The Income Tax Officer, Ward-3(2), , Vijayawada V. Fusion Voice Solutions(India)Private Limited, Vijayawada

ITA 186/VIZ/2020

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 2580 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 21-09-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K SONAWAL
• Keywords: Set aside
• Section: 143(3); 40(a)(ia); 201; 192; 13; 63

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM (T HROUGH WEB - BASED VIDEO CONFERENCING PLATFORM) BEFORE SHRI V. DURGA RAO , HONBLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , HONBLE ACCOUNTANT MEMBER I . T . A . NO. 186 / VIZ /2020 (ASST. YEAR : 201 4 - 1 5 ) ITO, WARD - 3(2), VIJAYAWADA. VS. M/S. FUSION VOICE SOLUTIONS (INDIA) PVT. LTD., D.NO. 36 - 14 - 2, FUSION TOWERS, SIDDARTHA PUBLIC SCHOOL ROAD, VIJAYAWADA. PAN NO. AABCF 2029 A (APP ELLANT ) (RESPONDENT) C.O.NO. 28/VIZ/2020 (ARISING OUT OF I.T.A. NO. 186/VIZ/2020) (ASST. YEAR : 2014 - 15 ) M/S. FUSION VOICE SOLUTIONS (INDIA) PVT. LTD., D.NO. 36 - 14 - 2, FUSION TOWERS, SIDDARTHA PUBLIC SCHOOL ROAD, VIJAYAWADA. VS. ITO, WARD - 3(2), VIJAYAWADA. PAN NO. AABCF 2029 A (APPELLANT ) (RESPONDENT) ASSESSEE BY : SHRI G.V.N. HARI , ADVOCATE . DEPARTMENT BY : SHRI D.K. SONAWAL , CIT DR DATE OF HEARING : 26 / 11 /2020 . DATE OF PRONOUNCEMENT : 27 / 1 1 /20 20 . O R D E R PER V. DURGA RAO , JUDICIAL MEMBER THIS APPEAL BY THE REVENUE AND THE CROSS OBJECTION BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF COMMISSIONER OF 2 ITA NO. 186 / VIZ /2020 C.O.NO.28/VIZ/2020 ( M/S. FUSION VOICE SOLUTIONS (INDIA) PVT. LTD. ) INCOME TAX (APPEALS) , VIJAYAWADA , DATED 12 /0 3 /20 20 FOR THE ASSESSMENT YEAR 201 4 - 1 5 . 2. AT THE OUTSET , LD.COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE VERY BASIS ON WHICH 263 ORDER PASSED BY THE PR. COMMISSIONER HAS BEEN QUASHED BY THE ITAT, THEREFORE LD. CIT(A) HAS CANCELLED THE CONSEQUENTIAL ORDER PASSED BY TH E AO AND SUBMITTED THAT APPEAL HAS TO BE DISMISSED . 3 . LD.DR SIMPLY RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 4 . WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIAL AVAILABLE ON RECORD AND ORDERS OF THE AUTHORITIES BELOW. 5. IN THIS CASE , THE ASSESSEE IS A PRIVATE LIMITED COMPANY DERIV ES INCOME FROM SALE OF NOKIA PRODUCTS , FILED ITS RETURN OF INCOME FOR THE A.Y. 2014 - 15 ADMITTING TOTAL INCOME OF RS. 10,86,812/ - . THE ASSESSMENT WAS ORIGINALLY COMPLETED U/SEC. 143(3) ON 20/12/2016 DETERMINING THE TOTAL INCOME OF RS.14,31,630/ - . THE PR.COMMISSIONER, VIJAYAWADA VIDE ORDER U/SEC. 263, DATED 15/03/2019 SET ASIDE THE ORDER PASSED BY THE AO AND DIRECTED THE AO TO REDO THE ASSESSMENT BY EXAMINING THE APPLICABILITY OF SECTION 194H OF THE ACT IN RELATION TO TRADE INCENTIVES ALLOWED BY THE ASSESSEE TO I T S RETAILERS. ACCORDINGLY, THE AO HAS TAKEN UP THE ISSUE AND AFTER ISSUING NOTICE, HE PASSED A CONSEQUENTIAL ORDER BY DISA L LOWING AN AMOUNT OF 3 ITA NO. 186 / VIZ /2020 C.O.NO.28/VIZ/2020 ( M/S. FUSION VOICE SOLUTIONS (INDIA) PVT. LTD. ) RS. 6,72,98,783/ - U/SEC. 40(A)(IA) OF THE ACT BEING TRADE INCENTIVES PAID TO ITS RETAILERS FOR THE DEFAULT OF NON - COMPLIANCE TO THE PROVISIONS OF SECTION 194H OF THE ACT. 6 . MEANWHILE, THE ASSESSEE HAS CONTESTED THE ORDER OF THE PR.COMMISSIONER PASSED U/SEC. 2 63 DATED 15/03/2019 BEFORE THE ITAT, VISAKHAPATNAM . THE ITAT VIDE ITS ORDER DATED 31/12/2019 IN ITA NO. 151/VIZ/2019 RELYING ON ITS ORDER IN ASSESSEES CASE ITSELF FOR THE A.Y. 2012 - 13 HELD THAT ASSESSMENT ORDER PASSED BY THE AO IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE REVENUE . SIMILARLY, THE INCENTIVES PAID TO ITS EMPLOYEES TAKEN THE CHARACTER OF SALARIES U/SEC. 192 AND NO DISALLOWANCE IS WARRANTED U/SEC. 40(A)(IA) FOR THE PAYMENT OF SALARIES AND SET ASIDE THE ORDER OF THE PR.COMMISSIONER U/SEC. 263 AND RESTORED THE ORIGINAL ASSESSMENT ORDER PASSED BY THE AO U/SEC. 143(3) DATED 20/12/2016. WE FIND THAT LD. CIT(A) HAS CORRECT LY QUASHED THE ORDER PASSED BY THE AO FOR THE REASON THAT CONSEQUENTIAL ORDER IS PASSED ON THE BASIS OF THE ORDER PASSED BY THE LD.PR.COMMISSIONER U/SEC. 263 DATED 15/03/2019 . THE VERY SAME ORDER HAS BEEN QUASHED BY THE ITAT IN ITA NO. 151/VIZ/2019 DATED 31/12/2019 , T HEREFORE , THE CONSEQUENTIAL ORDER PASSED BY THE AO CANNOT SURVIVE. THUS , THE LD. CIT(A) HAS RIGHTLY CANCELLED THE ORDER 4 ITA NO. 186 / VIZ /2020 C.O.NO.28/VIZ/2020 ( M/S. FUSION VOICE SOLUTIONS (INDIA) PVT. LTD. ) PASSED BY THE AO. WE FIND NO INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(A) . THUS, THIS APPEAL FILED BY THE REVENUE IS DISMISSED. 7 . SO FAR AS CROSS OBJECTION FILED BY THE ASSESSEE IS CONCERNED, IT IS ONLY SUPPORTIVE TO THE ORDER OF THE LD. CIT(A). AS THERE IS NO GRIEVANCE AGAINST THE ORDER OF THE LD. CIT(A), NO SEPARATE ORDERS ARE REQUIRED TO BE PASSED, THEREFORE THE SAME IS DISMISSED . 8 . IN THE RESULT, APPEAL FILED BY THE REVENUE AND THE C R OSS OBJECTION FILED BY ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON TH IS 2 7 T H DAY OF NOV. , 2020 . S D / - S D / - (D.S. SUNDER SINGH) (V. DURGA RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 2 7 T H NOVEMBER , 20 20 . VR/ - COPY TO: 1. THE ASSESSEE - M/S. FUSION VOICE SOLUTIONS (INDIA) PVT. LTD., D.NO. 36 - 14 - 2, FUSION TOWERS, SIDDARTHA PUBLIC SCHOOL ROAD, VIJAYAWADA. 2. THE REVENUE ITO, WARD - 3(2), VIJAYAWADA. 3. THE PR. CIT , VIJAYAWADA . 4. THE CIT(A) , VIJAYAWADA. 5. THE D.R . , VISAKHAPATNAM. 6. GUARD FILE. BY ORDER (VUKKEM RAMBABU) SR. PRIVATE SECRETARY, ITAT, VISAKHAPATNAM.