ASST CIT 22(3), MUMBAI V. SARUDHA INDUSTRIES, MUMBAI

ITA 1102/MUM/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5701 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 16-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARJU GARODIA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH J , MUMBAI BEFORE SHRI RAJENDRA , HON'BLE ACCOUNTANT MEMBER AND SHRI C.N. PRASAD, HON'BLE JUDICIAL MEMBER ITA NO . 1102 /MUM/201 7 (A.Y : 2011 - 12 ) ASST. CIT - 22 (3) ROOM NO. 305 , PIRAMAL CHAMBERS, LALBAUG, PAREL, MUMBAI 400 012 V . M/S. SARUDHA INDUSTRIES B - 14, PATEL PARK , NEHRU ROAD, OPP. P &T QTRS. SANTACRUZE (E), MUMBAI 400 029 PAN NO: AALFS 5973 K (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI MADHUR AGRAWAL DEPARTMENT BY : SHRI ARJU GARODIA DATE OF HEARING : 28 .06.2018 DATE OF PRONOUNCEMENT : 11 .07 .2018 O R D E R PER C.N. PRASAD (JM) 1. THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 34 , MUMBAI DATED 02.11.2016 F OR THE ASSESSMENT YEAR 2011 - 12. 2. THE ONLY GRIEVANCE OF THE REVENUE IS THAT LD.CIT(A) ERRED IN ALLOWING THE OVERSEAS COMMISSION DISALLOWED BY THE ASSESSING OFFI CER U/S. 40(A)(IA) OF THE ACT. 3. AT THE OUTSET, LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IDENTICAL I SSUE AROUSE IN THE A SSESSMENT YEAR 2007 - 08 WHEREIN THE 2 ITA NO.1102/MUM/2017 (A.Y: 2011 - 12) M/S. SARUDHA INDUSTRIES , ASSESSING OFFICER W HILE COMPLETING THE ASSESSMENT FOR ASSESSMENT YEAR 2007 - 08 DISALLOWED OVERSEAS COMMISSION PAID BY ASSESSEE INVOKING PROVISIONS OF SECTION 40(A)(IA) OF THE ACT FOR NOT DEDUCTING TDS . LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN THIS ASSESSMENT YEAR ALSO THE ASSESSING OFFICER MADE SIMILAR DISALLOWANCE OBSERVING THAT IN EARLIER ASSESSMENT YEAR SIMILAR DISALLOWANCE WAS MADE AND THE APPEAL IS PENDING BEFORE THE ITAT. LD. COUNSEL FO R THE ASSESSEE REFERRING TO THE ORDER OF THE TRIBUNAL IN ITA.NO. 7067/ MUM/ 2013 DATED 09.05.2017 SUBMITTED THAT THE ISSUE HAS BEEN DECIDED BY THE TRIBUNAL FOR THE ASSESSMENT YEAR 2007 - 08 WHICH THE ASSESSING OFFICER HAS REFERRED TO IN THE ASSESSMENT ORDER. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE TRIBUNAL DELETED THE DISALLOWANCE MADE U/S. 40(A)(IA) OF THE ACT IN RESPECT OF OVERSEAS COMMISSION PAID BY THE ASSESSEE. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT FACTS ARE IDENTICAL AND THEREFORE FOLLOWING THE ORDER OF THE TRIBUNAL , THE ORDER OF THE LD.CIT(A) BE SUSTAINED FOR THE CURRENT YEAR ALSO . 4. LD. DR VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF THE AUTHORITIES BELOW. WE NOTICE THAT THE ASSESSING OFFICER DISALLOWED COMMISSION PAID TO FOREIGN AGENT FOR NON - DEDUCTION OF TDS. IT IS ALSO OBSERVED IN THE ASSESSMENT ORDER THAT SIMILAR DISALLOWANCE WAS MADE IN 3 ITA NO.1102/MUM/2017 (A.Y: 2011 - 12) M/S. SARUDHA INDUSTRIES , EARLY ASSESSMENT YEARS AND THE APPEAL IS BEFORE THE TRIBUNAL. ON A P ERUSAL OF THE ORDER OF THE TRIBUNAL FOR THE ASSESSMENT YEAR 2007 - 08 , WE FIND THAT THE TRIBUNAL DELETED THE DISALLOWANCE FOLLOWING THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT V. GUJARAT RECLAIM AND RUBBER PRODUCTS LTD., [383 ITR 236] OB SERVING AS UNDER: - 3. AT THE OUTSET, LEARNED A. R. OF THE ASSESSEE RELIED ON THE ORDER OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. GUJARAT RECLAIM AND RUBBER PRODUCTS LTD. [2016] 383 ITR 236 (BOM) WHEREIN IT WAS HELD BY HON'BLE BOMBAY HIGH COURT THAT PAYMENT OF COMMISSION TO THE NON - RESIDENT AGENT NOT INCURRED IN INDIA, TAX NEED NOT BE DEDUCTED AT SOURCE FROM SUCH COMMISSION. LEARNED D.R. WAS FAIR ENOUGH TO CONCEDE THE POSITION. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, CAREFULLY CONSIDERED THE SAME ALONG WITH THE ORDERS OF THE TAX AUTHORITIES BELOW. IN VIEW OF THE DECISION BOMBAY HIGH COURT (SUPRA), WE ARE OF THE VIEW THAT THIS ISSUE IS NO MORE INTEGRA AND SINCE THE ASSESSEE WAS NOT LIABLE TO DEDUCT THE TAX AT SOURCE ON THE COMMISSION PAID TO NON - RE SIDENT, THEREFORE, THE PROVISIONS OF SECTION 40(A)(IA) WILL NOT APPLY. THEREFORE, WE DO NOT FIND ANY INFIRMITY OR ILLEGALITY IN T HE ORD E R OF CIT(A) DELETING THE DISALLOWANCE. 6. THERE IS NO DISPUTE THAT THE FACTS FOR ASSESSMENT YEAR 2007 - 08 AND THE CURRENT ASSESSMENT YEAR ARE SIMILAR. THUS, RESPECTFULLY FOLLOWING THE SAID DECISION , WE UPHOLD THE ORDER OF THE LD.CIT(A) IN DELETING THE DISALLOWANCE U/S. 40(A)(IA) OF THE ACT. GROUND RAISED BY THE REVENUE IS REJECTED . 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THE 11 TH JULY, 2018. SD/ - SD/ - (RAJENDRA) (C.N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI / DATED 11 / 07/2018 GIRIDHAR, SR.PS 4 ITA NO.1102/MUM/2017 (A.Y: 2011 - 12) M/S. SARUDHA INDUSTRIES , COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// BY ORDER, (ASSTT. REGISTRAR) ITAT, MUM