Income Tax Officer (Ward) 1(1), Panaji V. M/s. Karishma Goa Mineral Trading Pvt. Ltd., Panaji

ITA 19/PAN/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93465 (ITAT-PANAJI)
• Duration Of Justice: 1 year(s) 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 18-06-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 16-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MEHBOOB ALI KHAN LD
• Keywords: Deemed to accrue or arise in india

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI GEORGE MATHAN, HONBLE JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, HON'BLE ACCOUNTANT MEMBER ITA NO. 19/PNJ/2014 : (A.Y 2010 - 11) ITO, WARD - 1(1) PANAJI, GOA. ( APPELLANT) VS. M/S. KARISHMA GOA MINERAL TRADING PVT. LTD., NO. 206, 2 ND FLOOR, KAMAT TOWERS, PATTO PLAZA, PANJIM, GOA PAN : AACCK8782E (RESPONDENT) ASSESSEE BY : JITENDRA JAIN, ADV. REVENUE BY : MEHBOOB ALI KHAN, LD. DR DATE OF HEARING : 18/06/2015 DATE OF PRONOUNCEMENT : 18/06/2015 O R D E R PER GEORGE MATHAN : 1. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A), PANAJI IN ITA NO. 117/PNJ/2013 - 14 DT. 29.10.2013 FOR THE A.Y 2010 - 11. SHRI JITENDRA JAIN, ADV. REPRESENTED ON BEHALF OF THE ASSESSEE AND SHRI MEHBOOB ALI KHAN, LD. DR REPRESENTED ON BEHALF OF THE REVENUE. 2. IT WAS SUBMITTED BY THE LD. DR THAT THE AO HAD DISALLOWED DEMURRAGE PAYMENTS MADE BY THE ASSESSEE TO THE FOREIGN BUYER ON THE GR OUND THAT THE ASSESSEE HAD NOT DEDUCTED TDS U/S 195 OF THE ACT. IT WAS THE SUBMISSION THAT THE LD. CIT(A) DELETED THE ADDITION BY HOLDING THAT TDS WAS NOT LIABLE TO BE DEDUCTED IN RESPECT OF DEMURRAGE PAYMENT MADE BY THE ASSESSEE TO THE FOREIGN 2 ITA NO. 19/PNJ/2014 (A.Y : 2010 - 11) BUYER. IT WAS THE SUBMISSION THAT THE ORDER OF THE LD. CIT(A) WAS LIABLE TO BE REVERSED. 3. IN REPLY, THE LD. AR SUBMITTED THAT THE ASSESSEE IS AN IRON ORE EXPORTER. IT WAS THE SUBMISSION THAT THE ASSESSEE HAD SOLD GOODS REPRESENTING IRON ORE ON FOB BASIS TO CHIN A BASED COMPANY. IT WAS THE SUBMISSION THAT THE ASSESSEE HAD TO DELIVER THE GOODS AT GOA PORT. IT WAS THE FURTHER SUBMISSION THAT AS PER THE AGREEMENT, IF THERE WAS A DELAY IN LOADING OF THE GOODS ON THE SHIP HIRED BY THE PURCHASER, THE ASSESSEE WAS TO P AY THE DEMURRAGE. AS THERE WAS A DELAY IN LOADING OF THE GOODS, THE ASSESSEE HAD PAID THE DEMURRAGE OF RS. 94,18,640/ - TO THE SAID CHINA BASED COMPANY. IT WAS THE SUBMISSION THAT THE AO HAS RECOGNISED THAT THE DEMURRAGE HAS BEEN PAID TO THE VARIOUS SUPPL IERS IN CHINA. THE LD. AR DREW OUR ATTENTION TO THE PROVISIONS OF SEC. 9(1)(I), EXPLANATION (1)(B) TO SUBMIT THAT WHEN THE PAYMENT IS MADE TO THE PURCHASER OF GOODS WHICH ARE EXPORTED AND THE PURCHASER IS A NON - RESIDENT, NO INCOME SHALL BE DEEMED TO ACCRU E OR ARISE IN INDIA IN THE HANDS OF THE