Schawk India Private Ltd, Chennai V. DCIT, Corporate Circle 6(1), Chennai

ITA 100/CHNY/2018

• Counselvise Citation: [2019] 111 COUNSELVISE.COM (IT) 9491 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 10 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 08-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside
• Section: 195

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , . !, # !$ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ ITA NOS.100, 101 & 103/CHNY/2018 & '& / ASSESSMENT YEARS : 2012-13, 2013-14 & 2014-15 M/S SCHAWK INDIA PVT. LTD., RMZ MILLENIA BUSINESS PARK CAMPUS-2, 5 TH FLOOR, NO.143, DR. M.G.R. ROAD, KANDANCHAVADI, CHENNAI - 600 096. PAN : AAICS 2922 G V. THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 6(1), CHENNAI - 600 034. ()*/ APPELLANT) (+,)*/ RESPONDENT) )* - . / APPELLANT BY : SHRI SRIRAM SESHADRI, CA +,)* - . / RESPONDENT BY : SHRI AR.V. SREENIVASAN, JCIT / - 0# / DATE OF HEARING : 09.10.2019 12' - 0# / DATE OF PRONOUNCEMENT : 29.11.2019 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER : ALL THE THREE APPEALS OF THE ASSESSEE ARE DIRECT ED AGAINST THE COMMON ORDER PASSED BY THE COMMISSIONER OF INCO ME TAX (APPEALS) -15, CHENNAI, DATED 29.09.2017, FOR ASSES SMENT YEARS 2012-13, 2013-14 AND 2014-15. SINCE COMMON ISSUE A RISES FOR 2 I.T.A. NOS.100, 101 & 103/CHNY/18 CONSIDERATION IN THESE APPEALS, WE HEARD THESE APPE ALS TOGETHER AND DISPOSING THE SAME BY THIS COMMON ORDER. 2. SHRI SRIRAM SESHADRI, THE LD. REPRESENTATIVE FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSEE-COMPANY IS EN GAGED ITSELF IN THE BUSINESS OF ART DESIGNING. ACCORDING TO THE LD . REPRESENTATIVE, THE ASSESSEE HAS PAID 1,83,83,820/- FOR THE ASSESSMENT YEAR 2012-13 AS ADMINISTRATIVE EXPENSES TO ITS PARENT CO MPANY AT SINGAPORE. SIMILARLY DURING OTHER ASSESSMENT YEARS ALSO, THE ADMINISTRATIVE EXPENSES WERE PAID TO THE PARENT COM PANY AT SINGAPORE. ACCORDING TO THE LD. REPRESENTATIVE, TH E ASSESSING OFFICER DISALLOWED THE PAYMENTS ON THE GROUND THAT TAX WAS NOT DEDUCTED AS REQUIRED UNDER SECTION 195 OF THE INCOM E-TAX ACT, 1961 (IN SHORT 'THE ACT'). ACCORDING TO THE LD. RE PRESENTATIVE, BY VIRTUE OF SINGAPORE AND INDIA DOUBLE TAXATION AVOID ANCE AGREEMENT, UNLESS THE TECHNOLOGY WAS MADE AVAILABLE TO THE ASSESSEE, IT CANNOT BE SAID THAT TECHNOLOGY WAS PRO VIDED BY THE PARENT COMPANY. THEREFORE, ACCORDING TO THE LD. RE PRESENTATIVE, THE ASSESSEE IS NOT LIABLE TO DEDUCT TAX UNDER SECT ION 195 OF THE ACT. MOREOVER, FOR ASSESSMENT YEARS 2016-17 AND 20 17-18, BY ORDER DATED 25.10.2016 AND 09.03.2018, THE ASSESSIN G OFFICER 3 I.T.A. NOS.100, 101 & 103/CHNY/18 HIMSELF ISSUED CERTIFICATES TO THE ASSESSEE TO MAKE THE PAYMENT WITHOUT DEDUCTING TAX. THE LD. REPRESENTATIVE HAS ALSO PLACED HIS RELIANCE ON THE JUDGMENT OF KARNATAKA HIGH COURT IN CIT V. DE BEERS INDIA MINERALS (P.) LTD. (2012) 346 ITR 467 A ND SUBMITTED THAT ON IDENTICAL CIRCUMSTANCE, THE KARNATAKA HIGH COURT HELD THAT WHEN THE TECHNOLOGY WAS NOT MADE AVAILABLE TO THE R ECIPIENT IN INDIA, THERE IS NO NEED FOR DEDUCTION OF TAX UNDER SECTION 195 OF THE ACT. THE LD. REPRESENTATIVE HAS ALSO PLACED RELIAN CE ON THE DECISION OF MUMBAI BENCH OF THIS TRIBUNAL IN DCIT V . BOSTON CONSULTING GROUP PTE. LTD. (2005) 94 ITD 31 AND SUB MITTED THAT THE MUMBAI BENCH HAS SPECIFICALLY CONSIDERED THE SINGAP ORE-INDIA DOUBLE TAXATION AVOIDANCE AGREEMENT AND FOUND THAT TAX SHOULD NOT BE DEDUCTED UNLESS THE TECHNOLOGY WAS MADE AVAI LABLE TO THE ASSESSEE. THE LD. REPRESENTATIVE HAS ALSO PLACED H IS RELIANCE ON THE ORDER OF THIS BENCH OF THE TRIBUNAL IN DCIT V. FORD INDIA LTD. (2017) 78 TAXMANN.COM 5 AND ALSO DECISION OF THE SP ECIAL BENCH OF THIS TRIBUNAL AT MUMBAI IN MAHINDRA & MAHINDRA LTD. V. DCIT (2009) 30 SOT 374. THE LD. REPRESENTATIVE HAS ALSO PLACED RELIANCE ON THE JUDGMENT OF DELHI HIGH COURT IN DIT V. GUY CARP ENTER & CO. LTD. (2012) 346 ITR 504. 4 I.T.A. NOS.100, 101 & 103/CHNY/18 3. WE HEARD SHRI AR.V. SREENIVASAN, THE LD. DEPARTM ENTAL REPRESENTATIVE ALSO. THE LD. D.R. SUBMITTED THAT H E IS PLACING RELIANCE ON THE OBSERVATION MADE BY THE ASSESSING O FFICER AS WELL AS THE CIT(APPEALS). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF BOTH THE AUTHO RITIES BELOW. IT IS NOT THE CASE OF THE REVENUE THAT THE TECHNOLOGY WAS MADE AVAILABLE TO THE ASSESSEE-COMPANY BY THE PARENT COM PANY AT SINGAPORE. THE SERVICES, NAMELY, MANAGEMENT AND AD MINISTRATIVE DECISIONS WERE TAKEN AT SINGAPORE AND IT WAS COMMUN ICATED TO THE ASSESSEE. THE TECHNOLOGY WAS NOT MADE AVAILABLE TO THE ASSESSEE SO THAT THEY CAN CONDUCT THE BUSINESS ON THEIR OWN. IT IS NOT IN DISPUTE THAT THE ASSESSEE IS A SUBSIDIARY COMPANY O F SINGAPORE COMPANY. IN FACT, ENTIRE DECISIONS WERE TAKEN AT S INGAPORE. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINI ON THAT UNLESS THE TECHNOLOGY WAS MADE AVAILABLE TO THE ASSESSEE-COMPA NY, THE ASSESSEE IS NOT LIABLE TO DEDUCT TAX IN VIEW OF THE DOUBLE TAXATION AVOIDANCE AGREEMENT BETWEEN INDIA AND SINGAPORE. S IMILAR VIEW 5 I.T.A. NOS.100, 101 & 103/CHNY/18 WAS TAKEN BY THE MUMBAI BENCH OF THIS TRIBUNAL IN B OSTON CONSULTING GROUP PTE. LTD. (SUPRA). MOREOVER, THI S TRIBUNAL HAS ALSO TAKEN A SIMILAR VIEW IN FORD INDIA LTD. (SUPRA ). THESE DECISIONS OF THE TRIBUNAL ARE FORTIFIED BY THE JUDGMENTS OF K ARNATAKA HIGH COURT AND DELHI HIGH COURT REFERRED BY THE LD. REPR ESENTATIVE FOR THE ASSESSEE. 5. MOREOVER, THE ASSESSEE HAS FILED COPIES OF CERTI FICATES ISSUED BY THE ASSESSING OFFICER FOR NON-DEDUCTION O F TAX UNDER SECTION 195 OF THE ACT. WHEN THE ASSESSING OFFICER HIMSELF ISSUED CERTIFICATES SAYING THAT THE ASSESSEE IS NOT REQUIR ED TO DEDUCT TAX UNDER SECTION 195 OF THE ACT, THIS TRIBUNAL IS OF T HE CONSIDERED OPINION THAT THERE IS NO JUSTIFICATION FOR MAKING A NY DISALLOWANCE DURING THE YEARS UNDER CONSIDERATION. THE COPIES O F CERTIFICATES ARE AVAILABLE AT PAGES 319 AND 320 OF THE PAPER-BOOK FI LED BY THE ASSESSEE. IN VIEW OF THE ABOVE, THIS TRIBUNAL IS U NABLE TO UPHOLD THE ORDERS OF BOTH THE AUTHORITIES BELOW. ACCORDIN GLY, ORDERS OF BOTH THE AUTHORITIES BELOW ARE SET ASIDE AND THE DISALLO WANCE MADE BY THE ASSESSING OFFICER IS DELETED. 6 I.T.A. NOS.100, 101 & 103/CHNY/18 6. IN THE RESULT, ALL THE THREE APPEALS FILED BY TH E ASSESSEE STAND ALLOWED. ORDER PRONOUNCED IN THE COURT ON 29 TH NOVEMBER, 2019 AT CHENNAI. SD/- SD/- (. !) ( . . . ) (S. JAYARAMAN) (N.R.S. GANESAN) # / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 4 /DATED, THE 29 TH NOVEMBER, 2019. KRI. - +056 76'0 /COPY TO: 1. )*/ APPELLANT 2. +,)*/ RESPONDENT 3. / 80 () /CIT(A)-15, CHENNAI-34 4. PRINCIPAL CIT-6, CHENNAI 5. 69 +0 /DR 6. :& ; /GF.