ITAT Delhi: Commission to Banks Not Applicable for TDS Provisions

Towards commissions paid to the banks, the Delhi Bench of the Income Tax Appellate Tribunal (ITAT) ruled that the TDS provision would not be applicable.

The two-member bench of Saktijit Dey (Judicial Member) and Dr B.R.R. Kumar (Accountant Member) sees that the commission furnished to the partners would not be covered under section 194H of the income tax act since there would be no employer and employee or principal-agent relationship between the partners and the firm.

The taxpayer would be the resident partnership firm involved in manufacturing support goods. For assessment proceedings, the assessing officer post investigating the information available on record sees that the taxpayer would have claimed for the deduction on the basis of the payment of interest to the bank, partners, etc while the taxpayer furnished the interest-free advances/loans to various individuals.

The council opposed deleting the disallowance addition incurred under Section 40(a)(ia). For the assessment proceedings, the assessing officer sees that the taxpayer has paid commission to multiple parties with no deduction tax at source. As per that he refused the amount under Section 40(a)(is).

Read Also: ITAT: TDS Provisions Not Suitable for Service Tax and Charges of Late Payment

Tribunal ruled that the assessing officer would accept that the tax was duly deducted at source and paid to the government account as per the mentioned timelines.

“As regards commission to the bank, the assessing officer has accepted that TDS provisions are not applicable to commission paid to the bank. Thus, this addition was also rightly deleted,” the ITAT said.