Tanfac Industreis Limited, CHENNAI V. ACIT, CHENNAI

ITA 1155/CHNY/2017

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9581 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 08-05-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S BHARATH
• Assessee Lawyers: ARUN KARTHIK MOHAN
• Keywords: Double taxation relief; Non-deduction of tax
• Section: 40(a)(ia)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , , $ BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER /. I.T.A. NO. 1155/CHNY/2017 / ASSESSMENT YEAR : 2006-07 M/S. TANFAC INDUSTRIES LIMITED, 1 ST FLOOR, OXFORD CENTRE, 64, CP RAMASAMY ROAD, ALWARPET, CHENNAI 600 018. [PAN: AAACT 2591A] VS. ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE III(1), CHENNAI 600 034. ( / APPELLANT) ( %&' /RESPONDENT ) ASSESSEE BY : SHRI. ARUN KARTHIK MOHAN, ADVOCATE REVENUE BY : SHRI. S. BHARATH, CIT 0 /DATE OF HEARING : 26.11.2018 0 /DATE OF PRONOUNCEMENT : 26.11.2018 / O R D E R PER S. JAYARAMAN, ACCOUNTANT MEMBER : THE ASSESSEE FILED THIS APPEAL AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-11, CHENNAI IN ITA NO. 182/2013-14/CIT(A)-11 DATED 27.02.2017 FOR ASSESSME NT YEAR 2006- 07. :-2-: ITA NO. 1155/CHNY/2017 2. M/S. TANFAC INDUSTRIES LTD., THE ASSESSEE, IS EN GAGED IN MANUFACTURING OF FLUORIDE BASED CHEMICALS. WHILE M AKING THE ASSESSMENT FOR ASSESSMENT YEAR 2006-07, THE ASSESSI NG OFFICER, INTER ALIA, DISALLOWED EXPENSES NAMELY FRIGHT PAID TO FOR EIGN SHIPPING COMPANY, BANK CHARGES CHARGED BY THE FOREIGN BANKS ON REMITTANCE OF EXPORT PROCEEDS, TESTING CHARGES PAID ABROAD, PR ODUCT DEVELOPMENT AND MARKETING EXP PAID TO MS. SHORECHEM LLC, JOURNALS ALL AMOUNTING TO RS. 44,68,625/- U/S. 40(A)(IA) FOR NON-DEDUCTION OF TAX AT SOURCE. AGGRIEVED, THE ASSESSEE FILED APPEA L BEFORE THE CIT(A). THE CIT(A) DISMISSED THE APPEAL. AGGRIEVE D, THE ASSESSEE FILED THIS APPEAL. 3. THE LD. AR SUBMITTED THAT THE CIT(A) OUGHT TO HAVE APPRECIATED THE FACT, ALL THE ABOVE SERVICES HAVING BEEN PERFORMED OUTSIDE PAYMENT TO SUCH SERVICES CANNOT BE TREATED AS INCOME ACCRUED IN INDIA. WHEN THE INCOME ITSELF HAS NOT A CCRUED IN INDIA, THE PROVISIONS OF INDIAN INCOME TAX ACT IS NOT APPL ICABLE AND CONSEQUENTLY THE PROVISIONS OF DOUBLE TAXATION AVOI DANCE AGREEMENT ARE NOT APPLICABLE TO SUCH PAYMENTS. THE ASSESSEE F URNISHED THE BREAK UP OF ALL THE ABOVE EXPENSES AND SAMPLE VOUCH ERS OF EACH EXPENSE WAS ALSO SUBMITTED AT THE TIME OF HEARING V IDE LETTER DATED 15.6.2015. THE ASSESSEE THEREFORE WISH TO SUBMIT TH AT THE CIT(A) IS :-3-: ITA NO. 1155/CHNY/2017 NOT CORRECT IN HIS STATEMENT THAT VOUCHERS CALLED F OR WERE NOT PRODUCED FOR VERIFICATION AND RELIED ON THE FOLLOWI NG CASES IN SUPPORT OF ITS GROUNDS OF APPEAL. GE INDIA TECHNOLOGY CENTRE P LTD VS CIT (2010) 327 1TR 456 SC. DRESSER RAND INDIA P LTD VS ADDL CIT 2O12 ITR (TRIBUNAL) 422, MUMBAI COT VS DIVIS LABORATORIES LTD 2O11 ITR (TRIBUNAL) 501. 4. PER CONTRA, THE LD. DR INVITED OUR ATTENTION TO THE FINDINGS RECORDED BY THE LD. CIT(A) TO THE EXTENT THAT IN SP ITE OF SEVERAL OPPORTUNITIES GIVEN, THE ASSESSEE COULD NOT SUBMIT THE DTAA WITH THE COUNTRY OF NON-RESIDENTS AND THE SUPPORTING DOCUMEN TS WITH REGARD TO THE NATURE OF SERVICES RENDERED BY THE NON-RESID ENTS WITHOUT VERIFYING BOTH THE RELEVANT PARTICULARS, IT IS NOT POSSIBLE TO ACCEPT THE ASSESSEES ARGUMENTS THAT THE INCOME ON THE SAID PA YMENTS DOES NOT ACCRUE IN INDIA ETC. 5. WE HEARD THE RIVAL SUBMISSIONS AND GONE THROUGH THE RELEVANT MATERIAL. IN THE FACTS AND CIRCUMSTANCES OF THE CA SE, IT IS CLEAR THAT THE ASSESSEE HAS NOT LAID RELEVANT MATERIAL BEFORE THE LOWER AUTHORITIES AND HENCE THEY COULD NOT DECIDE IT PROP ERLY. THEREFORE, THESE ISSUES ARE REMITTED BACK TO THE AO FOR EXAMIN ATION AND :-4-: ITA NO. 1155/CHNY/2017 VERIFICATION AS TO WHETHER THE IMPUGNED PAYMENTS MA DE TO THE NON- RESIDENTS ARE LIABLE TO PAY INCOME TAX IN INDIA AND DECIDE THE ISSUE IN ACCORDANCE WITH LAW. 6. IN THE RESULT, THE ASSESSEES APPEAL IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH NOVEMBER, 2018 AT CHENNAI. SD/- ( ) (GEORGE MATHAN) ! /JUDICIAL MEMBER SD/- ( ) (S. JAYARAMAN) ! /ACCOUNTANT MEMBER /CHENNAI, 5 /DATED: 26 TH NOVEMBER, 2018 JPV 0%7898 /COPY TO: 1. ' / APPELLANT 2. %&' /RESPONDENT 3. ; ) ( /CIT(A) 4. ; /CIT 5. 8% /DR 6. /GF