Sundaram Brake Linings Limited, CHENNAI V. DCIT, CHENNAI

CO 85/CHNY/2015

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 1385 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 27 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 27-11-2015
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 29-10-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 31-07-2015
• Court: TRIBUNAL
• Department Lawyers: P RADHAKIRSHNAN JCIT B C DEF
• Assessee Lawyers: M BALASUBRAMANIYAM
• Keywords: Business expenditure; Earning of tax free income; Services rendered outside India; Permanent establishment; Capital expenditure
• Section: 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI , . ' # , $ #% BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER . /ITA NOS.844, 845 & 846 /MDS/2015 AND CO NO.85/MDS/2015 (IN ITA NO.1175/MDS/2015 / ASSESSMENT YEARS: 2008-09, 2009-10 & 2010-11 !'#$ %&$'#(#)#*+$ ,$-./011121# ,34335-67778 (APPELLANT/CROSS-OBJECTOR) V. THE ASSISTANT COMMISSIONER OF INCOME-TAX, COMPANY CIRCLE-VI(4), CHENNAI-34 [PRESENTLY DY. COMMISSIONER OF INCOME-TAX, CORPORATE CIRCLE- 6(2)]. 9:;<=> RESPONDENT) 345 . /ITA NO. 1175/MDS/2015 / ASSESSMENT YEAR: 2010-11 THE ASSISTANT COMMISSIONER OF !'#$ INCOME-TAX, V. CHENNAI 600 050. COMPANY CIRCLE-VI(4), CHENNAI-34 . [PRESENTLY DY. COMMISSIONER OF INCOME-TAX, CORPORATE CIRCLE-6(2)]. 9:;<=> RESPONDENT) ( <= /APPELLANT) <= ? @ / APPELLANT BY : SHRI M. BALASUBRAMANIYAM, CA :;<= ? @ / RESPONDENT BY : SHRI P. RADHAKIRSHNAN, JCIT B C ? DEF / DATE OF HEARING : 29.10.2015 GH ? DEF / DATE OF PRONOUNCEMENT : 27.11.2015 - - ITA 844, 845/15 ETC. 2 & / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THE APPEALS AND THE CROSS OBJECTION BY THE ASSE SSEE AS WELL AS THE APPEAL BY THE REVENUE ARE DIRECTED AGAI NST DIFFERENT ORDERS OF THE COMMISSIONER OF INCOME-TAX(APPEALS) FOR THE ASSESSMENT YEARS 2008-09, 2009-10 AND 2010-11. SI NCE, THE ISSUES INVOLVED IN THESE APPEALS ARE COMMON, THESE ARE CLUBBED TOGETHER, HEARD TOGETHER AND DISPOSED OFF BY THIS C OMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST WE TAKE UP THE ASSESSEES APPEAL. THE FIR ST COMMON ISSUE IN ALL THE APPEALS OF THE ASSESSEE IS WITH REGARD TO DISALLOWANCE U/S.14A OF THE ACT. 3. THE FACTS OF THE ISSUE AS NARRATED IN ITA NO. 844/MDS/2015 FOR THE ASSESSMENT YEAR 2008-09 ARE TH AT THE ASSESSING OFFICER DISALLOWED A SUM OF ` 1,28,544/- BY INVOKING THE PROVISIONS OF SEC.14A OF THE ACT. AGGRIEVED, T HE ASSESSEE WENT IN APPEAL BEFORE THE CIT(APPEALS), WHO CONFIRM ED THE ACTION OF THE AO. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE - - ITA 844, 845/15 ETC. 3 MATERIALS ON RECORD. REGARDING THE DISALLOWANCE U/ S.14A R.W. RULE 8D, THE MAIN CONTENTION OF THE ASSESSEES COUN SEL IS THAT THE ASSESSEE HAS NOT INCURRED ANY EXPENDITURE FOR E ARNING EXEMPTED INCOME AND THE ASSESSEE HAS NOT USED ANY INTEREST BEARING FUNDS FOR INVESTMENT. ON THE CONTRARY, THE LD. DR SUBMITTED THAT THE ASSESSEE HAS GIVEN SUFFICIENT OP PORTUNITY TO EXPLAIN THAT THE EXPENDITURE WAS INCURRED FOR EARNI NG EXEMPTED INCOME AND THE ASSESSEE HAS NOT PRODUCED NECESSARY EVIDENCE TO SUPPORT ITS CASE. IN OUR OPINION, THE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF M/S. DAGA GLOB AL CHEMICALS PVT. LTD. IN ITA NO.5592/MUM/2012 DATED 1.1.2015 AN D THE DECISION OF THE DELHI HIGH COURT IN THE CASE OF JOI NT INVESTMENTS PVT. LTD. VS. CIT IN ITA NO.117 OF 2015 DATED 25.2. 2015 IS HAVING BEARING ON THIS ISSUE, WHEREIN IT WAS OBSERV ED AS UNDER: 6. HEARD BOTH THE PARTIES. ON A PERUSAL OF THE ORDE R OF MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF M/S. DAGA GLOBAL CHEMICALS PVT. LTD. (SUPRA), WE FIND TH AT AN IDENTICAL ISSUE HAS BEEN DECIDED BY THE TRIBUNAL HOLDING THAT DISALLOWANCE UNDER SECTION 14A READ WI TH RULE 8D CANNOT EXCEED THE EXEMPT INCOME. WHILE HOLDING SO, THE TRIBUNAL OBSERVED AS UNDER:- 2. AT THE TIME OF HEARING, DR. K.SHIVARAM ALONG WI TH SHRI RAHUL HAKANI, LD. COUNSELS FOR THE ASSESSEE ADVANCED THEIR ARGUMENTS WHICH ARE IDENTICAL TO THE GROUND RAISED BY SUBMITTING THAT NO EXPENDITURE - - ITA 844, 845/15 ETC. 4 DIRECTLY OR INDIRECTLY WAS INCURRED BY THE ASSESSEE FOR EARNING EXEMPT INCOME AND FURTHER THE INVESTMENT IN SHARES WAS MADE IN EARLIER YEARS OUT OF OWN FUNDS A ND NOT OUT OF BORROWED FUNDS, THEREFORE, NO DISALLOWAN CE U/S 14A R.W. RULE 8D IS TO BE MADE. 2.1. ON THE OTHER HAND, SHRI AKHILENDRA YADAV STRON GLY DEFENDED THE CONCLUSION ARRIVED AT BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) BY CONTENDING THAT A WELL REASONED ORDER HAS BEEN PASSED BY THE L D. FIRST APPELLATE AUTHORITY AS APPORTIONMENT OF EXPENDITURE FOR EARNING THE DIVIDEND INCOME WAS DON E AS PER THE PROVISIONS OF THE ACT. IT WAS PLEADED TH AT SECTION 14A R.W. RULE 8D OF THE RULES IS CLEARLY APPLICABLE TO THE FACTS OF THE PRESENT APPEAL. 