×Latest Case Laws on Income Tax by Supreme Court of India
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20-11-2018, Roshini Rakesh Sheth, Section 194A, 40(a)(ia), Tribunal Chennai
These are appeal and cross objection of the Revenue and assessee respectively directed against an order dated 30.11.2017 of ld. Commissioner of Income Tax (Appeals)-15, Chennai.
2. Appeal of the Revenue is taken up first for disposal.
3. Revenue has taken altogether eight grounds of which ground No.1 & 8 are general needing no specific adjudication. Ground Number 7 is also, more or less general and assails various directions given by the ld. Commissioner of Income Tax (Appeals) to the ld. Assessing Officer, which as per Revenue was akin to exercising a ‘’power to set side’’ which was not there with the ld. Commissioner of Income Tax (Appeals). Since, this ground of the Revenue is relevant to almost all other grounds raised, it will be dealt by us at the appropriate places.
4. Vide its ground No.2, grievance of the Revenue is on the directions of the ld. Assessing Officer to verify the submission of the assessee with regard to disallowance of F17,25,125/- made u/s.40(a)(ia) of the Income Tax Act, 1961 (in short ‘’the Act’’).
5. Facts apropos are that assessee engaged doing business as architects, interior decorators and designers had filed her return for the impugned assessment year disclosing income of F96,76,870/-. During the course of assessment proceedings, it was noted by the ld. Assessing Officer that assessee had effected payments aggregating F17,25,125/- on which no tax was deducted at source u/s.194A, 194H, 194J and 194I of the Act. Break-up of such expenditure as given by the ld. Assessing Officer is reproduced hereunder:- Ld. Assessing Officer made a disallowance invoking Section 40(a)(ia) of the Act.
6. In its appeal before ld. Commissioner of Income Tax (Appeals), argument of the assessee was that recipients of the interest commission and consultancy fees had included such amounts in their respective Income Tax return and paid tax thereon. Relying on the first proviso to Section 201 (1) of the Act and second proviso to Section 40(a) (ia) of the Act, assessee argued that once the payee had shown the receipts as part on their income and paid taxes thereon, there could be no disallowance u/s 40(a)(ia) of the Act. It was also submitted by the assessee that part of consultancy charges claimed was actually incurred for fabrication work. Similarly according to her some of the payments made under the head ‘’repairs and maintenan e’’ included purchase cost of granite. Assessee also pointed out that travelling expenditure which was included as a part of consultancy charges, was paid in foreign currency and did not attract tax deduction provision. Ld. Commissioner of Income Tax (Appeals) considering the submissions of the assessee directed the ld. Assessing Officer to verify Form No.26A in respect of each of the parties, as well as the submissions made by the assessee and to give appropriate relief to the assessee.
7. Now before us, ld. Departmental Representative submitted that ld. Commissioner of Income Tax (Appeals) had no powers for giving directions which were akin for setting aside order. According to him, after the amendment made to Section 251(1) (a) of the Act through Finance Act, 2001 the power earlier available with the Commissioner of Income Tax (Appeals) for setting aside orders was no more there.
8. Per contra, ld. Authorised Representative submitted that directions given by the ld. Commissioner of Income Tax (Appeals) were fair and did not warrant interference.
9. We have heard rival submissions and perused the orders. Claim of the assessee was that many of the parties to whom payments were effected had shown such receipts in their respective returns and by virtue of second proviso to Section 40(a) (ia) of the Act read alongwith first proviso to Section 201(1) of the Act, the recipients having shown the income and paid taxes, assessee could not be saddled with a disallowance u/s.40(a)(ia) of the Act. Ld.CIT (Appeals) considering this argument had directed the ld. Assessing Officer to verify form No.26A of the recipients and give appropriate relief to the assessee. Ld. Commissioner of Income Tax (Appeals) also directed ld. Assessing Officer to examine the claim of the assessee that payments to three parties were below threshold limit for attracting tax provision. We are of the opinion that such directions cannot be considered as a setting aside order or an order directing