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2019 (2) TMI 110 - ITAT DELHITDS u/s 194H - Addition of commission expenditure paid on purchases made by the assessee - Held that:- Statement of one commission agent has been recorded who has categorically explained the entire nature and process of the chemicals procured; how he has introduced purchases for providing quality material used in the paper industry; what is the effect if material fails during the trial period; and how the responsibility for losses is to be owned. He has also explained that there is high risk of failure of the product on the basis of quality and why he has paid high commission for the assured quality so that the risk of failure is minimum. Without their being any discrepancy or any inconsistency in his statement, AO cannot discard the said statement and proceeded to make the disallowance of such a claim of payment of commission. Under the facts and circumstances the reasoning given by the authorities below cannot be upheld and accordingly, the disallowance is deleted. TDS u/s 194H - Disallowance of salary paid by the assessee under the head incentives to an ex employee on the ground that no TDS was deducted by the assessee - Held that:- Shri Amit Kumar was an employee of the assessee till last year and in this year he was not employee for the whole time. Assessee has decided to pay him performance based salary instead of regular salary and the salary was paid in the form of incentive based on his support provided to the assessee by visiting the industries on behalf of the assessee during use of the products by the paper industry. AO has held that such an incentive has to be treated as commission and therefore, assessee was liable to deduct TDS u/s 194H. How the said incentive has been treated to be as ‘commission’ is not clear, because once assessee has said that the incentive given to his ex employee was in the nature of salary, then simply rejecting the contention without any basis cannot be sustained. Even if any commission is paid in addition of any salary or wages that also falls in the category of ‘Salary’ in terms of clause (iv) of section 17. Since the assessee has only made payment of ₹ 62,000/- to Shri Amit Kumar and his income was below taxable limit, therefore, there was no requirement to deduct TDS - Decided in favour of assessee.
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