WOCKHARDT LTD, MUMBAI V. ACIT CEN CIR 14, MUMBAI

ITA 1967/MUM/2011

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1744 (ITAT-MUMBAI)
• Duration Of Justice: 8 year(s) 3 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: K
• Next Hearing Date: 05-09-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 10-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMRITA RANJAN
• Keywords: Transfer pricing; Opportunity of being heard; Non-deduction of tax; Revenue expenditure; Capital expenditure
• Section: 80IB; 195

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI RAJESH KUMAR , ACCOUNTANT MEMBER ITA NO. 1967 / MUM . /2011 ( ASSESSMENT YEAR : 20 06 07 ) ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 10(1) , MUMBAI . APPELLANT V/S WOCKHARDT LTD. WOCKHARDT TOWER BANDRA KURLA COMPLEX BANDRA (E), MUMBAI 400 051 PAN AAACW2472M . RESPONDENT IT (TP) A NO. 1875 /MUM. /2011 ( ASSESSMENT YEAR : 20 0 6 07 ) WOCKHARDT LTD. WOCKHARDT TOWER BANDRA KURLA COMPLEX BANDRA (E), MUMBAI 400 051 PAN AAACW2472M . APPELLANT V/S ASSTT. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 14, MUMBAI . RESPONDENT REVENUE BY : MS. AMRITA RANJAN ASSESSEE BY : SHRI YOGESH THAR A/W SHRI HARDIK NIRMAL DATE OF HEARING 20.03.2019 DATE OF ORDER 12.06.2019 2 WOCKHARDT LTD. O R D E R PER SAKTIJIT DEY. J.M. A FORESAID CROSS APPEAL S ARISE OUT OF THE ORDER DATED 27 TH DECEMBER 2010 , PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 15, MUMBAI, FOR THE ASSESSMENT YEAR 20 06 07 . ITA NO. 1967/MUM./2011 ASSESSEES APPEAL 2 . THE ONLY ISSUE RAISED IN THIS APPEAL PERTAINS TO THE DISALLOWANCE OF WEIGHTED DEDUCTION UNDER SECTION 35(2AB) OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT ' ). PERTINENTLY, THE REVENUE HAS ALSO CHALLENGED THE DECISION OF THE LEARNED COMMISSIONER (APPEALS) ON THIS ISSUE IN GROUND NO.3 OF ITS APPEAL BEING ITA NO.1875/MUM./2011. SINCE THE SE GROUNDS RAISED BY THE ASSESSEE AND THE REVENUE ARE ON A COMMON ISSUE, WE PROCEED TO DISPOSE OF THESE GROUNDS TOGETHER. 3 . BRIEF FACTS ARE, THE ASSESSEE COMPANY IS ENGAGED IN MANUFACTURING AND TRADING OF PHARMACEUTICAL PRODUCTS. WHILE VERIFYING THE RETURN OF INCOME FILED FOR THE IMPUGNED ASSESSMENT YEAR IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HA D CLAIMED DEDUCTION @ 150% UNDER SECTION 35(2AB) OF THE ACT TOWARDS CAPITAL AND REVENUE EXPENDITURE INCURRED IN THE IN 3 WOCKHARDT LTD. HOUSE RESEARCH AND DEVELOPMENT (R & D) FACILITY. THEREFORE, THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO FURNISH NECESSARY DETAILS A ND JUSTIFY ITS CLAIM. IN RESPONSE, IT WAS SUBMITTED BY THE ASSESSEE THAT IT HAS NOT YET RECEIVED CERTIFICATE IN FORM NO.3CL FROM THE APPROPRIATE AUTHORITY DSIR. FROM THE DETAILS FURNISHED BY THE ASSESSEE, THE ASSESSING OFFICER FOUND