ACIT 20(3), MUMBAI V. SHM SHIPCARE, MUMBAI

ITA 14/MUM/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1965 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-11-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 01-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANUPAM SINGLA
• Keywords: Retrospective amendment
• Section: 143(3); 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH , MUMBAI BEFORE SRI MAHAVIR SINGH, JM AND ASHWANI TANEJA , AM ITA NO . 14 /MUM/ 201 5 (A.Y: 2010 - 11 ) ASST. COMMISSIONER OF INCOME TAX - 20(30, , ROOM NO.614, 6 TH FLOOR, PIRAMAL CHAMBERS, PAREL, MUMBAI - 12 VS. M/S SHM SHIPCARE 1 ST LEDJET, COTTON PRESS, 1 ST MAGAZINE STREET, DERUKHANA, MAZAGAON, MUMBAI - 10 APPELLANT .. RESPONDENT REVENUE BY .. MISS. ANUPAM SINGLA , DR ASSESSEE BY .. NONE DATE OF HEARING .. 2 4 - 11 - 2016 DATE OF PRONOUNCEMENT .. 2 4 - 11 - 2016 O R D E R PER MAHAVIR SINGH , JM : THIS APPEAL BY THE REVENUE IS ARISING OUT OF THE ORDER OF CIT (A) - 2 9 , MUMBAI IN APPEAL NO. CIT (A) - 2 9/RG - 17/52/13 - 14 DATED 14 - 10 - 2014 . THE ASSESSMENT WAS FRAMED BY JCIT - 17(1), MUMBAI FOR THE A . Y . 20 10 - 11 VIDE ORDER DATED 28 - 03 - 20 13 U/S 143(3) R. W. S. 154 OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT). 2. THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS AGAINST THE ORDER OF CIT(A) DELETING THE DISALLOWANCE OF EXPENSES ON PAYMENT OF TRAINING FEES ROYALTY AMOUNTING TO RS.26,17,330/ - A ND RS.11,77,864/ - RESPECTIVELY FOR NON - DEDUCTION OF TDS BY INVOKING THE PROVISION OF SECTION 40(A) (IA) OF THE ACT. FOR THIS REVENUE HAS RAISED FOLLOWING GROUND NO. 1: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELET ING THE ADDITION ON RS.26,17,330/ - (OUT OF TOTAL OF RS.30,04,839/) AND RS. 1177,864/ - MADE U/S 40 (A) (IA) ON ACCOUNT OF NON DEDUCTION OF TDS ON PAYMENT FOR TRAINING FEES AND ROYALTY IGNORING THE DECISION OF HONBLE ITAT, MUMBAI IN THE CASE OF SATELLITE TE LEVISION ASIA REGION LTD. VS. DCIT (2006) 99 ITD 914 (MUM) WHICH HOLDS THAT SECTION 195 OF THE IT ACT LAYS EMPHASIS ON CHARGEABILITY RATHER THAN SOURCE OF PAYMENT. 3. AT THE OUTSET LEARNED COUNSEL FOR THE ASSESSEE FILED COPY OF TRIBUNAL ORDER IN ASSESSEES O WN CASE IN ITA NO. 1047/MUM/2013 FOR THE A.Y. 2008 - 09 VIDE ORDER DATED 10 - 02 - 2016 WHEREIN EXACTLY IDENTICAL ISSUE IS DEALT WITH AS REGARDS TO THE PAYMENT OF TRAINING FEES, SERVICE FEES AND ROYALTY PAYMENTS FOR THE SUBJECT MATTER AS IN THE PRESENT CASE AND TRIBUNAL HAS DELETED THE DISALLOWANCE BY OBSERVING AS UNDER: - ITA NO. 14 /MUM/2015 2 5. WE HAVE HEARD THE DR AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT THE ASSESSEE IS ENGAGED IN SALES AND SERVICES OF SAFETY EQUIPMENTS INSTALLED ON BOARD MARINE VESSELS, THAT IT WOULD GET BUSINESS FROM THE EQUIPMENT MANUFACTURERS, THAT AFTER COMPLETING THE SERVICING OF SAFETY EQUIPMENTS IT WOULD ISSUES A CERTIFICATE TO THE VESSELS OPERATING IN INTERNATIONAL WATERS, THAT IT WOULD PURCHASE BLANK CERTIFICATES FROM EQUIPMENT MANUFACTURERS, THA T IT ALSO UNDERTOOK SERVICING OF LIFE BOATS AND ITS LUNCHING APPLIANCES, THAT TO CARRY OUT THE SERVICING OF SUCH EQUIPMENTS SERVICE PERSONNEL WOULD BE SENT OUTSIDE INDIA FOR TRAINING, THAT THE TRAINING FEE INCLUDED ACCOMMODATION AND CONVEYANCE, THAT BOTH T HESE PAYMENTS WERE REIMBURSEMENT OF ACTUAL EXPENDITURE, THAT NO TDS IS REQUIRED TO BE DEDUCTED FOR SUCH PAYMENTS. WE FIND THAT THE FAA HAS GIVEN A CATEGORICAL FINDING OF FACT THAT NONE OF THE PAYMENTS IN QUESTION ARE COVERED BY THE PROVIS IONS OF SECTION 9, THAT THE NON - RESIDENTS HAD NO PE IN INDIA, THAT THE ASSESSEE WAS NOT LIABLE TO DEDUCT TAX AT SOURCE FOR THESE PAYMENTS. WE ARE OF THE OPINION THAT HIS ORDER DOES NOT SUFFER FROM ANY LEGAL INFIRMITY. HERE, WE WOULD ALSO LIKE TO MENTION THAT THE ISSUE OF TA XABILITY OF THESE THREE PAYMENTS HAD ARISEN BECAUSE OF THE RETROSPECTIVE AMENDMENT TO SECTION. THE ASSESSEE HAD MANAGED ITS AFFAIRS AS PER THE PROVISIONS OF EXISTING LAW AND AT THE TIME OF FILING OF RETURN, IT HAD NOT TO DEDUCT THE TAX. THE SETTLED PRINCIP LE OF JURISPRUDENCE STIPULATES THAT IMPOSSIBLE ACTS CANNOT BE EXPECTED TO BE PERFORMED BY AN ASSESSEE. IN THE CASE OF IDBI CAPITAL MARKET SERVICES LTD.(ITA NO. 1404/ MUM/2013 - DTD.08.05.2015)THE TRIBUNAL HAS, IN ALMOST SIMILAR CIRCUMSTANCES, HELD THAT IF AT THE ITA/1047/M/13,AY.08 - 09 - SHM SHIPCARE TIME OF FILING OF ITS RETURN THE ASSESSEE IS NOT REQUIRED TO DEDUCTED TAX AS PER THE EXISTING PROVISIONS AND LATER ON BECAUSE OF THE RETROSPECTIVE AMENDMENT OR JUDGMENT OF A COURT LIABILITY TO DEDUCT TAX AT SOURCE A RISES, THE ASSESSEE CANNOT BE HELD RESPONSIBLE FOR NOT DEDUCTING OF TAX AT THE TIME OF FILING OF RETURN. CONSIDERING THE ABOVE DISCUSSION, WE CONFIRM THE ORDER OF THE FAA AND DECIDE THE EFFECTIVE GROUND OF APPEAL AGAINST THE AO. 4. ON QUERY FROM THE BENCH LE ARNED SENIOR DR CONCEDED THE POSITION. WE FIND THAT THIS ISSUE IS CLEARLY COVERED IN FAVOUR OF ASSESSEE AND AGAINST THE REVENUE BY THE TRIBUNAL DECISION IN ASSESSEES OWN CASE CITED (SUPRA). RESPECTFULLY FOLLOWING THE SAME WE CONFIRMED THE ORDER OF CIT(A) DELETING THE DISALLOWANCE. THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AND ORDER OF CIT(A) IS CONFIRMED. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 24 - 11 - 2016 . SD/ SD/ ( ASHWANI TANEJA ) (MAHAVIR SINGH) ACCOUNTANT MEM B E R JUDICIAL MEMBER MUMBAI, DATED: 24 - 11 - 2016 SUDIP SARKAR /SR.PS ITA NO. 14 /MUM/2015 3 COPY OF THE ORDER FORWARDED TO : BY ORDER, ASSISTANT REGISTRAR ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT (A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//