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Shri Sajid Iqbal Qureshi Versus Asstt. Commissionr of Income Tax

2016 (7) TMI 106 - ITAT MUMBAI

Method of accounting - Disallowance u/s 40(a)(ia) - short accounting of receipts in the books of accounts vis-à-vis in the TDS certificates - rejection of books of accounts - Since the assessee working as sole selling agent make direct payment to principal which was received from various parties without reflecting in its books of accounts - assessee booked only its commission in its books of accounts - Held that:- Assessee was acting as sole selling agent of M/s S S Films and make payment to M/s .....

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dition deleted - Decided in favour of assessee - I.T.A. No. 4023/Mum/2014 - Dated:- 28-6-2016 - Shri Shailendra Kumar Yadav, JM And Shri Rajesh Kumar, AM For the Assessee : Shri Rajeev Khandelwal and Neelkanth Khandelwal For the Revenue : Love Kumar ORDER Per Rajesh Kumar, A. M. This is an appeal filed by the assessee and challenging the order dated 28.3.2014 of ld.CIT(A)-31, Mumbai, for assessment year 2009-10. 2. The issue raised in the various grounds of appeal raised by the assessee is again .....

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section 143(1) of the Act, however, later on the case was selected for scrutiny and statutory notices under section 143(2) and 142(1) were issued and served upon the assessee. The assessee was a sole selling agent of M D Salauddin, Prop of S S Films and was engaged in the marketing of films procured by M/s S S Films. In the said arrangement, the assessee was responsible for all agreements of M/s S S Films with the prospective customers/sub-distributors and also responsible for collection of mon .....

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urse of collection of payment by the assessee on behalf of M/s S S Films were to the tune of ₹ 2,20,42,656/- and accordingly accounted for the commission at the rate of 10% ₹ 22,04,265/-. However, some sub-distributors deducted tax on the entire amount of payment due from them which as per TDS certificates total receipt came to ₹ 82,38,000/- and the TDS thereon was deducted ₹ 7,99,383/- which was claimed by assessee in his return of income. 4. The AO, during the course of .....

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ompliance of provisions of section 194J of the Act and therefore the assessee is not entitled to be allowed expenditure of the equal amount as per the provision of section 40(a) (ia) of the Act. Aggrieved by the order of the AO, the assessee has preferred an appeal before the ld. CIT(A), who after considering the detailed submissions of the assessee which has been incorporated in para 4 of the appellate order dismissed the appeal of the assessee by observing and holding as under (para 5): 5. I h .....

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receipts as per TDS certificates were ₹ 82,38,OOO/- whereas the appellant had shown total receipt of only ₹ 22,04,265/-. The A.O. asked the appellant to reconcile the difference. The AR explained that the appellant received gross proceeds of the entire amount on behalf of those persons, from whom, he had taken rights of films and the appellant paid the amount not reflected in his receipts, directly to the rightholders after taking his part of commission income. It was submitted that .....

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unts on the ground that the gross receipts are not included in the books of the appellant and therefore, the books has picked up the figure of gross receipts from 5 tax deductors in their form no.16A aggregating to ₹ 82,88,000 and after reducing the commission amount, he has added the difference as no TDS was deduced by the appellant on this amount. The appellant stated that the total sale value received by the appellant on behalf of his principals amount to ₹ 2,20,42,656/- fro 33 pa .....

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d receipts. The appellant's theory that he was only accounting for commission income, lacks force since, if that were so, the receipts of the appellant should have been" subjected to TDS of the respective payers, however, this is not the case. As regards the other contention of the appellant that he had reduced the amount of commission from the gross receipts and forwarded the remaining receipts to the film distributors, the A.O. has observed that if that been the case, then the said am .....

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t the appellant has been unable to adduce any agreement entered into with the exhibitors / onward distribution either before me or before the A.O. as has discussed in his submissions. As regards the so-called 'agency agreement the appellant has only produced samples that only indicate that the appellant is entitled to received 10% of commission on gross value of business generated by him. A general submission has been made to the effect that there is a diversion of income at source, but to p .....

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is therefore subject to TDS. Even otherwise, such payments are disallowable as per the provisions of section 40(a)(ia) of the Act if the conditions stipulated by the Act are not met. As observed earlier, the appellant has failed to adduce any documentary evidence to show that there is diversion of income. In such a situation, it is difficult to accept the proposition made by the AR of the appellant. Therefore, after consideration of the facts of the instant case, the addition made by the A.O. be .....

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nt from various parties after deducting various expenditures incurred by him on behalf of M/s S S Films such as dubbing, mixing recording and publicity and also his commission at the rate of 10% of the gross receipt collected on behalf of the assessee. It was argued by the ld.AR that during the year the total sale value received by the assessee on behalf of the principle from 33 parties amounting to ₹ 2,20,42,656/-, the details whereof was filed at page 7 of the paper book. During the year .....

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which is an extract of income and expenditure statement is contained which shows the commission charges received at ₹ 22,04,265/-, net profit after deducting various expenses as per Sch.11,12 and 13 at ₹ 7,92,887/-. The ld. AR strongly argued that the assessee was acting as a sole selling agent of the principal and therefore the AO was wrong in arriving at the conclusion that the assessee should have accounted for the receipt of ₹ 82.38 lakhs as against ₹ 22,04,265/- actu .....

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ld. AR finally argued that the orders of authorities below be reversed as being incorrect and contrary to the facts and law and the appeal of the assessee be allowed. 7. On the other hand, the ld. DR strongly supported the orders of authorities below by submitting that the assessee has accounted for only ₹ 22,04,265/- in respect of ₹ 82.38 lakhs and therefore the books of account maintained by the assessee were rightly rejected by the AO and also justified the addition made of ₹ .....

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ollected from the parties on behalf of the principal. We further find that the assessee used to make payment to the principal of M/s S S Films after deducting various expenses which were of the nature of dubbing, mixing and recording etc including the publicity and his commission and after deducting the above expenses, the agent used to remit balance payment to the principal. 9. During the year, the assessee collected ₹ 2,20,42,656/- from 33 parties including the payment of ₹ 82.38 l .....

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