John Deere India Pvt.Ltd, Pune V. Deputy Commissioner of Income tax, Pune

ITA 1164/PUN/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2301 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 11-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NANDITA KANCHAN
• Keywords: Double taxation relief; Retrospective amendment; Difference of opinion; Change of opinion; TDS
• Section: 143(3); 40(a)(ia); 201(1); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO. 1 163 /P U N/201 7 / ASSESSMENT YEAR : 20 08 - 09 JOHN DEERE EQUIPMENT PVT. LTD., (NOW MERGED WITH JOHN DEERE INDIA PVT. LTD.) TOWER XIV, CYBERCITY, MAGARPATTA CITY, HADAPSAR, PUNE 411028 . / APPELLANT PAN: A AACL73 31A VS. THE DY . COMMISSIONER OF INCOME TAX, CIRCLE 14 , PUNE . / RESPONDENT . / ITA NO. 1164 /P U N/201 7 / ASSESSMENT YEAR : 2008 - 09 JOHN DEERE INDIA PVT. LTD., TOWER XIV, CYBERCITY, MAGARPATTA CITY, HADAPSAR, PUNE 411028 . / APPELLANT PAN: AAACJ4233B VS. THE DY. COMMISSIONER OF INCOME TAX, CIRCLE 14, PUNE . / RESPONDENT / APPELLANT BY : SHRI NIKHIL PATHAK / RESPONDENT BY : MS . NANDITA KANCHAN / DATE OF HEARING : 0 7 . 0 6 .201 9 / DATE OF PRONOUNCEMENT: 26 . 0 6 .201 9 ITA NO S . 1 163 & 1 164 /P U N/20 1 7 JOHN DEERE EQUIPMENT PVT. LTD. & A NR 2 / ORDER PER SUSHMA CHOWLA, J M : BOTH T HE APPEAL S FILED BY CONNECTED ASSESSEE ARE AGAINST RESPECTIVE ORDER S OF CIT (A) - 7 , PUNE , BOTH DATED 3 1 . 0 1 .201 7 RELATING TO ASSESSMENT YEAR 20 08 - 09 AGAINST RESPECTIVE ORDER S PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2. BOTH THE APPEALS RELATING TO THE CONNECTED ASSESSEE ON SIMILAR ISSUE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. HOWEVER, IN ORDER TO ADJUDICATE THE ISSUES, REFERENCE IS BEING MADE TO THE FACTS AND ISSUES IN ITA NO.1 163 /PUN/2017. 3. THE ASSESSEE IN ITA NO.1 163 /PUN/2017 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1] THE LEARNED CIT(A) ERRED IN HOLDING THAT THE REOPENING U/S. 148 WAS JUSTIFIED IN LAW AND ACCORDINGLY, THE REASSESSMENT ORDER PASSED BY THE LEARNED ASSESSING OFFICER U/S 147 R.W.S. 143(3) WAS VALID. 1.1] TH E LEARNED CIT(A) ERRED IN NOT APPRECIATING THAT THE REOPENING U/S. 148 AND THE CONSEQUENTIAL REASST. ORDER PASSED U/S. 147 WAS NOT JUSTIFIED ON ACCOUNT OF THE FOLLOWING REASONS - A . THE ASSESSMENT U/S 143(3) WAS COMPLETED AND THE REOPENING IS BEYOND 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR AND SINCE ALL THE MATERIAL FACTS WERE DULY SUBMITTED BY THE ASSESSEE IN THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS, THE REOPENING IS NOT VALID SINCE THERE IS NO FAILURE ON THE PART OF THE ASSESSEE TO FURNISH THE MATERIAL FACTS. B . THE REOPENING IS MADE ON A MERE CHANGE OF OPINION AND HENCE, THE SAME WAS NOT JUSTIFIED AT ALL. C . THE REOPENING IS BEING MADE ON THE BASIS OF RETROSPECTIVE AMENDMENT IN LAW WHICH CANNOT BE THE BASIS FOR REOPENING THE CASE AND ACCORDINGL Y, THE REASSESSMENT U/S. 147 BE DECLARED NULL AND VOID. 2] THE LEARNED CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF RS.12,837,828/ - U/S. 40(A)(I) OF THE ACT IN RESPECT OF INFORMATION SYSTEM CHARGES AND TELECOMMUNICATION EXPENSES DEBITED BY THE ASSESSEE WITHOUT APPRECIATING THAT NO DISALLOWANCE WAS WARRANTED ON FACTS OF THE CASE. ITA NO S . 1 163 & 1 164 /P U N/20 1 7 JOHN DEERE EQUIPMENT PVT. LTD. & A NR 3 2.1] THE CIT(A) ERRED IN HOLDING THAT THE ASSESSEE WAS LIABLE TO DEDUCT TDS IN RESPECT OF THE PAYMENTS OF RS.12,837,828/ - MADE TO DEERE & CO., USA TOWARDS IT SOFTWARE LICENSES, I NTERNET ACCESS CHARGES AND IT SUPPORT SERVICES AND THEREBY DISALLOWING THE SAID AMOUNT U/S 40(A)(I) OF THE ACT. 2.2] THE LEARNED CIT(A) ERRED IN HOLDING THAT THE PAYMENTS MADE TOWARDS INTERNET CONNECTIVITY CHARGES AND RIGHT TO USE COMPUTER SOFTWARE WERE T AXABLE AS ROYALTY BOTH UNDER THE INCOME TAX ACT AS WELL AS DTAA AND HENCE, THE ASSESSEE SHOULD HAVE DEDUCTED TDS IN RESPECT OF THE SAID PAYMENTS MADE TO DEERE & CO., USA. 2.3] THE LEARNED CIT(A) FURTHER ERRED IN HOLDING THAT THE PAYMENTS MADE BY THE ASSES SEE COMPANY TO DEERE & CO., USA FOR VARIOUS IT SUPPORT SERVICES WERE IN THE NATURE OF 'FEES FOR TECHNICAL SERVICES' UNDER THE INCOME TAX ACT AS WELL AS DTAA AND SINCE THE ASSESSEE HAS NOT DEDUCTED TDS IN RESPECT OF THE ABOVE PAYMENTS, THE DISALLOWANCE U/S 40(A)(I) IS ATTRACTED IN THE CASE OF THE ASSESSEE. 2.4] THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE ABOVE PAYMENTS WERE MERELY IN THE NATURE OF 'REIMBURSEMENT OF COSTS' INCURRED BY DEERE & CO., USA FOR PROVIDING THE ABOVE SERVICES TO THE ASSESSEE COM PANY AND THEREFORE, THE ASSESSEE WAS NOT LIABLE TO DEDUCT TDS IN RESPECT OF THE SAME AND THUS, THE DISALLOWANCE U/S 40(A)(I) OF RS.12,837,828 / - IS NOT JUSTIFIED. 2.5] THE LEARNED CIT(A) FAILED TO APPRECIATE THAT WHEN THE ACTUAL PAYMENTS WERE MADE BY IT F OR RIGHT TO USE SOFTWARE AND INTERNET CONNECTIVITY CHARGES, THE EXPLANATION TO SECTION 9(I)(VI) WAS NOT INTRODUCED AND IT WAS ABSOLUTELY IMPOSSIBLE FOR THE ASSESSEE TO WITHHOLD TAX AT SOURCE ON SUCH PAYMENTS AND HENCE, THE DISALLOWANCE U/S 40(A)(I) IS NOT JUSTIFIED ON THE GROUND THAT THE ASSESSEE HAD FAILED TO DEDUCT TDS ON SUCH PAYMENTS. 2.6] THE LEARNED CIT(A) FURTHER ERRED IN NOT APPRECIATING THAT THE IT SUPPORT SERVICES DID NOT 'MAKE AVAILABLE' ANY TECHNOLOGY TO THE ASSESSEE BY DEERE & CO. AND THEREFOR E, THE SAID SERVICES COULD NOT BE TERMED AS FEES FOR TECHNICAL SERVICES AS PER IN ARTICLE 12(4) OF THE INDIA - USA DTAA AND ACCORDINGLY, THE ASSESSEE WAS NOT LIABLE TO DEDUCT TDS ON THE PAYMENTS MADE FOR IT SUPPORT SERVICES. 2.7] THE LEARNED CIT(A) ERRED IN CONFIRMING THE GROSSING UP OF AMOUNTS AS PER THE PROVISIONS OF SECTION 195A WITHOUT APPRECIATING THAT THE SAID SECTION WAS NOT APPLICABLE AND HENCE, THE GROSSING UP OF THE AMOUNTS WAS NOT JUSTIFIED AS PER LAW. 3] THE LEARNED CIT(A) ERRED IN ENHANCING THE INCOME OF THE APPELLANT COMPANY BY MAKING A DISALLOWANCE OF RS.1,256,650/ - U/S. 40(A)(I) OF THE ACT IN RESPECT OF PAYMENT ON ACCOUNT OF WEB BASED TRAINING MADE BY ASSESSEE ON THE GROUND THAT THE SAID PAYMENT WAS ON ACCOUNT OF FEES FOR TECHNICAL SERVICES A ND HENCE, THE APPELLANT SHOULD HAVE DEDUCTED TDS ON THE SAID PAYMENT MADE. 3.1] THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THAT THE TRAINING CHARGES CHARGED BY DEERE & CO DID NOT MAKE AVAILABLE ANY TECHNICAL SERVICE AND HENCE, THE SAME WAS NOT TAXABLE UNDER ARTICLE 12 OF THE DTAA BETWEEN INDIA AND USA AND HENCE, THERE WAS NO REASON FOR THE APPELLANT COMPANY TO DEDUCT TDS ON THE SAID PAYMENTS. 4] THE LEARNED CIT(A) ERRED IN ENHANCING THE INCOME OF THE APPELLANT BY MAKING A DISALLOWANCE OF RS.31,437,185/ - U/S. 40(A)(I) OF THE ACT IN RESPECT OF REIMBURSEMENT OF EXPATRIATE SALARY ON THE GROUND THAT THE SAID PAYMENT WAS ON ACCOUNT OF FEES FOR TECHNICAL SERVICES AND HENCE, THE APPELLANT SHOULD HAVE DEDUCTED TDS ON THE SAID PAYMENT MADE. ITA NO S . 1 163 & 1 164 /P U N/20 1 7 JOHN DEERE EQUIPMENT PVT. LTD. & A NR 4 4.1] THE LEARNED CIT(A ) ERRED IN HOLDING THAT DEERE & CO. BY DEPUTING ITS EMPLOYEES TO THE APPELLANT COMPANY WAS PROVIDING TECHNICAL SERVICES TO THE APPELLANT COMPANY AND ACCORDINGLY, THE TDS WAS REQUIRED TO BE DEDUCTED ON SUCH PAYMENTS. 4.2] THE LEARNED CIT(A) FAILED TO APPRE CIATE THAT AS PER THE SECONDMENT AGREEMENT BETWEEN THE APPELLANT COMPANY AND DEERE & CO., ALL THE EXPAT EMPLOYEES ARE ON THE ROLL OF THE APPELLANT COMPANY AND TDS U/S 192 IS DEDUCTED IN RESPECT OF THE SALARY PAID TO THEM AND HENCE, THERE IS NO QUESTION OF HOLDING THAT THE SERVICES RENDERED BY THESE EMPLOYEES CONSTITUTED FEES FOR TECHNICAL SERVICES UNDER THE INCOME TAX ACT AS WELL AS UNDER THE DTAA BETWEEN INDIA AND USA. 4.3] THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THAT DEERE & CO. WAS NOT PROVIDING A NY FEES FOR TECHNICAL SERVICES TO THE APPELLANT COMPANY BY DEPUTING ITS EMPLOYEES TO THE APPELLANT COMPANY AND THEREFORE , THERE WAS NO QUESTION OF DEDUCTING ANY TDS ON THE REIMBURSEMEN T OF THE SALARIES OF THE EXPAT EMPLOYEES. 