9911796707
TMI Blog2014 (1) TMI 304X X X X Extracts X X X X X X X X Extracts X X X X ..... dition 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 reimbursement of expenses incurred by them. However, the A.O. noted that the case of the assessee was not reimbursement of actual expenses incurred by consignees but a fixed percentage was paid irrespective of the actual expenses incurred by them. Therefore, as per the A.O. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... linked to that actual expenses is nothing but commissions as it is linked to sale made by the consignee agents. Therefore the appellant was liable to deduct tax at source on these payment which it failed to do. The AO has rightly applied the provisions of section 40(a)(ia) while making that disallowance. The grounds are dismissed.' The facts are identical to the facts of this case for the year under consideration. I am in agreement with the views of my predecessor and accordingly the addition made by the AO is confirmed and grounds of appeal 2 to 5 are dismissed." 5. We have heard the learned Representatives of the parties and records perused. The issue under consideration whether the impugned expenditures are in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it and loss account. It is relevant to note that the assessee paid commission on sale and were separately accounted for under the head commission on sale of Rs.48,55,646/-in profit loss account. The consignee agents make the sale on behalf of the assessee company to the distributor/dealer/retailer appointed by them for which they are paid commission at the fixed percentage as per the Agreement executed between them and TDS is deducted on the said commission. No dispute on this issue. Goods are sent to the consignee agents from Malanpur Unit for which the primary freight is paid on behalf of the assessee company. This freight paid is reimbursed by the assessee company by way of credit note. No dispute of this fact also. The sale of U.P., Raj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on sales and the expenses at the fixed cost rate structure as per Agreement. The assessee company by way of credit note amount for their expenses as pr Sale Patti, though 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 maki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the paper book, copies of ledger account of expenses page nos. 32 to 50. On perusal of agreement, we notice that as per clause-3 in addition to 3% sale, the agent is entitled to reimbursement of expenses. The relevant abstract of the agreement is reproduced as below :- "1.5 That on the receipt of goods by the consignee agents till the sales made by them, the consignee agents incur certain expenses on behalf of the assessee company which are otherwise to be incurred by the assessee company if the assessee company make direct sale at these places. The nature of expenses incurred by the consignee agents and reimbursed by the assessee company as per the agreement executed between them are :- & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utstanding 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 respect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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