ACIT, New Delhi V. Sh. Dushyant Kumar Jain, Delhi

ITA 1468/DEL/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2898 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 18-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K JAIN
• Assessee Lawyers: NAVIN KUMAR JAIN

Judgement Text

1 | P A G E IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: A NEW DELHI BEFORE SHRI B.P.JAIN, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 1468/DEL /2016 ASSTT. YEAR: 2011-12 ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-63(1), NEW DELHI. VS SHRI DUSHYANT KUMAR JAIN, PROP. M/S BHARAT IMPEX, 3706, BARNA STREET, BARA TOOTI, SADAR BAZAR, DELHI-110006 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.K. JAIN, SR. DR RESPONDENT BY : SHRI NAVIN KUMAR JAIN, CA DATE OF HEARING : 09.11.2017 DATE OF PRONOUNCEMENT: 27.12.2017 ORDER PER SUDHANSHU SRIVASTAVA, J.M. THIS APPEAL HAS BEEN PREFERRED BY THE DEPARTMENT A GAINST THE ORDER DATED 29.01.206 PASSED BY THE LD. COMMISSIONE R OF INCOME TAX(A)-20, NEW DELHI AND PERTAINS TO ASSESSMENT YEA R 2011-12. 2. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD PAID AN AMOUNT OF R S. 36,97,401.59 AS ITA 1468/DEL/2016 ASSESSMENT YEAR 2011-12 COMMISSION TO FOREIGN PARTIES. THE AO NOTED THAT TD S HAD NOT BEEN DEDUCTED AS PER PROVISIONS OF SECTION 195 (1) OF TH E INCOME TAX ACT, 1961 (HEREINAFTER CALLED THE ACT) AND, THEREFORE, THE AMOUNT OF COMMISSION PAID WAS ADDED TO THE INCOME OF THE ASSE SSEE UNDER SECTION 40 (A) (I) OF THE ACT. THE ASSESSEE PREFERR ED AN APPEAL BEFORE THE LD. FIRST APPELLATE AUTHORITY WHO DELETED THE A DDITION AFTER RELYING ON CERTAIN JUDICIAL PRECEDENTS. NOW, THE DEPARTMENT IS IN APPEAL AND THE FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPE AL:- (I). IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION U/S 40(A)(I) OF THE INCOME TAX ACT, 1961 MADE ON THE BASIS OF NON-DEDUCTION OF TDS ON COMMIS SION PAID OF RS. 3697402/- TO NON RESIDENT AGENTS AND RS. 3,01,956/- ON ACCOU NT OF ADVERTISEMENT AND SALES PROMOTION EXPENSES TO A NON RESIDENT ADVERTISEMENT CONCERN AND FAILED TO APPRECIATE THE FACT THAT THE ASSESSEE HAS VIOLATED THE PROVISIONS CONTAINED IN T HE SEC. 195 OF THE I.T. ACT. 1965. (II) IN THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE LD. CIT(A) HAS ERRED AND FAILED TO APPRECIATE THE FACT THAT DESPITE THE FACT THAT THE SERVICES HAVE BEEN RENDERED OUTSIDE INDIA, THE RIGHT TO RECE IVE SUCH INCOME CAME INTO EXISTENCE IN INDIA. AS SUCH THE COMMISSION AND FEE PAID FOR ADVERTISEMENT WERE LIABLE TO BE TREATED AS PER THE PROVISIONS CONTAINED ITA 1468/DEL/2016 ASSESSMENT YEAR 2011-12 IN SEC. 5(2)(B) READ WITH SEC. 9(1 )(I) OF THE INCO ME TAX ACT, 1961. (ILL) THAT THE APPELLANT, CRAVES, LEAVE TO A DD, AMEND OR MODIFY THE GROUND(S) OF APPEAL AT ANY TIME. RELIEF CLAIMED IN APPEAL AS PER THE GROUNDS OF APPEAL & THE ORDER PASSED BY LD. CIT(A)- 20, NEW DELHI BE QUASHED. 3. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED TH AT THE LD. CIT (APPEALS) HAD WRONGLY DELETED THE ADDITION AND SUBM ITTED THAT THE RIGHT TO RECEIVE THE COMMISSION AROSE IN INDIA ONLY WHEN THE SALES ORDERS WERE EXECUTED BY THE ASSESSEE IN INDIA. IT W AS SUBMITTED THAT THE FACT THAT THE AGENTS HAD RENDERED SERVICES OUTS IDE INDIA IN FORM OF SOLICITING THE ORDERS AND COMMISSION WAS REMITTED T O THEM ABROAD WAS WHOLLY IRRELEVANT FOR DETERMINING THE PLACE OF ACCRUAL OF THEIR INCOME. THE LD. DR VEHEMENTLY ARGUED THAT THE LD. C IT (APPEALS) HAD DELETED THE ADDITION WITHOUT CONSIDERING THE FA CTS OF THE CASE. 4. THE LD. AUTHORISED REPRESENTATIVE PLACED RELIANC E ON THE ORDER OF THE LD. CIT (APPEALS) AND ALSO ON ORDER OF ITAT DELHI BENCH IN THE CASE OF DIVYA CREATION VERSUS ACIT REPORTED IN (2017) 86 ITA 1468/DEL/2016 ASSESSMENT YEAR 2011-12 TAXMANN.COM 276 (DELHI TRIBUNAL) WHEREIN VIDE ORD ER DATED 14/09/2017, AN IDENTICAL ISSUE HAD BEEN DECIDED IN FAVOUR OF THE ASSESSEE. RELIANCE WAS ALSO PLACED ON ANOTHER ORDER OF ITAT DELHI BENCH IN THE CASE OF LE PASSAGE TO INDIA TOURS & TR AVEL (P) LTD VS. DCIT REPORTED IN (2015) 54 TAXMANN.COM 138 (DELHI-T RIBUNAL) WHICH WAS ALSO ON AN IDENTICAL ISSUE. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALS O PERUSED THE MATERIAL ON RECORD. THE FACTS IN THIS CASE ARE NOT DISPUTED AT ALL. THE LD. CIT (APPEALS) HAS DISCUSSED THE FACTS OF THE CA SE IN LIGHT OF NUMEROUS ORDERS OF THE ITAT/JUDICIAL PRECEDENTS AND HAS REACHED THE CONCLUSION THAT UNDENIABLY THE PARTIES TO WHOM THE IMPUGNED PAYMENTS WERE MADE WERE RESIDENTS OUTSIDE INDIA, TH E EXHIBITIONS CONDUCTED BY THOSE AGENTS ON BEHALF OF THE ASSESSEE WERE ALSO HELD OUTSIDE INDIA AND THE INCOME FROM COMMISSION TO THO SE PARTIES ACCRUED OUTSIDE INDIA SINCE NO SERVICES WERE RENDER ED IN INDIA. THE PAYMENTS WERE MADE ALSO OUTSIDE INDIA AND, THEREFOR E, NO INCOME COULD BE DEEMED TO ACCRUE OR ARISE IN INDIA. APART FROM THE JUDICIAL PRECEDENTS RELIED UPON BY THE LD. CIT (APPEALS) WHI LE ALLOWING RELIEF TO THE ASSESSEE, WE ALSO FIND THAT THE LD. ARS REL IANCE ON THE CASE OF ITA 1468/DEL/2016 ASSESSMENT YEAR 2011-12 DIVYA CREATIONS VERSUS ACIT (SUPRA) OF ITAT DELHI B ENCH AND ON THE CASE OF LE PASSAGE TO INDIA TOURS & TRAVEL (P) LTD VS. DCIT (SUPRA) OF ITAT DELHI IS ALSO WELL PLACED. THE ITAT DELHI B ENCH IN THESE CASES HAS HELD THAT RETAINER-SHIP CHARGES AND COMMI SSION PAID BY THE ASSESSEE TO OVERSEAS NON-RESIDENT AGENTS FOR PROMOT ING ASSESSEES BUSINESS IN FOREIGN COUNTRIES WAS NOT IN NATURE OF FEES FOR TECHNICAL SERVICES AND WAS, THEREFORE, NOT LIABLE TO BE TAXED IN INDIA AND FURTHER THAT SINCE THE FOREIGN AGENTS HAD THEIR OFFICES SIT UATED ABROAD AND, MOREOVER, THE SERVICES WERE ALSO RENDERED OUTSIDE I NDIA, THE PAYMENTS MADE TO THEM DID NOT HAVE ANY TAX IMPLICAT IONS IN INDIA. RESPECTFULLY FOLLOWING THE SAME, WE UPHOLD THE ORDE R OF THE LD. CIT (APPEALS) AND DISMISS THE GROUNDS RAISED BY THE DEP ARTMENT. 6. IN THE FINAL RESULT THE APPEAL OF THE DEPARTMENT STANDS DISMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 27 TH DECEMBER, 2017. SD/- SD/- (B.P. JAIN ) (SUDHANSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 27 TH DECEMBER, 2017 DRAGON ITA 1468/DEL/2016 ASSESSMENT YEAR 2011-12 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER ASSISTANT REGI STRAR