5] WITHOUT PREJUDICE TO THE A BOVE GROUNDS, THE ASSESSEE SUBMITS THAT THE DISALLOWANCE U/S 40(A)(I) IS ATTRACTED ONLY IN RESPECT OF THE EXPENDITURE WHICH REMAINS PAYABLE AS AT THE YEAR END AND NO DISALLOWANCE U/S 40(A)(I) IN RESPECT OF THE EXPENSES WHICH HAVE ALREADY BEEN PAID OFF DURI NG THE YEAR. 6] WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED A.O. FAILED TO ALLOW SET OFF OF BROUGHT FORWARD LOSSES OF RS.973,961,798/ - WHILE COMPUTING THE TOTAL INCOME OF THE ASSESSEE COMPANY FOR THIS YEAR. 4. THE LEARNED AUTHORIZED REPRESENTATIVE FOR TH E ASSESSEE AT THE OUTSET POINTED OUT THAT RE - ASSESSMENT PROCEEDINGS WERE INITIATED AGAINST ASSESSEE ON THE GROUND THAT IT HAD FAILED TO DEDUCT TAX AT SOURCE ON THE PAYMENTS MADE FOR SOFTWARE LICENSE, LEASE D LINE CHARGES AND IT SUPPORT SERVICES. HE FURTHER STATED THAT INITIALLY ORDER UNDER SECTION 201(1) OF THE ACT WAS PASSED AND THEREAFTER, RE - ASSESSMENT PROCEEDINGS WERE INITIATED UNDER SECTION 147 OF THE ACT IN ORDER TO MAKE THE DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT. THE NEXT CONTENTION OF LEAR NED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE WAS THAT WHILE DECIDING APPEAL AGAINST ORDER PASSED UNDER SECTION 201(1) OF THE ACT, AN ENHANCEMENT WAS MADE BY CIT(A), WHEREIN THE ASSESSEE WAS HELD TO BE IN DEFAULT FOR NON DEDUCTION OF TAX AT SOURCE AGAINST TRAINING FEES; REIMBURSEMENT OF SALARY OF EXPATRIATE, WHICH WERE HELD TO BE FEES FOR TECHNICAL SERVICES. IN THE ORDER PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE ACT, THE ASSESSING OFFICER HAD MADE DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT ON ACC OUNT OF ITA NO S . 1 163 & 1 164 /P U N/20 1 7 JOHN DEERE EQUIPMENT PVT. LTD. & A NR 5 PAYMENT OF SOFTWARE LICENSE, LEASE D LINE CHARGES AND IT SUPPORT SERVICES. HOWEVER, WHILE DECIDING THE APPEAL AGAINST ORDER PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE ACT, ENHANCED THE DISALLOWANCE ON ACCOUNT OF TRAINING FEES AND REIMBURSEMENT O F SALARY OF EXPATRIATES, AGAINST WHICH THE PRESENT APPEAL HAS BEEN FILED BY ASSESSEE. 5. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THEN REFERRED TO ORDER OF PUNE BENCH OF TRIBUNAL IN ASSESSEES OWN CASE AGAINST ORDER PASSED UNDER SECTION 20 1(1) OF THE ACT, WHEREIN THE ADDITION ON BOTH THE ACCOUNTS HAS BEEN STRUCK DOWN. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT GROUNDS OF APPEAL NO.1 AND 1.1 ARE NOT PRESSED. HE FURTHER REFERRED TO GROUNDS OF APPEAL NO.2 TO 2.7 WHICH WERE AGAINST DISALLOWANCE MADE UNDER SECTION 40(A)(IA) OF THE ACT IN RESPECT OF NON DEDUCTION OF TAX OUT OF SOFTWARE LICENSE CHARGES, LEASE D LINE CHARGES AND IT SUPPORT SERVICES. THE GROUNDS OF APPEAL NO.3 AND 3.1 ARE VIS - - VIS DISALLOWANCE MADE UND ER SECTION 40(A)(IA) OF THE ACT IN RESPECT OF WEB BASED TRAINING CHARGES PAID BY ASSESSEE ON THE GROUND THAT THESE WERE FEES FOR TECHNICAL SERVICES. THE GROUNDS OF APPEAL NO.4 TO 4.3 ARE SIMILARLY AGAINST DISALLOWANCE MADE UNDER SECTION 40(A)(IA) OF THE A CT AGAINST REIMBURSEMENT OF EXPATRIATES SALARY BEING ON THE GROUND THAT SAME WERE FEES FOR TECHNICAL SERVICES. THE GROUNDS OF APPEAL NO.5 AND 6 ARE NOT PRESSED. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THEN REFERRED TO ORDER OF CIT(A), WHI CH FIRST DECIDED THE ISSUE RAISED BY ASSESSING OFFICER AND UPHELD THE ORDER OF ASSESSING OFFICER AND THEN VIDE PARA 6.6 IT REFERS TO ISSUE OF ENHANCEMENT I.E. PAYMENT MADE ON ACCOUNT OF WEB BASED TRAINING AND REIMBURSEMENT OF EXPATRIATES SALARY AND ALSO H ELD THE ASSESSEE TO BE IN DEFAULT FOR NON DEDUCTION OF TAX AT SOURCE AND HENCE, THE DISALLOWANCE WARRANTED UNDER SECTION 40(A)(IA) OF THE ACT. ITA NO S . 1 163 & 1 164 /P U N/20 1 7 JOHN DEERE EQUIPMENT PVT. LTD. & A NR 6 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE OTHER HAND, PLACED HEAVY RELIANCE ON THE ORDER S OF AUTHORITIES BELOW. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE WHICH ARISES BEFORE US IS WHETHER THE DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT IS WARRANTED IN THE HANDS OF ASSESSEE ON THE GROUND THAT THE ASSESSEE H AD FAILED TO DEDUCT TAX AT SOURCE OUT OF CERTAIN PAYMENTS MADE TO ITS AES. THE ASSESSING OFFICER HAD MADE THE AFORESAID DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT AGAINST PAYMENTS MADE ON ACCOUNT OF SOFTWARE LICENSE CHARGES, LEASE D LINE CHARGES AND I T SUPPORT SERVICES. THE BASIS FOR MAKING AFORESAID DISALLOWANCE WAS THE ORDER PASSED UNDER SECTION 201(1) OF THE ACT BY ASSESSING OFFICER ON THE GROUND THAT SUCH PAYMENTS WERE IN THE NATURE OF ROYALTY AND THERE WAS OBLIGATION ON THE PART OF ASSESSEE TO DE DUCT TAX AT SOURCE OUT OF SUCH PAYMENTS BOTH IN VIEW OF SECTION 9(1)(VI) OF THE ACT AND ALSO IN VIEW OF DTAA BETWEEN INDIA AND USA. 8. THE PUNE BENCH OF TRIBUNAL IN JOHN DEERE INDIA PVT. LTD. VS DDIT (INTERNATIONAL TAXATION) (2019) 70 ITR (TRIB) 73 (PUNE) HAD ADJUDICATED THE ISSUE OF DEDUCTION OF TAX AT SOURCE IN THE HANDS OF ASSESSEE AND HAD VIDE DIFFERENT PARA S CONCLUDED BY HOLDING THAT THERE IS NO OBLIGATION ON THE PART OF ASSESSEE TO DEDUCT TAX AT SOURCE OUT OF SUCH PAYMENTS. VIDE PARA 90, THE TRIBUNA L DECIDED THE ISSUE OF NON DEDUCTION OF TAX AT SOURCE OUT OF SOFTWARE LICENSE CHARGES; VIDE PARA 93, SIMILAR DECISION IN RESPECT OF IT SUPPORT SERVICES AND VIDE PARAS 100 AND 101, IT WAS HELD THAT IN THE ABSENCE OF ANY EQUIPMENT ROYALTY, THERE WAS NO REQUI REMENT TO DEDUCT TAX AT SOURCE AND AT BEST PAYMENT OF LEASE LINE CHARGES WAS REIMBURSEMENT OF EXPENSES. IN SUCH CIRCUMSTANCES WHERE THERE IS NO OBLIGATION ON THE ASSESSEE TO DEDUCT TAX AT SOURCE, THEN THE ASSESSEE CANNOT BE HELD TO BE IN DEFAULT FOR THE A FORESAID NON DEDUCTION OF TAX ITA NO S . 