ITAT dismisses solitary ground of appeal in the appeal of the department

IN THE INCOME TAX APPELLATE TRIBUNAL,
JAIPUR BENCHES,"A" JAIPUR

BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM

ITA No.166/JP/2020
Assessment Year : 2016-17

The DCIT
Circle-4
Jaipur
Appellant

Vs.

M/s. JLC Electromet Pvt. Ltd.
E-153-A, Road No. 11-H,
VKI Area, Jaipur
Respondent

PAN/GIR No.: AABCJ 8786 A

Assessee by : Shri Mahendra Gargieya
Revenue by: Shri A.S. Nehra, Addl. CIT

Date of Hearing : 09/03/2022
Date of Pronouncement: 12/04/2022

This appeal by the Department is directed against the order of the learned Commissioner of Income Tax, Appeals-2, Jaipur [Herein after referred to as ld. CIT(A) ]dated 10-12-2019 for the assessment year 2016-2017.]

2. The hearing of the appeal was concluded through audio-visual medium on account of Government guidelines on account of prevalent situation of Covid-19 Pandemic, both the parties have placed their written as well as oral arguments during this online hearing process.

3. The solitary ground raised by the Department is as under:-

''Whether in the facts and circumstances of the case and in law the ld. CIT(A) was correct in deleting disallowance of Rs.2,28,86,971/- made u/s 40(a)(ia) of the I.T. Act, 1961 in respect of the payments made on account of commission, exhibition expenses and testing expenses without deduction of tax at source as required u/s 195 of the Act.

4. The facts as culled out from the orders of the lower authorities are reproduced hereunder so as to deal with contentions raised in this appeal by the Department.

''The assessee company filed its E-ITR for A.Y. 2016-17 on 28-09-2016 thereby declaring total income of Rs.5,50,08,880/- which was further revised on 29-09-2016 thereby declaring Rs.5,49,71,640/-. The case was selected for complete scrutiny under CASS. Therefore, notice u/s 143(2) of the I.T. Act was issued on 9- 09-2017 by fixing the case for hearing on 26-09-2017. Further to complete the assessment proceedings, notice u/s 142(1) alongwith questionnaire was issued through ITBA Portal on 05-07-2018 and in response thereto the assessee submitted required details/ documents and on perusal of the same, the following points are emerged.

2. Disallowance u/s 40(a)(ia) of the I.T. Act

2.1 On perusal of audited final accounts of the assessee, it has been observed that the assessee has made payment of Rs.2,11,07,351/- towards Selling Commission, Rs.15,70,429/- towards Exhibition expenses and Rs.2,09,191/- towards Testing Expenses without making TDS, in view of insertion of Explanation to Section 195 by Finance Act, 20212 with retrospective effect from 01-04-1962. Therefore, a show cause notice was issued to the assessee on 26-11-2018 mentioning therein as to why the above expenses shall not be disallowed u/s 40(a)(ia) of the I.T. Act and added the same to the total taxable income for the year under consideration."

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