No TDS on Commission paid to Partner by Firm: ITAT [Read Order]
![No TDS on Commission paid to Partner by Firm: ITAT [Read Order]](https://www.taxscan.in/wp-content/uploads/2022/11/No-TDS-Commission-paid-to-Partner-by-Firm-ITAT-Taxscan.jpg "No TDS on Commission paid to Partner by Firm: ITAT [Read Order]")
The Income Tax Appellate Tribunal (ITAT), Delhi bench has held that commission paid to partners is not covered under Section 194H of the Income Tax Act and therefore, the same is not subject to TDS deduction. The assessee, M/s. Sareen Sports Industries is a sports goods manufacturer. While verifying the income tax returns filed by the assessee for the relevant year, the assessing officer...
The Income Tax Appellate Tribunal (ITAT), Delhi bench has held that commission paid to partners is not covered under Section 194H of the Income Tax Act and therefore, the same is not subject to TDS deduction.
The assessee, M/s. Sareen Sports Industries is a sports goods manufacturer. While verifying the income tax returns filed by the assessee for the relevant year, the assessing officer has disallowed the commission paid to partners on the ground that TDS was not deducted from the amount. In course of assessment proceedings, the assessing officer noticed that the assessee has paid commission of Rs.24,69,362 to various parties without deducting tax at source. Accordingly, he disallowed the amount under Section 40(a)(ia) of the Act.
On appeal, the Commissioner of Income Tax (Appeals) has overruled the above observation and allowed relief to the assessee.
The department challenged the deletion of addition of Rs.7,68,305 representing disallowance made under Section 40(a)(ia) of the Act.
A division bench of the Tribunal comprising Shri Saktijit Dey, Judicial Member and Dr. BRR Kumar, Accountant Member observed that the commission paid to partners is not covered under Section 194H of the Income Tax Act, 1961.
Dismissing the plea of the department, the Tribunal upheld the order of the Commissioner of Income Tax (Appeals) and held that “The only addition which, therefore, remains is commission to partners amounting to Rs.3,68,305. As righty observed by learned Commissioner (Appeals), commission paid to partners is not covered under Section 194H of the Act as there is no employer and employee or principal agent relationship between the partners and the firm. Thus, we do not find any reason to interfere with the decision of learned Commissioner (Appeals) on the issue.”
S/Shri K.Sampth & V. Rajkumar, Adv. Appeared for the assessee.
To Read the full text of the Order CLICK HERE
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