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2014 (7) TMI 516 - AT - Income TaxPayments of commission to petty persons – Unverified payments – Held that:- CIT(A) was of the view that the services rendered by commission agent included procurement of order/indent from various CMOs of Distt. Hospitals spread all over the state of Uttar Pradesh, supply of goods to such district hospitals, collection of payments against supplies and carrying on such follow up works which were essential subsequent to supplies - the assessee has furnished the confirmations and affidavits of these 12 persons also along with the proof of identity such as addresses, copy of PAN, ration card, driving license, copy of return etc. - the assessee has also furnished the details of payment of commission giving the details of particulars of bill, date of bill, order/indent no., amount, of commission, mode of payment, payee name and their addresses to the AO during the assessment proceedings – thus, there was no infirmity in the order of the CIT(A) – Decided against Revenue. TDS not deducted on commission on sales and remuneration u/s 40(a)(ia) of the Act – Held that:- CIT(A) followed the decision rendered in CIT vs. Vector Shipping Services Pvt. Ltd. [2013 (7) TMI 622 - ALLAHABAD HIGH COURT] – the provision of 40(a)(ia) was brought on statute to disallow the claim of even genuine and admissible expenses of the assessee under the head 'Income from Business and Profession' in case the assessee does not deduct TDS on such expenses and the default in deduction of TDS would result in disallowance of expenditure on which such TDS was deductible - no finding was given by the CIT(A) on merit with regard to the nature of payments – thus, the order of the CIT(A) is set aside and the matter is remitted back with the direction to adjudicate the issue on merit as to whether the provisions of section 194C are applicable to the present case and for the remaining issue, whether the provision of section 40(a)(ia) is applicable in respect of such amounts, which are payable as on 31st of March of the year under consideration – the disallowance made by the AO u/s 40(a)(ia) cannot be deleted on this basis alone that the amount in question was not unpaid/payable on the last date of the previous year relevant to the present assessment year – Decided in favour of Revenue. CIT(A) noted that 15 employees who have been paid liasioner remuneration are listed as marketing staff and their daily attendances have been marked on a register. He has also given a finding that they have been paid monthly salary - Since the total income was below taxable limit, the appellant was not required to deduct any tax u/s 192 of the Act - although disallowance was made by the AO under the provisions of section 40(a)(ia) of the Act, the AO has failed to comment under which section the assessee was liable to deduct TDS so as to attract section 40(a)(ia) of the Act – AO has simply mentioned that the payment of lisisoner remuneration is in the nature of contract without conducting any enquiry - the AO has failed to place any material on record to demonstrate that the payments made to the marketing staff was in pursuance of any contract and was covered by section 194C of the Act – thus, there was no reason to interfere in the order of the CIT(A) – Decided partly in favour of Revenue. Addition of non-confirmation of creditors – Held that:- The disallowance was made by the AO on account of non-receipt of reply from the creditor M/s Balaji Furnishers to the notice served on him u/s 133 (6)/131 of the Act - in respect of creditor, addition can be made on two basis - First basis can be that a liability has ceased to exist and this addition can be made by invoking the provisions of section 41 (1) of the Act - it is not the case of the AO that the liability has ceased to exist - the assessee has also furnished the copies of invoices of M/s. Balaji Furnishers most of which were related to purchase of chairs, tables and other furnitures - the furnitures so purchased have been supplied to various hospitals - if sale is there, corresponding purchase cannot be said to be bogus - the AO has not brought on record any adverse material even in course of remand proceedings – thus, there was no infirmity in the order of the CIT(A) – Decided against Revenue.
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