ACIT, Circle-10(2), New Delhi V. Graziano Transmission India Pvt. Ltd., New Delhi

ITA 1820/DEL/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 3052 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-03-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 15-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; TDS
• Section: 195

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL, DELHI BENCH C, NEW DELHI BEFORE : SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NOS. 1820 & 1821/DEL/2018 ASSESSMENT YEARS: 2012-13 & 2013-14 ACIT, CIRCLE 10(2), NEW DELHI. (APPELLANT) VS. GRAZIANO TRANSMISSION INDIA PVT. LTD., 510-511, 5 TH FLOOR, DLF TOWER-B, JASOLA, NEW DELHI. (PAN- AAACG 4258M). (RESPONDENT) APPELLANT BY SH. AMIT KATOCH, SR. DR RESPONDENT BY SH. RISHABH MALHOTRA, ADVOCATE ORDER PER L.P. SAHU, A.M.: THESE TWO APPEALS ARE FILED BY THE REVENUE AGAINST SEPARATE ORDERS OF LD. CIT(A)-35, NEW DELHI FOR THE ASSESSMENT YEARS 2 012-13 AND 2013-14 RESPECTIVELY. IN BOTH THESE APPEALS THE GROUNDS RAI SED BY REVENUE ARE COMMON BARRING THE AMOUNT OF DISALLOWANCE. HENCE, B OTH THE APPEALS, HAVING COMMON ISSUE, WERE HEARD TOGETHER AND ARE BEING DIS POSED OF BY THIS CONSOLIDATED ORDER. THE SOLITARY GROUND RAISED IN A PPEAL FOR A.Y. 2012-13 READ AS UNDER : 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE IN LAW LD. CIT(A) IS CORRECT IN DELETING THE DISALLOWANCE OF RS.1,47,04, 728/- MADE ON ACCOUNT OF NON-DEDUCTION OF TDS ON THE PAYMENT MADE TO M/S. GRAZIANO DATE OF HEARING 06.03.2019 DATE OF PRONOUNCEMENT 06.03.2019 ITA NOS. 1820 & 1821/DEL/2018 2 TRANSMISSION NORTH AMERICA USA AND OERLIKON GRAZIANO SPA, ITALY (SPA) HOLDING THE SAME AS COMMISSION IGNORING THE FACT TH AT THE PAYMENT IS ACTUALLY IN THE NATURE OF FEE FOR TECHNICAL SERVICE S AND THE ASSESSEE ONLY NAMED THE SAME AS COMMISSION. 2. IN VIEW OF AFORESAID GROUND RAISED BY THE REVENU E, THE ONLY ISSUE WHICH NEEDS ADJUDICATION AT THIS STAGE IS WHETHER THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITIONS OF RS.1,47,04,728/- IN A.Y. 2012-13 AND RS.2,54,24,667/- (WRONGLY NOTED AS RS.1,47,04,728/- IN THE GROUNDS OF APPEAL) IN A.Y. 2013-14, MADE ON ACCOUNT OF NON-DEDUCTION O F TDS ON PAYMENT MADE TO FOREIGN ENTITY AND WHETHER SUCH PAYMENTS MADE WA S IN THE NATURE OF COMMISSION OR FEE FOR TECHNICAL SERVICES. 3. DURING THE COURSE OF HEARING, THE LD. DR, THOUGH RELIED ON THE ORDERS OF THE ASSESSING OFFICER, BUT DID NOT OBJECT TO THE CO NTENTION OF THE LEARNED AR THAT THE ISSUE INVOLVED IN BOTH THESE APPEALS ARE S QUARELY COVERED BY THE DECISION OF CO-ORDINATE BENCH IN ASSESSEES OWN CAS E FOR A.Y. 2010-11 (ITA NO. 2575/DEL/2016), WHEREBY IN THE IDENTICAL FACTS OF THE CASE, THE PAYMENTS MADE TO THE SAME AGENTS HAVE BEEN TREATED AS COMMIS SION AND NOT AS FEE FOR TECHNICAL SERVICES. RELEVANT FACTS AND FINDINGS OF THE ITAT, DELHI BENCH IN THE AFORESAID CASE READ AS UNDER : FACTS: FURTHER, AO OBSERVED THAT THE ASSESSEE COMPANY HAD PAID AN AMOUNT OF RS. 88,91,816/- TO M/S GRAZIANO TRASMISSIONI NORTH AMERICA USA AND THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE PAYMENT MADE TO M/S GRAZIANO TRASMISSIONI NORTH AMERICA USA BE NOT TREAT ED AS ROYALTY / FEES FOR TECHNICAL SERVICES IN LIGHT OF THE SERVICES OFF ERED BY THE SAID COMPANY. THE ASSESSEE COMPANY WAS FURTHER ASKED TO EXPLAIN AS TO WHY NO TDS WAS DEDUCTED ON THE PAYMENT MADE TO THE SAID COMPANY. I N COMPLIANCE ITA NOS. 1820 & 1821/DEL/2018 3 THERETO THE ASSESSEE COMPANY DID NOT FILE ANY REPLY . THEREFORE, AS PER THE PROVISIONS OF THE ACT AND IN ACCORDANCE WITH JUDICI AL PRONOUNCEMENT ON THE ISSUE IN DISPUTE, THE AO OBSERVED THAT ASSESSEE WAS LIABLE TO DEDUCT TDS ON EXPORT COMMISSION OF RS. 89,91,816 PAID TO NO N-RESIDENT / OUTSIDERS. SINCE ASSESSEE DID NOT DEDUCT THE TDS AS PER PROVISION OF THE SECTION 195 OF THE ACT, THEREFORE, TOTAL DEDUCTION OF EXPENDITURE OF RS. 88,91,816/- ON EXPORT COMMISSION, AS CLAIMED BY ASS ESSEE, WAS DISALLOWED AND ADDED BACK TO THE TAXABLE INCOME OF THE ASSESSE E FOR THE AY 2010-11. ACCORDINGLY, THE AO ASSESSED THE INCOME OF THE ASSE SSEE AT RS. 22,10,20,170/- U/S.143(3) OF THE ACT DATED 28.2.201 4. AGAINST THE ASSESSMENT ORDER, ASSESSEE APPEALED BEFORE THE LD. CIT(A), WHO VIDE HIS IMPUGNED ORDER DATED 04.2.2016 HAS ALLOWED THE APPE AL OF THE ASSESSEE. AGGRIEVED WITH THE IMPUGNED ORDER, REVENUE IS IN AP PEAL BEFORE THE TRIBUNAL. FINDINGS: 5.2 AS REGARDS GROUND NO. 2 RELATING TO DISALLOWAN CE OF RS. 88,91,816/- IS CONCERNED, AFTER PERUSING THE DUTIES AND OBLIGATION S AS MENTIONED AT PAGE NO. 44 TO 46 OF THE IMPUGNED ORDER, WE FIND THAT TH E AGENT IS NOT PROVIDING ANY TECHNICAL SERVICES TO THE ASSESSEE. THE AGENT IS ACTING ONLY COMMISSION AGENT AND PROCURING THE ORDERS FOR THE ASSESSEE AND TO INFORM THE ASSESSEE FOR ANY INFRINGEMENT OF RIGHTS. EVEN IF THE SAME IS CONSIDERED AS BUSINESS INCOME OF THE COMMISSION AGENT SAME IS NOT TAXABLE IN INDIA AS THE FOREIGN ENTITY DOES NOT HAVE ANY PE OR BC IN INDIA. THE COMM ISSION IS BEING ENTERTAINED IN THE FOREIGN COMPANY IN THE FOREIGN C OUNTRY. NO PART OF ITS INCOME ACCRUE OR ARISE IN INDIA. NOR IT IS MAKING A VAILABLE ANY TECHNICAL KNOWLEDGE, EXPERIENCE, SKILL, KNOWHOW ETC. TO THE A SSESSEE. HENCE, LD. CIT(A) HAS RIGHTLY HELD THAT THE CASE OF THE ASSESSE E IS IDENTICAL TO THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CAS E OF DIT VS. GUY CARPENTER AND COMPANY LTD. (ITA NO. 202/2012)- HON BLE DELHI HIGH COURT AND THE ITAT, HYDERABAD AND DELETED THE ADDIT ION OF RS. 88,91,816/- . IN VIEW OF ABOVE, WE ARE OF THE CONSIDERED VIEW T HAT LD. CIT(A) HAS PASSED A WELL REASONED ORDER WHICH DOES NOT NEED ANY INTER FERENCE ON OUR PART, HENCE, WE UPHOLD THE ACTION OF THE LD. CIT(A) ON THE ISSUE IN DISPUTE AND REJECT THE GROUND NO. 2 RAISED BY THE REVENUE. ITA NOS. 1820 & 1821/DEL/2018 4 4. HAVING CONSIDERED THE RIVAL SUBMISSIONS AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD AND RESPECTFULLY FOLLOWING THE DECISION OF CO-ORDINATE BENCH OF TRIBUNAL, WE FIND NO JUSTIFICATION TO INTE RFERE WITH THE ORDERS OF THE LD. CIT(A) ON THE ISSUE UNDER CONSIDERATION. ACCORD INGLY, THE GROUNDS RAISED BY THE REVENUE IN BOTH THE APPEALS DESERVE TO BE RE JECTED. 5. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE A RE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 06.03.2019. SD/- SD/- (H.S. SIDHU) (L.P. SA HU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 06.03.2019 *AKS* COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI