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2017 (3) TMI 258 - ITAT VISAKHAPATNAM

2017 (3) TMI 258 - ITAT VISAKHAPATNAM - TMI - Penalty levied u/s 271C - failure to deduct tax at source u/s 194H/194J of the Act, towards commission payment - Held that:- The coordinate bench of ITAT, Visakhapatnam in assessee’s own case for the assessment years 2003-04 to 2005-06 as considered the issue in detail and held that transaction between the assessee and MMTC is not on principal to principal basis and hence the assessee is not liable to deduct TDS u/s 194H of the Act. - Thus we are .....

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99 & 300/Vizag/2016 - Dated:- 3-3-2017 - SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER For The Appellant : Shri Shri G. Gurusamy, DR For The Respondent : Shri Laxminiwas Sharma,AR ORDER PER Shri G. Manjunatha, Accountant Member: These two appeals filed by the revenue are directed against separate orders of the Commissioner of Income Tax (A)-2, Guntur for the assessment year 2008-09, challenging deletion of demand raised by the A.O. u/s 201(1) & 201(1A) of the I .....

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Sector undertaking engaged in the business of mineral exploration and sale of iron ore. In this case, the assessment was completed u/s 143(3) r.w.s. 147 of the Act for the assessment year 2008-09, wherein the A.O. has disallowed commission payment u/s 40(a)(ia) of the Act, for nondeduction of tax at source. Based on the information, the A.O. passed an order u/s 201(1) & 201(1A) of the Act and held the assessee as an assessee in default for failure to deduct tax at source u/s 194H/194J of th .....

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DC has not incurred any expenditure in the nature of commission or brokerage, therefore, the question of deduction of tax at source does not arise. The assessee further submitted that the issue has been already considered by the jurisdictional ITAT, in assessee s own case for the earlier year, wherein the Hon ble ITAT categorically held that transaction between the assessee and M/s. MMTC is on principal to principal basis and the question of deduction of tax at source does not arise. The CIT(A) .....

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venue is in appeal before us. 4. The Ld. D.R. submitted that the Ld. CIT(A) erred in holding that the assessee company is not liable to make TDS u/s 194H of the Act, on the commission payment to M/s. MMTC. The Ld. CIT(A) failed to appreciate the fact that the transaction between the assessee company and MMTC was on principal to agent basis. The Ld. D.R. referring to the provisions of section 182 of the Indian Contract Act, 1872 submitted that an agent is a person employed to do any act for anoth .....

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a recipient, which is the income by way of commission or brokerage and does not talk about the relationship between the buyer and the payee necessarily be of a principal and agent. Since, the assessee itself has admitted before the A.O. that it had paid commission to M/s. MMTC on fixed percentage basis towards export sales, the assessee is liable to deduct TDS u/s 194H/194J of the Act. Since, the assessee failed to deduct TDS, the A.O. has rightly invoked the provisions of section 201(1) & 2 .....

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s and hence, the assessee is not liable to deduct TDS on commission payments. The Ld. A.R. further submitted that the ITAT, Hyderabad B Bench in assessee s own case for the assessment years 2008-09 & 2009-10 in ITA No.292/H/2013 and 293/H/2013 has considered the issue of disallowance of commission payment to M/s. MMTC u/s 40(a)(ia) of the Act and after following the decision of ITAT, Visakhapatnam in assessee s own case has held that the transaction between the assessee and MMTC was on princ .....

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sessee and MMTC is in the nature of commission or brokerage which attracts TDS u/s 194H/194J of the Act. The issue no longer is a res integra. The coordinate bench of ITAT, Visakhapatnam in assessee s own case for the assessment years 2003-04 to 2005-06 in ITA Nos.145, 146 & 147/Vizag/2006 has considered the issue in detail and held that transaction between the assessee and MMTC is not on principal to principal basis and hence the assessee is not liable to deduct TDS u/s 194H of the Act. The .....

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cipal only in respect of those transactions which the principal is entitled to carry on directly without the assistance/help of the agent, i.e. even in the absence of an agent, the principal should be entitled to carry on the said transaction. In the instant case there is no dispute with regard to the fact that the assessee herein is not entitled to export the iron ore with Fe content of 64% and above. Since the assessee is disentitled to export the goods, it cannot be possible to say that the g .....

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view of the foregoing, we set aside the orders of the Ld CIT(A) as well as that of the assessing officer. Since we have decided the first issue in favour of the assessee, the second issue urged by the assessee becomes infructuous. 7. A similar issue has been considered by the coordinate bench of ITAT, Hyderabad in assessee s own case for the assessment years 2008-09 & 2009-10 in ITA Nos.292 & 293/H/2013 in the light of the disallowance of commission payment u/s 40(a)(ia) of the Act, for .....

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