TMI Blog2012 (9) TMI 366X X X X Extracts X X X X X X X X Extracts X X X X ..... n terms of the agreement and this did not amount to incurring of an expenditure no infirmity in the findings of the CIT(A) in deleting the disallowance u/s 40a(ia). As the notices issued by the ld. CIT(A) were never served upon it and the issues raised in ground nos. 2 & 5 in this appeal having not been adjudicated by him, it is fair and appropriate to vacate the findings of the CIT(A) and restore the matter to his file with the directions to readjudicate the issues in the light of aforesaid decision of the ITAT on identical facts in the AY 2006-07 after allowing sufficient opportunity to both the parties - ITA no.356/Del/2012 - - - Dated:- 31-7-2012 - SHRI I.C. SUDHIR AND A.N. PAHUJA, JJ. Assessee by Shri Rajesh Jhulani , AR Revenue by Shri Satpal Singh, DR ORDER A.N. PAHUJA:- This appeal filed on 24.01.2012 by the assessee against an order dated 09-11-2011 of the ld. CIT(A)-XV, New Delhi, raises the following grounds:- [l] That the Ld. CIT(A) has erred both in law and on facts in confirming the assessment made by the Learned Assessing Officer (LAO) at an income of Rs..1,42,15,482/- as against the returned loss of Rs..9,09,780/- declared by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mbers of receipts/amounts collected by the appellant on their behalf is not in the nature of commission, hence, the provisions of section 194H are not applicable in this case. 4.2 That the lower authorities in respect of the impugned additions have wrongly invoked the provisions of section 40(a)(ia) of the Act and failed to consider and appreciate that the said provisions are only applicable in respect of payment of commission for rendering services, which does not exist in the arrangement between the appellant and the various travel agents constituting the consortium. 4.3 That on identical facts, the addition made in the assessment year 2006-07 stands deleted by the CIT(A). 4.4 That on identical facts, no addition was made in past assessment years as well as in the subsequent assessment years except assessment year 2006-07. 5. That the LAO erred in initiating proceedings u/s 271B of the Act, for non filing of the Tax Audit Report u/s 44AB, by treating the total receipts of Rs.1,67,64,152/- (Rs.1,51,52,182+Rs.16,01,970), being additions made, as part of sales, turnover or gross receipts of the appellant company without understanding the method of accounting being followed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reflected commission income of Rs.1,46,59,898/- while assessee reflected in the profit and loss account, commission income of Rs.1,30,57,928/-, the AO asked the assessee as to why the difference be not added. In the absence of any reply, the AO added the difference of Rs.16,01,970/-. 2.2 Moreover, the assessee did not deduct tax at source from the following payments:- [In Rs.] a) Amadeus Segment fee payment Rs. 54,78,848/- b) UA PLB payment Rs. 5,23,797/- c) Galileo Segment fee payment Rs. 61,81,554/- Total Rs.1,21,84,199/- Since M/s Amadeus India (P) Ltd., Interglobe Technology Qotient (P) Ltd. M/s United Airlines Inc. having deducted tax at source from the aforesaid payments while the assessee did not deduct tax at source from the payment on account of commission, the AO disallowed the amount of Rs.1,21,84,199/-in terms of provisions of section 40(a)(ia) of the Act. 3. On appeal, none appeared on behalf of the assessee before the ld. CIT(A) despite issuance of notice dated 28th June, 2011, 27.07.2011, 22.09.2011 and 03.10.2011.In absence of any submissions, the ld. CIT(A) upheld the disallowances holding as under:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt and 13 travel agents, the appellant paid the commission to these 13 travel agents (after retaining the amount for meeting proportionate expenses) in proportion to the segment bookings effected by each of the travel agents (refer clause 1) without deducting TOS, hence provisions of Section 40 (a)(ia) are clearly attracted in appellant's case. The appellant had an independent agreement jointly with 13 travel agents, under which: . i) appellant was duty bound to retain only that sum which was sufficient to meet the fixed and variable expenditure the corporate structure. II)each of the 13 travel agents will proportionally contribute toward the expenditure incurred by the appellant. III) distribute the monies to each of the consortium travel agents in proportion to the segment bookings effected by each travel agents. The appellant has relied on the case of Ahmedabad Stamp Vendors Vs. UOI (2571TR 202) (Gujrat) and stated that provision of Section 194H are not applicable. In my view, facts of that case are not same as that of the appellant. In Ahmedabad Stamp Vendor's case (Supra) the issue was that "discount made available to the licensed stamp vendors" doesn't fall within ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity nor the ld. AR demonstrated before us as to how the said principles are applicable in this case. .In the absence of any finding on that aspect ,emerging from the impugned order, we refrain from expressing any opinion on that aspect or the applicability of decisions relied upon by the ld. AR, especially when the ld. AR did not demonstrate before us as to how these decisions are applicable in facts and circumstances before us. At this stage, we may also clarify that it is a settled position that credit for TDS is to be given in the case of the person in whose hands income is taxable and that too in the year in which the corresponding income is taxed . Now adverting to the facts narrated before us , the assessee entered into a consortium agreement with 12 other members who are travel agents for booking air tickets through the platform provided by M/s Amadeus Pvt. Ltd. .In terms of the said agreement dated 01.04.2003 , all the member travel agents except the assessee, rendered services of booking air line tickets, utilized the computerized electronic reservation system platform provided by Amadeus ,who offered preferential rates subject to bulk business being offered by all the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be made in terms of provisions of sec. 40(a)(ia) of the Act. As is evident from the terms and conditions of the consortium agreement, the payment by the assessee to other consortium members is not voluntary .The assessee is under a legal obligation in terms of the agreement to pay the amount to other consortium members in accordance with settled terms. There is nothing to suggest that the assessee rendered any service to Amadeus. It is the settled legal position that income accrues when an enforceable debt is created in favour of an assessee. In other words, income accrues when the assessee acquires the right to receive the same. The terms of the consortium agreement do not reveal any such right in favour of the assessee . Income of 52,22,326/-rightfully belonged to the other consortium members, to whom the amount was distributed by the assessee. Thus , the ld. CIT(A) rightly concluded that the said amount can not be treated as income of the assessee. Since the assessee only distributed the income in terms of the agreement and this did not amount to incurring of an expenditure nor the assessee claimed any, we do not find any infirmity in the findings of the ld. CIT(A) in deleting ..... X X X X Extracts X X X X X X X X Extracts X X X X
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