TMI Blog2005 (2) TMI 453X X X X Extracts X X X X X X X X Extracts X X X X ..... n the P L a/c, commission and discount were shown under the head "Handling charges" at Rs. 7,14,37,140. The AO accordingly issued show-cause notice to the assessee for short deduction of tax at source. The AO also imposed interest/penalty under s. 201(1)/201(1A). The matter for imposition of penalty under S. 271C for shortfall in deduction of tax was referred to the Jt. CIT. After considering reply of the assessee, the Jt. CIT as per the impugned order, held that the assessee had failed to deduct tax at source from discount paid by the assessee without any reasonable cause and, therefore, was liable to pay penalty of Rs. 1,79,342 under s. 271C of the IT Act. 3. The assessee impugned above levy of penalty in appeal before the CIT(A). Befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icket to the passengers as the same did not constitute commission or brokerage. Copies of opinion received in this regard from TAFI and other associations were filed before the CIT(A). 5. The learned CIT(A) also noted following submissions advanced on behalf of the assessee: "5. It is also submitted that the agents associations TAFI and TAAI as well as other persons associated with this trade have also sought the opinions of the eminent professionals in the field of taxation including the ex-chairman of CBDT on this issue. Almost all the income-tax experts such as Sh. T.N. Pandey, ex-chairman, CBDT, Sh. R. Santhanam, senior Supreme Court advocate, and Sh. Pradeep Dinodia, a leading chartered accountant, are of the opinion that the rebat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the same practice was followed by the industry as a whole, that is both by airlines and agents probably throughout India till the matter was clarified by CBDT. It is argued that theirs in not a case in isolation and the appellant-company has not committed any default within the meaning of s. 271C of the Act r/w s. 273B of the IT Act, as there was reasonable cause to believe that no tax was to be deducted on the discount portion." 6. On careful consideration of the matter, the learned CIT(A) held that the assessee was prevented by reasonable cause within meaning of s. 273B from complying with provisions relating to deduction of tax at source. In the light of s. 273B, no penalty could be imposed on the assessee as failure to comply with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that in present case the levy of penalty was not warranted, the same was cancelled. 7. The Revenue is aggrieved and has brought the issue in appeal. The learned Departmental Representative strongly relied upon order of the Jt. CIT. He further pointed out that Jt. CIT had considered various pleas advanced by the assessee and held that default committed was without any reasonable cause. The finding to the contrary recorded in the impugned order was, therefore, erroneous. The assessee failed to deduct tax at source from commission paid by the assessee under the garb of discount and, therefore, was liable to pay penalty. He prayed that order of the Jt. CIT should be restored. 8. I have given careful thought to the submissions advanced befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . CIT (2004) 83 TTJ (Cal) 409 (2) Marubeni Corporation (Liaison Office) vs. Jt. CIT (2003) 78 TTJ (Del) 297 : (2002) 83 ITD 577 (Del) (3) Wipro Finance Ltd. vs. ITO (2003) 81 TTJ (Bang) 887 (4) CIT vs. Misui Co. Ltd. Anr. (2004) 190 CTR (Del) 38; and (5) CIT vs. Itochu Corporation (2004) 190 CTR (Del) 31. In fact, Courts have drawn distinction between commission and discount and from discount, no tax at source was held to be deductible. 9. The learned Departmental Representative contended, and in my view rightly, that the learned Jt. CIT had also recorded in the impugned order that default in the present case was not due to a reasonable cause. But he did not refer to the facts and circumstances of the case under which opinio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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