Muradul Haque vs. ITO (ITAT Delhi)

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI
BENCH ‘SMC-1’, NEW DELHI
BEFORE SH. BHAVNESH SAINI, JUDICIAL MEMBER
AND
SH. ANIL CHATURVEDI, ACCOUNTANT MEMBER
ITA No.114/Del/2019
Assessment Year: 2014-15
(THROUGH VIDEO CONFERENCING)
Muradul Haque,
D-94 B, Hastsal Vihar,
Uttam Nagar,
New Delhi-110059
PAN No. AEDPH 8229 R
Vs. Income Tax Officer
Ward- 44 (1)
New Delhi
(APPELLANT) (RESPONDENT)
Appellant by Ms. Rano Jain, Advocate
Respondent by Sh. R. K. Gupta, Sr. DR
Date of hearing: 16/06/2020
Date of Pronouncement: 18/06/2020
ORDER
PER ANIL CHATURVEDI, AM:
This appeal filed by the assessee is directed against the
order dated 15.10.2018 of the Commission of Income Tax (A)-15,
Delhi relating to A. Y. 2014-15.
2. The relevant facts as culled from the material on records are
as under:
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3. The assessee is an individual and is stated to be engaged in
the business of trading in fabric and job work. Assessee
electronically filed his return of income for AY 2014-15 on
28.11.2014 declaring total income of Rs. 8,07,670/-. The case
was selected for scrutiny and thereafter the assessment was
framed u/s.143(3) vide order dated 23.12.2016 and the total
income was determined at Rs. 32,33,420/- by inter alia
disallowing Rs.24,25,747/- u/s. 40(a)(ia) of the Act. Aggrieved
with order of the AO, assessee carried the matter before the
CIT(A) who vide order dated 15.10.2018 (in appeal No.
114/Del/2019) dismissed the appeal of the assessee.
4. Aggrieved by the order of the CIT(A), the assessee is now in
appeal before us and raised the following grounds :-
“1. That on facts and circumstances of the case, the Ld. CIT(A) erred
in law and on facts in upheld the disallowance of commission/
incentives paid to employees and parties to the tune of Rs.
24,25,747/-.
2. That on facts and circumstances of the case, the Ld. CIT(A) erred
in law and on facts in not giving reasonable opportunity of being
heard.
3. That on facts and circumstances of the case, the Ld. CIT(A) has
erred in law and on facts on followings
a) Not providing copy of the Assessing officer remand report to the
Assessee for rebuttal and alleging that not served on Assessee
address when earlier notices were duly served on same address
and further Ld CIT (A) also sent the notices by e-mail but have not
made it possible in case of remand report to send by e-mail.
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b) Holding, that various notices alleged to have been sent to
Assessee by ITO were not at all delivered in remand proceedings,
Whereas AR of the Assessee had been following up with the
assessing officer and duly provided documents and information and
that is on record.
c) Finding, that documents have not filed before AO in remand
proceedings to justify commission paid which is against the factual
matrix of the assessment record.”
5. Before us the Ld. AR at the outset inter alia submitted that
though the assessee has raised various grounds but the Assessee
wishes to press only ground No. 1 which is with respect
disallowance of Rs.24,25,747/-.
6. Before us the Ld. AR on the facts of the matter submitted
that during the year assessee had paid commission of
Rs.24,25,747/- to various persons on which no TDS was
deducted. In the computation of income the amount of
commission on which the TDS was not deducted was not
disallowed u/s. 40(a)(ia) of the Act for the reason that the
Assessee was of the view that the disallowance u/s. 40(a)(ia) of
the Act was attracted only where the amount of expenditure on
which the TDS, was payable at the end of the financial year and
not when the amount of such expenditure has already been paid
during the financial year. The submission of the assessee for non
applicability of provisions of s. 40(a)(ia) was not found acceptable
to AO. AO was of the view that the non deduction of TDS would
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attract provision of u/s. 40(a)(ia) of the Act. He accordingly made
disallowance of the entire amount of commission of
Rs.25,24,747/- . When the matter of disallowance was carried by
the Assessee before CIT(A), the action of disallowance was upheld
by CIT(A). Aggrieved by the order of CIT(A), Assessee is now before
us.
