DCIT, CHENNAI V. M/s. Virgo Polymers (India) Ltd., CHENNAI

ITA 1937/CHNY/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61289 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 7 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-07-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 12-06-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 15-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: D ANAND
• Section: 143(3); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH CHENN AI BEFORE SHRI N. S. SAINI, ACCOUNTANT MEMBER AND SHRI V.DURGA RAO, JUDICIAL MEMBER .. ITA NO.1937/MDS./2010 ASSESSMENT YEAR:2006-07 THE DY. COMMISSIONER OF INCOME-TAX, COMPANY CIRCLE-III(4), CHENNAI. VS. M/S. VIRGO POLYMERS (INDIA) LTD., NO. 10, ARUNACHALAM STREET, SALIGRAMAM, CHENNAI-600 096. PAN : AAACV8490Q (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SHAJI P. JACOB, ADDL. CIT RESPONDENT BY : SHRI D. ANAND, ADVOCATE DATE OF HEARING : 12.06.2012 DATE OF PRONOUNCEMENT : 06.0 7.2012 O R D E R PER V. DURGA RAO, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(APPEALS)-III, CHENNAI DATED 19-08-2010 F OR THE ASSESSMENT YEAR 2006-07. 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS A LI MITED COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURE OF ITA. 1937/MDS/2010 2 HDDE/PP CIRCULAR WOVEN FABRICS AND SACKS AND DECLAR ED A TOTAL INCOME OF RS 70,29,932/-. THE RETURN WAS INI TIALLY PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX AC T, 1961 (THE ACT FOR SHORT). SUBSEQUENTLY THE ASSESSMENT ORDER WAS COMPLETED AFTER FOLLOWING DUE PROCESS UNDER SECTION 143(3) OF THE ACT DETERMINING THE TOTAL INCOME AT RS. 2,07,03 ,478/-. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS THE AO HAS ASKED THE ASSESSEE TO EXPLAIN WITH REGARD TO THE PA YMENTS MADE TO M/S. RADO SHIPPING AGENCIES. THE ASSESSEE HAS SUBMITTED BEFORE THE AO THAT M/S. RADO SHIPPING AGE NCIES IS CLAIMING OCEAN FREIGHT AND CLEARING AND FORWARDING CHARGES IN FOREIGN CURRENCY ONLY AS REIMBURSEMENT AND THUS WAS NOT LIABLE TO TDS ON THE ABOVE SAID TRANSACTIONS. HOWE VER, THE AO HAS NOT ACCEPTED THE EXPLANATION OF THE ASSESSEE AND DISALLOWED RS. 1,,36,73,546/- BY INVOKING SECTION 4 0(A)(IA) OF THE ACT AND THE SAME WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 3. ON BEING AGGRIEVED THE ASSESSEE CARRIED THE MAT TER BEFORE THE CIT(A). BEFORE THE LEARNED CIT(A) IT WA S SUBMITTED THAT THE ASSESSEE HAS UTILIZED THE SERVICES OF M/S. RADO SHIPPING AGENCIES WHO ARE AGENTS OF FOREIGN SHIPPER S AND ON THE FREIGHT CHARGES PAID TO FOREIGN SHIPPERS NO TDS HAS TO BE ITA. 1937/MDS/2010 3 DEDUCTED. HOWEVER, BEFORE THE LEARNED CIT(APPEALS) HE RELIED UPON A CIRCULAR NO.723 DATED 19-09-1995. THE LEARN ED CIT(APPEALS) AFTER CONSIDERING THE CIRCULAR HAS HEL D THAT PAYMENTS MADE TO NON-RESIDENT SHIP OWNERS OR CHARTE RERS OR THEIR INDIAN SHIPPING AGENTS FOR CARRIAGE OF PASSEN GERS, GOODS ETC. SHIPPED AT A PORT IN INDIA DID NOT ATTRACT WIT HHOLDING TAX, SINCE THE NON-RESIDENTS ARE GOVERNED BY SECTION 172 OF THE ACT WHICH CONTAINED A NON OBSTANTE CLAUSE TO OVERRIDE ALL OTHER PROVISIONS OF THE ACT INCLUDING WITHHOLDING TAX PRO VISIONS OF SECTIONS 194C AND 195 OF THE ACT. BY FOLLOWING THE ABOVE CIRCULAR, THE LEARNED CIT(APPEALS) DELETED THE ADDI TION MADE BY THE AO. 4. ON BEING AGGRIEVED, THE REVENUE CARRIED THE MATT ER BEFORE THE TRIBUNAL. AT THE TIME OF HEARING THE LE ARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT HIS CASE IS COV ERED IN HIS FAVOUR BY THE CIRCULAR NO. 723 DATED 19-09-1995 AND STRONGLY SUPPORTED THE ORDER OF THE LEARNED CIT(APPEALS). O N THE OTHER HAND, THE LEARNED DR SUPPORTED THE ORDER OF THE AO. 5. WE HAVE HEARD BOTH THE SIDES, PERUSED THE RECORD S AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE ONLY ISSUE FOR CONSIDERATION IS WHETHER THE ASSESSEE IS TO DEDUCT TDS OR NOT. THE ASSESSEE IS IMPORTING PLASTIC GRAN ULES FROM ITA. 1937/MDS/2010 4 FOREIGN COUNTRIES. FOR THAT PURPOSE IT HAS UTILIZE D THE SERVICES OF M/S. RADO SHIPPING AGENCIES, WHO ARE THE AGENTS OF FOREIGN SHIPPERS. THE ABOVE FACT WAS NOT DISPUTED BY THE R EVENUE. AS PER CIRCULAR NO. 723 DATED 19-09-1995 THE ASSESS EE IS NOT UNDER OBLIGATION TO DEDUCT THE TDS AS OBSERVED BY T HE LEARNED CIT(APPEALS). WE HAVE THEREFORE NO REASON TO INTER FERE WITH THE ORDER PASSED BY THE LEARNED CIT(APPEALS). THIS GROUND OF APPEAL RAISED BY THE REVENUE IS DISMISSED. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. 7. ORDER PRONOUNCED ON 6 TH JULY, 2012. SD/- SD/- (N. S. SAINI) ( V. DURGA RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED 06 TH JULY, 2012. H. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE ITA. 1937/MDS/2010 5