DCIT, CHENNAI V. LF&D Fashions P Ltd., CHENNAI

ITA 1331/CHNY/2014

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7147 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2014
• Appeal Filed By: Department
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 15-05-2014
• Court: TRIBUNAL
• Department Lawyers: S DASGUPTA
• Keywords: Permanent establishment

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNALD BENCH, CHEN NAI . , ! ' #' '!$, % ! & BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER . / I.T.A. NO. 1331/MDS/2014 / ASSESSMENT YEAR : 2010-11 THE DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE-II(4), 121, M.G.ROAD, CHENNAI 34. ( $' /APPELLANT) VS M/S.LF&D FASHIONS P. LTD., NO.33, HASTHINAPURAM MAIN ROAD, NEHRU NAGAR, CHROMPET, CHENNAI 600 044 [PAN: AABCL 5079 N] ( ()$' /RESPONDENT) REVENUE BY : SHRI S.DAS GUPTA, JCIT ASSESSEE BY : SHRI SAROJKUMAR PARIDA, ADV. / DATE OF HEARING : 28-07-2014 / DATE OF PRONOUNCEMENT : 22-08-2014 * / O R D E R PER VIKAS AWASTHY, J.M: THE APPEAL HAS BEEN FILED BY THE REVENUE ASSAILING THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-II , CHENNAI DATED 27-12-2013 RELEVANT TO THE ASSESSMENT YEAR (A Y) 2010-11. THE ONLY ISSUE RAISED IN APPEAL BY THE REVENUE IS D ELETING OF DIS-ALLOWANCE U/S.40(A)(I) OF INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT). ITA NO. 1331/MDS/2014 2 2. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE AY.2010-11 ON 10-09-2010 DECLARING INCOME OF ` 54,44,490/-. THE CASE OF ASSESSEE WAS SELECTED FOR SCRUTINY AND NOTICE U/S. 143(2) WAS ISSUED TO THE ASSESSEE ON 26-08-2011. DURING THE C OURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSER VED THAT THE ASSESSEE HAD PAID COMMISSION TO M/S.LA FLORENS, ITA LY TO THE TUNE OF ` 83,72,939/-. ON THE SAID PAYMENTS, THE ASSESSEE HA D NOT DEDUCTED TAX AT SOURCE. THE ASSESSING OFFICER DIS -ALLOWED THE SAID AMOUNT UNDER THE PROVISIONS OF SECTION 40(A)(I ). AGGRIEVED BY THE ASSESSMENT ORDER DT.31-01-2013, TH E ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(APPEALS ). THE CIT(APPEALS) VIDE IMPUGNED ORDER HELD, THAT THE ASS ESSEE HAS PAID COMMISSION TO NON-RESIDENT AGENT WHO IS HAVING NO BUSINESS CONNECTION IN INDIA AND HAS RENDERED SERVICE OUTSID E INDIA, THEREFORE, INCOME HAD NOT ACCRUED TO THE OVERSEAS A GENTS IN INDIA. THE CIT(APPEALS) PLACED RELIANCE ON THE DECISION OF THE HON'BLE SUPREME COURT OF INDIA IN THE CASE OF GE TECHNOLOGY CEN. P.LTD., VS. CIT REPORTED AS 327 ITR 456 (SC) AND ALLOWED THE APPEAL OF THE ASSESSEE. ITA NO. 1331/MDS/2014 3 3. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF BOTH THE SIDES. WE HAVE ALSO PE RUSED THE ORDERS OF THE AUTHORITIES BELOW. THE CIT(APPEALS) I N HIS IMPUGNED ORDER HAS PLACED RELIANCE ON THE SUBMISSIONS OF THE ASSESSEE THAT THE COMMISSION HAS BEEN PAID TO THE NON-RESIDENT AG ENT WHO IS NOT HAVING ANY BUSINESS CONNECTION OR ANY PERMANENT ESTABLISHMENT [PE] IN INDIA. THE OVERSEAS AGENTS A RE PROCURING EXPORT ORDERS FOR THE ASSESSEE AND IS OPERATING OUT SIDE INDIA. THUS, THE SERVICES ARE RENDERED BY THE OVERSEAS AGE NT OUTSIDE INDIA. THE COMMISSION PAYMENTS TO SUCH NON-RESIDEN T AGENT IS NOT TAXABLE IN INDIA. 4. THE HON'BLE APEX COURT IN THE CASE OF GE TECHNOLOGY CEN. P.LTD., VS. CIT (SUPRA) HAS HELD THAT, IF NO TAX IS ASSESSABLE ON T HE PAYMENTS, THERE IS NO QUESTION OF DEDUCTION OF TAX AT SOURCE. THE LD.COUNSEL FOR THE ASSESSEE HAS PLACED RELIANCE ON THE ORDER OF CO-ORDINATE BENCH IN ITA NO.199/MDS/2014 T ITLED DCIT VS. M/S FULIDTHERM TECHNOLOGY PVT. LTD., DECIDED ON 22- 05-2014. WHEREIN, ON SIMILAR FACTS IT WAS HELD THAT WHERE NO TAX LIABILITY IS FASTENED ON THE PAYEE WHO RECEIVED THE COMMISSION, THERE IS NO OBLIGATION ON THE PART OF THE PAYER TO DEDUCT THE T AX IN INDIA. ITA NO. 1331/MDS/2014 4 5. WE DO NOT FIND ANY ERROR IN THE ORDER OF CIT(APP EALS). THE APPEAL OF THE REVENUE IS DISMISSED BEING DEVOID OF MERIT. ORDER PRONOUNCED ON FRIDAY, THE 22 ND AUGUST, 2014 AT CHENNAI. SD/- SD/- (. ) (#' '!$) (A. MOHAN ALANKAMONY) ! / ACCOUNTANT MEMBER (VIKAS AWASTHY) % ! / JUDICIAL MEMBER /CHENNAI, /DATED: 22 ND AUGUST, 2014 TNMM ! ' #$ %$ /COPY TO: 1. &' /APPELLANT 2. '(&' /RESPONDENT 3. ) () /CIT(A) 4. ) /CIT 5. $,- ' . /DR 6. -/ 0 /GF