Emptorconic Solutions P Ltd., CHENNAI V. ITO, CHENNAI

ITA 1881/CHNY/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8877 (ITAT-CHENNAI)
• Duration Of Justice: 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 14-06-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 21-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: A S SRIRAMAN
• Section: 143(3)

Judgement Text

, / , IN THE INCOME TAX APPELLATE TRIBUNAL , C/SMC BENCH, CHENNAI . , ! BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.1881/MDS/2015 ( / ASSESSMENT YEAR: 2007-08) M/S .EMPTORCONIC SOLUTIONS P.LTD., 7, 4 TH STREET, BHARAT RATHNA RAJIV NAGAR, AMBATTUR, CHENNAI-600 053. VS THE INCOME TAX OFFICER, COMPANY WARD-II(1), CHENNAI. PAN: AABCE5937A ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. A.S.SRIRAMAN, ADVOCATE /RESPONDENT BY : MR. A.V.SREEKANTH, JCIT /DATE OF HEARING : 14 TH JUNE, 2016 /DATE OF PRONOUNCEMENT : 1 ST JULY, 2016 / O R D E R THIS APPEAL IS FILED BY THE ASSESSEE AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APP EALS)- 6, CHENNAI DATED 17.04.2015 IN ITA NO.92/CIT(A) -6/2009- 10 PASSED UNDER SECTION143(3) & 250(6) OF THE ACT. 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN ITS A PPEAL, HOWEVER THE CRUX OF THE ISSUE IS THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN SUSTAINING THE DISALLOWANCE MADE BY THE LEARNED ASS ESSING OFFICER AGAINST PAYMENT MADE TO CONSEQUENCE AUSTRAL IA PTY.LTD., AUSTRALIA FOR PURCHASE OF DATA BASE BY TR EATING IT AS 2 ITA NO.1881/MDS/2015 PAYMENT MADE FOR OBTAINING TECHNICAL SERVICES WHICH COME WITHIN THE SCOPE OF SECTION 9 OF THE ACT, CONSEQUEN TLY ATTRACTING THE PROVISIONS OF SECTION 40(A)(I) R.W.S 195 OF THE ACT. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TELEMARKETING AND TELE-CALLING F ILED ITS RETURN OF INCOME ON 10.11.2007 DECLARING NIL INCOME . THE CASE HAS BEEN SELECTED FOR SCRUTINY UNDER CASS AND THE ASSESSMENT WAS COMPLETED BY THE LEARNED ASSESSING O FFICER UNDER SECTION 143(3) OF THE ACT ON 05.11.2009. DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS, THE LEARNED ASSES SING OFFICER NOTICED THAT ASSESSEE HAD PAID A SUM OF ` 20,99,648/- TO M/S. CONSEQUENCE AUSTRALIA PTY. LTD., AUSTRALIA FOR PURCHASE OF DATABASE. HOWEVER, THE ASSESSEE HAS NOT DEDUCTED ANY TDS ON THE AFORESAID AMOUNT. THEREFORE , THE LEARNED ASSESSING OFFICER BY INVOKING THE PROVISION S OF SECTION 40(A)(I) DISALLOWED ` 20,99,648/-. 4. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME T AX (APPEALS) CONFIRMED THE ORDER OF THE LEARNED ASSESS ING OFFICER BY OBSERVING AS UNDER:- 3 ITA NO.1881/MDS/2015 4.2 I HAVE CONSIDERED THE ASSESSEES SUBMISSIONS CAREFULLY. THE ABOVE DATA BASE CONTAINS DATA OF PROFILES OF CERTAIN PEOPLE, MARKETS ETC. THIS IS NOT A GENERALIZED DATA WHICH IS READILY AVAILABLE IN THE MARKET FOR SALE. THE DATE BASE SUPPLIED TO A CLIENT IS ALWAYS TAILOR MADE TO SUIT THE REQUIREMENTS OF THE CLIENT. BASED ON THE ORDER PLACED, THE SUPPLIER COLLECTS THE DATA, COMPILE AND ANALYZE IT AND SUPPLY IN THE REQUIRED FORMAT AND PATTERN. THIS PROCESS INVOLVES TECHNICAL EXPERTISE AND CARRIED OUT BY TECHNICALLY QUALIFIED PERSONNEL. HENCE, SUPPLY OF SUCH SPECIALIZED AND TAILOR MADE DATA BASE WILL AMOUNT TO TECHNICAL SERVICES, THOUGH THE INVOICES PROJECT IT AS A SALE. THEREFORE, THE ASSESSEES PURCHASE OF DATA BASE IS A TECHNICAL SERVICE AVAILED AND ACCORDINGLY FALLS WITHIN THE AMBIT OF SECTION 9 OF THE ACT. CONSEQUENTLY, THE ASSESSEE BEING THE REMITTER OF THE AMOUNT, IS REQUIRED TO WITHHOLD THE NECESSARY TAX U/S.195. AS THE ASSESSEE FAILED TO DO SO, THE ASSESSING OFFICER HAS RIGHTLY INVOKED THE PROVISIONS OF SECTION 40(A)(I) OF THE ACT AND DISALLOWED THE SAME. THE ACTION OF THE ASSESSING OFFICER IS AS PER THE LAW AND CONFIRMED. 5. AT THE OUTSET, WE FIND THAT THE DDTA AGREEMENT BETWEEN INDIA AND AUSTRALIA IS NOT CONSIDERED BY TH E REVENUE WHILE ARRIVING AT THEIR RESPECTIVE DECISION S. THEREFORE, IN THE INTEREST OF JUSTICE, WE HEREBY RE MIT THE MATTER BACK TO THE FILE OF THE LEARNED ASSESSING OF FICER FOR DE NOVO CONSIDERATION WITH A DIRECTION TO PASS APPROPR IATE ORDER AS PER LAW & MERIT KEEPING IN VIEW OUR ABOVE MENTIO NED OBSERVATIONS. 4 ITA NO.1881/MDS/2015 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE 1 ST JULY, 2016 SD/- ( . ) ( A.MOHAN ALA NKAMONY ) # / ACCOUNTANT MEMBER % /CHENNAI, & /DATED 1 ST JULY, 2016 SOMU () *) /COPY TO: 1. APPELLANT 2. RESPONDENT 3. + () /CIT(A) 4. + /CIT 5. ) 0 /DR 6. /GF .