1 163 & 1 164 /P U N/20 1 7 JOHN DEERE EQUIPMENT PVT. LTD. & A NR 7 AT SOURCE AND HENCE, THERE IS NO MERIT IN MAKING ANY DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT. ACCORDINGLY, WE REVERSE THE ORDERS OF AUTHORITIES BELOW IN THIS REGARD AND DIRECT THE ASSESSING OFFICER TO DELETE THE DISAL LOWANCE MADE ON THIS COUNT. 9. COMING TO THE ORDER OF CIT(A), WHO IN ADDITION TO THE DISALLOWANCE MADE BY ASSESSING OFFICER HAD MADE ENHANCEMENT I.E. IT HAD FURTHER MADE DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT ON ACCOUNT OF NON DEDUCTION OF TAX AT SOURCE AGAINST THE AMOUNTS PAID FOR WEB BASED TRAINING AND REIMBURSEMENT OF SALARY OF EXPATRIATES. BOTH THESE AMOUNTS WERE HELD TO BE FEES FOR TECHNICAL SERVICES, WHICH WARRANTED DEDUCTION OF TAX AT SOURCE AND THE ASSESSEE WAS HELD TO BE IN DEFAULT UND ER SECTION 201(1) OF THE ACT. 10. THE TRIBUNAL WHILE DECIDING APPEAL OF ASSESSEE IN JOHN DEERE INDIA PVT. LTD. VS DDIT (INTERNATIONAL TAXATION) (SUPRA) AGAINST THE ORDER PASSED UNDER SECTION 201(1) OF THE ACT IN PARA 106 (WEB BASED TRAINING) AND PARA 110 (REIMBURSEMENT OF SALARIES TO EXPATS) HAD ADJUDICATED THE SAID ISSUE AND HAS HELD THAT THERE WAS NO REQUIREMENT TO DEDUCT TAX AT SOURCE OUT OF SUCH PAYMENTS AND FOR NON - DEDUCTING THE TAX AT SOURCE, THE ASSESSEE COULD NOT BE HELD TO BE IN DEFAULT. CONSEQUE NTLY, THE ORDER OF CIT(A) IN THE PRESENT CASE NEEDS TO BE REVERSED AS WHERE THERE WAS NO REQUIREMENT TO DEDUCT TAX AT SOURCE UNDER SECTION 197 OF THE ACT, THEN THE ASSESSEE COULD NOT BE HELD TO BE IN DEFAULT . W HERE THE ASSESSEE WAS HELD TO BE NOT IN DEFAU LT UNDER SECTION 201(1) OF THE ACT, THEN THERE IS NO REQUIREMENT FOR MAKING ANY DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT. ACCORDINGLY, WE REVERSE THE ORDER OF CIT(A) IN THIS REGARD. THE GROUNDS OF APPEAL NO.2 TO 4.3 ARE THUS ALLOWED. THE GROUNDS OF APPEAL NO.1 & 1.1 AND 5 & 6 ARE NOT PRESSED AND HENCE, THE SAME ARE DISMISSED AS NOT PRESSED. ITA NO S . 1 163 & 1 164 /P U N/20 1 7 JOHN DEERE EQUIPMENT PVT. LTD. & A NR 8 11 . WE HAVE DECIDED THE ISSUE IN ITA NO.1163/PUN/2017 I.E. JOHN DEERE EQUIPMENT PVT. LTD., WHICH NOW STANDS MERGED WITH JOHN DEERE INDIA PVT. LTD. THE ASSESSEE IN JOHN DEERE INDIA PVT. LTD. FOR THE SAME ASSESSMENT YEAR HAS ALSO FILED AN INDEPENDENT APPEAL IN ITA NO.1164/PUN/2017 AND OUR DECISION IN ITA NO.1163/PUN/2017 SHALL APPLY MUTATIS MUTANDIS TO ITA NO.1164/PUN/2017 . 12. IN THE RESULT, BOTH THE APPEALS OF ASSESSEE ARE ALLOWED AS INDICATED ABOVE. ORDER PRONOUNCED ON THIS 26 TH DAY OF JUNE , 201 9 . SD/ - SD/ - (ANIL CHATURVEDI) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 26 TH JUNE , 201 9 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) - 7 , PUNE ; 4. THE PR. CIT - 6 , PUNE ; 5. 6. , , / DR B , ITAT, PUNE ; / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE