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2018 (9) TMI 1229 - AT - Income TaxTDS u/s 194C - amount reimbursed to regional distributors in respect of advertisement expenses incurred - amount paid from principal to principal - Held that:- In the present Assessment Year, the assessee during the previous year paid ₹ 18,35,15,604/- to regional distributors on account of reimbursement of expenses against third party bills, incurred by them for advertisement in relation to the assessee’s products sold by them on their own account. From the records it is seen that these expenses included manpower reimbursement to RDS, Salesman incentives and other reimbursement to RDS. Thus, the assessee raised the bill in the name of payee and the assessee also produced evidences before the Assessing Officer to establish that the parties to whom the reimbursement have been made had actually complied with the Provisions of Chapter XVII-V. Therefore, we are of the view that the CIT(A) has not looked into the evidences produced before the Assessing Officer as well as before CIT(A). - Decided in favour of assessee. TDS u/s 192 - amount paid towards salary, at average rate of tax, as well as short deduction of tax the interest levied on the basis of monthly shortage u/s 201(1A) - Levy of interest under Section 201(1A) - Held that:- The rate of tax deducted at source was calculated at “average rate of income tax” computed on the basis of the rates on the estimated income of the payee for the relevant financial year. AO proceeded to compute the amount of tax to be deducted on month to month basis of average tax deducted. This needs to be verified as the Ld. AR made submission before us that the Assessing Officer has not given any credit for interest where there is no surplus payment of TDS, while charging interest on deficit amount. Thus, this issue is remanded back to the file of the Assessing Officer for verifying as to whether the interest clause is applicable or not and if applicable whether there is surplus payment of TDS or not. After verifying the same the Assessing Officer decide this issue. Provisions made for recruitment expenses - TDS liability - Held that:- The assessee company made a provision for recruitment expenses, where TDS has been deducted at the time of actual payment or credit to the party. Thus, there is no default in TDS deduction. Therefore, the action of the Assessing Officer in treating the assessee as an “assessee-in-default” and levying interest under Section 201(1A) of the Act is not based on proper appreciation of the facts of the case. Ground of assessee is allowed. TDS u/s 194J - provision for commission to directors - Held that:- The assessee made a provision for commission to directors at the end of the year, which can be paid strictly in accordance with Section 211 of the Companies Act, 1956 and TDS can be deducted and paid, when actual liability is ascertained, which generally happens after five/six months from the end of the financial year. Further, in Finance Bill, 2012, Section 194J of the Income Tax Act, 1961 has been amended and a clause (ba) to sub section (1) of the Section 194J effective from 1st July, 2012 has been Introduced wherein tax is required to be deducted on the remuneration paid to director, which is not in nature of salary, at the rate of 10% of such remuneration. Thus, the contention of the Ld. AR that this clause is applicable w.e.f. 1.07.2012 is just and proper. Ground of assessee is allowed.
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