FARIDA LEATHER COMPANY Vs. THE INCOME TAX OFFICER

JUDGEMENT

(1.) THIS appeal of the assessee is directed against the order of the Administrative Commissioner -IX, Chennai, dated 27.1.2014 and pertains to assessment year 2009 -10.

(2.) Shri G Baskar, ld. Counsel for the assessee submitted that during the course of assessment proceedings, the Assessing Officer called for the details of difference between the closing stock in the Balance Sheet and statement produced to the bank, details of salary/wages, and loading and unloading charges, details of overseas commission paid to the extent of Rs. 37,18,965/ - and details of TDS deducted etc. The assessee has filed all the details called for by the Assessing Officer. The Assessing Officer, after considering all the details filed by the assessee, allowed the payment of commission to non -residents. However, the Administrative Commissioner in the guise of exercising his revisional jurisdiction u/s. 263 of the Act, found that the payment of commission was made to non -residents, therefore, it was liable for TDS at the time of making payment. The CIT further found that u/s. 40(a)(i) of the Act, the Assessing Officer ought to have disallowed a sum of Rs. 37,18,965/ -. Accordingly, the CIT directed the Assessing Officer to disallow payment of foreign commission of Rs. 37,18,965/ - u/s. 40(a)(i) of the Act.

(3.) THE ld. Counsel submitted that since the Assessing Officer has applied his mind to the details filed by the assessee and taken one view, the CIT cannot substitute his own view and disallow the claim u/s. 40(a)(i) of the Act. Referring to the order of this Tribunal in assessee's own case in I.T.A. No. 85/Mds/2014 dated 10.4.2014, the ld. Counsel submitted for assessment year 2010 -11, this Tribunal, after following the judgment of the Hon'ble Madras High Court in CIT v. Faizan Shoes Pvt. Ltd. : [2014] 367 ITR 155, allowed the claim of the assessee. Therefore, the CIT ought not to have directed the Assessing Officer to disallow the claim of the assessee u/s. 40(a)(i) of the Act.