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Facts
The assessee appealed against the CIT(A)/NFAC's order which partly restricted an assessment disallowance of Rs.10,30,996/- under Section 40(a)(ia) of the Income Tax Act for failure to deduct TDS on commission paid to e-marketing companies. The Revenue contended the disallowance was correctly invoked.
Held
The Tribunal held that the disallowance under Section 40(a)(ia) should only be applied to the actual commission fee of Rs.7,90,536/-, excluding other charges like collection, fixed, listing, and shipping fees. The Assessing Officer was directed to re-compute the disallowance based solely on the commission fee.
Key Issues
Whether disallowance under Section 40(a)(ia) for non-deduction of TDS should apply only to the actual commission fees paid to e-marketing companies, or also include other related charges.
Sections Cited
40(a)(ia), 143(3)
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Income Tax Appellate Tribunal, DELHI BENCH ‘SMC’, NEW DELHI
Before: Sh. Satbeer Singh Godara
ORDER This assessee’s appeal for Assessment Year 2020-21 arises against the CIT(A)/NFAC, Delhi’s DIN & order No. ITBA/NFAC/S/250/2025-26/1081007249(1) dated 22.09.2025, in proceedings u/s 143(3) of the Income Tax Act, 1961 (in short “the Act”).
Heard both the parties at length. Case file perused.
It emerges at the outset during the course of hearing that the assessee/appellant challenges the learned CIT(A)/NFAC’s action partly restricting assessment findings invoking section 40(a)(ia) disallowance of Rs.34,36,654/- @30% thereof; coming to Rs.10,30,996/-, in the lower appellate discussion.
Sonam Jain 4. That being the case, Mr. Shukla vehemently argues that the impugned disallowance has been rightly invoked in the assessee’s hands since she had failed to deduct TDS on commission paid to various e-marking companies namely, Amazon, Flipkart and other similar portals. He could hardly dispute that the clinching fact emerging from the assessment order itself at page 4 that the actual commission fee involved herein is Rs.7,90,536/- which does not include collection fee, fixed fee, listing fee and shipping fee involving varying sums. This tribunal is accordingly of the considered view that the impugned disallowance u/s 40(a)(ia) of the Act could not have been invoked for any other expenditure than the commission fee which involves Rs.7,90,536/- incurred by the assessee. The learned Assessing Officer is accordingly directed to re-compute the impugned section 40(a)(ia) disallowance in the assessee’s hands going by the above commission fee expenditure only as per law. Ordered accordingly.