TMI Blog2014 (1) TMI 304X X X X Extracts X X X X X X X X Extracts X X X X ..... o tax deducted at source, provisions of Section 40(a)(ia) of the Act is not applicable – Decided in favour of Assessee. - IT Appeal Nos. 54 & 55 ( Agra) of 2013 - - - Dated:- 30-4-2013 - BHAVNESH SAINI AND A.L. GEHLOT , JJ. For the Appellant : Pankaj Gargh. For the Respondent : K.K. Mishra. ORDER:- PER : A.L. Gehlot These are appeals filed by two different assessees against two different orders, both dated 31.01.2013, passed by the ld. CIT(A)-II, Agra for the Assessment Years 2009-10. 2. First we take up ITA No.54/Agra/2013 in the case of M/s Pee Cee Cosma Sope Limited. The assessee has raised as many as seven grounds of appeal. However, effective ground of appeal is in respect of addition of Rs.28,14,174/- invoking section 40(a)(ia) of the Income Tax Act, 1961 ('the Act' hereinafter). 3. The brief facts of the case are that the assessee company is engaged in the business of manufacturing and trading of laundry soap and washing power, detergent cake etc. During the course of assessment proceedings, the A.O. noticed that the assessee company has paid certain amounts to the consignees to whom they have sold their goods. These amounts were claimed as reimbur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n whether the impugned expenditures are in nature of commission or reimbursement of expenditures. To understand nature of transaction first of all we have to see dictionary meaning of "Commission". The related meaning as per different dictionaries are as under :- (i) As per THE LAW LEXICON Commission Agent : One who sales or buys goods for another and receives by way of remuneration a commission or percentage upon the amount involved in each transaction. (ii) As per OXFORD DICTIONARY Payment to an agent for selling goods or services. (iii) By FARLEX DICTIONARY A fee paid based on a percentage of the sale made by an employee or agent, as distinguished from regular payments of wages or salary. (iv) As per WEBSTER'S DICTIONARY The fee given an agent or sales person for his or her services. (v) As per Dictionary of CULTUIRAL LITERACY ECNOMICS A fee paid to a broker or other financial agents for negotiating a sale. The fee is based on percentage of sale price. 5.1 In the light of above dictionary meaning, if we see the facts of the case under consideration, we notice that the assessee claimed Rs.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ough the expenses incurred by the, are much more than the expenses accounted for by the assessee company. Copies of their Ledger Account of expenses incurred by them on behalf of Assessee Company have been filed and are put on record. It is also to note that that the expenses incurred by the consignee agents on behalf of the assessee company are from the sale amount collected by them as there always remain outstanding balance. Considering the facts of the case following points are not in dispute :- (i) Consignee agents are making sales on behalf of assessee company on commission basis. (ii) Consignee agent incurs expenses on sales on behalf of the assessee company. (iii) Consignee agent maintains day to day details of expenses incurred by them for and behalf of the assessee company. (iv) Monthly Sale Patti is sent by consignee agents along with ledger account of expenses incurred. (v) In Sale Patti consignee agent, from the sale amount deduct their commission and expenses which they have to receive from the assessee company on the basis of fixed cost rate as per agreement. (vi) On receipt of Sale Patti credit note ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reimbursed to them by way of credit note. 1.7 It is important to mention here that the expenses incurred by the consignee agents on behalf of the assessee company are from the sale amount collected by them as there always remain outstanding balance. 1.8 That the Assessing Officer has treated the reimbursement of expenses as commission paid only on the ground that the expenses are reimbursed at fixed rate and therefore it is not in the nature of reimbursement of expenses but it was part and parcel of commission on which tax at source has not been deducted and consequently made addition u/s 40a(ia) of the Act." 5.3 The concerned parties have also furnished the sale Patti along with claim of the expenses on sale of consignment goods the claim of expenses given detail the expenses pertaining to the monthly selling expenses loading and unloading dealing with expenses. These expenses have been adjusted and accounted for in the account of respective parties. After considering these arguments, we notice that the impugned payment is reimbursement of the expenses and are not the commission as the concerned party did not give any services in respect of the payment of expendit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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