THAT RESEARCH ACTIVITY IN RESPECT OF WHICH THE CAPITAL AND REVENUE EXPENDITURE WERE CLAIMED WAS NOT CARRIED OUT IN THE IN HOUSE RESEARCH FACILITY BUT WAS DONE OUTSIDE. THEREFORE, HE CALLED UPON THE ASSESSEE TO EXPLAIN WHY THE DEDUCTION CLAIMED UNDER SECTION 35(2AB) OF THE ACT SH OULD NOT BE DISALLOWED. IN RESPONSE, THE ASSESSEE FILED A DETAILED REPLY STATING THAT DEDUCTION CLAIMED UNDER SECTION 35(2AB) OF THE ACT IS ALLOWABLE EVEN IN RESPECT OF EXPENDITURE INCURRED ON RESEARCH AND DEVELOPMENT ACTIVITY CARRIED OUT OUTSIDE THE R & D FACILITY OF THE ASSESSEE. THE ASSESSING OFFICER, HOWEVER, WAS NOT CONVINCED WITH THE EXPLANATION OF THE ASSESSEE. HE OBSERVED , THE ASSESSEE WAS OTHERWISE ENTITLED TO CLAIM DEDUCTION UNDER SECTION 35(1) OF THE ACT. HOWEVER, FOR CLAIMING WEIGHTED DEDUCTION UNDER SECTION 35(2AB) OF THE ACT, THE ASSESSEE MUST INCUR THE EXPENDITURE FOR CARRYING OUT THE ACTIVITY IN ITS OWN IN HOUSE RESEARCH AND DEVELOPMENT FACILITY. THEREFORE, HE DISALLOWED ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 35(2AB) OF THE ACT FULLY. BE ING AGGRIEVED WITH SUCH DISALLOWANCE, THE ASSESSEE PREFERRED APPEAL BEFORE LEARNED COMMISSIONER (APPEALS). AFTER CONSIDERING THE 4 WOCKHARDT LTD. SUBMISSIONS OF THE ASSESSEE, LEARNED COMMISSIONER (APPEALS) DIRECTED THE ASSESSING OFFICER TO ALLOW ASSESSEES CLAIM OF DEDUCTI ON UNDER SECTION 35(2AB) OF THE ACT. 4 . THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , ASSESSEE IS ENTITLED TO CLAIM DEDUCTION OF REVENUE AND CAPITAL EXPENDITURE INCURRED TOWARDS RESEARCH AND DEVELOPMENT ACTIVITY EVEN IF SUCH ACTIVITY IS NOT CARRIED OUT IN THE IN HOUSE RESEARCH AND DEVELOPMENT FACILITY OF THE ASSESSEE. HE SUBMITTED , THE HONBLE GUJARAT HIGH COURT IN CIT V/S CADILA HEALTHCARE LTD., [2013] 31 TAXMANN.COM 300 (GUJ.), HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. THE LEARNED AUTHORISED REPRE SENTATIVE SUBMITTED , THOUGH , IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR S 2002 03, 2003 04, 2004 05, THE TRIBUNAL HAS DECIDED THE ISSUE AGAINST THE ASSESSEE, HOWEVER, WHILE DECIDING IDENTICAL ISSUE IN THE ASSESSMENT YEAR 2007 08, THE TRIBUNAL HAS RESTOR ED IT TO THE ASSESSING OFFICER FOR FRESH ADJUDICATION KEEPING IN VIEW THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN CADILA HEALTHCARE LTD. (SUPRA). THUS, HE SUBMITTED , THE ISSUE MAY BE RESTORED BACK TO THE ASSESSING OFFICER FOR FRESH ADJUDICATION. 5 . THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED , AS PER THE PROVISIONS OF SECTION 35(2AB) OF THE ACT, THE ASSESSEE CAN CLAIM DEDUCTION IF THE RESEARCH AND DEVELOPMENT ACTIVITY IS CARRIED OUT IN THE IN HOUSE RESEARCH AND DEVELOPMENT FACILITY. HE SUBMITTED , S INCE THE 5 WOCKHARDT LTD. ASSESSEE HAS CARRIED OUT SUCH ACTIVITY BY OUT SOURCING , IT IS NOT ENTITLED TO CLAIM DEDUCTION UNDER SECTION 35(2AB) OF THE ACT. HOWEVER, HE AGREED THAT IN THE ASSESSMENT YEAR 2007 08, THE ISSUE HAS BEEN RESTORED BACK TO THE ASSESSING OFFICER FOR F RESH ADJUDICATION. 6 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. ON A PERUSAL OF THE IMPUGNED ORDER OF LEARNED COMMISSIONER (APPEALS) AND , MORE PARTICULARLY , HIS FINDING IN PARA 8 TO 8.4 OF THE IMPUGNED ORDER, IT IS VERY MUCH CLEAR THAT HE HAS FULLY ALLOWED THE CLAIM OF THE ASSESSEE UNDER SECTION 35(2AB) OF THE ACT. THEREFORE, WE FAIL TO UNDERSTAND HOW THE ASSESSEE CAN BE AGGRIEVED WITH THE DECISION OF LEARNED COMMISSIONER (APPEALS). BE THAT AS IT MAY, THE REVENUE HAS ALSO CHALLENGED THE DECISION OF LEARNED COMMISSIONER (APPEALS) ON THE ISSUE OF DEDUCTION CLAIMED UNDER SECTION 35(2AB) OF THE ACT. UNDISPUTEDLY, THE RESEARCH AND DEVELOPMENT ACTIVITY IN RESPECT OF WHICH THE ASSESSEE HAS CLAIMED DEDUCTION UNDER SECTION 35(2AB) OF THE ACT WERE NOT CARRIED OUT IN ASSESSEES OWN IN HOUSE RESEARCH AND DEVELOPMENT FACILITY. THEREFORE, THE ISSUE WHICH ARISES FOR CONSIDERATION IS , WHETHER THE EXPENDITURE INCURRED FOR CARRY ING OUT RESEARCH AND DEVELOPMENT ACTIVITY OUTSIDE BY WAY OF OUT SOURCING OR OTHERWISE CAN BE ELIGIBLE FOR DEDUCTION UNDER SECTION 35(2AB) O F THE ACT? AS PER THE PROVISION CONTAINED UNDER SECTION 35(2AB) OF THE ACT, WEIGHTED DEDUCTION CAN BE ALLOWED IN 6 WOCKHARDT LTD. RESP ECT OF EXPENDITURE ON SCIENTIFIC RESEARCH CARRIED OUT IN THE IN HOUSE RESEARCH AND DEVELOPMENT ACTIVITY AS APPROVED BY THE PRESCRIBED AUTHORITY. THEREFORE, GOING BY THE PLAIN MEANING OF THE WORDS USED IN SECTION 35(2AB) OF THE ACT , ONLY THOSE EXPENDITURE S WHICH ARE INCURRED IN THE IN HOUSE RESEARCH AND DEVELOPMENT FACILITY ARE ELIGIBLE FOR DEDUCTION. IN FACT, WHILE DEALING WITH IDENTICAL ISSUE IN ASSESSEES OWN CASE IN THE ASSESSMENT YEAR S 2002 03 TO 2004 05 IN ITA NO.2522 TO 2524/MUM./ 2009, DATED 13 TH APR IL 2012, THE TRIBUNAL DECIDED THE ISSUE AGAINST THE ASSESSEE. HOWEVER, WHILE DECIDING THE SAME ISSUE IN ASSESSEES OWN CASE IN ASSESSMENT YEAR 2007 08, IN ITA NO.5557/MUM./ 2012, DATED 5 TH JANUARY 2018, THE TRIBUNAL HAS RESTORED THE ISSUE TO THE ASSESSING OFFICER FOR FRESH ADJUDICATION KEEPING IN VIEW VARIOUS DECISIONS CITED BY THE ASSESSEE INCLUDING THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN CADILA HEALTHCARE LTD. (SUPRA). THEREFORE, FOLLOWING THE DECISION OF THE TRIBUNAL IN ASSESSMENT YEAR 2007 08, WE ARE INCLINED TO RESTORE THE ISSUE TO THE ASSESSING OFFICER FOR DE NOVO ADJUDICATION KEEPING IN VIEW THE RATIO LAID DOWN IN THE DECISION S TO BE CITED BY THE ASSESSEE INCLUDING THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN CADILA HEALTHCARE LTD. (SUP RA). WHILE DOING SO, THE ASSESSING OFFICER IS ALSO DIR ECTED TO EXAMINE THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN COMMISSION ER OF CUSTOMS V/S DILIP KUMAR & CO. & ORS., VIDE JUDGMENT DATED 30 TH JUL Y 2018, IN CIVIL APPEAL NO.3327 OF 2007. NEEDLESS T O 7 WOCKHARDT LTD. MENTION , THE ASSESSING OFFICER MUST AFFORD REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BEFORE DECIDING THE ISSUE. THESE G ROUND S ARE ALLOWED FOR STATISTICAL PURPOSES. 