IN THE INCOME TAX APPELLATE TRIBUNAL DELHI
\nBENCH \u2018SMC-1\u2019, NEW DELHI
\nBEFORE SH. BHAVNESH SAINI, JUDICIAL MEMBER
\nAND
\nSH. ANIL CHATURVEDI, ACCOUNTANT MEMBER
\nITA No.114\/Del\/2019
\nAssessment Year: 2014-15
\n(THROUGH VIDEO CONFERENCING)
\nMuradul Haque,
\nD-94 B, Hastsal Vihar,
\nUttam Nagar,
\nNew Delhi-110059
\nPAN No. AEDPH 8229 R
\nVs. Income Tax Officer
\nWard- 44 (1)
\nNew Delhi
\n(APPELLANT) (RESPONDENT)
\nAppellant by Ms. Rano Jain, Advocate
\nRespondent by Sh. R. K. Gupta, Sr. DR
\nDate of hearing: 16\/06\/2020
\nDate of Pronouncement: 18\/06\/2020
\nORDER
\nPER ANIL CHATURVEDI, AM:
\nThis appeal filed by the assessee is directed against the
\norder dated 15.10.2018 of the Commission of Income Tax (A)-15,
\nDelhi relating to A. Y. 2014-15.
\n2. The relevant facts as culled from the material on records are
\nas under:
\nPage | 2
\n3. The assessee is an individual and is stated to be engaged in
\nthe business of trading in fabric and job work. Assessee
\nelectronically filed his return of income for AY 2014-15 on
\n28.11.2014 declaring total income of Rs. 8,07,670\/-. The case
\nwas selected for scrutiny and thereafter the assessment was
\nframed u\/s.143(3) vide order dated 23.12.2016 and the total
\nincome was determined at Rs. 32,33,420\/- by inter alia
\ndisallowing Rs.24,25,747\/- u\/s. 40(a)(ia) of the Act. Aggrieved
\nwith order of the AO, assessee carried the matter before the
\nCIT(A) who vide order dated 15.10.2018 (in appeal No.
\n114\/Del\/2019) dismissed the appeal of the assessee.
\n4. Aggrieved by the order of the CIT(A), the assessee is now in
\nappeal before us and raised the following grounds :-
\n\u201c1. That on facts and circumstances of the case, the Ld. CIT(A) erred
\nin law and on facts in upheld the disallowance of commission\/
\nincentives paid to employees and parties to the tune of Rs.
\n24,25,747\/-.
\n2. That on facts and circumstances of the case, the Ld. CIT(A) erred
\nin law and on facts in not giving reasonable opportunity of being
\nheard.
\n3. That on facts and circumstances of the case, the Ld. CIT(A) has
\nerred in law and on facts on followings
\na) Not providing copy of the Assessing officer remand report to the
\nAssessee for rebuttal and alleging that not served on Assessee
\naddress when earlier notices were duly served on same address
\nand further Ld CIT (A) also sent the notices by e-mail but have not
\nmade it possible in case of remand report to send by e-mail.
\nPage | 3
\nb) Holding, that various notices alleged to have been sent to
\nAssessee by ITO were not at all delivered in remand proceedings,
\nWhereas AR of the Assessee had been following up with the
\nassessing officer and duly provided documents and information and
\nthat is on record.
\nc) Finding, that documents have not filed before AO in remand
\nproceedings to justify commission paid which is against the factual
\nmatrix of the assessment record.\u201d
\n5. Before us the Ld. AR at the outset inter alia submitted that
\nthough the assessee has raised various grounds but the Assessee
\nwishes to press only ground No. 1 which is with respect
\ndisallowance of Rs.24,25,747\/-.
\n6. Before us the Ld. AR on the facts of the matter submitted
\nthat during the year assessee had paid commission of
\nRs.24,25,747\/- to various persons on which no TDS was
\ndeducted. In the computation of income the amount of
\ncommission on which the TDS was not deducted was not
\ndisallowed u\/s. 40(a)(ia) of the Act for the reason that the
\nAssessee was of the view that the disallowance u\/s. 40(a)(ia) of
\nthe Act was attracted only where the amount of expenditure on
\nwhich the TDS, was payable at the end of the financial year and
\nnot when the amount of such expenditure has already been paid
\nduring the financial year. The submission of the assessee for non
\napplicability of provisions of s. 40(a)(ia) was not found acceptable
\nto AO. AO was of the view that the non deduction of TDS would
\nPage | 4
\nattract provision of u\/s. 40(a)(ia) of the Act. He accordingly made
\ndisallowance of the entire amount of commission of
\nRs.25,24,747\/- . When the matter of disallowance was carried by
\nthe Assessee before CIT(A), the action of disallowance was upheld
\nby CIT(A). Aggrieved by the order of CIT(A), Assessee is now before
\nus.
