INDO INDUSTRIES LTD, MUMBAI V. ITO 2(2)(1), MUMBAI

ITA 1379/MUM/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92458 (ITAT-MUMBAI)
• Duration Of Justice: 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-05-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 28-04-2015
• Assessment Year: 2011-2012
• Appeal Filed On: 09-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Services rendered outside India

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI . . , . , BEFORE SHRI I.P. BANSAL, JM AND RAJENDRA, AM ./ I.T.A. NO.1379/MUM/2015 ( / ASSESSMENT YEAR : 2011-12 M/S.INDO INDUSTRIES LTD., A/1 SAMEER APARTMENT, 169, S.V.ROAD, ANDHERI(W), MUMBAI - 58 / VS. THE ITO 2(2)(1), AAYKAR BHAVAN, MK ROAD, MUMBAI 400 020 ./ ./ PAN/GIR NO. : AAACI 8197D ( / APPELLANT ) .. ( / RESPONDENT ) APPELLANT BY SHRI BHUPENDRA SHAH R ESPONDENT BY SHRI JITENDRA KUMAR ' #$ / DATE OF HEARING : 28/04/2015 ' #$ / DATE OF PRONOUNCEMENT : 01/05/2015 / O R D E R PER I.P.BANSAL, J.M: THIS IS AN APPEAL FILED BY THE ASSESSEE AND IT IS DIRECTED AGAINST ORDER OF LD. CIT(A)-5, MUMBAI DATED 28/1/2015 FOR ASSESSM ENT YEAR 2011-12. GROUNDS OF APPEAL READ AS UNDER: 1) IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED COMMISSIONER OF INCOME TAX(A) ERRED IN CONFIRMING T HE DISALLOWANCE OF TDS ON EXPORT COMMISSION OF RS. 8661971/- BY DISREGARDING AND NOT FOLLOWING THE ORDER NO-IT A-183/M/2014 OF THE HON'BLE ITAT IN THE CASE OF THE APPELLANT FOR A. Y. 20 I 0-1 I WHICH IS AGAINST THE PRINCIPLES OF BINDING NATURE OF THE ORDERS OF THE ITAT. 2) IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW. THE LEARNED ASSESSING OFFICER ERRED IN DISALLOWING EXPORT COMMI SSION OF RS. 86,61,970/- U/S 40A(I) LW.S 195. 3) IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LEARNED COMMISSIONER OF INCOME TAX (A) ERRED IN CONFIRMING DISALLOWANCE OF EXPORT ./ I.T.A. NO.1379/MUM/2015 ( / ASSESSMENT YEAR : 2011-12 2 COMMISSION OF RS. 86,61,970/- U/S 40A(I) R.W.S. 195 MADE BY ASSESSING OFFICER. 4) IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED ASSESSING OFFICER ERRED IN CHARGING INTEREST U/S 23 4A,8 AND C AND ALSO INITIATING PENALTY U/S 271 (1)(C). 2. DURING THE COURSE OF HEARING, IT WAS CLAIMED BY LD. AR THAT FOR A.Y 2010-11 SIMILAR DISALLOWANCE OF RS.92,14,509/- WAS MADE BY AO, WHICH WAS UPHELD BY LD. CIT(A). HOWEVER, TRIBUNAL HAS DE LETED THE SAME VIDE ORDER DATED 14/11/2014 IN ITA NO.183/MUM/2014, COPY OF THE SAID ORDER WAS PLACED ON OUR RECORD AND WAS ALSO GIVEN TO LD. DR. LD. DR COULD NOT CONTROVERT SUCH SUBMISSION OF LD. AR AND ADMITTED T HAT THE ISSUE IS IDENTICAL. FOR THE SAKE OF COMPLETENESS OF FACTS T HE CONCLUDING PORTION OF THE ORDER OF THE TRIBUNAL IS REPRODUCED BELOW. 9 . WE HAVE CONSIDERED RIVAL CONTENTIONS, CAREFULLY G ONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND ALSO DELIBERATED ON TH E JUDICIAL PRONOUNCEMENTS CITED BEFORE US IN THE CONTEXT OF FACTUAL MATRIX OF THE CASE. FROM THE RECORD WE FOUND THAT DURING THE YEAR ASSESSEE HAS PAID COMMIS SION TO VARIOUS NON- RESIDENT FOREIGN BROKERS AMOUNTING TO RS.92,14,509/ - FOR RENDERING SERVICES OUTSIDE INDIA IN RELATION TO EXPORT ORDERS AND RECO VERY OF THE SALE PROCEEDS. NOTHING WAS BROUGHT ON RECORD BY THE AO TO ESTABLIS H THAT THE SAID