M/s. Minda Valeo Security Systems (P) Ltd., New Delhi V. DCIT, New Delhi

ITA 1935/DEL/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2843 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2011-2012
• Appeal Filed On: 31-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BANITA DEVI NAOREY
• Assessee Lawyers: DR RAKESH GUPTA; DEEPASH GARG
• Keywords: Rectification of order

Judgement Text

1 ITA NO. 1935/DEL/2017 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: E NEW DELHI BEFORE SMT. DIVA SINGH, JUDICIAL ME MBER AND SHRI. T. S. KAPOOR, ACC OUNTANT MEMBER I.T.A .NO.-1935/DEL/2017 (A.Y 2011-12) MINDA VALEO SECURITY SYSTEMS (P) LTD. C/O. M/S. RRA TAX INDIA, D-28, SOUTH EXTENSION PART-1 NEW DELHI AAECM0061R (APPELLANT) VS DCIT CIRCLE-16(2) NEW DELHI (RESPONDENT) APPELLANT BY SH. DR. RAKESH GUPTA, ADV & SH. DEEPASH GARG, ADV RESPONDENT BY MS. BANITA DEVI NAOREY, SR. DR ORDER PER T. S. KAPOOR, AM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE LD.CIT (A) DATED 27/01/2017 FOR ASSESSMENT YEAR 2011-12. 2. THE GROUNDS OF APPEAL TAKEN BY THE ASSESSEE ARE REPRODUCED IN BELOW:- 1. THAT HAVING REGARD TO THE FACT AND CIRCUMSTANCES O F THE CASE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD. AO IN MAKING A DISALLOWANCE OF RS.40,66,781/- U/S 40(A)(IA) ALLEGE DLY ON ACCOUNT OF NON- DEDUCTION OF TDS ON ROYALTY PAYMENT. DATE OF HEARING 18.12.2017 DATE OF PRONOUNCEMENT 21.12.2017 2 ITA NO. 1935/DEL/2017 2. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER, TH E ACTION OF LD. CIT(A) IN THE CONFIRMING THE ACTION OF LD. AO FOR MAKING DISA LLOWANCE OF RS.40,66,781/- U/S 40(A)(IA) IS BAD IN LAW AND AGAI NST THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THAT HAVING REGARD TO THE FACT AND CIRCUMSTANCES O F THE CASE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD. AO IN MAKING DISALLOWANCE OF RS.76,10,530/- U/S 40(A)(IA) ALLEGE DLY ON ACCOUNT OF NON- DEDUCTION OF TDS ON MANAGEMENT FEE. 4. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER, TH E ACTION OF LD. CIT(A) IN THE CONFIRMING THE ACTION OF LD. AO FOR MAKING DISA LLOWANCE OF RS.76,10,530/- U/S 40(A)(IA) IS BAD IN LAW AND AGAI NST THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. THAT HAVING REGARD TO THE FACT AND CIRCUMSTANCES OF THE CASE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT DELETING THE DOUBL E DISALLOWANCE OF RS.3,15,593/- ON ACCOUNT OF PROFIT ON SALE OF FIXED ASSETS, MORE SO WHEN THE ASSESSEE HAS PAID TAXES ON SUCH AMOUNT AND THEREFOR E THE SAID AMOUNT SHOULD HAVE BEEN REDUCED FROM NET PROFIT. 6. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT REVERSING THE ACTI ON OF LD. AO IN CHARGING INTEREST U/S 234A, 234B, 234C AND 234D OF INCOME TA X ACT, 1961. 7. THAT THE APPELLANT CRAVES THE LEAVE TO ADD, MODIFY , AMEND OR DELETE ANY OF THE GROUNDS OF APPEAL AT THE TIME OF HEARING AND AL L THE ABOVE GROUNDS OF APPEAL AT THE TIME OF HEARING AND ALL THE ABOVE GRO UNDS ARE WITHOUT PREJUDICE TO EACH OTHER. 3 ITA NO. 1935/DEL/2017 3. AT THE OUTSET THE LD. AR SUBMITTED THAT GROUND N O. 1 TO 4 RELATES TO THE DISALLOWANCES U/S 40 A (IA) OF THE ACT WHICH THE AS SESSING OFFICER HAD MADE ON ACCOUNT OF NON DEDUCTION OF TAX ON ROYALTY PAYMENT AND ON MANAGEMENT FEE. THE LD. AR SUBMITTED THAT THE ROYALTY & MANAGEMENT FEE WAS PAYABLE TO PERSONS SITUATED OUTSIDE THE COUNTRY. THE ASSESSEE HAD MADE PROVISION FOR PAYMENTS BUT THE PAYMENTS WERE NOT REMITTED ABROAD AND, THEREFORE, THE ASSESSEE WAS NOT LIABLE TO DEDUCT TAX THEREON BECAU SE AS PER THE TAX TREATY WITH FRANCE THE TAX WAS TO BE DEDUCTED ONLY AT THE TIME OF REMITTANCE. IT WAS SUBMITTED THAT DETAILED SUBMISSIONS WERE MADE TO TH E LD.CIT(A) REGARDING THIS AND IN THIS RESPECT OUR ATTENTION WAS INVITED TO PA PER BOOK PAGE NO. 180 TO 189 WHERE A COPY OF SUBMISSIONS MADE TO LD.CIT(A) WAS P LACED. OUR SPECIFIC ATTENTION WAS INVITED TO PAPER BOOK PAGE NO. 181 WH ERE THE SPECIFIC ARGUMENTS WERE MADE AND RELIANCE WAS PLACED ON A NUMBER OF CA SE LAWS. IT WAS SUBMITTED THAT THE LD.CIT(A) HAS THROUGH NOTED THAT THE PAYMENTS WERE NOT MADE DURING THE YEAR BUT HE HAS HELD THAT THE AMOUN TS WERE EXPENDED DURING THE YEAR AND, THEREFORE, WERE LIABLE TO TAX DEDUCTI ON AT SOURCE. 4. REGARDING GROUND NO.5, THE LD. AR SUBMITTED THAT THE ASSESSEE HAD SOLD SOME FIXED ASSETS AND HAD CREDITED THE PROFIT ON SALE OF FIXED ASSETS TO PROFIT AND LOSS ACCOUNT WHICH OTHERWISE SHOULD HAVE BEEN REDUCED FROM THE WDV OF FIXED ASSETS. IT WAS SUBMITTED THAT THE LD .CIT (A) HAS DISMISSED THIS GROUND OF APPEAL BY HOLDING THAT NO SUCH DISALLOWAN CE WAS MADE BY THE ASSESSING OFFICER. IT WAS SUBMITTED THAT BY INADVE RTENT MISTAKE ASSESSEE DID NOT REDUCE SUCH PROFITS FROM TAXABLE INCOME IN THE COMPUTATION OF INCOME WHICH THE ASSESSEE WAS ENTITLED TO. THEREFORE, REC TIFICATION APPLICATION WAS ALSO FILED WHICH HAS NOT YET BEEN DECIDED. IT WAS PRAY ED THAT THIS ISSUE MAY ALSO BE SENT BACK TO THE ASSESSING OFFICER FOR RE-ADJUDI CATION. 4 ITA NO. 1935/DEL/2017 5. THE LD. DR RELIED ON THE ORDERS OF AUTHORITIES B ELOW. 6. WE HAVE HEARD BOTH THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT TIN RESPECT OF GROUND NO.1 TO 4, THE ASSESSEE HAD CONTENDED THAT SINCE THAT NO PAYMENTS WERE REMITTED DURING THE YEAR, AND THEREFORE, THE ASSESSEE WAS NOT LIABLE TO TAX DEDUC TION AT SOURCE. THE LD. AR ALSO SUBMITTED THAT AS PER DOUBLE TAXATION AGREEMEN T WITH FRANCE, THE ASSESSEE WAS LIABLE TO TAX DEDUCT AT SOURCE AT THE TIME OF REMITTANCE OF THE PAYMENTS. WE FIND THAT THE AUTHORITIES BELOW HAS N OT CONSIDERED THE CASE LAWS RELIED ON BY THE ASSESSEE AND HAS ALSO NOT CONSIDER ED THE ARGUMENTS OF THE ASSESSEE THAT THE TAX WAS REQUIRED TO BE DEDUCTED O NLY AT THE TIME OF REMITTANCE IN VIEW OF THE TREATY WITH FRANCE. THER EFORE, WE DEEM IT APPROPRIATE TO REMIT THESE ISSUES BACK TO THE OFFICE OF THE ASS ESSING OFFICER WHO SHOULD RE- ADJUDICATE ON THE ISSUES AFTER AFFORDING A REASONAB LE OPPORTUNITY TO THE ASSESSEE OF BEING HEARD. THEREFORE, GROUND NO. 1 T O 4 ARE ALLOWED FOR STATISTICAL PURPOSES. 7. AS REGARDS, GROUND NO.5, WE FIND THAT THE A SSESSEE HAD SOLD A PART OF FIXED ASSETS AND HAD EARNED GAIN ON SALE OF FIXED A SSETS WHICH HAD TO BE REDUCED FROM THE WDV OF FIXED ASSETS BUT WHICH THE ASSESSEE CREDITED TO THE PROFIT AND LOSS ACCOUNT. WE FURTHER FIND THAT THE ASSESSEE HAD FILED APPLICATION FOR RECTIFICATION TO RECTIFY THIS MISTAKE. A COPY OF APPLICATION FOR RECTIFICATION IS PLACED ON PAPER BOOK PAGE NO. 176 TO 178. IT WAS A RGUED DURING THE PROCEEDINGS THAT THE ASSESSING OFFICER HAD NOT PASS ED ANY ORDER ON THIS RECTIFICATION ORDER ALSO. THEREFORE, WE DEEM IT AP PROPRIATE TO REMIT THIS ISSUE ALSO TO THE OFFICE OF ASSESSING OFFICER WHO SHOULD RE-DECIDE THE ISSUE AS PER 5 ITA NO. 1935/DEL/2017 FACTS AND CIRCUMSTANCES AND IN ACCORDANCE WITH LAW. IN VIEW OF THE ABOVE, GROUND NO.5 IS ALSO ALLOWED FOR STATISTICAL PURPOSE S. 8. IN NUT SHELL, THE APPEAL FILED BY THE ASSESSEE I S ALLOWED FOR THE STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST DECEMBER, 2017. SD/- SD/- (DIVA SINGH) (T. S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 21/12/2017 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 6 ITA NO. 1935/DEL/2017 DATE 1. DRAFT DICTATED ON 18/12/2017 PS 2. DRAFT PLACED BEFORE AUTHOR 18/12/2017 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER .2017 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 21.12.2017 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 21.12.2017 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER. 7 ITA NO. 1935/DEL/2017