Commission Paid to Pigmy Collectors to be treated as Salary, Liable for TDS u/s 192: ITAT directs Re-adjudication [Read Order]

The Income Tax Appellate Tribunal (ITAT), Bangalore Bench has held that the commission paid to pigmy collectors shall be treated as salary and the same shall be liable for Tax Deducted at Source (TDS) under Section 192 of the Income Tax Act, 1961.

The assesse, M/s. Shri Basaveswar Credit Co-op Society Ltd registered under Karnataka State Co-operative Societies Act, 1959 had filed a Nil return after claiming a deduction under section 80P(2)(a)(i) under chapter VIA of the Income Tax Act, 1961. 

The case was selected for scrutiny. The assessee, represented by Shri.Ravishankar S. V contended that the order of the Commissioner of Income Tax (Appeals) (CIT(A)) is liable to be set aside denying itself liable to be assessed to a total income of Rs.10,02,282/- as against the Nil income stated in its returns.

The CIT(A) directed the assessing officer (AO) to disallow the claim of the assesse. It was noted that the assessee has not submitted any detail or proof. Accordingly, the CIT(A) had confirmed the addition made u/s 40(a)(ia) of the Income Tax Act, 1961.Aggrieved by this order passed by the CIT(A), Hubballi, the assessee has filed this appeal.

The assessee strongly argued that the order of CIT(A) is completely wrong. Therefore, he requested that the matter may be remanded back to the CIT(A) for fresh consideration in light of the submissions made before him and the actual issue raised before the CIT(A). 

The revenue represented by Shri. Ganesh R. Ghalesubmitted that the commission paid to pigmy collectors was to be treated as salary as per the circular of the Central Board of Direct Tax and no disallowance ought to have been made under section 40(a)(ia) of the act.

The single bench of Shri Laxmi Prasad Sahu (Accountant Member) observed that as per the Circular issued by the Revenue department, it has been clearly stated that the pigmy commission will be treated as a salary and subject to the TDS under section 192 of the Act. 

Accordingly, this issue is sent back to the CIT(A) for the verification of whether the payment made by the assessee towards pigmy commission is liable for TDS or not in the above terms of the Circular.

In the result, the appeal of the assessee is allowed for statistical purposes.

To Read the full text of the Order CLICK HERE

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