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2015 (12) TMI 383 - ITAT LUCKNOW

2015 (12) TMI 383 - ITAT LUCKNOW - TMI - TDS u/s 194H - disallowance under section 40 (a)(ia) - commission paid by the assessee to its agent in relation to any transaction relating to securities for procuring business for it - Held that:- The impugned issue is squarely covered by various orders of the Tribunal in favour of the assessee. This Bench of the Tribunal has also taken a view in the case of ACIT vs. M/s Tandon & Mahendra (2014 (4) TMI 811 - ITAT LUCKNOW) that TDS is not required to be d .....

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red in law and on facts of the case in deleting the addition of ₹ 35,56,116/- being the disallowance under section 40 (a)(ia) of the Income-tax Act, 1961 (hereinafter called in short the Act"), ignoring the facts that the commission paid by the assessee to its agent in relation to any transaction relating to securities for procuring business for it, falls under the category of payment received or receivable directly or indirectly by a person for services rendered, within the provision .....

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that an amount of ₹ 35,56,116/- has escaped assessment due to failure on the part of the assessee and accordingly issued notice under section 148 of the Act after recording reasons for reopening of the case under section 147 of the Act. Though the assessee has contended during the course of assessment proceedings before the Assessing Officer that the payment was made to the agents or sub-brokers for procuring mutual fund business and as per section 194H of the Act, no tax is required to be .....

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held that the commission has not been paid by the assessee to its agent in relation to any transaction relating to securities and he accordingly disallowed the said payment having invoked the provisions of section 40 (a)(ia) of the Act resulting into an addition of ₹ 35,56,116/-. 3. Assessee preferred an appeal before the ld. CIT(A) and filed written submissions, which were duly recorded by the ld. CIT(A) in his order. Being convinced with the explanations of the assessee, the ld. CIT(A) h .....

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ommission, do not attract the provisions of section 194H of I.T. Act, 1961 and accordingly the disallowances could not be made u/s 40a (ia) of I.T. Act. As mentioned earlier the appellant has paid commission for mobilizing Mutual Fund business as stated below: - "The assessee has paid commission only for mobilizing MF business and as per Income Tax Act, no TDS is required to be deducted. Moreover, AO 's contention that the payments made by the assessee for procuring business for it fall .....

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n of appellant and case law cited on this issue by the appellant in its written submission and facts & circumstances of appellant present case, I hold that the A.O. was not justified in making the disallowances of ₹ 35,56,1167- u/s 40a (ia) of I.T. Act, 1961 on account of non deduction of TDS on payment of commission on procure the Mutual Fund business. It is worthwhile to mention here that the said commission was paid by appellant to its working agents in lieu of business procure from .....

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llowances made by A.O. of ₹ 35,56,116/- is hereby deleted. Thus the appellant gets relief of ₹ 35,56,116/-. Ground Nos. 1 to 3 are allowed. 4. Aggrieved, the Revenue is in appeal before the Tribunal and has placed reliance upon the order of the Assessing Officer; whereas the ld. counsel for the assessee has contended that even on merit the issue is covered in favour of the assessee by the orders of the Tribunal in the cases of DCIT vs. Noble Enclave & towers (P) Ltd., (2012) 50 S .....

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f the assessee. This Bench of the Tribunal has also taken a view in the case of ACIT vs. M/s Tandon & Mahendra (supra) that TDS is not required to be deducted on such payment of commission in relation to securities under section 194H of the Act. The relevant observations of the Tribunal are extracted hereunder for the sake of reference:- 5. We have considered the rival submissions, perused the material available on record and have also gone through the orders of the authorities below and the .....

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and had earned commission to this extent. The Assessing Officer has also noted that the assessee had debited brokerage amount of ₹ 51,27,815/- to one company namely M/s Tapasya Projects Ltd. Thereafter, the Assessing Officer has noted that the assessee did not make any deduction of TDS while debiting the above brokerage amount in favour of M/s Tapasya Projects Ltd. The Assessing Officer disputed the allowability of this amount on two counts as to whether M/s Tapasya Projects Ltd. had rende .....

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his amount. The Learned CIT(A) has deleted this disallowance on the basis that since the commission income earned by the assessee and commission expenditure incurred by the assessee were in relation to securities, as per the provision of section 194H, no TDS was required to be deducted on such expenditure and consequently, no disallowance is to be made u/s 40(a)(ia) of the Act for this amount. 5.1 In the light of the facts of the present case, as noted above, we now examine the applicability of .....

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