NON- RESIDENT BROKERS HAVE THEIR PLACE OF ESTABLISHMENT IN INDIA BECAUSE THEY WERE OPERATING IN THEIR RESPECTIVE COUNTRIES. THE SAID N ON-RESIDENT BROKERS ARE NOT LIABLE TO ANY TAX IN INDIA INSOFAR AS IT IS ALSO NO T THE CASE OF REVENUE THAT SERVICES WERE RENDERED IN INDIA, THEREFORE, NEITHER THERE WAS ACCRUAL NOR RECEIPT OF INCOME IN INDIA. WE FOUND THAT THE NON-R ESIDENT BROKERS HAVE NOT RENDERED ANY SERVICES IN INDIA, THEREFORE, COMMISSI ON INCOME NEITHER ACCRUED NOR AROSE IN INDIA IN VIEW OF THE DECISION OF THE H ONBLE DELHI HIGH COURT IN THE CASE OF EON TECHNOLOGY PVT. LTD., 343 ITR 366 (DEL) . THERE IS NO DISPUTE TO THE WELL SETTLED PROPOSITION THAT PROVISIONS OF SEC TION 195 DOES NOT APPLY WHEN NO INCOME IS FOUND TO BE TAXABLE IN INDIA, THEREFOR E, THERE WAS NO REASON FOR MAKING ANY DISALLOWANCE UNDER PROVISIONS OF SECTION 40(A)(I) IN VIEW OF DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F G.E.INDIA TECHNOLOGY CENTRE PVT. LTD., 327 ITR 456 . THERE ARE ALSO JUDICIAL PRONOUNCEMENTS SUPPORTING THIS PROPOSITION, WHICH ARE REPORTED IN 10 ITR 501(TRIB), 86 ITD 102 AND 10 ITR 147(TRIB) . 10 . PAYMENT OF BROKERAGE TO THE SAID NON-RESIDENT BRO KERS FOR NON TECHNICAL SERVICES IS THE BUSINESS INCOME OF THE PAYEE AND TH EREFORE, NOT LIABLE TO TAX IN INDIA AS WAS HELD IN THE CASE OF SRI SUBHARAMAN SUBRAMANIAN, 30 TAXMANN.COM 236 (BANG.) . WE DO NOT FIND ANY MERIT IN THE CONTENTION OF THE LEARNED DR THAT BROKERAGE SO PAID TO THE NON-RESIDE NT BROKERS WAS FEE FOR TECHNICAL SERVICES. OUR VIEW IS SUPPORTED BY THE DE CISION OF THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF ADIDAS SOURCING LTD., 28 TAXMANN.COM 267 (DEL) . EVEN THE AMENDED SECTION 9 APPLIES ONLY TO TECHNI CAL SERVICES AND NOT TO BROKERAGE. ACCORDINGLY, THE PAYMENT OF BROKERAGE TO NON-RESIDENT DID NOT ./ I.T.A. NO.1379/MUM/2015 ( / ASSESSMENT YEAR : 2011-12 3 ATTRACT THE PROVISIONS OF SECTION 9 R.W.S.195 AS WA S HELD BY THE DELHI BENCH IN THE CASE OF ANGELIQUE INTERNATIONAL LTD., 28 TAXMANN.COM 219 (D EL) AND ALLAHABAD BENCH OF THE TRIBUNAL IN THE CASE OF MODEL EXIMS, 42 TAXMANN.COM 446 (ALL) . 11 . IN VIEW OF THE ABOVE, WE CAN SAFELY CONCLUDE THAT MERELY BECAUSE PAYMENTS HAVE BEEN MADE FROM INDIA, THE SAME CANNOT BE MADE LIABLE TO BE TAXED IN INDIA INSOFAR AS PAYMENT WAS MADE TO NON-R ESIDENT FOR THE SERVICES RENDERED OUTSIDE INDIA AS WAS HELD IN THE CASE OF DR. REDDYS LABORATORY, 58 ITD 104 (HYD.) . 12 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. 3. IN THIS VIEW OF THE SITUATION, AFTER HEARING BOT H THE PARTIES, AS THE FACTS AND CIRCUMSTANCES ARE IDENTICAL, RESPECTFULLY FOLLOWING THE AFOREMENTIONED DECISION OF TRIBUNAL IN ASSESSEES O WN CASE IN RESPECT OF IMMEDIATE PRECEDING ASSESSMENT YEAR, WE DELETE THE DISALLOWANCE AND ADDITION OF RS.86,61,971/- IS DELETED. 4. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 01/05/2015 ' * +, 01/05/2015 ' SD/- SD/- (RAJENDRA) . . (I.P.BANSAL) /ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBAI; + DATED 01/05/2015 !'# $#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. /# ( ) / THE CIT(A)- 4. /# / CIT 5. 01 #23 , $ 23 , / DR, ITAT, MUMBAI 6. 4 / GUARD FILE. / BY ORDER, 0# # //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI . . .VM , SR. PS