ACIT Range Ii, V. Hindustan Mint & Agro Products Pvt Ltd,

ITA 1539/DEL/2007

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 2260 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2009
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 02-12-2009
• Assessment Year: 2004-2005
• Appeal Filed On: 28-03-2007
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NAMITA
• Keywords: Question of law; TDS
• Section: 80HHC; 80IB

Judgement Text

ITA NO. 1537, 1538 & 1539/DEL/07 A.YRS. 2001-02, 2003-04&2004-05 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NOS. 1537, 1538 & 1539/DEL/2007 A.YRS. 2001-02, 2003-04 & 2004-05 ASSTT. COMMISSIONER OF INCOME TAX, VS. M/S HINDU STAN MINT & AGRO RANGE-II, MORADABAD PRODUCTS PVT. LTD., CHANDAUSI. (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE DEPARTMENT BY : SMT. NAMITA PANDEY, DR ORDER PER SHAMIM YAHYA : AM THESE APPEALS BY THE REVENUE ARE DIRECTED AGAINST THE COMMON ORDER OF THE LD. CIT(A) DATED 29.12.2006. 2. ONE COMMON ISSUE RAISED IN THE APPEALS IS THAT T HE LD. CIT(A) HAS ERRED IN DIRECTING TO ALLOW THE DEDUCTION UNDER SECTION 80HHC AND 80IB ON GROSS TOTAL INCOME SEPARATELY, WHICH IS NOT AS PER THE PROVISION OF SECTION 80IA(9) OF THE IT ACT. 3. WE HAVE HEARD LD. DR AND PERUSED THE RECORDS. NONE APPEARED ON BEHALF OF THE ASSESSEE. IT TRANSPIRES THAT THIS ISSUE HAS BEEN DECIDED AGAINST THE ASSESSEE BY THE DECISI ON OF THE SPECIAL BENCH DELHI OF THE TRIBUNAL IN 119 ITD 107 IN ASSE SSEES CASE. ITA NO. 1537, 1538 & 1539/DEL/07 A.YRS. 2001-02, 2003-04&2004-05 2 THE SPECIAL HAS DEALT WITH THE ISSUE AND DECIDED T HE ISSUE IN FAVOUR OF THE REVENUE. IT IS ALSO NOTED THAT THE SPECIAL BENCH HAS OBSERVED ON P.144 AS UNDER:- THE LATER DECISION OF MADRAS HIGH COURT IN THE CAS E OF GENERAL OPTICS (ASIA) LTD. V. DY. CIT(A) DECIDED ON 27.12.2 008 HAS MADE OUR TASK EASIER. IN THE SAID CASE, SIMILAR QUESTIO N WAS RAISED AND THE TRIBUNAL, AFTER FOLLOWING THE DECISION OF SPECI AL BENCH IN THE CASE OF ROGINI GARMENTS (SUPRA) HAD ALLOWED DEDUCTI ON UNDER SECTION 80HHC AFTER DEDUCTING RELIEF ALLOWED UNDER SECTION 80- IA(9). THEIR LORDSHIPS IN THE JUDGMENT NOTED PROVI SION OF SUB- SECTION (9A) AS ALSO CIRCULAR OF CBDT NO.772 AND UL TIMATELY OBSERVED AS UNDER:- 8. THE DECISION IN ACIT V. M/S ROGINI GARMENTS OF THE SPECIAL BENCH, WHICH WAS FOLLOWED BY THE TRIBUNAL, RELATES TO THE PERIOD SUBSEQUENT TO THE DATE WHEN THE AMENDMENT CA ME INTO EFFECT. THEREFORE, THE TRIBUNAL ERRED IN APPLYING I T TO THE ASSESSMENT YEAR 1998-99 WHEN THE AMENDMENT HAD NOT YET COME INTO EFFECT. 9. IN THESE CIRCUMSTANCES, THE SUBSTANTIAL QUESTION OF LAW IS ANSWERED IN FAVOUR OF THE ASSESSEE, BUT RESTRICTING IT ONLY TO THE ASSESSMENT YEAR 1998-99. THIS CLARIFICATION IS NECESSARY SINCE THE IMPUGNED ORDER WAS PASSED FOR BOTH ASSESSM ENT YEARS 1998-99 AND 1999-2000. TAX CASE (APPEAL) IS DISPOSED OF ACCORDINGLY. NO C OSTS. CONSEQUENTLY, CONNECT M.P.S ARE CLOSED. IT IS CLEAR FROM ABOVE THAT APPLICATION OF RESTRICT IONS AS UPHELD BY THE SPECIAL BENCH IN THE CASE OF ROGINI GA RMENTS (SUPRA) WAS HELD TO BE APPLICABLE FROM ASSESSMENT YE AR 1999- 2000 ONWARD. 