Asst. Commissioner of Income tax Cir. 2(1}, Panaji V. Teracom Ltd., Goa

ITA 177/PAN/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93539 (ITAT-PANAJI)
• Duration Of Justice: 3 year(s) 8 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 07-07-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 18-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B BALAKRISHNA
• Assessee Lawyers: NITIN KHANVILKAR FM
• Keywords: Permanent establishment; Bad and doubtful debts
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI N.S. SAINI , HONBLE ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN , HONBLE JUDICIAL MEMBER ITA NO. 177 /PNJ/201 1 (ASST. YEAR : 200 8 - 0 9 ) ACIT, CIRCLE - 2(1), PANAJI. VS. TERACOM LTD., 250, KUNDAIM INDUSTRIAL ESTATE, KUNDAIM, GOA. PAN NO. AABCT 5254 B (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI NITIN KHANVILKAR FM DEPARTMENT BY : SHRI B. BALAKRISHNA - D.R. DATE OF HEARING : 07 / 0 7 /2015 . DATE OF PRONOUNCEMENT : 07 / 0 7 /201 5 . O R D E R PER GEORGE MATHAN: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF L D. CIT (A), PANAJI IN APPEAL NO. 164/PNJ/2010 - 11 DATED 18 /0 8 /201 1 FOR A.Y. 2008 - 0 9 . 2. SHRI NITIN KHANVILKAR, FINANCE MANAGER OF THE ASSESSEE REPRESENTED ON BEHALF OF THE ASSESSEE AND SHRI B. BALAKRISHNA, LEARNED DR REPRESENTED ON BEHALF OF THE REVENUE. 2 ITA NO. 177 /PNJ/2011 3. IT IS SUBMITTED BY THE LEARNED DR THAT IN GROUND NO.1 THE REVENUE HAS CHALLENGED THE ACTION OF THE LD. CIT(A) IN ALLOWING THE ASSESSEES CLAIM FOR DEDUCTION U/S. 80IB OF THE ACT IN RESPECT OF BAD DEBTS WHICH HAD BEEN OFFERED BY THE ASSESSEE AS INCOME U/S. 40(A)(I) . IT WAS SUBMITTED BY THE LEARNE D DR THAT THE ASSESSEE HAD ALREADY CLAIMED DEDUCTION U/S. 80IB ON CERTAIN TRANSACTIONS. THE ASSESSEE HAD ALSO CLAIMED CERTAIN BAD DEBTS RELATING TO THOSE TRANSACTIONS. IT WAS THE SUBMISSION THAT DURING THE RELEVANT ASSESSMENT YEAR , THE ASSESSEE HAD OF F ERED TO TAX DEBTS WHICH HAD BEEN RECOVERED BY THE ASSESSEE , AS ITS INCOME BY APPLYING THE PROVIS I ONS OF SEC. 41(1) . IT WAS THE SUBMISSION THAT THE ASSESSEE NOW CLAIMING DEDUCTION U/S. 80IB ON THE SAID INCOME OFFERED U/S. 41 ( 1 ). IT WAS THE SUBMISSION THAT THE ASSESSEE HAS ALREADY OBTAINED DEDUCTION IN RESPECT OF THE TRANSACTIONS U/S. 80IB. THE INCOME , NOW OFFERED BY THE ASSESSEE WAS NOT ELIGIBLE FOR DEDUCTION U/S. 80IB. 4 . IN REPLY, IT WAS SUBMITTED BY THE LEARNED AR THAT WHEN ASSESSEE CLAIMED BAD DEBTS, THE INCOME OF THE ASSESSEE HAD BEEN REDUCED BY THE AMOUNTS OF THE BAD DEBTS. IT WAS THE SUBMISSION THAT CONSEQUENTLY 80IB DEDUCTION CLAIMED BY THE ASSESSEE WAS ON THE REDUCED AMOUNT I.E. THE INCOME REDUCED BY THE BAD DEBTS CLAIM. IT WAS THE SUBMISSION 3 ITA NO. 177 /PNJ/2011 THAT NOW ASSESSEE HAVING OFFERED THE INCOME U/S. 4 1 ( 1 ) IN RESPECT OF THE RECOVERY WHICH HAD BEEN MADE IN RESPECT OF THE BAD DEBTS WHICH HAD BEEN EARLIER CLAIMED , T HE ASSESSEE WAS ENTITLED U/S.80IB. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. 6. ADMITTEDLY, WHEN THE ASSESSEE CLAIMED BAD DEBTS, THE CLAIM U/S.80IB WAS REDUCED INSOFAR AS BAD DEBTS W ERE REDUCED FROM THE TOTAL INCOME. CONSEQUENTLY , IT CANNOT BE SAID THAT THE ASSESSEE IS GETTING A DOUBLE DEDUCTION. IN THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE FINDING OF THE LD. CIT(A) IS ON THE RIGHT FOOTING AND DOES NOT CALL FOR ANY INTERFERENCE. CONSEQUENTLY GROUND NO.1 OF THE REVENUES AP PEAL STANDS DISMISSED. 7. IN RESPECT OF GROUND NO.2, IT WAS SUBMITTED BY THE LEARNED DR THAT THE ISSUE WAS AGAINST THE LD. CIT(A) IN ALLOWING THE ASSESSEES CLAIM THAT TDS WAS NOT LIABLE IN RESPECT OF PAYMENTS MADE TO ITS AGENTS IN MALAYSIA . LEARNED D R VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER. 8 . IN REPLY, LEARNED AR SUBMITTED THAT MALAYSIA AGENTS DO NOT HAVE PERMANENT ESTABLISHMENT IN INDIA . IT WAS THE SUBMISSION THAT THE 4 ITA NO. 177 /PNJ/2011 PAYMENTS HAD BEEN MADE TO THE MALAYSIA PARTY THROUGH BANKING CHAN NELS BY LETTER OF CREDIT AND THE PAYMENTS HAVE BEEN MADE IN MALAYSIA . IT WAS THE SUBMISSION THAT THE TDS WAS NOT LIABLE TO THE DEDUCTED ON THOSE PAYMENTS. 9 . WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. 1 0 . ADMITTEDLY, PAYMENTS TO THE MALAYSIA PARTY W ERE CLEARLY NOT TAXABLE IN INDIA INSOFAR AS THE MALAYSIA PARTY WAS NOT LI A BLE TO INCOME TAX IN INDIA. ONCE IT IS EVIDENCE THAT THE INCOME OF THE MALAYSIA PARTY IS NOT LIABLE TO TAX IN INDIA, THE PROVISIONS U/S. 195 WOULD NOT APPLY. IN THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE FINDING OF THE LD.CIT(A) ON THIS ISSUE IS ON RIGHT FOOTING AND DOES NOT CALL FOR ANY INTERFERENCE . IN THE RESULT, GROUND NO.2 STANDS DISMISSED. 1 1 . IN THE RESULT, APPEAL OF THE REV ENUE STANDS DISMISSED. ( ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH JULY , 201 5 ). SD/ - SD/ - ( N.S.SAINI ) ( GEORGE MATHAN ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 7 TH JU LY , 201 5 . VR/ - 5 ITA NO. 177 /PNJ/2011 COPY TO: 1 . THE APPELLANT 2 . THE RESPONDENT 3 . THE LD. CIT 4 . THE CIT(A) 5 . THE D.R 6 . GUARD FILE. BY ORDER ASSISTANT REGISTRAR I.T.A.T., PANAJI 6 ITA NO. 177 /PNJ/2011 DATE INITIAL ORIGINAL DICTATION PAD IS ENCLOSED IN THE FILE 1. DRAFT DICTATED ON 0 7 .0 7 .2015 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 08 .07 .2015 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 08 /07 /2015 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 08 /0 7 /2015 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 08 /07 /2015 SR.PS 6. DATE OF PRONOUNCEMENT 07 /0 7 /2015 SR.PS 7. FILE SENT TO THE BENCH CLERK 09 /07 /2015 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER