ACIT, Nellore V. Sri H Hanumantha Rao, Nellore

ITA 1109/HYD/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 9434 (ITAT-HYDERABAD)
• Duration Of Justice: 2 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 12-01-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 13-11-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H PHANI RAJU

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL HYDERABAD BENCH 'A' BEFORE SHRI N.R.S.GANESAN AND SHRI CHANDRA POOJARI I.T.A.NO.1109/HYD/2009 ASSESSMENT YEAR 2006-07 ASST. CIT, CIRCLE 1, NELLORE. .. APPELLANT VERSUS SHRI S.HANUMANTHA RAO, NELLORE. ..RESPONDENT (PAN AGMPS2524K) APPELLANT BY : SHRI H.PHANI RAJU RESPONDENT BY : NONE C.O.NO.1/HYD/2010 (IN I.T.A.NO.1109/HYD/2009) ASSESSMENT YEAR 2006-07 SHRI S.HANUMANTHA RAO, NELLORE. .. CROSS OBJECTOR (PAN AGMPS2524K) VERSUS ASST. CIT, CIRCLE 1, NELLORE. .. APPELLANT CROSS OBJECTOR BY : NONE APPELLANT BY : SHRI H.PHANI RAJU O R D E R PER N.R.S.GANESAN, JUDICIAL MEMBER: THE REVENUE HAS FILED THIS APPEAL AGAINST THE ORDE R OF THE CIT (APPEALS), GUNTUR, DATED 27-8-2009, FOR ASST. YEAR 2006-07. TH E ASSESSEE HAS FILED THE CROSS OBJECTION TO SUPPORT THE SAME ORDER OF THE CI T (A). SINCE BOTH THE APPEAL AND THE CROSS OBJECTION ARISE OUT OF THE VERY SAME ORDER OF THE CIT (A), WE HEARD THE SAME TOGETHER AND WE DISPOSE OF THE SAME BY THIS COMMON ORDER. 2 2. NO ONE APPEARED FOR THE ASSESSEE IN SPITE OF SER VICE OF NOTICE. WE, THEREFORE, HEARD THE LEARNED DEPARTMENTAL REPRESENT ATIVE AND PROCEEDED TO DISPOSE OF THE APPEAL AND THE CROSS OBJECTION ON ME RITS. 3. SHRI H.PHANI RAJU, LEARNED DEPARTMENTAL REPRESEN TATIVE, SUBMITTED THAT THE ASSESSEE PAID A SUM OF RS.9,00,000 TO CCS INFOT ECH LTD., AND CLAIMED THE SAME AS ROYALTY. HOWEVER, THE ASSESSING OFFICER WAS OF THE OPINION THAT THE PAYMENT OF RS.9,00,000 WAS COMMISSION AND, THEREFOR E, THE ASSESSEE HAS TO DEDUCT TAX AT SOURCE BEFORE PAYMENT. THE LEARNED DE PARTMENTAL REPRESENTATIVE FAIRLY BROUGHT TO THE NOTICE OF THIS BENCH THAT UND ER IDENTICAL CIRCUMSTANCES FOR THE ASST. YEAR 2005-06 THE ASSESSEE PAID A SUM OF R S.8,82,246. THIS TRIBUNAL, AFTER CONSIDERING THE MEMORANDUM OF UNDERTAKING, FO UND THAT WHAT WAS PAID BY THE ASSESSEE WAS ONLY ROYALTY AND NOT COMMISSION. A CCORDINGLY, THIS TRIBUNAL CONFIRMED IDENTICAL ORDER OF THE CIT (A) IN THE ASS ESSEE'S OWN CASE FOR ASST. YEAR 2005-06. THE ASSESSEE FILED COPY OF THE ORDER ALONG WITH THE CROSS OBJECTION. THE LEARNED DEPARTMENTAL REPRESENTATIVE FAIRLY SUBMITTED THAT THE ISSUE THAT ARISES FOR CONSIDERATION IN THIS APPEAL IS COVERED IN FAVOUR OF THE ASSESSEE BY THE EARLIER ORDER OF THIS TRIBUNAL IN T HE ASSESSEE'S OWN CASE FOR ASST. YEAR 2005-06. 4. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LEARNE D DEPARTMENTAL REPRESENTATIVE AND ALSO PERUSED THE MATERIAL AVAILA BLE ON RECORD. ADMITTEDLY, THE ASSESSEE PAID A SUM OF RS.9,00,000 AND CLAIMED THE SAME AS ROYALTY. HOWEVER, THE AO WAS OF THE OPINION THAT THE PAYMENT OF RS.9,00,000 WAS COMMISSION. THIS TRIBUNAL IN THE ASSESSEE'S OWN CAS E FOR ASST. YEAR 2005-06 EXAMINED THIS ISSUE UNDER IDENTICAL CIRCUMSTANCES A ND FOUND THAT THE 3 RELATIONSHIP BETWEEN THE ASSESSEE AND CCS INFOTECH LTD. IS ONE OF CONTRACTOR AND SUB-CONTRACTOR. THE ASSESSEE WAS DESIGNATED AS TECHNOLOGY PARTNER. IN THE ABSENCE OF ANY OTHER MATERIAL, THIS TRIBUNAL FOUND THAT THERE WAS NO JUSTIFICATION FOR THE AO TO HOLD THE RELATIONSHIP B ETWEEN THE ASSESSEE AND CCS INFOTECH LTD. AS IN THE NATURE OF COMMISSION AND NO T ROYALTY. ACCORDINGLY, AN IDENTICAL ORDER OF THE CIT (A) WAS CONFIRMED BY THI S TRIBUNAL. IN THIS CASE ALSO, NO MATERIAL IS AVAILABLE ON RECORD TO SUGGEST THAT WHAT WAS PAID BY THE ASSESSEE IS COMMISSION. THEREFORE, WE HAVE NO HESIT ATION TO UPHOLD THE CLAIM OF THE ASSESSEE THAT WHAT WAS PAID BY THE ASSESSEE IS ONLY ROYALTY AND, THEREFORE, THERE IS NO NEED FOR MAKING DEDUCTION OF TAX AT SOU RCE. BY FOLLOWING THE ORDER OF THIS TRIBUNAL FOR THE ASST. YEAR 2005-06 IN I.T.A.N O.1432/HYD/2008 DATED 9-4- 2009 AND FOR THE REASONS STATED THEREIN, WE UPHOLD THE ORDER OF THE CIT (A). 5. CONING TO THE CROSS OBJECTION, THE ASSESSEE HAS FILED THE CROSS OBJECTION ONLY TO SUPPORT THE ORDER OF THE CIT (A). NO INDEPE NDENT ISSUE IS RAISED IN THE CROSS OBJECTION. THEREFORE, THE CROSS OBJECTION BEC OMES INFRUCTUOUS. 6. IN THE RESULT, BOTH THE APPEAL OF THE REVENUE AN D THE CROSS OBJECTION OF THE ASSESSEE STAND DISMISSED. ORDER PRONOUNCED IN THE COURT ON 29-1-10. SD SD (CHANDRA POOJARI) (N.R.S.GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, 29TH JANUARY 2010. RRRAO. 4 COPY OF THE ORDER FORWARDED TO:- 1. SHRI S.HANUMANTHA RAO, PROP OF DATA MANAGEMENT CORP N., SESHA SAI TOWERS, R.R. STREET, NELLORE 1. 2. ASST. CIT, CIRCLE 1, NELLORE. 3. CIT, GUNTUR. 4. CIT (A), GUNTUR. 5. DR, ITAT, HYDERABAD.