TMI Blog2013 (11) TMI 1333X X X X Extracts X X X X X X X X Extracts X X X X ..... solution - The assessee has deducted the tax at source under Section 192 of the Act treating the commission as part of salary. Shri Raj Kumar Bardeja has disclosed the income under the head ‘salary – Deduction of commission was allowed u/s 36(1)(ii) of the Income Tax Act. Addition on account of remission/cessation of liability under Section 41(1) of the Income-tax Act - Assessee could not produce the confirmation from these three creditors – Held that:- Relying upon the judgment in the case of Uttam Air Products (P) Ltd [2004 (10) TMI 284 - ITAT DELHI-C], it was held that Revenue has no material or evidence to substantiate that the said supplier had given up its claim against the assessee. The onus to bring on record such material or evidence is on the Revenue - On the basis of the facts and material as found on record, it cannot be held that the liability had ceased to exist in the hands of the assessee in the absence of any material to the contrary – Decided in favor of Assessee. - ITA Nos.4340,4341/Del/2010 & 3986,3985/Del/2011 - - - Dated:- 26-3-2013 - G D Agrawal and Diva Singh, For the Appellant: Shri Ashwani Kumar, CA For the Respondent: Ms Susan George, DR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 37 (Delhi). He stated that payment to the Managing Director was made in terms of Board s Resolution. He was a whole time director cum employee of the assessee company and the salary and commission were part of the salary and were disclosed by him under the head salary and assessed as such in his individual assessment. That his returned income is more than ₹ 2 crores. Thus, he has paid the tax on that commission income at the maximum marginal rate. That the TDS was deducted from commission also treating the same as part and parcel of the salary. That the share of the assessee in the assessee company is only 20.96%. The payment of dividend is to be made to all the shareholders as per their shareholding. Therefore, on these facts, the above two decisions of Hon'ble Jurisdictional High Court would be squarely applicable. He, therefore, submitted that the disallowance of commission paid to the Managing Director under Section 36(1)(ii) is not justified. The same should be deleted. 4. Learned DR, on the other hand, relied upon the assessment order as well as the order of the learned CIT(A). She also relied upon the decision of the Special Bench of ITAT in the case of Dalal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee company who had been paid salary and commission in terms of Board s Resolution. Copy of the Board s Resolution is placed before us in the paper book. The commission was treated as part and parcel of the salary by the assessee company as well as Shri Raj Kumar Bardeja. The assessee has deducted the tax at source under Section 192 of the Act treating the commission as part of salary. Shri Raj Kumar Bardeja has disclosed the income under the head salary . The dividend has to be paid to all the shareholders as per their shareholding. The assessee s shareholding in the company is less than 21% and no other person has been paid commission. 8. At the time of hearing before us, learned DR has vehemently contended that the above decision of the Hon'ble Jurisdictional High Court would not be applicable in the case of the assessee because the assessee has not been able to establish that the payment of commission was for services rendered to the company. We find that the payment of commission was made in the earlier years also. That in AY 2005-06 and 2006-07, payment of commission was disallowed by the Assessing Officer on the ground that the assessee failed to deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision of Hon'ble Jurisdictional High Court reads as under:- In both these cases, the issue relates to payment of commission made by the assessee to its Managing Director, in addition to salary. The same was disallowed by the Assessing Officer on two grounds, viz., a) No tax at source was deducted on amount; and b) It was not proved that the Managing Director has rendered services to earn such commission. Insofar as second ground is concerned, the finding of fact recorded by the CIT(A) as well as the Income Tax Appellate Tribunal that the services were in fact rendered by the Managing Director as an employee. This being a finding of fact, which could not be disputed by the learned counsel for the appellant, he lays stress on the first ground on which the addition was made, viz., non-deduction of tax at source. His submission in this behalf is that even if it is treated as commission for brokerage, the tax was still to be deducted under Section 36(1)(i) read with Section 40A(ia) of the Act which fact according to him, is glossed over by the assessee. 10. From the above, it is evident that the only contention of the Revenue that the payment of comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned DR, on the other hand, relied upon the orders of authorities below. 14. We have carefully considered the arguments of both the sides and perused the material placed before us. We find that ITAT Delhi Bench in the case of Uttam Air Products (P) Ltd. (supra) relied upon by the learned counsel for the assessee has held as under:- The balance of the creditor was outstanding in the books of the assessee for a considerable period of time. The essential dispute is as to whether in the absence of any write off by the assessee and also in the absence of any tangible proof of the supplier having given up its claim, could the Revenue be justified in ignoring the liability and making out a case for cessation of liability and thus, treating the same as income of the assessee. In the instant case, insofar as the intention of the assessee is concerned, it is undisputed that the same has been shown by it in his balance sheet as creditor, indicating thereby that the amount stood payable. Insofar as the stand of the supplier is concerned, the Revenue has no material or evidence to substantiate that the said supplier had given up its claim against the assessee. The onus to bring on re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the IT Act. No argument was advanced at the time of hearing before us. We, therefore, infer that the assessee is not interested in pressing ground No.2 of its appeal. Accordingly, the same is treated as not pressed and rejected as such. ITA No.4340/Del/2010 (K.L. Concast Pvt.Ltd.) AY 2007-08 :- 19. The only ground raised in this appeal by the assessee reads as under:- That the order u/s 250 passed by the Learned Commissioner of Income-Tax (Appeals) VIII, New Delhi is against law and facts on the file in as much as he was not justified to uphold the action of the Learned Addl Commissioner of Income-Tax, Range-5, New Delhi in making disallowance of ₹ 31,68,000/- on account of Commission paid to Shri Ramesh Kumar Bardeja, Shri Parikshit Bardeja and Shri Parteek Bardeja Directors of the Company. 20. This ground is identical to ground No.1 in the case of K.L. Steels Pvt.Ltd. vide ITA No.4341/Del/2010 decided above. The facts of both the cases are more or less similar with the variation in the quantum of commission paid. While in the case of K.L. Steels Pvt.Ltd. the commission was paid to the Managing Director, in this case, the commission is paid to three direct ..... X X X X Extracts X X X X X X X X Extracts X X X X
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