The Cochin bench of Income Tax Appellate Tribunal (ITAT) in the case of Assistant Commissioner of Income-tax versus Biji Suresh held that provision under Section 194G of the Income Tax Act not applicable to payments made to sub-agents by the assessee.
In instant case Assessing Officer disallowed an amount under section 40(a)(ia) of the Act on the ground that the assessee failed to deduct tax u/s. 194G of the Act on commission paid to sub-Agents.
On appeal before CIT(A) , the appeal of Assessee was allowed by relying on the decision of Cochin bench in the case M/s. Meenakshy Enterprises and declared that provisions under section 194G of the Act are not applicable to payments made to sub-agents by the assessee.
Being aggrieved with the decisions Revenue came up with an appeal before this ITAT and the counsel for Revenue, A.S. Bindhu contended that so far the fact and circumstances in the aforementioned case was not same with the present issue.
The counsel also added that the the said amount were admitted by the Assessee as commission paid to sub-Agents and relied on the decision of Mumbai bench in the case of Bambino Investment & Trading Co. Ltd.
The cochin bench ITAT comprising Judicial Member George George K and Accountant Member Chandra Poojari heard both the parties and cited the above mentioned case and called up the decision of High Court in the case of M.S. Hameed and Ors. Vs. Director of State Lotteries and observed that “the assessee is not liable to deduct TDS under section 194G of the Act and therefore, no disallowance under section 40(a)(ia) of the Act is called for.”
As a result, the ITAT dismissed the appeal of Revenue and held that Assessee is not liable to deduct TDS under section 194G since Payments to Sub-Agents does not attract the said provision.
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