Appeal details
Counselvise Citation
[2014] 140 COUNSELVISE.COM (IT) 81231 (ITAT-CHENNAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
5 month(s) 12 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
27-10-2014
Appeal Filed By
Department
Bench Allotted
D
Next Hearing Date
27-10-2014
Assessment Year
2004-2005
Appeal Filed On
15-05-2014
Judgement Text
, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHE NNAI . . . , ! , ' # $ BEFORE DR. O.K. NARAYANAN, VICE PRESIDENT & SHRI VIKAS AWASTHY, JUDICIAL MEMBER . / I.T.A. NO. 1332/MDS/2014 / ASSESSMENT YEAR : 2004-05 THE DEPUTY COMMISSIONER OF INCOME TAX , COMPANY CIRCLE-II(4), 121, M.G.ROAD, CHENNAI-34 ( !% /APPELLANT) VS M/S.LASER WORDS P.LTD., 117/1, ARIHANT EPARK, LATTICE BRIDGE ROAD, ADYAR, CHENNAI-600 020 [PAN: AAACL 5993 L] ( &'!% /RESPONDENT) REVENUE BY : SHRI A.V.SREEKANTH, JCIT ASSESSEE BY : SHRI J.C.PRAKASH, CA / DATE OF HEARING : 27-10-2014 / DATE OF PRONOUNCEMENT : 27-10-2014 #( / O R D E R PER VIKAS AWASTHY, J.M: THE APPEAL HAS BEEN FILED BY THE REVENUE AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-II, CHEN NAI DATED 12-12-2013 FOR THE ASSESSMENT YEAR (AY) 2004-05. THE ONLY ISSUE RAISED BY THE REVENUE IN APPEAL IS D ELETING OF DIS-ALLOWANCE MADE U/S.40(A)(I) OF THE INCOME TAX A CT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT) ON ACCOUNT OF NON-DEDUCTION I.T.A. NO. 1332/MDS/2014 2 OF TAX AT SOURCE ON PAYMENT OF AGENCY COMMISSION TO NON-RESIDENT AGENTS. 2. THE ASSESSEE IN ITS RETURN OF INCOME FOR THE AY. 2004-05 DECLARED NIL INCOME AFTER CLAIMING DEDUCTION OF ` 10,05,850/- U/S.80HHC OF THE ACT. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT WAS COMPLETED ON 20-12- 2006. SUBSEQUENTLY, THE COMMISSIONER OF INCOME TAX, CHENN AI INITIATED PROCEEDINGS U/S.263 AND VIDE ORDER DT.27-03-2009, S ET ASIDE THE ASSESSMENT ORDER. THE COMMISSIONER OF INCOME TAX DIRECTED THE ASSESSING OFFICER TO EXAMINE THE ISSUE OF EXCLU SION OF AGENCY COMMISSION PAID AND UN-REALISED EXPORT PROCEEDS FRO M THE EXPORT TURNOVER WHILE DETERMINING DEDUCTION U/S.10A OF THE ACT. THE ASSESSING OFFICER VIDE ORDER DT.18-12-2009 PASSED U /S.143(3) R.W.S.263 DIS-ALLOWED PAYMENT OF AGENCY COMMISSION OF ` 1,50,07,000/- TO FOREIGN AGENTS FOR NON-DEDUCTION O F TAX AT SOURCE. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PR EFERRED AN APPEAL BEFORE THE CIT(APPEALS). THE CIT(APPEALS) VIDE IMPUGNED ORDER ACCEPTED THE SUBMISSIONS OF ASSESSEE AND DELETED THE ADDITION MADE U/S.40(A)(IA). THE CIT(A PPEALS) PLACED RELIANCE ON THE DECISION OF CO-ORDINATE BENCH OF TH E TRIBUNAL IN THE CASE OF M/S.FARIDA SHOES P LTD., IN ITA NO.359/MDS/2013 DECIDED I.T.A. NO. 1332/MDS/2014 3 ON 11-04-2013 AND IN THE CASE OF ACIT VS. DELTA SHOES P. LTD., IN ITA NO.909/MDS/2013 DECIDED ON 31-07-2013. NOW, THE REVENUE HAS COME IN APPEAL BEFORE THE TRIB UNAL IMPUGNING THE FINDINGS OF FIRST APPELLATE AUTHORITY . 