Virupaksha Organics Limited, Hyderabad V. Dy. Commissioner of Income Tax , Circle-17(2), Hyderabad

ITA 1211/Hyd/2018

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 2585 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Assessment Year: 2014-2015
• Appeal Filed On: 08-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: V SIVA KUMAR
• Keywords: TDS
• Section: 40(a)(ia)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD (THROUGH VIDEO CONFERENCE) BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER I.T.A. NO. 1211/HYD/2018 ASSESSMENT YEAR: 2014-15 VIRUPAKSHA ORGANICS LIMITED, HYDERABAD [PAN: AABCD0026F] VS DY.COMMISSIONER OF INCOME TAX, CIRCLE-17(2), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI V.SIVA KUMAR, AR FOR REVENUE : SHRI ROHIT MUJUMDAR, DR DATE OF HEARING : 12-05-2021 DATE OF PRONOUNCEMENT : 23-06-2021 O R D E R PER S.S.GODARA, J.M. : THIS ASSESSEES APPEAL FOR AY.2014-15 ARISES FROM TH E CIT(A)-5, HYDERABADS ORDER DATED 08-05-2018 PASSED IN CASE NO.0223/2017-18/CIT(A)-5, IN PROCEEDINGS U/S.143(3) R.W.S.92CA(3) OF THE INCOME TAX ACT, 1961 [IN SHORT, THE ACT]. HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. THE ASSESSEES SOLE SUBSTANTIVE GRIEVANCE CANVASS ED IN THE INSTANT APPEAL CHALLENGES CORRECTNESS OF BOTH THE LEA RNED LOWER AUTHORITIES ACTION MAKING SECTION 40(A)(I) DISA LLOWANCE OF RS.16,61,611/- CLAIMED TOWARDS FOREIGN SALES COMM ISSION WITHOUT DEDUCTING TDS THEREUPON. ITA NO. 1211/HYD/2018 :- 2 -: 3. WE NOTED THAT THE ASSESSING OFFICERS ASSESSMENT ORD ER DT.29-12-2017 TAKEN INTO CONSIDERATION THE ASSESSEES AL LEGED AGREEMENT TO THE IMPUGNED DISALLOWANCE AS UPHELD IN THE CIT(A)S ORDER. THE VERY FACTUAL POSITION CONTINUES B EFORE US AS WELL AS PER THE DEPARTMENTS CONTENTIONS THAT THE AS SESSEE IS ESTOPPED FROM CHALLENGING THE IMPUGNED FOREIGN SAL ES COMMISSIONS DISALLOWANCE ONCE CONCEDED THROUGHOUT IN BOTH THE LOWER PROCEEDINGS. 4. WE FIND NO MERIT TO SUSTAIN THE REVENUES INSTANT TECHNICAL ARGUMENTS AS WELL THOSE SUPPORTING THE IMPUGNE D DISALLOWANCE ON MERITS. WE MAKE IT CLEAR THAT THE QUES TION AS TO WHETHER THE PRINCIPLES OF ESTOPPEL APPLIES IN INCOME TAX PROCEEDINGS OR NOT IS NO MORE RES INTEGRA AS PER CIT VS. C.PARAKH & CO (INDIA) LTD., [291 ITR 661] (SC) THAT A DEDUCTION HAS TO BE DECIDED ON THE BASIS OF STATUTORY PROVISIONS THAN ESTOPPEL ONLY. COUPLED WITH THIS, IT HAS ALREADY COME ON RECORD THAT THE ASSESSEES PAYEE(S) HAD NOT RENDERED ANY SERVICES IN INDIA SINCE IT HAS CLAIMED FOREIGN SALES COMMISSION ONLY. CASE LAW CIT VS. M/S.FAIZAN SHOES PVT. LTD., [367 ITR 155] AND WELSPUN CORPORATION LTD., VS. DCIT ITA NO.249/AHD/201 5, DT.03-01-2017 HOLD THAT SUCH FOREIGN SALES COMMISSION EXPENSES ARE NOT EXIGIBLE TO TDS DEDUCTION ONCE THE CO NCERNED RECIPIENTS HAVE NOT RENDERED ANY SERVICES IN INDIA. H ON'BLE APEX COURTS LANDMARK DECISION IN GE INDIA TECHNOLOG Y CENTRE P. LTD. V. CIT (2010) [327 ITR 456] ALSO HOLDS THAT CH APTER-XVII OF THE ACT REQUIRING TDS DEDUCTION APPLIES ONLY IN CA SE THE CORRESPONDING INCOME IS ASSESSABLE IN THE PAYEES HA NDS AND NOT OTHERWISE. WE FOLLOW THE VERY REASONING MUTATIS MUTANDIS ITA NO. 1211/HYD/2018 :- 3 -: TO DECLINE REVENUES ARGUMENT SEEKING TO INVOKE SECTIO N 40(A)(IA) QUA ASSESSEES OVERSEAS COMMISSION PAYMENTS DISALLOWANCE PAYMENTS. BOTH THE LEARNED LOWER AUTHORITI ES IMPUGNED ACTION INVOKING THE SAME TO THIS EFFECT STANDS REVERSED THEREFORE. 5. THIS ASSESSEES APPEAL IS ALLOWED IN ABOVE TERMS. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD JUNE, 2021 SD/- SD/- (LAXMI PRASAD SAHU) (S.S.G ODARA) ACCOUNTANT MEMBER JUDICIAL MEM BER HYDERABAD, DATED: 23-06-2021 TNMM ITA NO. 1211/HYD/2018 :- 4 -: COPY TO : 1.VIRUPAKSHA ORGANICS LIMITED, FLAT NO.301, PREETHA M RESIDENCY, SIDDHARTHA NAGAR, SR NAGAR, HYDERABAD. 2.THE DY.COMMISSIONER OF INCOME TAX, CIRCLE-17(2), HYDERABAD. 3.CIT(APPEALS)-5, HYDERABAD. 4.PR.CIT-5, HYDERABAD. 5.D.R. ITAT, HYDERABAD. 6.GUARD FILE.