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2015 (12) TMI 284 - ITAT MUMBAI

2015 (12) TMI 284 - ITAT MUMBAI - TMI - Warehousing charges paid to C&F agents - whether were in the nature of commission liable for deduction of tax @ 10% u/s 194H or as ‘rent’ liable for deduction of tax @ 20% u/s 194I? - disallowance u/s 40(a)(ia) - Held that:- CIT(A) has appropriately considered the issue and held that the payments made to the C&F agents are in the nature of ‘Commission’, which fall for consideration under section 194H of the Act, though in the account books, the terminology .....

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As per the assessee, the agreement with C&F agents, shows that there is a principal and agent relationship and it was not an agreement for taking the warehouse on rent. The factual findings arrived at by the CIT(A), which we have extracted above, clearly establishes that the services rendered by C&F agent are compensated by way of ‘Commission’ which is related to the sales made and, therefore, the payments have been rightly held to be subject to deduction of tax at source u/s 194H of the Act at .....

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he Commissioner of Income Tax (Appeals) (hereinafter referred to as the CIT(A) ) dated 15.11.2013, which in turn has arisen from an order passed by the Assessing Officer u/s. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) dated 19.12.2011, pertaining to assessment year 2009-10. 2. The Revenue has raised the following Grounds of appeal:- 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance of ₹ 71,83,663 .....

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in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance of ₹ 71,83,663/- made by the AO u/s. 40(a)(ia) of the Act without appreciating the department has not accepted the decision of the Hon ble ITAT and appeal of the Hon ble Bombay High Court has been filed in the case of Hindustan Thomson Associates (I) Ltd. for A.Y. 2005-06 & 2006-07. 3. Briefly put, the relevant facts are that assessee is a Company incorporated under the provisions of the Comp .....

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s represent commission paid to the C&F agents on which tax was deducted at source @ 10% u/s 194H of the Act. However, as per the Assessing Officer the nature of warehousing charges are in the nature of rent on which tax was liable to be deducted at source @ 20% u/s 194I of the Act. Because of the shortfall in deduction of tax at source, the Assessing Officer disallowed the expenditure of ₹ 71,38,663/- by invoking section 40(a)(ia) of the Act. 4. The CIT(A) upheld the stand of the asses .....

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g and forwarding of the assessee s goods and that even the sale bills were created by those agents on behalf of the assessee whereon the address of the assessee company i.e. J K Helence Curtis Ltd is given as care of those agents. For eg. One of its agents is Vihira Traders in Ahmedabad. The assessee s goods were first transported from its premises in Thane to the godowns of Vihira Traders at Ahmedabad and then from there the same were dispatched to its various clients. The relvant invoices in t .....

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ed by the AO in his remand report. In view thereof, it is held that TDS was to be made in accordance with the provision of Sec. 194H @ 10% only and not @20% u/s 194I as held by the AO. The disallowance u/s 40(a)(ia) could even be made if the assessee fails to make TDS @ 10% u/s 194H. Before me it is pleaded that the assessee has indeed deducted tax @ 10% and paid the same to the Govt. account. The AO is required to verify the same and if that is correct then the addition stands deleted. The AO i .....

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)(ia) of the Act. 7. On the other hand, the Ld. Representative for the respondentassesseee defended the order of CIT(A) on the basis of the findings recorded therein. The assessee further argued that the CIT(A) has rightly observed that services rendered by the agents were in the nature of commission as understood for Section 194H of the Act and not rent as understood for Section 194I of the Act. 8. We have carefully considered the rival submissions. In the present case, the stand of the Assessi .....

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