7 . IN THE RESULT, APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO.1875/MUM./2011 REVENUE S APPEAL 8 . IN GROUND NO.1, THE REVENUE HAS CHALLENGED THE DELETION OF ADDITION MADE OF ` 35,12,209, TOWARDS TRANSFER PRICING ADJUSTMENT ON THE PROVISIONS OF CORPORATE GUARANTEE. 9 . BRIEF FACTS ARE, IN THE COURSE OF PROCEEDINGS BEFORE HIM, THE TRANSFER PRICING OFFICER FOUND THAT IN RESPECT OF A L OAN TAKEN BY THE ASSESSEES ASSOCIATED ENTERPRISE (AE) IN UNITED KINGDOM (UK) , THE ASSESSEE HAS PROVIDED CORPORATE GUARANTEE AND HAS CHARGED 0.75% PER ANNUM AS GUARANTEE FEE. IT WAS CLAIMED BY THE ASSESSEE THAT THE GUARANTEE FEE CHARGED @ 0.75% IS AT ARM'S LENGTH , SINCE , THE HSBC INDIA CHARGES 0.75% AS A GUARANTEE FEE FOR RENDERING FINANCIAL GUARANTEE. THUS, IT WAS SUBMITTED , THE LETTER ISSUED BY THE HSBC INDIA CAN BE USED AS COMPARABLE UNCONTRO LLED PRICE ( CUP ) TO BENCHMARK THE ARM'S LENGTH PRICE FOR GUARANTEE FEE. THE TRANSFER PRICING OFFICER, HOWEVER, DID NOT ACCEPT THE CLAIM OF THE ASSESSEE AND REFERRING TO CERTAIN COMPARABLE TRANSACTION S HE HELD THAT THE GUARANTEE FEE 8 WOCKHARDT LTD. CHARGEABLE ON THE CORPOR ATE GUARANTEE PROVIDED SHOULD BE FIXED @ 2.08%. ACCORDINGLY, HE WORKED OUT THE ARM'S LENGTH PRICE OF THE GUARANTEE FEE AT ` 54,92,778, WHICH RESULTED IN AN ADJUSTMENT OF ` 35,12,209. THE AFORESAID AMOUNT WAS ADDED BACK TO THE INCOME OF THE ASSESSEE AT THE TIME OF COMPLETION OF ASSESSMENT. THE ASSESSEE CHALLENGED THE AFORESAID ADDITION BEFORE THE FIRST APPELLATE AUTHORITY. 10 . AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, LEARNED COMMISSIONER (APPEALS) FOUND THAT THE GUARANTEE COMMISSION CHARGED BY THE ASS ESSEE @ 0.75% IS SUPPORTED BY THE QUOTATION OBTAINED FROM HSBC INDIA I N RESPECT OF THE SAME UNDERLYING TRANSACTION. HE OBSERVED , HSBC INDIA AFTER ASSESSING AND CARRYING OUT DUE DILIGENCE OF THE ASSESSEES ACCOUNT, ETC., HAS FIXED THE COMMISSION RATE @ 0.75 %. THUS, HE CONCLUDED THAT THE QUOTATION OBTAINED FROM HSBC INDIA CAN BE USED AS AN EXTERNAL CUP. ACCORDINGLY, HE DELETED THE ADDITION MADE ON ACCOUNT OF TRANSFER PRICING ADJUSTMENT. 11 . THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED , THE TRANSFER PRICING OFFICER HAS CARRIED OUT A PROPER ANALYSIS TO BENCH MARK THE ARM'S LENGTH PRICE OF THE CORPORATE GUARANTEE COMMISSION. THEREFORE , THE ADJUSTMENT PROPOSED BY THE TRANSFER PRICING OFFICER SHOULD BE UPHELD. 