2.2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT THE ASSESSEE IS A LIMITED COMPANY, ENGAGED IN TRADING OF BULK AND FINE, CHEMICALS, SOL VENT AND PHARMACEUTICAL RAW MATERIALS DECLARED ITS INCOM E AT RS.74,40,000/- ON 26/09/2009. THE ASSESSEE CREDITED DIVIDEND INCOME OF RS.1,82,262/- IN ITS PR OFIT AND LOSS ACCOUNT. THE ASSESSING OFFICER WHILE FRAMI NG THE ASSESSMENT INVOKE SECTION 14A R.W. RULE 8D BY CONTENDING THAT ASSESSEE CLAIMED VARIOUS EXPENSES WHICH ARE RELATED TO EXEMPT INCOME IN ITS PROFIT & LOSS ACCOUNT AND DISALLOWED RS.14,58,412/-. ON APPEAL, BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) BROADLY THE STAND TAKEN IN THE ASSESSMENT ORDER WAS AFFIRMED AGAINST WHICH THE ASSESSEE IS IN FURTHER APPEAL BEFORE THIS TRIBUNAL. THE TOTALITY OF FACTS CLEARLY INDICATES, AS CLAIMED BY THE ASSESSEE THAT NO BORROWED FUNDS WERE UTILIZED FOR EARNING THE EXEMPT INCOME BY THE ASSESSEE AND FURTHER THE DIVIDEND WER E DIRECTLY CREDITED IN THE BANK ACCOUNT OF THE ASSESS EE AND NO EXPENDITURE WAS CLAIMED. WHAT IT MAY BE, WE FIND THAT THE ASSESSEE ONLY RECEIVED RS.1,82,362/- AS DIVIDEND INCOME, THEREFORE, THERE IS NO QUESTION OF DISALLOWANCE OF RS.14,58.412/- BY INVOKING SECTION - - ITA 844, 845/15 ETC. 5 14A R.W. RULE 8D UNDER THE FACTS AVAILABLE ON RECOR D. IT WAS ALSO EXPLAINED BY THE LD. COUNSEL FOR THE ASSES SEE THAT ON IDENTICAL FACT IN EARLIER YEARS, NO DISALLO WANCE WAS MADE. IN THE PRESENT ASSESSMENT YEAR ALSO, NO BORROWED FUNDS WERE INVESTED BY THE ASSESSEE FOR MAKING INVESTMENT IN SHARES OR FOR EARNING DIVIDEND INCOME . AT BEST, IF ANY DISALLOWANCE COULD BE MADE THAT CAN BE RESTRICTED TO RS. 1,485/- WHICH WERE CLAIMED AS DEMAT CHARGES. DISALLOWANCE U/S 14A R.W. RULE 8D CANNOT EXCEED THE EXEMPT INCOME. IN VIEW OF THIS FACT, WE FIND MERIT IN THE CLAIM OF THE ASSESS EE. THE APPEAL OF THE ASSESSEE IS THEREFORE, ALLOWED. FOLLOWING THE ABOVE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL, WE ARE OF THE OPINION THAT DISALLOWANCE U /S.14A R.W. RULE 8D SHOULD NOT EXCEED THE EXEMPT INCOME. THE M UMBAI BENCH IN ITS ORDER SUSTAINED THE DISALLOWANCE ON AP PLICABILITY OF PROVISIONS OF SEC.14A R.W. RULE 8D. HOWEVER, THE A LTERNATIVE CLAIM OF THE ASSESSEE WAS THAT DISALLOWANCE IF AT A LL SHOULD BE MADE, IT SHOULD BE RESTRICTED TO EXEMPT INCOME EARN ED AND NOT BEYOND THAT. ACCORDINGLY, THE AO IS DIRECTED TO LO OK AT THIS ISSUE ON THIS ANGLE AND DECIDE IT AFRESH IN THE LIGHT OF THE ABOVE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL. ACCO RDINGLY, THIS GROUND OF APPEAL IS ALLOWED FOR STATISTICAL PURPOSE FOR THE ASSESSMENT YEARS 2008-09, 2009-10 AND 2010-11. 5. IN ITA NO.846/MDS/2015, THE ASSESSEE HAS RAISED ONE MORE GROUND AND THE GRIEVANCE OF THE ASSESSEE I S WITH - - ITA 844, 845/15 ETC. 6 REGARD TO DISALLOWANCE OF SHARE ISSUE EXPENSES OF ` 50,96,000/-. 6. THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAS CLAIMED SHARE ISSUE EXPENSES OF ` 50,96,000/-. ACCORDING TO LD. AR, THE FUNDS RAISED BY THE ASSESSEE ARE ON ACCOUNT OF THE ISSUE OF RIGHT SHARES, WHICH WERE UTILIZED B Y THE COMPANY FOR WORKING CAPITAL REQUIREMENTS AND THE SA ME IS BUSINESS EXPENDITURE. HE RELIED ON THE DECISION OF THE APEX COURT IN THE CASE OF BROOKE BOND INDIA LTD. V. CIT (1997) (225 ITR 798) FOR THE PROPOSITION THAT THE E XPANSION OF THE CAPITAL WAS UNDERTAKEN BY THE ASSESSEE IN OR DER TO MEET THE NEED FOR MORE WORKING FUND FOR THE ASSESSE E. THEREFORE, HE SUBMITTED THAT THE ABOVE JUDGMENT OF THE APEX COURT IS TO BE APPLIED, WHICH IS IN FAVOUR OF THE ASSESSEE. 7. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATERIAL ON RECORD. IN OUR OPINION, THE EXPANSION OF THE CAPITAL WAS UNDERTAKEN BY THE ASSESSEE IN CAPITAL B ASE AND THEREAFTER HE CANNOT PROCEED ON THE PREMISE THAT IT WAS UNDERTAKEN FOR THE PURPOSE OF MEETING THE WORKING F UNDS OF - - ITA 844, 845/15 ETC. 7 THE ASSESSEE TO CARRY ON THE BUSINESS. THOUGH THE I NCREASE IN THE CAPITAL RESULTS IN EXPANSION OF THE CAPITAL BASE OF THE COMPANY AND INCIDENTALLY THAT WOULD HELP IN THE BUS INESS OF THE COMPANY IN ONE WAY OR OTHER WAY AND MAY ALSO HE LP IN PROFIT MAKING. THE EXPENDITURE INCURRED IN THAT CON NECTION STILL RETAIN THE CHARACTER OF A CAPITAL EXPENDITURE , SINCE THE EXPENDITURE IS DIRECTLY RELATED TO THE EXPANSION OF CAPITAL BASE OF THE COMPANY. BEING SO, STRAIGHTAWAY, IN OU R OPINION, THE JUDGMENT OF THE SUPREME COURT IN THE C ASE OF BROOKE BOND INDIA LIMITED (SUPRA) IS DIRECTLY AGAIN ST THE ASSESSEE. APPLYING THE SAME RATIO, WE ARE INCLINED TO DECIDE THE ISSUE AGAINST THE ASSESSEE. ACCORDINGLY , ITA NOS.844, 845/MDS/2015 AND 846/MDS/2015 ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. 8. NOW, WE TAKE UP THE REVENUES APPEAL IN ITA NO.1175/MDS/2015. THE GROUND RAISED BY THE REVENUE IS AS UNDER: THE LEARNED CIT(A) ERRED IN DIRECTING THE AO TO DELETE THE DISALLOWANCE ON EXPORT COMMISSIONS U/S.40(A)(IA) OF ` 1,04,94,000/- - - ITA 844, 845/15 ETC. 8 9. THE FACTS OF THE CASE ARE THAT THE AO DISALLOWED THIS EXPENDITURE, WHICH WAS CLAIMED AS EXPORT COMMISSION ON THE REASON THAT IT IS IN THE NATURE OF TECHNICAL SE RVICES AND LIABLE FOR DISALLOWANCE U/S.40(A)(IA) OF THE ACT. AGAINST THIS, THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(APPEALS) , WHO ALLOWED THE CLAIM OF THE ASSESSEE BY PLACING RELIAN CE ON THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.2093/MDS/12 FOR THE ASSESSMENT YEAR 2009-10, WHE REIN IT WAS OBSERVED THAT THE ADDITIONS MADE ON ACCOUNT OF PAYMENTS TO VARIOUS OVERSEAS AGENTS WAS DELETED. H E ALSO RELIED ON THE DECISION OF THE JURISDICTIONAL HIGH C OURT IN THE CASE OF FAIZAN SHOES (P) LTD. REPORTED IN (2014) 48 TAXMANN.COM 48(MADRAS) DATED 22.7.2014 AND ALLOWED THE CLAIM OF THE ASSESSEE. AGGRIEVED BY THIS, THE REVENUE IS IN APPEAL BEFORE US. 10. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IT IS BROUGHT TO OUR NOTICE B Y THE LD. AR THAT SIMILAR ISSUE CAME FOR CONSIDERATION BEFORE TH E TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2009-10 IN ITA NO. 2093/MDS/12. VIDE ORDER DATED - - ITA 844, 845/15 ETC. 9 29.8.2013, THE TRIBUNAL CONSIDERING THE SAME NATURE OF PAYMENT OBSERVED AS UNDER: 15. VIDE ITS GROUND NO.3, GRIEVANCE RAISED BY THE ASSESSEE IS THAT A DISALLOWANCE OF ` 86,84,000/- MADE UNDER SECTION 40(A)(IA) OF THE ACT ON EXPORT COMMISSION PAID TO ITS AGENTS ABROAD WITHOUT DEDUCTING TAX AT SOURCE, WAS CONFIRMED BY THE CIT(APPEALS). 16. ASSESSEE, DURING THE RELEVANT PREVIOUS YEAR, PA ID FOLLOWING PAYMENTS TO VARIOUS OVERSEAS AGENTS, WHO HAD PROCURED ORDERS FOR ASSESSEE ABROAD:- SL.NO. NAME OF THE PAYEE COMMISSION ( ` ) 1. M/S TOM NEID, USA 60,45,661 2. M/S V.C. EDWART, SINGAPORE 8,51,263 3. M/S TVS AUTO PARTS, SRI LANKA 5,21,171 4. M/S MANSONS OVERSEAS, BANGLADESH 3,72,92 4 5. M/S SPARTAN SERVICES, CANADA 3 ,06,271 6. M/S DAHAL TRADING, MAURITIUS 1,74,562 7. M/S BABU VARSANI, KENYA 1,73,146 8. M/S INTERNATIONAL DIESEL SERVICES, KUWAIT 1,66 ,572 9. M/S WISCOM INTERNATIONAL, SINGAPORE 72,754 TOTAL 86,84,324 ASSESSING OFFICER WAS OF THE OPINION THAT ASSESSEE WAS BOUND TO DEDUCT TAX AT SOURCE, SINCE BY VIRTUE OF EXPLANATION TO SECTION 9(2) OF THE ACT, IT WAS NOT NECESSARY FOR AGENTS ABROAD TO HAVE A BUSINESS CONNECTION IN INDIA OR PERMANENT ESTABLISHMENT IN INDIA. AS PER THE A.O., ASSESSEE HAD NOT DEDUCTED T AX AT SOURCE AS SPECIFIED UNDER SECTION 195 OF THE ACT . HE MADE A DISALLOWANCE UNDER SECTION 40(A)(IA) OF T HE ACT. LD. CIT(APPEALS) CONFIRMED THE DISALLOWANCE PLACING RELIANCE ON HIS OWN ORDER FOR ASSESSMENT YE AR 2008-09 IN ASSESSEE'S OWN CASE. - - ITA 844, 845/15 ETC. 10 17. NOW BEFORE US, LEARNED A.R. SUBMITTED THAT SIMI LAR ISSUE REGARDING DISALLOWANCE UNDER SECTION 40(A)(IA ) HAD COME UP BEFORE THIS TRIBUNAL IN PRECEDING ASSESSMENT YEAR AS WELL. AS PER LEARNED A.R., IT WA S HELD BY THIS TRIBUNAL THAT THERE WAS NO LIABILITY F OR THE ASSESSEE TO DEDUCT TAX AT SOURCE. 18. PER CONTRA, LEARNED D.R. SUPPORTED THE ORDERS O F AUTHORITIES BELOW. 19. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL SUBMISSIONS. 