Deputy Commissioner Of Income Tax' Circle- 5(1)(2), Bangalore V. M/s. Oakwood Management Services India Private Limited, Bengaluru

ITA 1294/BANG/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 2039 (ITAT-BANGALORE)
• Duration Of Justice: 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 06-06-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: JANMAJEE RAJKUMAR
• Keywords: Additional evidence; TDS
• Section: 40(a)(ia); 195; 40a(ia)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI. B. R. BASKARAN, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER ITA 1294/BANG/2019 ASSESSMENT YEARS : 2015 16 THE DY. COMMISSIONER OF INCOME TAX, CIRCLE 5(1) (2), BANGALORE. VS. M/S OAKWOOD MANAGEMENT SERVICES INDIA PVT. LTD., T-7, NO.40, 3 RD FLOOR, LAKSHMI COMPLEX, K.R ROAD, BANGALORE-560 002. PAN AAACO 8241 N APPELLANT RESPONDENT APPELLANT BY : SHRI RAJENDRA CHANDEKAR, JCIT DR RESPONDENT BY : MS. JANMAJEE RAJKUMAR, ADVOCATE DATE OF HEARING : 09-03-2020 DATE OF PRONOUNCEMENT : 19-03-2020 ORDER PER BEENA PILLAI, JUDICIAL MEMBER PRESENT APPEAL HAS BEEN FILED BY ASSESSEE AGA INST ORDER DATED 21/03/2019 PASSED BY LD. CIT (A), BANGALORE FOR ASS ESSMENT YEAR 2015-60 ON FOLLOWING GROUNDS OF APPEAL 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPE ALS)-5, BANGALORE, IS OPPOSED TO THE LAW AND NOT ON THE FAC TS AND CIRCUMSTANCES OF THE CASE. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SES AND IN LAW, CIT(A) WAS CORRECT IN NOT DECIDING THE ISSUE O F DEDUCTION OF TAX AT SOURCE ON THE MANAGEMENT FEE HIMSELF AND DIR ECTING AO TO APPROACH TDS WING FOR THIS PURPOSE. PAGE 2 OF 6 ITA 1294/BANG/2019 A. Y : 2015 16 3. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED UP ON, THE ORDER OF THE CIT(A) MAY BE REVERSED AND THAT ASSESS MENT ORDER BE RESTORED. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR DELETE ANY OTHER GROUNDS ON OR BEFORE HEARING OF THE APPEAL. BRIEF FACTS OF THE CASE ARE AS UNDER: 2. ASSESSEE FILED ITS RETURN OF INCOME FOR YEAR UNDER CONSIDERATION ON 28/11/2015 DECLARING TOTAL INCOME OF RS.1,43,63, 340/-. ASSESSMENT WAS COMPLETED UNDER SECTION 143 (3) ON 2 9/12/2070 BY MAKING CERTAIN ADDITIONS/DISALLOWANCE OF EXPENSE S AMOUNTING TO RS.1,72,12,515/-. 3. AGGRIEVED BY ADDITIONS MADE BY LD.AO ASSESSEE PREF ERRED APPEAL BEFORE LD. CIT (A). 3.1. DURING THE PROCEEDINGS BEFORE LD.CIT(A) ASSESSEE F ILED CERTAIN ADDITIONAL EVIDENCES WHICH WAS REMANDED TO LD.AO CALLING FOR A REMAND REPORT. LD.AO FILED REMAND REP ORT ON 20/11/2018, WHEREIN LD.AO CONSIDERED APPLICABILITY OF TDS ON CERTAIN PAYMENTS MADE BY ASSESSEE TOWARDS MANAGEMEN T FEES PAID TO THE PARENT COMPANY FOR PROVIDING TECHNICAL SERVICES. LD.CIT(A) AFTER CONSIDERING REPLY FILED BY ASSESSEE ALLOWED ASSESSEES CLAIM BY OBSERVING AS UNDER: 9. THE OBSERVATIONS OF THE AO, THE REMAND-REPORT A ND ASSESSEE'S REJOINDER HAVE BEEN PERUSED. IN LIGHT OF THE FACTS & CIRCUMSTANCES EMERGING ON THE ISSUE, I DO NOT FIND MYSELF IN AGREEMENT WITH THE AO'S ACTION FOR THE REASONS SUMM ARIZED AS UNDER: (I) THE AO MADE A SUMMARY DISALLOWANCE OF OTHER EX PENSES' OF RS.1,72,12,515/- WITHOUT ELABORATING ANY SPECIFI C REASONS OR FINDINGS, TO ARRIVE AT SUCH A DECISION. IT IS APPAR ENT THAT, THE DISALLOWANCE IS NOT SUPPORTED BY ANY CORROBORATIVE FINDINGS BASED ON FINANCIAL STATEMENTS AVAILABLE DURING THE ASSESSMENT- PROCEEDINGS. (II) THE AO IN ITS REMAND-REPORT DATED 27.12.2018 H AS ACCEPTED THE ASSESSEES CONTENTIONS IN RESPECT OF T HE GENUINENESS OF THE IMPUGNED EXPENDITURES, WHICH ARE THE SUBJECT-MATTER OF THE PRESENT APPEAL, AS EMANATING FROM THE PAGE 3 OF 6 ITA 1294/BANG/2019 A. Y : 2015 16 IMPUGNED- ASSESSMENT ORDER. IT IS STATED IN THE REMAND-REPORT THAT 'FURTHER ON VERIFICATION OF THE AGREEMENTS AND INVOICES IT IS UNDERSTOOD THAT THE MAJOR AMOUNTS HAVE BEEN EXPENDE D TOWARDS FEES PAID TO PARENT COMPANY AND APPEAR GENU INE. IT IS CLEAR THEREFORE THAT THERE IS NO PRIMA-FACIE MATERI AL, TO UPHOLD THE AO'S ACTION. THE ASSESSEE'S GROUNDS OF APPEAL I N RESPECT OF THE ALLOWABILITY OF THE EXPENDITURES CANNOT THEREFO RE BE SUMMARILY REJECTED. (III) THE AO, IN THE REMAND-REPORT HAS MADE CERTAIN GENERAL REMARKS REGARDING THE ATTRACTION OF TDS PROVISIONS IN RESPECT OF PAYMENT MADE TO M/S OAKWOOD ASIA PACIFIC LIMITED SI NGAPORE. IT IS SEEN THAT THIS ISSUE DOES NOT DIRECTLY EMANAT E FROM THE CONTENTS OF THE AO'S ORDER. THE ASSESSEE HOWEVER, I N ITS DETAILED REJOINDER HAS MADE ELABORATE SUBMISSION THAT, THESE BEING NON- TECHNICAL SERVICE BASED PAYMENTS (OF A BUSINESS NAT URE) DID NOT ATTRACT SECTION 195 OF THE I.T. ACT. IT IS FURTHER ARGUED BY THE APPELLANT THAT, THE AO EVEN IN THE REMAND-REPORT HA S NOT BROUGHT ANY SPECIFIC FACT ON RECORD TO CONCLUDE THAT THE IM PUGNED PAYMENTS REPRESENT FTS OR ROYALTY OR ANY OTHER REAS ON TO INVOKE THE SECTION 40A(IA) OF THE I.T. ACT. (IV) IT IS FURTHER SUBMITTED BY THE ASSESSEE IN THE REJOINDER DATED 27.12.2018 (AT PARA-2) THAT, THE ISSUE OF APP LICABILITY OF TDS TO THE IMPUGNED SUMS WERE EXAMINED BY THE AO DU RING THE ASSESSMENT-PROCEEDINGS FOR AY'S: 2012-13 AND 20I3-1 4. IN THIS REGARD IT IS SUBMITTED AS UNDER: '2. IT IS SUBMITTED THAT THE APPLICABILITY OF TDS O F ABOVE EXPENSES WERE EXAMINED BY THE LEARNED ASSESSING OFFICER DURI NG THE ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEARS 2012-13 AND 2013-14. HOWEVER, THE APPELLANT COULD NOT FURNISH A NY DETAILS FOR THE CURRENT YEAR SINCE NO NOTICE WAS SERVED ON THE APPELLANT. THEREFORE, THE APPELLANT IS MAKING THE SUBMISSIONS ON APPLICABILITY OF TDS ON THE PAYMENT OF MANAGEMENT FEE. IT IS FURTHER SUBMITTED THAT FOR ASSESSMENT YEARS 2013-13 & 2013 14, THE SAME ISSUE WAS CONSIDERED AND ACCEPTED BY T HE LD. AO AND NO DISALLOWANCE WAS MADE U/S 40(A)(IA) OF THE A CT . WITH REGARD TO THE ISSUE OF TDS, IT MAY BE PLACED O N RECORD THAT, THE AG REMAINS AT IIBE;1.Y TO TAKE UP THE ISSUE WIT H THE TDS WING, FOR DETERMINING THE QUESTION OF ATTRACTION OF TDS ON THE IMPUGNED PAYMENTS. ON THE OTHER HAND THE ASSESSEE A LSO REMAINS DUTY BOUND TO APPROACH THE TDS WING TO OBTA IN A NON- DEDUCTION OR LOWER DEDUCTION CERTIFICATE U/S 195 OF THE LT. ACT., SO AS TO CRYSTALLIZE THE POSITION ON THE ISSUE AT H AND. IN BACKGROUND OF THE ABOVE DISCUSSION AND FACTS & CIRCUMSTANCES, 1 DO NOT FIND SUFFICIENT EVIDENCIARY JUSTIFICATION TO UPHOLD THE DISALLOWANCE OF EXPENDITURES MADE BY THE AO IN THE IMPUGNED ORDER. THE ASSESSEES GROUNDS OF APPEAL AR E THEREFORE ALLOWED. SUBJECT TO THE ABOVE OBSERVATIONS. PAGE 4 OF 6 ITA 1294/BANG/2019 A. Y : 2015 16 4. REVENUE IS CHALLENGING RELIEF GRANTED BY LD.CIT(A) BEFORE US. WE HAVE HEARD BOTH SIDES ON THE BASIS OF RECORDS PL ACED BEFORE US. 5. FROM THE VIEW EXPRESSED BY LD.CIT(A), REPRODUCED HEREINABOVE, WE NOTE THAT ORIGINAL DISALLOWANCE MAD E BY LD.AO IN ASSESSMENT ORDER, ALLEGED BY ASSESSEE BEFORE LD. CIT(A) WAS ACCEPTED TO BE GENUINE IN REMAND REPORT BY LD.AO, B ASED UPON ADDITIONAL EVIDENCES. 5.1. SUBSEQUENTLY, LD.AO MADE DISALLOWANCE U/S 40(A)(IA) IN REMAND PROCEEDINGS, WITHOUT FOLLOWING DUE PROCESS O F LAW. LD.CIT(A) CATEGORICALLY NOTES THAT THE DISALLOWANCE MADE BY LD.AO IN REMAND REPORT DOES NOT EMINATE FROM ASSESS MENT ORDER. FURTHER, LD.CIT(A) RELIED ON VIEW TAKEN BY LD.AO ON SIMILAR ISSUE IN ASST. YEAR 2012-13, AGAINST WHICH REVENUE AUTHOR ITIES HAVE NOT FILED ANYTHING ON RECORD. 5.2. WE ARE OF THE VIEW THAT IF AT ALL A NEW ISSUES NOT FORMING PART OF ASSESSMENT ORDER IS TO BE CONSIDERED, ONLY RECOURSE IS TO INITIATE PROCEEDINGS U/S.263 IN ACCORDANCE WITH LAW . UNDER SUCH CIRCUMSTANCES, WE DO NOT FIND ANY INFIRMITY IN ORDE R PASSED BY LD.CIT(A). ACCORDINGLY GROUNDS RAISED BY REVENUE STANDS DISMIS SED. IN THE RESULT APPEAL FILED BY REVENUE STANDS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH MARCH, 2020. (B. R. BASKARAN) (BEENA PILLAI) ACCOUNTANT MEMBER JUDICIAL ME MBER BANGALORE, DATED, THE 19 TH MARCH, 2020. /VMS/* PAGE 5 OF 6 ITA 1294/BANG/2019 A. Y : 2015 16 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL. BANGALORE. PAGE 6 OF 6 ITA 1294/BANG/2019 A. Y : 2015 16 DATE INITIAL 1. DRAFT DICTATED ON ON DRAGON SR.PS 2. DRAFT PLACED BEFORE AUTHOR 10-03-2020 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 10-03-2020 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 10-03-2020 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 17-03-2020 SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON -03-2020 SR.PS 7. DATE OF UPLOADING THE ORDER ON WEBSITE -03-2020 SR.PS 8. IF NOT UPLOADED, FURNISH THE REASON -- SR.PS 9. FILE SENT TO THE BENCH CLERK -03-2020 SR.PS 10. DATE ON WHICH FILE GOES TO THE AR 11. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 12. DATE OF DISPATCH OF ORDER. 13. DRAFT DICTATION SHEETS ARE ATTACHED NO SR.PS