TMI Blog2018 (10) TMI 180X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of loading charges on account of non-deduction of TDS - Held that:- The decision rendered by the Delhi High Court in CIT vs. Ansal Land Mark Township Pvt. Ltd. (2015 (9) TMI 79 - DELHI HIGH COURT) which has been discussed by the tribunal in detailed, we are of the opinion that tribunal has not committed any error in allowing the appeal only for statistical purposes. Addition on account of commission paid to Arpit Khandelwal - Held that:- Given that Arpit Khandelwal also happens to be an employee of the assessee, the latter has to demonstrate that the former’s involvement in the purchase activity is in addition to his regular activity for which he has been compensated by way of regular salary. We are not suggesting that an employee cannot be paid compensation by way of commission in addition to his regular salary but the said arrangement has to be mutually agreed and reflected clearly and brought on record which has apparently not happened in the instant case. Further, merely the fact that the basis of payment has been specified in the payment voucher and the payment has been effected during the year or the fact that the latter has offered the same in his return of income do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entions and purused the material available on record. Recently, in case of M/s Sand Plast India Limited vs. DCIT (in ITA No. 310/JP/2018 dated 24/07/2018), we had an occasion to examine a similar issue and our findings are contained at Para 11 and 12 which are reproduced as under:- 11. As far as interest on late payment of TDS u/s 201 (1A) is concerned, useful reference can be drawn to the decision of Hon ble Bombay High Court in case of Ferro Alloys Corporation Ltd vs. CIT (1992) 196 ITR 406 (Bom) where interest payment u/s 201(1A) for failure to deduct or pay tax deducted at source was held not deductible. A Similar view has been taken by the Madras High Court in case of CIT vs. Chennai Properties Investment Ltd., (1999) 239 ITR 435 (Mad) wherein it was held as under (Head notes): The liability for deduction of tax arises by reason of the provisions of the Act. Under section 201, the consequence of failure to comply with the same renders that person liable to be deemed as an assessee in default with all the consequences attached thereto. The liability to pay interest on the amount not deducted or deducted, but not paid is directly related to the failure to deduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osit of TDS u/s 201(1A) cannot be allowed to the assessee and the same has rightly been disallowed by the AO. In the result, ground No. 7 is partly allowed. 6. Following our aforesaid decision, the disallowance of interest paid on late deposit of TDS is hereby confirmed. In the result, the ground of the assessee is dismissed. 7. In ground No. 2, the assessee has challenged the disallowance of loading charges amounting to ₹ 38,33,88.00/- on account of non- deduction of TDS. During the course of hearing, the only argument raised by the ld. AR is that though the amendment in section 40(a) for disallowance of 30% of the expenditure was made with effect from assessment year 2015-16, the amendment being curative in nature, the same should be applied retrospectively including the impugned assessment year. It was further submitted that the amendment being remedial in nature and the intention of the legislature was to remove undue hardship to tax payers. In support, reliance was placed on the Co-ordinate Bench decision in case of Smt. Sonu Khandelwal vs. ITO, Jaipur in ITA No. 597/JP/2013 dated 13/05/2016 and Shri Rajendra Yadav, Ajmer vs. ITO, Ajmer in ITA No. 895/JP/2012 da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spective and apply in the instant case. We have gone through the said provisions and there is nothing in the legislature which suggest the said amendment has to be read retrospectively. The decision of the Coordinate Bench in case of Rajendra Yadav is not a speaking order and we are not inclined to follow the same in absence of appropriate reasoning of the Coordinate Bench which is not discernable from the said order. Accordingly, disallowance of payments to these two institutions is confirmed. 8. Taking into consideration, the decision rendered by the Delhi High Court in CIT vs. Ansal Land Mark Township Pvt. Ltd. reported in (2015) 377 ITR 635 which has been discussed by the tribunal in detailed, we are of the opinion that tribunal has not committed any error in allowing the appeal only for statistical purposes. 9. The view taken by the tribunal is just and proper. Therefore, no substantial question of law arises. 10. The appeal stands dismissed. 10. Respectfully following the above decision, the contention of the ld AR cannot be accepted and the disallowance so made by the AO is confirmed. The ground is thus dismissed. 