20. WE FIND THAT THE CIT(APPEALS) CONFIRMED THE DISALLOWANCE WITH SPECIFIC NOTING THAT FACTS RELATI NG TO THE DISALLOWANCE WERE VERY SIMILAR TO THAT OF PRECE DING ASSESSMENT YEAR 2008-09. IT WAS HELD BY THIS TRIBUN AL AT PARAS 11 AND 12 OF ITS ORDER, AS UNDER:- 11. WE HAVE HEARD BOTH THE SIDES, PERUSED THE RECO RDS AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELO W. IN THIS CASE THE ASSESSEE IS IN THE BUSINESS OF MANUFACTURE OF FRICTION MATERIALS. IT HAD PAID AGEN CY COMMISSION TO THE FOREIGN AGENTS AMOUNTING TO ` 32.93 LAKHS. THE ASSESSEE HAS NOT DEDUCTED ANY TDS. ACCORDING TO THE ASSESSING OFFICER AND THE LEARNED CIT(APPEALS) TDS HAS TO BE DEDUCTED. THE ASSESSING OFFICER HAS NOT DISCUSSED ANYTHING AS TO HOW THE ASSESSEE HAS TO DEDUCT TDS. NOTHING WAS BROUGHT ON RECORD. THERE IS NOTHING IN THE ASSESSMENT ORDER TH AT THERE IS A BUSINESS CONNECTION AND THAT THE ASSESSE E HAS TO DEDUCT TDS U/S 195 OF THE ACT. UNDER SIMILAR CIRCUMSTANCES, THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT V. EON TECHNOLOGY P. LTD. (343 ITR 366) HAS HELD AS UNDER: HELD, DISMISSING THE APPEAL, THAT THE ASSESSING OF FICER HAD NOT DEALT WITH OR EXAMINED WHETHER THE COMMISSI ON INCOME ACCRUED OR AROSE DIRECTLY OR INDIRECTLY FROM ANY BUSINESS CONNECTION IN INDIA BUT HAD MERELY RECORDE D - - ITA 844, 845/15 ETC. 11 THAT THE PAYMENT MADE TO THE U.K. COMPANY WAS TAXABLE IN INDIA BECAUSE OF ITS BUSINESS CONNECTIO N. THE ASSESSING OFFICER DID NOT ELABORATE OR HAD NOT DISCUSSED ON WHAT BASIS HE HAD COME TO THE CONCLUSI ON THAT BUSINESS CONNECTION AS ENVISAGED UNDER SECTI ON 9(1)(I) EXISTED. THE ASSESSEE HAD SUBMITTED THAT TH E U.K. COMPANY WAS A NON-RESIDENT COMPANY AND DID NOT HAVE ANY PERMANENT ESTABLISHMENT IN INDIA. THE U.K. COMPANY WAS NOT RENDERING ANY SERVICE OR PERFORMING ANY ACTIVITY IN INDIA ITSELF. THESE FACTS WERE NOT AND COULD NOT BE DISPUTED. THE STAND OF THE REVENUE WAS CONTRARY TO THE TWO CIRCULARS ISSUED BY THE CBDT IN WHICH IT WAS CLEARLY HELD THAT WHEN A NON-RESIDENT AGENT OPERATES OUTSIDE THE COUNTRY NO PART OF HIS INCOME ARISES IN INDIA, AND SINCE PAYMENT WAS REMITTED DIR ECTLY ABROAD, MERELY BECAUSE AN ENTRY IN THE BOOKS OF ACCOUNT WAS MADE, IT DID NOT MEAN THAT THE NONRESID ENT HAD RECEIVED ANY PAYMENT IN INDIA. THIS FACT ALONE DID NOT ESTABLISH BUSINESS CONNECTION. IN CIRCULAR NO. 786, DATED FEBRUARY 7, 2000, IT HAD BEEN STATED THAT IN SUCH CASES, THE INDIAN ASSESSEE WAS NOT LIABLE TO DEDUCT TAX AT SOURCE UNDER SECTION 195 FROM THE COMMISSION AND OTHER RELATED CHARGES PAYABLE TO SUCH A NON-RESIDEN T HAVING RENDERED SERVICE OUTSIDE INDIA. THE ASSESSIN G OFFICER DID NOT MAKE OUT A CASE OF BUSINESS CONNECT ION AS STIPULATED IN SECTION 9(1)(I) OF THE ACT. HE HAD NOT MADE ANY FOUNDATION OR BASIS FOR HOLDING THAT THERE WAS BUSINESS CONNECTION AND, THEREFORE, SECTION 9(1)(I) OF THE ACT WAS APPLICABLE. THE APPELLATE AUTHORITIES, ON THE BASIS OF MATERIAL ON RECORD, HAD RIGHTLY HELD THAT BUSINESS CONNECTION WAS NOT ESTABLISHED. 