Invoking of the provisions of section 194H and 40(a)(ia) to disallow salary expenditure incurred by assesse by treating it as commission paid for selling goods on the basis of presumption is not justifiable.

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Invoking of the provisions of section 194H and 40(a)(ia) to disallow salary expenditure incurred by assesse by treating it as commission paid for selling goods on the basis of presumption is not justifiable.

 

TDS Fee for professional or technical services Assessee filed return of income which was selected for scrutiny During scrutiny assessment proceedings, AO observed that assessee had debited an amount in his P&L Account towards market support expenses and said amount was embedded under head ‘current liabilities’ in balance sheet It was also observed that payments were made in cash exceeding Rs. 20,000 and paid within period April 2013 to June 2013 Further, assessee could not produce evidence that expenditure incurred was towards salary by furnishing attendance register, copies of appointment order etc therefore, AO presumed that expenditure was incurred towards marketing commission and since TDS was not deducted, AO made disallowance invoking provisions of Ss 194H and 40(a)(ia) which was also confirmed by CIT(A) Held, in small business houses such record were not normally maintained and they were not mandatory Assessee had also produced vouchers with respect to payment made to his employees but, they were also rejected by Revenue Authorities without valid reasons Revenue Authorities have also not brought out anything on record from details produced by assessee to establish that payments made to individuals exceeded taxable limits Thus, addition made on basis of presumption was not justifiable When assessee had furnished details of payment to his employees it could not be simply rejected without verifying facts Therefore, AO was directed to delete addition made invoking provisions of Ss 194H and 40(a)(ia)—Assessee’s ground allowed.
MANNE HAREESH vs. INCOME TAX OFFICER
(1889) 57 CCH 0185 HydTrib

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