11. In Ground No. 3, the assessee has chal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee demonstrate that such services have been rendered and availed by him and have been adequately compensated for. It can be demonstrated through producing for necessary verification before the AO any understanding, arrangement, or an agreement that has been entered into between the two parties in terms of scope of services, nature of product, area of operations, rate of commission, etc. Even where such an understanding/arrangement has not been entered in writing and there is a verbal understanding/arrangement, the details of such an understanding/arrangement can be brought on record by way of filing an affidavit and/or producing the commission agent for necessary verification before the AO. Further, where the purchases are effected through the commission agent s efforts during the year, the documentation in support of such purchase efforts and involvement of the commission agent in effecting the purchases in form of communication, confirmation from the customers, and the products, the price and the customers to whom such products have been purchased through such commission agent. Once the assessee discharge the initial onus by producing the necessary verifiable evidence, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eby confirmed. In the result, the appeal of the assessee is dismissed. ITA No. 735/JP/2016 14. In ITA No. 735/JP/2016 for AY 2011-12, the assessee has taken the following two grounds of appeal:- 1. That the Learned CIT(A) is wrong and illegal in confirming/maintaining addition ₹ 56,59,50/- on account of bad debts. 2. That the learned CIT(A) is wrong and illegal in confirming/maintaining additions of ₹ 593199/- on account of commission paid to Arpit Khandelwal. 15. In Ground No. 1, the assessee has challenged the sustenance of addition of ₹ 56,59,50/- on account of bad debt. In this regard, the relevant facts and findings of the ld CIT(A) are contained at Para 3.1.2 of the ld. CIT(A) order which is reproduced as under:- ( i) The brief facts of the case are that during the year under consideration, the appellant has written off bad debt amounting to ₹ 5,65,950/- which was not allowed by the AO. It was held by the AO that the appellant was having regular dealing with the said parties during the year under consideration. Further, the appellant has also written back the bad debts written off in earlier years and thus the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . vs. CIT [1998] 233 ITR 203, has taken the view that though standard proof of proving the same as bad debt is not required to be adopted and is to be decided on the wisdom of the assessee and not on the wisdom of the Assessing officer, but to show that the entry had been made as bad debt, there has to be some material in support of the same, giving some semblance of genuineness and truthfulness to the same in direction of forming an opinion that said debt was arising out of trading activity, there was relationship of debtor or creditor and same was irrecoverable. It is therefore held that the AO was justified in making addition of ₹ 5,65,951/- on account of bad debts written off by it during the year under consideration. Hence this ground of appeal is hereby rejected. 16. We find that a similar issue has been dealt by us in assessee s own case in AY 2008-09 in ITA No. 736/JP/2016 dated 28/02/2018 wherein we have held as under:- 23. We have heard the rival contentions and perused the material available on record. As per the AO, copy of account of these parties shows that most of the trade dues written off relates to the sales made during the year only and these b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be made to p. 878 of the Law and Practice of Income-tax by Kanga, Palkhiwala Vyas, 9th Edn. where the learned Jurist opined as under :- Under the amended clause, the requirement of 'establishing' that the debt had become bad in the relevant accounting year is dispensed with; all that the assessee has to show is that the bad debt has been written off as irrecoverable. But, the subject-matter of the clause is still 'any bad debt' and 'not any debt'. The consequences of the amendment are mainly three :- ( i) The assessee cannot arbitrarily, irrationally or mala fide treat a good debt as bad, write it off in his accounts. ( ii) Where the assessee has acted bona fide and reasonable, the Assessing Officer cannot substitute his own subjective judgment, but must accept the assessee's decision, as to the quality of the debt. ( iii) The assessee is not obliged to write off and claim the debt in the very year in which it becomes bad. He can write it off and claim it in a subsequent year in which the debt continues to remain bad. 11. All this would indicate that when the assessee treats the debt as a bad debt in his books the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his Court in CIT v. Star Chemicals (Bombay) (P.) Ltd. [2008] 220 CTR (Bom.) 319 had also taken a view that post-amendment on a reading of the section and the circular, what was required was to write off the debt as a bad debt based on the assessee's commercial wisdom and that will satisfy the purpose of the section. 13. Considering the above discussion, in our opinion to treat the debt as bad debt has to be commercial or business decision of the assessee based on the relevant material in possession of the assessee. Once the assessee records the debt as bad debt in his books of account that would prima facie establish that it is a bad debt unless the Assessing Officer for good reasons holds otherwise. The writing in the accounts no doubt, has to be bona fide. Once that be the case, the assessee is not called upon to discharge any further burden. In our opinion, therefore, we are in agreement with the view taken by the majority constituting the Bench of the learned Tribunal. 14. The question as framed will have to be answered by holding that after the amendment it is neither obligatory nor is the burden on the assessee to prove that the debt written off by him is inde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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