The Gauhati Bench of the Income Tax Appellate Tribunal (ITAT) has ruled that the Tax Deducted at Source (TDS) does not apply to salary or commission paid to partners, LiveLaw reported.
A two-member bench of ITAT, comprising Sanjay Garg (Judicial Member) and Manish Board (Accountant Member), noted that salary, bonus, remuneration, or commission are collectively referred to as "remuneration," and the remuneration paid during the year falls within the permissible limit set forth in section 40(b)(v) of the Income Tax Act, the report said.
The respondent in the plea is a partnership firm that deals in the construction business. The case came under scrutiny through CASS due to a high ratio of refund to TDS, large refund claims value and a sizable increase in its capital in a year.
According to the e-return filed on October 16, 2017, for the fiscal year 2017-18, an income of Rs 1.21 crore was declared.
The issue of non-deduction of TDS on commission paid to partners was thus raised.
The ITAT ruled that there is no requirement under the IT Act for the deduction of tax at source by the partnership firm on salary, bonus, commission, remuneration, etc., or whatever name is given or credited to a partner of a firm.
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