SAID FOREIGN PURCHASER. IT WAS THE SUBMISSION THAT THE HON'BLE SUPREME COURT IN THE CASE OF GE INDIA TECHNOLOGY CENTRE P. LTD. REPORTED IN 327 ITR 456 HAS CATEGORICALLY HELD THAT TAX IS LIABLE TO BE WITHHELD ONLY IF THE SUM PAID RESULTS INTO ANY INCOME CHARGEABLE TO TAX IN INDIA. IT WAS THE SUBMISSION THAT THE INCOME OF THE FOREIGN PURCHASER WAS NOT LIABLE TO TAX IN INDIA AND CONSEQUENTLY, THERE WAS NO LIABILITY TO DEDUCT TDS U/S 195. THE LD. AR ALSO DREW OUR ATTEN TION TO THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF SESA GOA IN ITA NO. 72/PNJ/2012 DT. 8.3.2013 WHEREIN THE SAID PROPOSITION HAS BEEN ACCEPTED BY THE COORDINATE BENCH OF THIS TRIBUNAL . IN THE SAID ORDER, THE COORDINATE BENCH HAS H ELD THAT AS PER EXPLANATION - (1)(B) TO SEC. 9(1)(I) IT IS PROVIDED THAT IN CASE OF A NON - RESIDENT NO INCOME SHALL BE DEEMED TO ACCRUE OR ARISE IN INDIA THROUGH OR FROM THE OPERATIONS WHICH ARE CONFINED TO THE PURCHASE OF GOODS IN INDIA FOR THE PURPOSE OF EXPORT. THE NON - RESIDENT BUYER HAD GOT COMPENSATION TOWARDS DEMURRAGE 3 ITA NO. 19/PNJ/2014 (A.Y : 2010 - 11) INCURRED THROUGH THE OPERATION WHICH ARE CONFINED TO THE PURCHASE OF GOODS AND CONSEQUENTLY, THE SAID DEMURRAGE CANNOT BE DEEMED TO BE INCOME WHICH HAS ACCRUED OR ARISEN IN THE HANDS OF THE FOREIGN BUYER IN INDIA AND THEREFORE, IS NOT TAXABLE IN INDIA AND IS NOT LIABLE TO TAX DEDUCTION AT SOURCE. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AS IT IS NOTICED THAT THE ISSUE IN THE PRESENT APPEAL IS SQUARELY COVERED BY THE DECISION OF T HE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF SESA GOA REFERRED TO SUPRA AND THE LD. CIT(A) HAS FOLLOWED THE SAME, AS ALSO THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF GE TECHNOLOGY REFERRED TO SUPRA, WE ARE OF THE VIEW THAT THERE IS NO E RROR IN THE ORDER OF THE LD. CIT(A) WHICH CALLS FOR OUR INTERFERENCE. 5. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18/06/2015. S D / - (N.K. BILLAIYA) ACCOUNTANT MEMBER S D / - ( GEORGE MATHAN ) JUDICIAL MEMBER PLACE : PANAJI / GOA DATED : 1 9 /06/ 201 5 *SSL* COPY TO : (1) APPELLANT (2) RESPONDENT (3) CIT(A) CONCERNED (4) CIT CONCERNED (5) D.R (6) GUARD FILE TRUE COPY, BY ORDER , 4 ITA NO. 19/PNJ/2014 (A.Y : 2010 - 11) DATE INITIAL ORIGINAL DICTATION PAD & DRAFT ORDER ARE ENCLOSED IN THE FILE 1. DRAFT DICTATED ON 18/06/2015 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 1 9 /06/2015 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 1 9 /06/2015 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 1 9 /06/2015 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 1 9 /06/2015 SR.PS 6. DATE OF PRONOUNCEMENT 18/06/2015 SR.PS 7. FILE SENT TO THE BENCH CLERK 1 9 /06/2015 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER