GOCL Corporation Limited, Hyderabad V. Deputy Commissioner of Income Tax, Circle-2(2), Hyderabad

ITA 1872/Hyd/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4966 (ITAT-HYDERABAD)
• Duration Of Justice: 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 16-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K J DIVYA
• Keywords: Permanent establishment
• Section: 143(3)

Judgement Text

ITA NO 1872 O F 2017 GOCL CORPN LTD HYDERABAD. PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO.1872/HYD/2017 (ASSESSMENT YEAR: 2014-15) GOCL CORPORATION LTD HYDERABAD PAN:AABCG8433B VS DY. COMMISSIONER OF INCOME TAX, CIRCLE 2(2) HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI Y. RATNAKAR FOR REVENUE : SMT. K.J. DIVYA, DR O R D E R PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y 2014-15 AGAIN ST THE ORDER OF THE CIT (A)-2, HYDERABAD, DATED 29 TH SEPTEMBER, 2017. THE ASSESSEE HAS RAISED THE FOLLOWING GROUND S OF APPEAL: 1. THE ORDER OF THE LEARNED CIT DATED 29/9/2017 I S CONTRARY TO LAW AND FACTS. 2. THE APPELLANT CONTENDS THAT THE DISALLOWANCE OF RS.78,48,525 U/S 40(A)(IA) OF THE I.T. ACT IS ERRON EOUS. 3. IT IS CONTENDED THAT THE COMMISSION PAID TO THE FOUR NON RESIDENT ENTITIES (AGGREGATING TO RS.78,48,525) (DETAILS AS PER LIST ENCLOSED TO THE GROUNDS OF APP EAL) IS NOT TAXABLE IN INDIA AND SECTION 195(1) OF THE I.T. ACT IS NOT ATTRACTED. CONSEQUENTLY, THE PROVISIONS OF SECT ION 40(A)(IA) ARE NOT ATTRACTED. 4. IT IS CONTENDED THAT THE PAYMENTS ARE MADE TO T HE EXPORT AGENTS WHO RESIDE OUTSIDE INDIA, THEIR SERVI CES ARE WHOLLY RENDERED OUTSIDE INDIA, AND THESE EXPORT AGE NTS DATE OF HEARING : 20.09.2018 DATE OF PRONOUNCEMENT : 24.10.2018 ITA NO 1872 O F 2017 GOCL CORPN LTD HYDERABAD. PAGE 2 OF 4 DO NOT HAVE ANY PERMANENT ESTABLISHMENT IN INDIA AN D AS SUCH THE PROVISIONS OF SECTION 195(1) ARE NOT AT TRACTED. 5. THE APPELLANT SUBMITS THAT THE LEARNED CIT CONFI RMED THE DISALLOWANCE ON THE ERRONEOUS GROUND THAT FULL PARTICULARS ALONG WITH EVIDENCE THAT NO SERVICE WAS RENDERED IN INDIA AND THAT THE EXPORT AGENTS DO NOT HAVE ANY PERMANENT ESTABLISHMENT IN INDIA HAVE NOT BEEN SUBMITTED. THE PARTICULARS ARE AVAILABLE AND IF IN DOUBT, THE AO SHOULD HAVE MADE APPROPRIATE ENQUIRY. 6. THE APPELLANT CRAVES LEAVE TO ADD TO, AMEND OR A LTER ANY OF THE AFORESAID GROUNDS AS THE OCCASION MAY REQUIRE. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY, FURNISHED ITS RETURN OF INCOME FOR THE A.Y 2014-15 ON 30.11.2014 ELECTRONICALLY U/S 139(1) OF THE I.T. ACT, 1961 DEC LARING A TOTAL INCOME OF RS.79,93,89,940 AND PAID TAXES THEREON. D URING THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT, THE A O OBSERVED THAT THE ASSESSEE HAS REMITTED A SUM OF RS.3,10,98, 992 UNDER THE HEAD SELLING COMMISSION EXPENSE. THE ASSESSEE WAS A SKED TO FURNISH THE DETAILS OF THE SELLING EXPENSE ALONG WI TH TDS DONE ON THESE EXPENSES. VIDE LETTER DATED 15.12.2016 THE AS SESSEE SUBMITTED THE BREAKUP OF SELLING EXPENSES AND RELAT ED TDS DETAILS. ON VERIFICATION OF THE SAME, THE AO OBSERV ED THAT THE ASSESSEE HAS PAID A SUM OF RS.78,48,525 AS EXPORT A GENTS COMMISSION BUT DID NOT DEDUCT TAX AT SOURCE. THEREF ORE, VIDE ORDER SHEET ENTRY DATED 26.12.2016, THE ASSESSEE WA S ASKED TO SHOW CAUSE AS TO WHY DISALLOWANCE SHOULD NOT BE MAD E SINCE TDS WAS NOT DONE ON EXPORT PAYMENTS. THE ASSESSEE EXPLA INED THAT THE RECIPIENT AGENTS DO NOT HAVE PERMANENT ESTABLIS HMENT IN INDIA AND THEREFORE, THE PAYMENTS DO NOT ATTRACT TD S. THE AO WAS HOWEVER, NOT CONVINCED WITH THE ASSESSEES CONTENTI ONS AND BY HOLDING THAT SINCE THE ASSESSEE HAS MADE PAYMENTS T O FOREIGN ITA NO 1872 O F 2017 GOCL CORPN LTD HYDERABAD. PAGE 3 OF 4 ENTITIES, IT IS REQUIRED TO DEDUCT TAX AT SOURCE, H E DISALLOWED THE SUM OF RS.78,48,525 U/S 40(A)(IA) OF THE I.T. ACT A ND BROUGHT IT TO TAX. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BE FORE THE CIT (A), WHO CONFIRMED THE ORDER OF THE AO AND THE ASSE SSEE IS IN SECOND APPEAL BEFORE US BY RAISING THE ABOVE GROUND S OF APPEAL. 3. AT THE TIME OF HEARING ON 20.09.2018, THE ASSESS EE HAS FILED CERTAIN DOCUMENTS IN SUPPORT OF HIS CONTENTIO N THAT THE PAYMENTS MADE TO NON-RESIDENTS WERE NOT TOWARDS ANY SERVICES PERFORMED BY THEM WITHIN INDIA AND THAT THEY DO NOT HAVE ANY PERMANENT OR TEMPORARY ESTABLISHMENT IN INDIA AND T HEIR COMMISSION INCOME IS NOT LIABLE TO TAX IN INDIA. IN SUPPORT THEREOF, THE DOCUMENTS SUCH AS FORM NO.11CD ISSUED BY THE CHARTERED ACCOUNTANT, FORM NO.15CA FILED WITH THE I .T. DEPARTMENT AND BANK ACKNOWLEDGEMENT FOR FOREIGN REM ITTANCE AND COPY OF THE AGENT AGREEMENT ETC., ARE FILED BEF ORE US WITH RESPECT TO EACH OF THE PAYMENT. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THESE DOCUMENTS GOES TO PRO VE THE CONTENTION OF THE ASSESSEE AND PRAYED FOR ADMISSION OF THE SAME. 4. THE LEARNED DR WAS ALSO HEARD. 5. ON GOING THROUGH THE MATERIAL, WE FIND THAT THES E DOCUMENTS PROVE THAT THE SERVICES WERE RENDERED BY THE AGENTS OUTSIDE INDIA AND THEREFORE, THEIR COMMISSION INCOM E IS NOT TAXABLE IN INDIA. HOWEVER, SINCE THESE DOCUMENTS AR E FILED FOR THE FIRST TIME BEFORE US, WE DEEM IT NECESSARY TO ADMIT THESE DOCUMENTS AND REMIT THE ISSUE TO THE FILE OF THE AO FOR RECONSIDERATION IN ACCORDANCE WITH LAW AFTER VERIFI CATION OF THE ITA NO 1872 O F 2017 GOCL CORPN LTD HYDERABAD. PAGE 4 OF 4 DOCUMENTS. NEEDLESS TO MENTION THAT THE ASSESSEE SH ALL BE GIVEN A FAIR OPPORTUNITY OF HEARING. 6. IN THE RESULT, ASSESSEES APPEAL IS TREATED AS A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH OCTOBER, 2018. SD/- SD/- (S.RIFAUR RAHMAN) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 24 TH OCTOBER, 2018. VINODAN/SPS COPY TO: 1 GOCL CORPORATION LTD, PB NO.1, SANATNAGAR, KUKATP ALLY, HYDERABAD 2 DY. CIT, CIRCLE 2(2), ROOM NO.513, 5 TH FLOOR, SIGNATURE TOWERS, KONDAPUR, HYDERABAD 3 CIT (A)-2, HYDERABAD 4 PR. CIT 2, HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER