Case Law Details
Demarte Silk and Sarees Vs ITO (ITAT Chandigarh)
The issue under consideration is whether A.O. is correct in disallowing the expense of retainership debited in P & L on the basis of non deduction of TDS u/s 194C when the Same was shown as salary by recipient in their Income Tax return?
In the present case, A.O. during the course of assessment proceedings noticed that the assessee had debited Rs. 3,00,000/- in the Profit & Loss account under the head ‘Retainership Expenses’ paid to Shri Daljeet Singh amounting to Rs. 1,20,000/- and Sh. Pawan Kumar amounting to Rs. 1,80,000/-. A.O. made an addition of Rs 3,00,000 by stating that assessee did not deduct TDS u/s 194C hence expense is disallowed u/s 40(1)(ia). The contention of the assessee was that the payments were made during the festive season and it was remuneration in respect of sales boys who were not the regular sales employees of the assessee.
ITAT states that, both those persons filed their Income Tax Return and claimed in the said return that the amount in question was received as a salary from the assessee and furnished copies of their returns of income before finalization of the assessment proceedings. In the present case the returns of income were furnished by Shri Daljeet Singh wherein the income of Rs. 1,20,000/- has been shown as salary received from the assessee. Similarly Shri Pawan Kumar furnished the return of income and had shown the salary of Rs. 1,80,000/- received from the assessee. In the present case when the income shown by the recipients had been accepted, there was no reason to doubt explanation given by the Assessee. I therefore, by considering the totality of the facts deem it appropriate to delete the addition made by the A.O. and hence appeal filed by assessee allowed.
FULL TEXT OF THE ITAT JUDGEMENT
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