3.1 RESPECTFULLY FOLLOWING THE ABOVE, WE DECIDE TH E ISSUE IN FAVOUR OF THE REVENUE. 4. ANOTHER COMMON ISSUE RAISED IS FOR ASSESSMENT Y EAR 2001-02 AND 2003-04 THAT THE LD. CIT(A) ERRED IN DIRECTING TO ALLOW ITA NO. 1537, 1538 & 1539/DEL/07 A.YRS. 2001-02, 2003-04&2004-05 3 DISALLOWANCE MADE ON ACCOUNT OF SALE COMMISSION AS ASSESSEE FAILED TO PROVE THAT RECIPIENT OF COMMISSION WAS NO N-RESIDENT. 5. ON THIS ISSUE THE AO DISALLOWED THE SALES COMMI SSION PAID TO ONE M/S TARIQ TRADERS, PAKISTAN. THE AO ASKED THE ASSESSEE TO FURNISH INDEPENDENT EVIDENCE IN SUPPORT OF THE CLAI M THAT FOREIGN AGENT WAS IN FACT NON-RESIDENT AND EXPLAIN AS TO WH Y FOR FAILURE TO SUBMIT SUCH EVIDENCE, THE EXPENSES CLAIMED AS DEDUC TION SHOULD NOT BE DISALLOWED IN VIEW OF THE PROVISION OF SECTI ON 40A(I), AS NO TDS WAS MADE. NOT SATISFIED WITH ASSESSEE EXPLANA TION, AO HELD THAT SINCE THE ASSESSEE FAILED TO ESTABLISH THAT PA YEE WAS NON- RESIDENT, THE ASSESSEE WAS NOT ENTITLED TO CLAIM DE DUCTION ON ACCOUNT OF FOREIGN AGENT COMMISSION AS PER THE PRO VISIONS OF SECTION 40A(I). 6. UPON ASSESSEES APPEAL THE LD. CIT(A) NOTED THAT THE AO HAS ACCEPTED THAT THE PAYMENT WAS OUT OF INDIA, BUT HE WAS NOT SATISFIED THAT THE COMMISSION AGENT WAS NON-RESIDEN T. IT WAS SUBMITTED BEFORE THE LD. CIT(A) THAT PAYMENT HAS IN FACT BEEN MADE TO PERSON OUTSIDE INDIA AND HENCE THE PAYMENT SHOUL D BE ALLOWED. LD. CIT(A) HELD THAT HE AGREED WITH THIS PROPOSITI ON AND DIRECTED THAT AO WILL RE-VERIFY FROM THE BANK CERTIFICATE TH AT PAYMENT WAS OUT OF INDIA AND ALLOW THE CLAIM OF THE ASSESSEE. 7. AGAINST THIS ORDER THE REVENUE IS IN APPEAL BEF ORE US. 8. WE HAVE HEARD LD. DR AND PERUSED THE RECORDS. NONE APPEARED ON BEHALF OF THE ASSESSEE. ITA NO. 1537, 1538 & 1539/DEL/07 A.YRS. 2001-02, 2003-04&2004-05 4 9. WE FIND THAT IT IS NOT THE CASE OF THE REVENUE T HAT THE PAYMENT HAS ACTUALLY NOT BEEN MADE. ONLY DOUBT HAS BEEN RAISED BY THE AO THAT PAYMENT HAS NOT BEEN MADE OUTSIDE INDIA. L D. CIT(A) HAS DIRECTED THE AO TO VERIFY AS TO WHETHER THE PAYMENT IS OUT OF INDIA OR NOT AND THEREAFTER ALLOW THE ASSESSEES CLAIM. IN OUR CONSIDERED OPINION, THERE IS NO INFIRMITY IN THE SAID DIRECTIO NS, IF THE PAYMENT HAD BEEN MADE TO A PARTY OUTSIDE INDIA AND THE REC IPIENTS INCOME IS NOT EXIGIBLE TO TAX IN INDIA, THE SAME HAS TO BE ALLOWED AND IN SUCH AN EVENTUALITY THE PROVISION OF SECTION 40A(I) WILL NOT BE ATTRACTED. ACCORDINGLY, WE UPHOLD THE ORDER OF THE LD. CIT(A) REMITTING THE MATTER TO THE AO FOR VERIFICATION. 10. IN THE RESULT, ALL THE THREE APPEALS FILED BY T HE REVENUE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 04/12/2009. SD/- SD/- [I.P. BANSAL] [SHAMIM YAHYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 04/12/2009 SRB COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES