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TMI Blog2021 (12) TMI 232X X X X Extracts X X X X X X X X Extracts X X X X ..... ly for not filing the details before such authority. The details filed by the respondent assessee along with Form No.26 naturally could be construed as sufficient compliance. No fault can be found with these detailed findings and the settled position of law. - Decided in favour of assessee. Disallowance of commission expenses - Assessing Officer has treated as non-genuine commission claimed by the assessee given to M/s. C.M. Smith and Sons Ltd.- HELD THAT:- We notice that the Assessing Officer chose not to exercise its powers under section 131/133(6) of conducting the investigation or enquiries. Tribunal has rightly observed that on surmises and conjectures, AO has chosen to make disallowance. This Court in the case of Voltamp Transformers Pvt. Ltd. vs. CIT [ 1980 (10) TMI 35 - GUJARAT HIGH COURT] has left it to the concerned assessee to decide its commercial expediency and business needs. Ordinarily, a business person would alone decide as to in what manner it would seek to hire the service of the commission agent. Merely because, the doubt was created by the Assessing Officer only on the premises that two of the companies were already being served by the respondent assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee that TDS was not deducted, as the same was not applicable as per the provisions of law. According to the assessee Company TDS was not to be deducted on payment made to the transporters as per Clause 6 of section 194(c). Again, the details of the transporters have been filledin at the time of filing of the TDS return, wherein their PANs have been duly submitted to the authority. Therefore, the condition reflected in sub-section(7) also have been fulfilled. The Assessing Officer held the assessee in default and made the disallowance of all the three charges of the total income of the assessee under section 40(a)(ia). 5.The assessee preferred the appeal before the CIT(Appeals), which deleted the addition to the extent of transportation towards freight, inward charges and clearing charges, but confirmed the addition of ₹ 1,38,350/- towards forwarding charges for payment to M/s. Trishul Transport Company. 6.The Revenue as well as the assessee both preferred appeal before the Tribunal. The Tribunal dismissed the appeal of the Revenue and allowed the appeal of the assessee. The appeal of assessee was allowed on the ground that it had obtained PAN card details fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fifty thousand rupees, the person responsible for paying such sums referred to in sub-section (1) or, as the case may be, subsection (2) shall be liable to deduct income-tax under this section: Provided further that no deduction shall be made under sub-section (2), from the amount of any sum credited or paid or likely to be credited or paid during the previous year to the account of the sub-contractor during the course of business of plying, hiring or leasing goods carriages, on production of a declaration to the person concerned paying or crediting such sum, in the prescribed form and verified in the prescribed manner and within such time as may be prescribed, if such sub-contractor is an individual who has not owned more than two goods carriages at any time during the previous year: Provided also that the person responsible for paying any sum as aforesaid to the subcontractor referred to in the second proviso shall furnish to the prescribed income-tax authority or the person authorised by it such particulars as may be prescribed in such form and within such time as may be prescribed; or (ii)any sum credited or paid before the 1st day of June, 1972; or (iii)any sum credited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would arise. Despite such circumstances existing, sub-section (3) makes exclusion in cases where such liability would not arise. We are concerned with the further proviso to sub-section (3), which provides that no deduction under sub-section (2) shall be made from the amount of any sum credited or paid or likely to be credited or paid to the subcontractor during the course of business of plying, hiring or leasing goods carriages, on production of a declaration to the person concerned paying or crediting such sum in the prescribed form and verified it in the prescribed manner within the time as may be prescribed, if such sub-contractor is an individual who has not owned more than two goods carriages at any time during the previous year. 7) The exclusion provided in sub-section (3) of section 194C from the liability to deduct tax at source under sub-section (2) would thus be complete the moment the requirements contained therein are satisfied. Such requirements, principally, are that the sub-contractor, recipient of the payment produces a necessary declaration in the prescribed format and further that such sub-contractor does not own more than two goods carriages during the en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s discussed along with subsection(7) of section 194. The Court held that this benefit comes with the condition of compliance of sub-section (7) of section 194(c). This is a procedure required to be followed. The Court held that non-filing of the statement in terms of sub-section(7) of section 194(C) cannot take away the benefit, which will accrue to the assessee under subsection( 6) of section 194. Relevant paragraphs are reproduced as under: 6. We find sub-Section 6 of Section 194C is the provision which grants benefit to the assessee. This benefit comes with the condition of compliance of Sub-Section (7) of Section 194C, which is the procedure to be followed. The question would be as to whether if the procedure under Section 194C(7) has not been adhered to by the assessee would it be fatal and thereby disentitle the assessee to the benefit under sub-Section 6 of Section 194C. 7. It is a submission of Mr.A.S.Sriraman, learned counsel for the appellant/assessee that Section 31A deals with statement of deduction of tax under sub-Section 3 of Section 200 referring to Section 31(A)(4)(vi). It is submitted that the deductor at the time of preparing statement of tax, deduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DS return, wherein their PAN cards also have been duly submitted to the Income-tax authorities, as this is a sufficient compliance of sub-section (7) of section194(c). The Tribunal was absolutely correct in upholding the version of the assessee. It also rightly held that after obtaining the PAN Card from the transporters, assessee is needed to furnish the same in the prescribed form to the prescribed authority within prescribed time. section194(C) (7) is reproduced as under: (7) The person responsible for paying or crediting any sum to the person referred to in sub-section (6) shall furnish, to the prescribed income-tax authority or the person authorised by it, such particulars, in such form and within such time as may be prescribed. 11. The Tribunal held that there is no prescribed authority nominated under the provisions of law. Thus, in absence of such prescribed authority, no fault was attributed to the assessee obviously for not filing the details before such authority. The details filed by the respondent assessee along with Form No.26 naturally could be construed as sufficient compliance. No fault can be found with these detailed findings and the settled positio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the business. This is a very vexed question, and a lot of litigation revolves around this issue. In fact, once the assessee has furnished the details for the deduction of commission expenses, the onus is shifted upon the O to reject the contention of the assessee with valid reasoning and not on the basis of surmise and conjecture. 33.5 Indeed 2 of the parties were the old parties of the assessee yet the assessee hired services for the commission agent. Now the question arises commission paid by the assessee can be denied merely on the ground that these were old parties of the assessee. In our considered view, it cannot be a ground for rejecting the claim of the assessee in the given facts and circumstances. It is because the commission agent has shown turnover of ₹ 1685378746 in its financial statement for the year ending 31st March 2011 with the net profit at ₹ 115016371.00. In other words the commission agent cannot be categorized as a paper company. There can be a possibility for getting a better deal for the assessee from the parties who were the existing clients of the assessee through the involvement of the commission agent. To prove that the commission ..... X X X X Extracts X X X X X X X X Extracts X X X X
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