\n7. Before us the Ld. AR pointed to the person-wise details of
\nthe payment of commission which is placed at 5 of the paper
\nbook. Pointing to the aforesaid details, she submitted that out of
\nthe total payment to 21 persons, the payment of the persons at
\nSr. No. 17, 18, 19 and 20 are less than Rs 10,000 each and
\ntherefore as per the provisions of section 194H, the assessee was
\nnot required to deduct any TDS on such payments and therefore
\nno disallowance u\/s 40(a)(ia) was called for. With respect to the
\npayments to other parties of the list, she submitted that the
\ndisallowance of expenses on account of non deduction of TDS be
\nrestricted to 30% of the expenses in view of the fact that the
\namendment made by the Finance Act (2) to section 40(a)(ia) is
\ncurative in nature. In support of her contention that provision is
\ncurative in nature and is therefore also applicable to the
\nassessment year 2014-15 she relied on the following decisions :-
\n1. M\/s. R. H. International Vs. ITO ITA No. 6724\/Del\/2018
\ndated 20.03.2019
\nPage | 5
\n2. ITAT, Jaipur Bench in the case of Rajendra Yadav Vs. ITO
\nfor the A.Y. 2007-08 order dated 29.01.2016
\n3. Smt. Kanta Yadav Vs. ITO, ITA No. 6312\/Del\/2016 dated
\n12.05.2017
\n4. Umaxe Projects (P) Ltd. Vs. DCIT , ITA No. 206\/Del\/2019
\n8. She submitted that in the case of R.H. International (supra)
\nthe Delhi Benches of the tribunal have held that the disallowance
\nu\/s 40(a)(ia) should be restricted to 30% only as against 100%
\nbecause the amended provision made to section 40(a)(ia) by
\nFinance (No 2) Act is curative in nature and should be applied
\nretrospectively. She therefore submitted that in view of her
\naforesaid submissions the disallowance be restricted to 30% of
\nthe commission.
\n9. The Ld. DR on the other hand supported the orders of the
\nlower authorities.
\n10. We have heard the rival submissions and perused the
\nmaterial available on record. The issue in the present appeal is
\nwith respect to disallowance to section 40(a)(ia) of the Act. The
\nperusal of the details of the commission paid by the assessee,
\nwhich is placed in the paper book reveals that out of the total
\ncommission of Rs. 25,24,747\/- which has been disallowed u\/s
\nPage | 6
\n40(a)(ia), includes the amounts paid to Anuj Kumar, Surya
\nKumar, Mukesh Tyagi and Krishna Dayal which individually are
\nbelow Rs. 10,000\/- each and therefore we find force in the
\nargument of the Ld AR that on those payments assessee was not
\nrequired to deduct TDS u\/s. 194H of the Act. We therefore hold
\nthat the same cannot be disallowed u\/s 40(a)(ia) of the Act. We
\naccordingly direct its deletion.
\n11. As far as the amounts paid to other persons in the list are
\nconcerned, we find the payments to be in excess of Rs 10000\/-
\neach. We find that Finance (No.2) Act has made amendment to
\nsection 40(a)(ia) of the Act w.e.f. 01.04.2015. Various benches of
\nthe Tribunals including the Delhi Benches of the Tribunal, have
\nheld the amendment made by Finance (No 2) Act to be curative in
\nnature. We further finds the coordinate bench of the Tribunal in
\nthe case of R.H. International Vs. ITO (supra) has held that
\ndisallowance u\/s. 40(a)(ia) of the Act be restricted to 30% of the
\nexpenses paid as against 100% because amended provision is
\ncurative in nature and the provisions should be applied
\nretrospectively. Before us no contrary binding has been point out
\nby the Revenue nor could the DR point any distinguishing feature
\nin the cases relied upon by Ld. AR. We, therefore, hold that the
\ndisallowance of expenses on account of non deduction of TDS be
\nrestricted to 30% of the expenses where the amounts paid are in
\nexcess of Rs. 10,000\/-. We thus hold so.
\nPage | 7
\n9. In the result, the appeal filed by the assessee is partly
\nallowed.
\nOrder pronounced in the open court on 18.06.2020
\nSd\/- Sd\/-
\n(BHAVNESH SAINI) (ANIL CHATURVEDI)
\nJUDICIAL MEMBER ACCOUNTANT MEMBER
\n*Neha*
\nDate:- 18.06.2020
\nCopy forwarded to:
\n1. Appellant
\n2. Respondent
\n3. CIT
\n4. CIT(Appeals)
\n5. DR: ITAT
\nASSISTANT REGISTRAR
\nITAT NEW DELHI<\/p>\n","protected":false},"excerpt":{"rendered":"
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<\/p>\n