ACIT, Circle-16(3), Hyderabad V. M/S Photon energy Systems Ltd., Hyderabad

ITA 1697/HYD/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3260 (ITAT-HYDERABAD)
• Duration Of Justice: 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 07-06-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 31-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T DIWAKAR PRASAD
• Assessee Lawyers: A V RAGHURAM
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI G.C. GUPTA, VICE PRESIDENT & SHRI AKBER BASHA, ACCOUNTANT MEMBER I.T.A. NO. 1697/HYD/2010 ASSESSMENT YEAR 2007-08 THE ASST. CIT CIRCLE-16(3), HYDERABAD VS. M/S. PHOTON ENERGY SYSTEMS LTD., HYDERABAD PAN: AABCP9113B APPLICANT RESPONDENT APPELLANT BY: MR. T. DIWAKAR PRASAD RESPONDENT BY: MR. A.V. RAGHURAM O R D E R PER AKBER BASHA, AM: THIS APPEAL BY THE REVENUE, FOR THE ASSESSMENT YEA R 2007-08, IS DIRECTED AGAINST THE ORDER OF THE CIT(A )-V, HYDERABAD DATED 18.10.2010. 2. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: 1. THE HONBLE COMMISSIONER OF INCOME-TAX (APPEALS)-V, HYDERABAD ERRED BOTH IN FACTS AND LAW. 2. THE HONBLE COMMISSIONER OF INCOME-TAX (APPEALS)-V, HYDERABAD ERRED IN ALLOWING PAYMENT OF COMMISSION OF RS. 82,05,707/- ON EXPORT SALES. 3. THE HONBLE COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE APPRECIATED THE FACT THAT THE PROVISIONS OF SECTION 195 OF I.T. ACT ARE CLEARLY APPLICABLE IN THE CASE OF THE ASSESSEE AND AS THE ASSESSEE FAILED TO DEDUCT TAX AT SOURCE, THE DISALLOWANCE MADE U/S. 40(A)(I) OUGHT TO HAVE BEEN UPHELD. I.T.A. NO. 1697/HYD/2010 M/S. PHOTON ENERGY SYSTEMS LTD.. ========================== 2 4. THE HONBLE COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE HELD THAT THE PROVISIONS OF SECTION 5(2)(A) ARE APPLICABLE AS THE COMMISSION PAYMENTS ARE DEEMED TO HAVE BEEN RECEIVED INDIA. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE- COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF SPV MODULES AND HOT WATER SYSTEMS. FOR THE A.Y. 2007-0 8, THE ASSESSEE-COMPANY FILED ITS RETURN OF INCOME ON 29.1 0.2007 ADMITTING TOTAL INCOME OF RS. 84,82,904. THE ASSES SING OFFICER COMPLETED THE ASSESSMENT U/S. 143(3) OF THE ACT DET ERMINING THE TOTAL INCOME OF THE ASSESSEE-COMPANY AT RS. 1,6 6,88,611 BY MAKING DISALLOWANCE OF COMMISSION PAID TO FOREIG N AGENT ON EXPORT SALES OF RS. 82,05,707. 4. THE ASSESSEE WAS IN APPEAL BEFORE THE CIT(A). THE LEARNED CIT(A) RELYING ON THE DECISION OF HIS PREDE CESSOR IN THE CASE OF M/S. PRIYADARSINI SPINNING MILLS FOR A.Y. 2 003-04 DELETED THE ADDITION BY OBSERVING AS UNDER: 5.1 SINCE THE ISSUE INVOLVED IS IDENTICAL IN THE CURRENT CASE AND HAVING REGARD TO THE PRINCIPLES OF THE JUDICIAL CONSISTENCY, I HOLD THAT THE PROVISION S OF SECTION 40(A)(IA) ARE NOT APPLICABLE TO THE CASE OF THE APPELLANT AS THE COMMISSION PAYMENTS MADE TO NON-RESIDENT AGENTS DURING THE PREVIOUS YEAR ARE NOT SUBJECT TO TAXATION IN INDIA. ACCORDINGLY THE ADDITION OF RS.82,05,707/- IS DELETED. 5. AT THE OUTSET, WE FIND THAT THE ISSUE IN THE PRESEN T APPEAL IS SQUARELY COVERED IN FAVOUR OF THE ASSESSE E BY THE ORDER OF THIS TRIBUNAL IN THE CASE OF M/S. DIVIS L ABORATORIES I.T.A. NO. 1697/HYD/2010 M/S. PHOTON ENERGY SYSTEMS LTD.. ========================== 3 LTD. (WHERE BOTH OF US WERE PARTIES), IN I.T.A. NOS . 601 TO 604/HYD/09 FOR ASSESSMENT YEARS 2001-02 TO 2004-05, WHEREIN THE ORDER OF THE LEARNED CIT(A) DELETING SI MILAR ADDITIONS WAS UPHELD. RESPECTFULLY FOLLOWING THE O RDER OF THE CO-ORDINATE BENCH OF THE TRIBUNAL, WE DO NOT FIND A NY INFIRMITY IN THE ORDER OF THE LEARNED CIT(A) AND ACCORDINGLY THE SAME IS UPHELD. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH JUNE, 2011. SD/- (G.C. GUPTA) VICE PRESIDENT SD/- (AKBER BASHA) ACCOUNTANT MEMBER HYDERABAD, DATED 15 TH JUNE, 2011 TPRAO COPY FORWARDED TO: 1. THE ASST. CIT, CIRCLE - 16(3), 6 TH FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD. 2. M/S. PHOTON ENERGY SYSTEMS LTD., PLOT NO. 775 - K, ROAD NO. 45, JUBILEE HILLS, HYDERABAD. 3. THE CIT(A) - V, HYDERABAD 4 THE CIT - IV, HYDERABAD. 5. THE DR A BENCH, ITAT, HYDERABAD