3. SHRI J.C.PRAKASH, APPEARING ON BEHALF OF THE ASS ESSEE AT THE OUTSET SUBMITTED THAT THE CASE OF THE ASSESSEE IS S QUARELY COVERED BY THE JUDGMENT OF THE HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. M/S.FARIDA SHOES P LTD., REPORTED AS 367 ITR 155. THE LD.AR SUBMITTED THAT THE FACTS OF THE CASE ARE IDEN TICAL TO THE FACTS OF THE CASE ADJUDICATED BY THE HON'BLE JURISDICTION AL HIGH COURT. 4. ON THE OTHER HAND, SHRI A.V.SREEKANTH, APPEARING ON BEHALF OF THE REVENUE VEHEMENTLY SUPPORTED THE ORDER OF AS SESSING OFFICER AND PRAYED FOR SETTING ASIDE THE FINDINGS O F CIT(APPEALS) ON THE ISSUE. 5. BOTH SIDES HEARD. ORDERS OF THE AUTHORITIES BEL OW AS WELL AS THE DECISIONS ON WHICH THE LD.AR HAS PLACED RELIANC E PERUSED. THE CIT(APPEALS) AFTER EXAMINING THE FACTS OF THE C ASE AND THE SUBMISSIONS MADE BY THE ASSESSEE HAS COME TO THE CO NCLUSION THAT THE ASSESSEE AVAILED THE SERVICES OF NON-RESID ENT AGENTS FOR I.T.A. NO. 1332/MDS/2014 4 PROCURING EXPORT ORDERS AND MARKETING OF ITS PRODUC TS OUTSIDE INDIA AND PAID COMMISSION FOR THE SERVICES RENDERED. THE NON-RESIDENT AGENTS HAVE NO BUSINESS CONNECTIONS IN INDIA NOR DO THEY HAVE ANY PERMANENT ESTABLISHMENT [PE] IN INDIA. THE NON -RESIDENT AGENTS ARE PROCURING EXPORT ORDERS FOR THE ASSESSEE AND ARE OPERATING OUTSIDE THE COUNTRY. 6. THE CIT(APPEALS) WHILE DECIDING THE ISSUE IN FAV OUR OF THE ASSESSEE HAS TAKEN SUPPORT FROM THE DECISIONS OF TH E TRIBUNAL RENDERED IN THE CASE OF CIT VS. M/S.FARIDA SHOES P LTD., (SUPRA) AND ACIT VS. DELTA SHOES P. LTD. (SUPRA). WE FIND THAT THE FACTS OF THE INSTANT CASE ARE SIMILAR TO THOSE ON WHICH THE CIT(APPEALS) HAS PLACED RELIANCE. THE CASE OF THE ASSESSEE IS F URTHER STRENGTHENED BY THE JUDGMENT OF THE HON'BLE MADRAS H IGH COURT IN THE CASE OF CIT VS. M/S.FARIDA SHOES P LTD., (SUPRA). THE HON'BLE HIGH COURT IN THE SAID CASE WHILE ADJUDICATING SIMI LAR ISSUE HAS HELD THAT THE NON-RESIDENT AGENTS ARE NOT PROVIDING TECHNICAL SERVICES TO THE ASSESSEE. THEREFORE, THE PAYMENT M ADE TO THEM ARE NOT HIT BY THE PROVISIONS OF SECTION 9 OF THE A CT, CONSEQUENTLY, SECTION 195 OF THE ACT WILL NOT COME INTO PLAY. THE HON'BLE SUPREME COURT OF INDIA IN THE CASE OF GE INDIA TECHNOLOGIES CEN. P. LTD., REPORTED AS 327 ITR 456 (SC) HAS I.T.A. NO. 1332/MDS/2014 5 HELD THAT WHERE THE REMITTANCE MADE TO NON-RESIDENT S ARE NOT CHARGEABLE TO TAX, THERE IS NO QUESTION OF DEDUCTIO N OF TAX AT SOURCE ON SUCH PAYMENTS. WE FIND THAT THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE AFOREMENTIONED DECISIONS OF THE HON'BLE MADRAS HIGH COURT AND THE HON'BLE SUPREME CO URT OF INDIA. HENCE, THE APPEAL OF THE REVENUE IS DISMISSED AND THE IMPUGNED ORDER IS UPHELD. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING ON MONDAY, THE 27 TH OCTOBER, 2014 AT CHENNAI. SD/- SD/- ( . . . ) ( ! ) (DR. O.K. NARAYANAN) (VIKAS AWAS THY) / VICE PRESIDENT ! / JUDICIAL MEMBER '# /CHENNAI, $ /DATED: 27 TH OCTOBER, 2014 TNMM #% & '( )#( /COPY TO: 1. *+ /APPELLANT 2. &,*+ /RESPONDENT 3. - () /CIT(A) 4. - /CIT 5. (01 & 2 /DR 6. 13 4 /GF