7. Before us the Ld. AR pointed to the person-wise details of
the payment of commission which is placed at 5 of the paper
book. Pointing to the aforesaid details, she submitted that out of
the total payment to 21 persons, the payment of the persons at
Sr. No. 17, 18, 19 and 20 are less than Rs 10,000 each and
therefore as per the provisions of section 194H, the assessee was
not required to deduct any TDS on such payments and therefore
no disallowance u/s 40(a)(ia) was called for. With respect to the
payments to other parties of the list, she submitted that the
disallowance of expenses on account of non deduction of TDS be
restricted to 30% of the expenses in view of the fact that the
amendment made by the Finance Act (2) to section 40(a)(ia) is
curative in nature. In support of her contention that provision is
curative in nature and is therefore also applicable to the
assessment year 2014-15 she relied on the following decisions :-
1. M/s. R. H. International Vs. ITO ITA No. 6724/Del/2018
dated 20.03.2019
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2. ITAT, Jaipur Bench in the case of Rajendra Yadav Vs. ITO
for the A.Y. 2007-08 order dated 29.01.2016
3. Smt. Kanta Yadav Vs. ITO, ITA No. 6312/Del/2016 dated
12.05.2017
4. Umaxe Projects (P) Ltd. Vs. DCIT , ITA No. 206/Del/2019
8. She submitted that in the case of R.H. International (supra)
the Delhi Benches of the tribunal have held that the disallowance
u/s 40(a)(ia) should be restricted to 30% only as against 100%
because the amended provision made to section 40(a)(ia) by
Finance (No 2) Act is curative in nature and should be applied
retrospectively. She therefore submitted that in view of her
aforesaid submissions the disallowance be restricted to 30% of
the commission.
9. The Ld. DR on the other hand supported the orders of the
lower authorities.
10. We have heard the rival submissions and perused the
material available on record. The issue in the present appeal is
with respect to disallowance to section 40(a)(ia) of the Act. The
perusal of the details of the commission paid by the assessee,
which is placed in the paper book reveals that out of the total
commission of Rs. 25,24,747/- which has been disallowed u/s
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40(a)(ia), includes the amounts paid to Anuj Kumar, Surya
Kumar, Mukesh Tyagi and Krishna Dayal which individually are
below Rs. 10,000/- each and therefore we find force in the
argument of the Ld AR that on those payments assessee was not
required to deduct TDS u/s. 194H of the Act. We therefore hold
that the same cannot be disallowed u/s 40(a)(ia) of the Act. We
accordingly direct its deletion.
11. As far as the amounts paid to other persons in the list are
concerned, we find the payments to be in excess of Rs 10000/-
each. We find that Finance (No.2) Act has made amendment to
section 40(a)(ia) of the Act w.e.f. 01.04.2015. Various benches of
the Tribunals including the Delhi Benches of the Tribunal, have
held the amendment made by Finance (No 2) Act to be curative in
nature. We further finds the coordinate bench of the Tribunal in
the case of R.H. International Vs. ITO (supra) has held that
disallowance u/s. 40(a)(ia) of the Act be restricted to 30% of the
expenses paid as against 100% because amended provision is
curative in nature and the provisions should be applied
retrospectively. Before us no contrary binding has been point out
by the Revenue nor could the DR point any distinguishing feature
in the cases relied upon by Ld. AR. We, therefore, hold that the
disallowance of expenses on account of non deduction of TDS be
restricted to 30% of the expenses where the amounts paid are in
excess of Rs. 10,000/-. We thus hold so.
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9. In the result, the appeal filed by the assessee is partly
allowed.
Order pronounced in the open court on 18.06.2020
Sd/- Sd/-
(BHAVNESH SAINI) (ANIL CHATURVEDI)
JUDICIAL MEMBER ACCOUNTANT MEMBER
*Neha*
Date:- 18.06.2020
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR
ITAT NEW DELHI