ASST.C.I.T., MANGALORE vs. SHRI. K.B. BALAKRISHNA RAI, MANGALORE

Facts apropos are that assessee, a transport operator, had filed his return for impugned assessment year declaring income of Rs.5,99,130/-. During the course of assessment proceedings, AO noted that assessee had claimed the following commission expenditure :

Aggrieved assessee moved in appeal before the CIT (A). Contention of assessee was that the drivers, conductors, cleaners, checking inspectors were working as salaried persons. As per the assessee, the payment was shown as commission. These were nothing but salary paid to drivers, conductors, cleaners and checking inspectors.

CIT (A) was appreciative of these contentions. According to him assessee had paid fixed daily amount of Rs.300/- to drivers, Rs.200 to conductors, Rs.150/- to cleaners and monthly remuneration of Rs.4000/- to Rs.6000/- to checking inspectors. Ac per the CIT (A), what was paid as commission was a percentage of the collections at the end of the month and incentives. CIT (A) also noted that assessee produced trip sheets and vouchers to prove the above. He thus held that payments were made by assessee in his capacity as an employer and therefore deduction u/s.194H of the Act was not necessary. He deleted the disallowance.

Now before us, Ld. DR strongly assailing the orders of the lower authorities submitted that assessee could not show that it was not liable for deducting tax u/s.194H of the Act. As per the Ld. DR there was no employer-employee relationship between the assessee and conductors, drivers, cleaners and checking inspectors. Thus Ld. DR argued that CIT (A) fell in error in deleting the addition.

Per contra Ld. AR supported the order of the CIT (A).

We have perused the orders and heard the rival submissions. Finding of the CIT (A) is that the commission was paid as an incentive to ITA.93/Bang/2015 Page - 4 the drivers, conductors, cleaners and checking inspectors at the end of the month based on percentage of collections. It is not disputed that drivers, conductors, cleaners and checking inspectors were also getting daily wages from the assessee. Thus any additional amount received by such persons, working as employees or workers of the assessee could only be considered as a part of remuneration. Just because assessee had debited the amount as commission, would not change the complexion of the payment which squarely fell within the meaning of the term ‘remuneration’. CIT (A) has clearly given a finding that there existed a master-servant relationship between the assessee and drivers, conductors, cleaners and checking inspectors which has not been rebutted by the Revenue. In the circumstances, we do not find any reason to interfere with the order of CIT (A).

In the result, appeal of the Revenue stands dismissed.