DCIT, New Delhi V. M/s. JC Decaux Advertising India Pvt. Ltd., New Delhi

ITA 1314/DEL/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2873 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 05-03-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Opportunity of being heard
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : D , NEW DELHI BEFORE SH. H.S. SIDHU , JUDICIAL M EMBER AND SH. O.P. KANT , ACCOUNTANT MEMBER ITA NO .1314 /DE L/ 2015 ASSESSMENT YEAR: 2009 - 10 DCIT, CIRCLE - 13(2), C.R. BUILDING, NEW DELHI VS. M/S. JC DECAUX ADVERTISING INDIA PVT. LTD., 231, PHASE - III, OKHLA INDUSTRIAL AREA, NEW DELHI PAN : AABCJ6312Q ( APPELLANT ) (RESPONDENT) APPELLANT BY SH. AMIT JAIN, SR.DR RESPONDENT BY SH. K.M. GUPTA, ADV. DATE OF HEARING 14.03.2018 DATE OF PRONOUNCEMENT 16.03.2018 ORDER PER O.P. KANT , A. M. : THIS APPEAL BY THE R EVENUE IS DIRECTED AGAINST ORDER DATED 31/12/2014 PASSED BY THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) - V, NEW DELHI [IN SHORT THE LD. CIT(A) ] FOR ASSESSMENT YEAR 2009 - 10 RAISING FOLLOWING GROUNDS: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE & IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.77,76,092/ - MADE U/S 40(A)(I) FOR NON DEDUCTION OF TDS ON THE PAYMENT MADE BY THE ASSESSEE COMPANY OUTSIDE OF INDIA. 2. THAT THE ORDER OF THE LD. CIT(A) IS ERRONEOUS AND IS NOT TENABLE ON FACTS AND IN LAW. 2 3. THAT THE GROUNDS OF APPEAL ARE WITHOUT PREJUDICE TO EACH OTHER. 4. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR FOREGO ANY GROUND(S) OF THE APPEAL RAISED ABOVE AT THE TIME OF HEARING. 2. T HE BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE FILED RETURN OF INCOME DECLARING LOSS OF RS. 2,59,63,652/ - ON 30/ 09/2009. THE CASE OF THE ASSESSEE WAS SELECTED FOR A SCRUTINY AND NOTICE UNDER SECTION 143(2) OF THE INCOME - TAX A CT, 1961 (IN SHORT THE A CT ) WAS ISSUED AND COMPLIED WITH. DURI NG ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE MADE CERTAIN PAYMENTS TO ITS FOREIGN ASSOCIATED COMPANIES AND IT WAS CLAIMED THAT THE PAYMENTS ARE IN THE NATURE OF REIMBURSEMENT OF THE EXPENDITURE INCURRED ON BEH ALF OF THE ASSESSEE COMPANY AND, THEREFORE , PROVISIONS OF SECTION 195 OF THE ACT WERE NOT APPLICA BLE. THE CONTENTION OF THE ASSESSEE WAS NOT ACCEPTED AND ACCORDING TO THE ASSESSING OFFICER, THE PAYMENTS WERE IN THE NATURE OF FEE FOR T EC HNICAL S ERVICES (FTS). THE ASSESSING OFFICER HELD THAT DUE TO NON - COMPLIANCE OF TDS PROVISIONS, THE EXPENDITURE CLAIM ED WAS NOT ALLOWABLE AS DEDUCTION IN TERMS OF SECTION 40(A)(I) OF THE A CT. THE ASSESSME NT UNDER SECTION 143(3) OF THE A CT WAS COMPLETED AT TOTAL INCOME OF RS.63,50,849/ - . AGGRIEVED , THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A), WHO PARTLY ALLOWED THE AP PEAL. 2.1 AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE THE T RIBUNAL, RAISING THE GROUNDS IS REPRODUCED ABOVE. 3. IN THE GROUNDS RAISED , THE SOLE ISSUE INVOLVED IS WHETHER THE AMOUNT OF RS.77, 76, 092/ - PAID BY THE ASSESSEE TO ITS ASSOCIATED FOREIGN ENTITIES IS LIABLE FOR DISALLOWANCE UNDER SECTION 40(A)(I) OF 3 THE A CT FOR NON - DEDUCTION OF TAX AT SOURCE (TDS) UNDER SECTION 195 OF THE A CT. 4. BEFORE US, THE LD. DR RELIED ON THE ORDER OF THE ASSESSING OFFICER AND ARGUED THAT THE PAYMENTS MADE BY THE ASSESSEE ARE T OWARDS AVAILING SERVICES FROM FOREIGN ENTITIES AND , THUS , THEY ARE IN THE NATURE OF FEE FOR TECHNICAL SERVICES, LIABLE FOR DEDUCTION OF TAX AT SOURCE. 5. ON THE CONTRARY, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN ASSESSMENT YEAR 2008 - 09, ID ENTICAL QUESTION WAS RAISED BY THE REVENUE BEFORE THE T RIBUNAL , AND THE TRIBUNAL HAS RESTORED THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER FOR DECIDING AFRESH IN THE LIGHT OF AGREEMENT/COMMUNICATION BETWEEN THE ASSESSEE AND THE ASSOCIATED ENTITIES. ACCORD INGLY, HE REQUESTED THAT ISSUE - IN - DISPUTE IN THE YEAR UNDER CONSIDERATION ALSO MIGHT BE RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER WITH SIMILAR DIRECTIONS. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT IN ASSESSMENT YEAR 2008 - 09 IN ITA NO. 5387/DEL/2011 ALSO, THE IDENTICAL ISSUE , WHETHER THE PAYMENT MADE TO NON - RESIDENT COMPANIES WERE IN THE NATURE OF REIMBURSEMENT , HAS BEEN ADJUDICATE D. THE RELEVANT FINDING OF THE TRIBUNAL IS REPRODUCED AS UNDER: 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE GONE THROUGH THE RELEVANT MATERIAL ON RECORD. DURING THE COURSE OF HEARING, THE BENCH MADE A SPECIFIC QUERY TO THE ID. AR OF ASSESSEE WHETHER THE ASSESSEE HAS SOME AGREEMENT UNDER WHICH THE IMPUGNED REI MBURSEMENT WAS MADE. ON THIS, THE ID. AR SUBMITTED THAT THERE IS NO SPECIFIC AGREEMENT REGARDING THE PAYMENTS MADE TO 4 FOREIGN AES. THE BENCH MADE ANOTHER QUERY AS TO WHY IN ABSENCE OF ANY AGREEMENT/COMMUNICATION, THE IMPUGNED PAYMENTS/REIMBURSEMENT SHOULD NOT BE TREATED AS CONSULTANCY SERVICES COVERED U/S. 9(L)(VII) OF THE ACT. THEREAFTER, THE ID. AR PRODUCED PRINTOUTS OF E - MAIL CORRESPONDENCE BETWEEN THE ASSESSEE AND FOREIGN AES. NO SUCH COMMUNICATION WAS SHOWN/PRODUCED BEFORE THE AUTHORITIES BELOW IN ORDE R TO ASCERTAIN THE CORRECT NATURE OF TRANSACTION. WE, THEREFORE, DEEM IT EXPEDIENT IN THE INTEREST OF JUSTICE TO RESTORE THE ISSUE TO THE FILE OF AO FOR THE LIMITED PURPOSE, TO DECIDE THE SAME AFRESH AFTER CONSIDERING THE COMMUNICATIONS/AGREEMENTS, THEIR T ERMS AND CONDITIONS AND THEN TO DECIDE THE CORRECT NATURE OF TRANSACTION AND APPLICABILITY OF SECTION 9(1)(VII OF THE IT ACT. NEEDLESS TO SAY, THE ASSESSEE SHALL BE AFFORDED REASONABLE OPPORTUNITY OF BEING HEARD. WE ORDER ACCORDINGLY. 7. S INCE IN THE YEA R UNDER CONSIDERATION ALSO , BEFORE US THE IDENTICAL QUESTION , WHETHER THE PAYMENTS WERE IN THE NATURE OF CONSULTANCY SERVICES OR REIMBURSEMENT HAS BEEN RAISED, THUS RESPECTFULLY FOLLOWING THE FINDING OF THE TRIBUNAL , WE RESTORE THE MATTER TO THE FILE OF TH E ASSESSING OFFICER FOR THE PURPOSE OF DECIDIN G A FRESH AFTER CONSIDERING THE COMMUNICATION/AGREEMENTS, THEIR TERMS AND CONDITION AND THEN DECIDE THE TRUE NATURE OF TRANSACTION AND APPLICABILITY OF SECTION 9(1)(VII) OF THE A CT AND ACCORDINGLY , DECIDE THE A PPLICATION OF PROVISI ONS OF SECTION 40(A)(I) OF THE A CT. THE ASSESSEE SHALL BE AFFORDED ADEQUATE OPPORTUNITY OF BEING HEARD. ACCORDINGLY, THE GROUND S NO . 1 AND 2 OF THE APPEAL ARE ALLOWED FOR STATISTICAL PURPOSES. 8. THE GROUND NOS. 3 AND 4 OF THE APPEAL B EING GENERAL IN NATURE, WE ARE NOT REQUIRED TO ADJUDICATE UPON AND ACCORDINGLY , DISMISSED AS INFRUCTUOUS. 5 9. IN THE RESULT, APPEAL OF THE R EVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. THE DECISION IS PRONOUN CED IN THE OPEN COURT ON 1 6 T H MARCH . , 201 8 . S D / - S D / - ( H.S. SIDHU ) ( O.P. KANT ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 6 T H MARCH , 201 8 . RK / - (D.T.D) COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR ASST. REGISTRAR, ITAT, NEW DELHI