TMI Blog2011 (3) TMI 1135X X X X Extracts X X X X X X X X Extracts X X X X ..... he has filed confirmation and certificate of statement of commission paid and according to her, commission paid is genuine and no disallowance should be made - Held that:- Assessee is subject to TDS in view of provisions of Section 194H, and once it is an admitted position that assessee has not deducted TDS on the above brokerage and commission payments, AO has rightly disallowed the expenditure, revenue's appeal is allowed. Over statement of purchases filed before the VAT Authority - Held that:- A.O. has considered only difference between Rs.37,28,213/- being raw material purchases and Rs.35,23,192/- being raw material and packing material purchases. The A.O. has not taken into consideration the packing material and central purchases on which no input tax credit is allowed. Thus the A.O's action in adding the difference is not factually correct, purchases in VAT return considered of Rs.37,28,213/- for raw material and Rs.2,82,422/- for packing material i.e. the total purchases accounted by the assessee in its account, only difference is that outside purchases are not recorded in the VAT return submitted with West Bengal VAT Authority, revenue's appeal dismissed - IT APPEAL NO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such payments as required u/s. 194C read with Section 40a(ia) of the Act. The Assessing Officer also noticed that the payments made exceeds threshold limit for deduction of TDS u/s. 194C of the Act. The assessee replied that no TDS has been deducted and the payment is made for advertisement expenses as per provisions of law and these payments are genuine payments. It was also replied that there is no requirement for deduction of TDS under the provisions of Section 194(1) of the Act. The Assessing Officer disallowed the expenditure towards advertisement expenses. Aggrieved, assessee preferred appeal before CIT(A). 4. The CIT(A) deleted the disallowance by stating that the payment made by individual/HUF was brought under the ambit of Section 194(1) by the Finance Act, 2007 with effect from 01.06.2007 and thus this provision is applicable for and from assessment year 2008-09 and as assessee's case falls in assessment years 2006-07 2007-08. According to him, these provisions will not be applied to this assessee. The CIT(A) deleted the disallowances. Aggrieved, now the revenue is in appeal against the deletion. 5. We have heard rival contentions and gone through facts and circums ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paying any sum to any resident (hereafter in this section referred to as the sub-contractor) in pursuance of a contract with the sub-contractor for carrying out, or for the supply of labour for carrying out, the whole or any part of the work undertaken by the contractor or for supplying whether wholly or partly any labour which the contractor has undertaken to supply shall, at the time of credit of such sum to the account of the sub-contractor or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to one per cent of such sum as income-tax on income comprised therein." ** ** ** 6. From the above provisions of Section 194C(1), it is clear that the payments made by individual or Hindu Undivided Family does not come within the ambit of TDS i.e. the expenditure incurred for advertisement as individual and HUF are specifically excluded in the above provisions. The provision of Sub-Section (2) applies only to payments made to Sub-Contractors and not to Contractors. Accordingly, Assessing Officer can not made disallowance by invoking provisions of Section 40a(ia), as presen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance of this case but we are of the considered view that Section 194C(2) will apply to the payments made to Sub-Contractors by the Contractor and not by the assessee. In the present case, it is an admitted position that the assessee has made payments on advertisement to the Contractors and not to Sub-Contractors. Further as referred by Ld. Counsel for the assessee, this provision was explained by CBDT Circular No.3 of 2008 dated 12.03.2008 which is reported in (2008)299 ITR 8 (Statute) and the relevant Circular as reported at page 71, reads as under:- "54. Expansion of scope of the provisions of section 194C. 54.1 The existing provisions of sub-section (1) of section 194C provided for deduction of income-tax at source from any sum credited or paid to the resident contractor for carrying out any work (including supply of labour for carrying out any work) in pursuance of a contract between the contractor and the Government, local authorities, statutory corporations, companies, co-operative societies, statutory authorities engaged in providing housing accommodation, etc., registered societies, trusts, universities and firms. The rate of TDS is 1% in respect of advertising contract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce and we confirm the same. 9. Exactly, similar are facts in ITA No.843/Kol/2010 for assessment year 2007-08, hence taking a consistent view, we confirm the deletion of disallowance made by CIT(A) in that year also. Accordingly, this common issue of revenue's appeals is dismissed. 10. The next issue in revenue's appeals in ITA No. 842/Kol/2010 for assessment year 2006-07, is against the order of CIT(A) deleting the disallowance of expenditure of commission and brokerage by invoking provisions of Section 194H read with Section 40a(ia) of the Act. For this, revenue has raised the following ground :- "That on the facts and circumstances of the case, the Ld. CIT(A) had erred by deleting the addition made on account of expenditure corresponding to commission and brokerage amounting to Rs.61,631/- without considering the existing provision of Section 194H and u/s. 40a(ia) of the I.T. Act, 1961 since the assessee being an individual whose disclosed turnover exceeds the monetary limits specified under clause (a) or clause (b) of Section 44AB during the financial year under consideration." 11. The brief facts leading to the above issue are that the Assessing Officer has disallowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere is difference in the purchase and over stated purchase are at Rs.2,05,020/-. Accordingly, he made additions of over stated purchases. Aggrieved, assessee preferred appeal before the CIT(A). 16. The CIT(A) deleted the addition after considering the reply of the assessee vide Para 4.3 of his order, which reads as under:- "I have carefully considered the submissions of the appellant and reconciliation statement and VAT certificate. The A.O. has considered only difference between Rs.37,28,213/- being raw material purchases and Rs.35,23,192/- being raw material and packing material purchases. The A.O. has not taken into consideration the packing material and central purchases on which no input tax credit is allowed. Thus the A.O's action in adding the difference is not factually correct. Further the appellant submitted that all purchases were made by account payee cheques. The appellant also furnished a certificate from the Commercial Tax Officer, Salt Lake City, Kolkata wherein the total purchases shown at Rs.40,10,635/- only. In view of the facts, I direct the A.O. to delete the addition made on account of overstatement of purchases." Aggrieved, revenue came in appeal before ..... X X X X Extracts X X X X X X X X Extracts X X X X
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