9911796707
TMI Blog2015 (9) TMI 328X X X X Extracts X X X X X X X X Extracts X X X X ..... AY 2009-10. 2. The Respondent Assessee is a company engaged in the business of manufacturing and trading of ceramics glazed and unglazed tiles and financing. As regards AY 2008-09, the Assessee filed its return of income on 29th September 2008 declaring nil income. The income was assessed under Section 143 (3) of the Act. The Assessing Officer ('AO') noted that the Assessee had taken a premises on rent from group company Dua Engineering Works Pvt. Ltd. (DEWPL) in terms of an agreement executed on 28th December 2006, whereby the annual rent was fixed at Rs. 48,00,000. The rent agreement also provided that the Assessee would pay an interest free security deposit of Rs. 5.35 crores. 3. The AO was of the view that the interest free de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts return on 30th September 2009 declaring the income of Rs. 5,69,92,660. While assessing the said return under Section 143 (3) of the Act, the AO made an addition of Rs. 11,25,000 being the expenses claimed on account of the foreign travel of dealers. The AO viewed these expenses to be in the nature of incentive/commission, which would be liable to TDS under Section 194H of the Act. Accordingly, the said amount was disallowed under Section 40(a) (ia) of the Act. The AO also disallowed the interest calculated on the excess security deposit made with DEWPL and accordingly made an addition of Rs. 81 lakhs. 7. In both the appeals one common question is common regarding the excess security deposit purportedly made by the Assessee in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proportionate to the volume of business conducted through a particular dealer/sub-dealer. Anyone who achieved the actual sale target was entitled to visit the foreign destination. In order to characterize the payment as commission, for the purposes of Section 194H of the Act, it was essential first to establish the relationship of principal and agent, which admittedly was absent in the case of the Assessee. Consequently, the CIT (A) held that the foreign travel expenses of the dealers could not be disallowed under Section 40(a)(ia) of the Act. 11. The Court finds that both the CIT (A) as well as ITAT proceeded on facts as far as the aforementioned payment is concerned. The Court is unable to find any substantial question of law arising th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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