Law:

Section:

ORDER 1. The appeal by the revenue under Section 260-A of the Income Tax Act, 1961 arises from a decision of the Income Tax Appellate Tribunal dated 24 October 2013. The Assessment Year to which the appeal relates is AY-2007-08. 2. The Revenue has raised the following questions of law:- "1. Whether in the facts and circumstances of the case, the ITAT was justified in law in holding that commission of Rs.51,27,815/- paid by the assessee firm to Tapasya Projects Ltd. was outside the ambit of section 194H of the Income Tax Act and 2. Whether on the facts and circumstances of the case, the ITAT was justified in law in allowing expenses of Rs.51,27,815/- paid by the assessee firm, as above, without deducting tax at source, ignoring the provisions of section 40(a)(ia)." 3. The assessee is a firm of Chartered Accountants. It had commission receipts amounting to Rs.73,28,868/-. To earn the said commission, the assessee paid an amount of Rs.51,27,815/- to Tapasya Projects Ltd. ('TPL'). While paying the commission, the assessee did not deduct tax at source under Section 194H. The assessee submitted, on a query, a reply together with details of the payment and a copy of the agreement with TPL. The JCIT, Range-5, Kanpur called for the assessment records and passed an order under Section 144-A on 23 December 2009 directing a dis-allowance of Rs.51,27,815/-, which was the commission paid to TPL, and ordered that it should be added back to the income of the assessee under Section 40(a) (ia). The Assessing Officer thereupon, added back the amount to the income of the assessee. 4. The case of the assessee before the Commissioner of Income Tax (Appeals) was that it had received from Mutual Fund Houses an amount of Rs.73,28,869/- and had paid in pursuance of an agreement dated 1 April 2006 an amount of Rs.51,27,815/- to TPL on account of brokerage for rendering such services as were necessary for procuring the business for the Fund Houses by mobilizing investments. Under the agreement, TPL canvased and marketed various Mutual Fund Schemes to potential investors after collecting details from the assessee. 5. The CIT(A) held, while allowing the appeal and setting aside the…

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