12. WE FIND THAT THE FACTS IN THE PRESENT CASE ARE IDENTICAL TO THE FACTS IN THE DECISION OF THE HONB LE DELHI HIGH COURT IN THE CASE OF CIT V. EON TECHNOLOGY P. LTD. (SUPRA). THE HONBLE DELHI HIGH COURT WHILE CONSIDE RING SECTION 40(A)(IA) OF THE ACT AND THE CBDT CIRCULAR NO. 23 DATED 23-7-1969 AND CIRCULAR NO. 786 DATED 7-2- 2000 HAS HELD THAT BUSINESS CONNECTION WAS NOT ESTABLISHED AND THEREFORE NO TDS HAS TO BE DEDUCTED . - - ITA 844, 845/15 ETC. 12 IN THE PRESENT CASE ALSO, THE ASSESSING OFFICER HAS FAILED TO ESTABLISH THE BUSINESS CONNECTION. WE, THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF T HE HONBLE DELHI HIGH COURT IN THE CASE OF EON TECHNOL OGY P. LTD. (SUPRA) HOLD THAT THE ASSESSEE HAS NO LIABI LITY TO DEDUCT TDS. 20. RESPECTFULLY FOLLOWING THE ABOVE ORDER OF THIS TRIBUNAL, WE ARE OF THE OPINION THAT SUCH DISALLOWA NCE IS TO BE DELETED. RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF TH E TRIBUNAL, WE CONFIRM THE FINDING OF THE CIT(APPEALS) AND THIS GR OUND OF APPEAL OF THE REVENUE IS DISMISSED. 11. AS FAR AS THE CROSS-OBJECTION FILED BY THE ASSE SSEE IS CONCERNED, THERE IS A DELAY OF 23 DAYS IN FILING TH E SAME BEFORE THE TRIBUNAL. THE ASSESSEE HAS NOT FILED ANY CONDO NATION PETITION EXPLAINING THE REASONS FOR DELAY IN FILING THE CROSS- OBJECTION. HOWEVER, THERE IS A LETTER SEEKING COND ONATION OF DELAY BY SHRI M. BALASUBRAMANIYAM, CA. HE HAS NOT EXPLAINED THE REASONS FOR DELAY. IN OUR OPINION, THE CONDO NATION PETITION TO BE FILED BY THE ASSESSEE AND NOT BY THE CHARTERE D ACCOUNTANT. ACCORDINGLY, FOR WANT OF PROPER CONDONATION PETITIO N, THE DELAY IS NOT CONDONED AND THE CROSS-OBJECTION IS DISMISSED. 12. IN THE RESULT, THE APPEAL OF THE REVENUE IN ITA NO.1175/MDS/2015 AND THE CROSS-OBJECTION OF THE - - ITA 844, 845/15 ETC. 13 ASSESSEEIN CO NO. 85/MDS/2015 ARE DISMISSED. ASSESSEES APPEALS IN ITA NOS.844, 845 AND 846/MDS/2015 ARE PARTLY ALLOWED FOR STATISTICAL PUR POSES. ORDER PRONOUNCED ON FRIDAY, THE 27 TH OF NOV., 2015 AT CHENNAI. SD/- SD/- ( I# B J ) ( K L M IE ) 9N#,OPQ9-.,++RQ S TU /JUDICIAL MEMBER F TU>3VV+'''W KS C /CHENNAI, XT /DATED, THE 27 TH NOV., 2015. MPO* TY?: DZ[\[D /COPY TO: 1. <= /APPELLANT 2. :;<= /RESPONDENT 3. B ]D9Q /CIT(A) 4. B ]D /CIT 5. [_: D ` /DR . 6. _ABC /GF.