SADHAN CHANDRA GHOSH,KATWA vs. ITO, WARD 1(4), BURDWAN, BURDWAN

The only issue raised by the assessee in the grounds of appeal is as to whether CIT(A) was justified in sustaining the addition of Rs..28,66,577/- made by the AO treating it as income of the assessee received from Vodafone Essar South Ltd.(hereinafter called Vodafone).

The Assessee is an individual. During the relevant previous year he acted as distribution of SIM cards, e-recharge vouchers of Vodaphone The said business was carried on by the assessee or sole proprietor of SG Communication. The AO noticed that the asessee had claimed in the return of income credit for TDS of Rs.3,16,882/- (wrongly mentioned as Rs.3,16,852/- in the order of assessment). The AO called upon the asessee to explain as to how the corresponding income reflected in TDS certificate issued by Vodafone Essar South Limited was declared in the total income reflected by the assessee for the relevant assessment year. As per the provisions of Sec.199 of the Sadhan Chandra Ghosh A.Yr.2008-09 Act credit for tax deducted at source can be given only when the corresponding income on which TDS is deducted is offered to tax.

The assessee explained that the sum referred to in the TDS certificate comprises of payment made by Vodafone not to the assesee. The assessee explained that it was the distributor of SIM card and E-charge vouchers of Vodafone. Vodafone had a scheme for giving commission/special incentive/CAF to retailers and runners. The payment to such retailers and runners were routed through the assessee and the assessee had no title, right or interest whatsoever on the aforesaid payment. The total amount of commission/special incentive/CAF payable to the retailers was a sum of Rs.25,65,832/- plus service tax at 12.36% of Rs.3,20,229/- in all a sum of Rs.28.82,061/-. Vodafone had settled the aforesaid due by making payment of Rs.28,78,150/-. The second component comprised in the TDS certificate was payments to runners of Rs.2,76,720- plus 12.3% service tax of Rs.34,204/- in all a sum of 3,10,924/-. The break up of the commission/special incentive/CAF to retailers with name of each retailer is at pages 80 to 87 of the assessee’s paper book. The break-up of payment to runners giving their names is at page 88 of the assesee’s paper book. It is not disputed by the AO that the assessee also furnished the addresses of each of the retailers and runners. Apart from the above the assessee owns a van that was used for the purpose of distributorship and Vodafone had reimbursed the expenses for use of the van of a sum of Rs.94,381/-. This sum of Rs.,94,381/- was duly reflected in the profit and loss account and considered while computing the total income declared in the return of income for A.Y.2007-08.

The assessee further pointed out that the amounts due are payable to the runners as commission/special incentive were reflected in the balance sheet of the assessee as on 31.03.2008 as outstanding liability. The amounts shown as outstanding were ultimately paid over a period of time to the retailers and runners during the subsequent financial years. The assessee also pointed out that vide letter dated 11.08.2010 the assessee’s 2

The AO however ignored all the aforesaid submissions and made an observation that except the van charge of Rs.94,381/- none of the other charges were reflected in the profit and loss account of the assessee and was taken into account in computing the total income of the assessee. The AO accordingly made an addition of Rs.28,66,577/- to the total income of the assesee (Rs.29,60,958/- - Rs.94,381/-) .

Aggrieved by the order of AO the assessee preferred appeal before CIT(A). The submissions made before AO were reiterated before CIT(A). The CIT(A) posed two questions to the assessee (i) the manner in which the assessee has paid the retainers their commission/incentive and payment to runners (ii) if payments are due to the third parties how the assessee can claim credit for TDS when the sum in question is not reflected in the total income declared for the relevant assessment year in the return of income filed by the assessee. In his opinion both the aforesaid questions were not satisfactorily answered by the assessee. The CIT(A) therefore held that there was no independent proof of actual payment to the retainers and runners by the assessee. There was no passing on of TDS credit to the retailers and runners by the assessee. There was nothing on record to establish the above facts. In these circumstances, the CIT(A) confirmed the order of AO.

Aggrieved by the order of CIT(A) the assessee has preferred the present appeal before the Tribunal.

I have heard the rival submissions. The ld. Counsel for the assessee reiterated the submissions as were made before the revenue authorities. The ld. DR relied on the order of CIT(A). 3

On the question of credit for TDS the assessee has reflected a sum of Rs.94,381/- in the total income declared for the relevant assessment year and to this extent is entitled to credit. As far as the remaining sum is concerned since the sum in question is 4

In the result the appeal by the assessee is partly allowed. Order pronounced in the Court on 03.01.2018.