, on the other hand, relied on the orders of the Revenue authorities.
On due consideration of the above facts and circumstances, we are of the view that the appeal of the assessee deserves to be dismissed because the assessee has not disputed the taxability of the commission payment in the hands of recipient and non-deduction of tax on such amounts, which were credited to the account of recipient. As far as the contention of the ld. Counsel on the strength of the decision of ITAT in the case of Merilyn Shipping & Transports v. Addl. CIT [2012] 136 ITD 23 that on the amount which remained payable, no disallowance can be made, is concerned, this decision has been overruled by Hon’ble Gujrat High Court in the case of CIT vs. Sikandarkhan N. Tanvar, 357 ITR 312 (Guj.). Therefore, we do not find any ITA Nos. 3662 & 3789/Del./2011 4 merit in this contention of the ld. Counsel for the assessee. Thus, the appeal of the assessee also deserves to be dismissed.