9 WOCKHARDT LTD. 12 . THE LEARNED AUTHORISED REPRESEN TATIVE SUBMITTED , WHILE DECIDING IDENTICAL ISSUE IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2007 08, THE TRIBUNAL HAS UPHELD ASSESSEES BENCH MARKING OF CORPORATE GUARANTEE COMMISSION @ 0.75%. 13 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL O N RECORD. UNDISPUTEDLY, THE ASSESSEE ITSELF HAS CHARGED GUARANTEE COMMISSION ON THE CORPOR ATE GUARANTEE PROVIDED TO THE AE @ 0.75%. THE GUARA NTEE FEE CHARGED HAS BEEN BENCH MARKED BY THE ASSESSEE BY OBTAINING A QUOTATION FROM HSBC INDIA WHICH HAS BEEN USED AS AN EXTERNAL CUP. IN OUR VIEW, THE METHOD A DOPTED BY THE ASSESSEE TO BENCH MARK THE GUARANTEE COMMISSION CANNOT BE FAULTED WITH. IT IS NECESSARY TO OBSERVE , WHILE DECIDING THE APPEAL OF THE REVENUE IN ASSESSEES OWN CASE IN ASSESSMENT YEAR 2007 08, VIDE I TA NO. 5557/MUM./2012, DATED 5 TH JANUARY 2018 , THE CO ORDINATE BENCH HAS HELD THAT GUARANTEE FEE CHARGED @ 0.75% IS AT ARM'S LENGTH. IT IS RELEVANT TO OBSERVE , IN VARIOUS OTHER CASES INVOLVING SIMILAR NATURE OF DISPUTE NOT ONLY THE TRIBUNAL BUT THE HON'BLE JURISDICTIONAL HIGH COURT HAS HELD THAT ARM'S LENGTH PRICE OF GUARANTEE FEE CAN REASONABLY BE FIXED @ 0.5%. IN VIEW OF THE AFORESAID, WE UPHOLD THE DECISION OF LEARNED COMMISSIONER (APPEALS). THIS GROUND IS DISMISSED. 14 . IN GROUND NO.2, THE REVENUE HAS CHAL LENGED THE DECISION OF LEARNED COMMISSIONER (APPEALS) IN REVERSING THE DECISION OF THE 10 WOCKHARDT LTD. ASSESSING OFFICER TO ALLOCATE RESEARCH AND DEVELOPMENT EXPE NDITURE TO SECTION 80IB AND 80 IC UNITS. 15 . BRIEF FACTS ARE, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS CLAIMED DEDUCTION UNDER SECTIONS 80IB AND 80IC OF THE ACT IN RESPECT OF THE ELIGIBLE UNITS. THE ASSESSING OFFICER HELD THAT THE EXPENDITURE INCURRED BY THE ASSESSEE ON RESEARCH AND DEVELO PMENT ACTIVITY WHICH WAS CLAIMED AS DEDUCTION UNDER SECTION 35(2AB) OF THE ACT HAS TO BE ALLOCATED TO SECTIONS 80IB AND 80IC ELIGIBLE UNITS. ACCORDINGLY, HE COMPUTED THE DEDUCTION UNDER SECTIONS 80IB AND 80IC OF THE ACT BY ALLOCATING THE RESEARCH AND DEVEL OPMENT EXPENDITURE WHICH WAS CLAIMED AS DEDUCTION UNDER SECTION 35(2AB) OF THE ACT. THE ASSESSEE CHALLENGED THE AFORESAID DECISION OF THE ASSESSING OFFICER BEFORE THE FIRST APPELLATE AUTHORITY. 16 . L EARNED COMMISSIONER (APPEALS) HAVING FOUND THAT IDENTICAL DISPUTE HAS BEEN DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE IN THE PRECEDING ASSESSMENT YEAR , FOLLOWED THE SAME AND DIRECTED THE ASSESSING OFFICER NOT TO ALLOCATE RESEARCH AND DEVELOPMENT EXPENDITURE TO UNITS ELIGIBLE FOR CLAIM ING DEDUCTION UNDER SECTIONS 80IB AND 80IC OF THE ACT. 17 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE LEARNED COUNSEL S APPEARING FOR THE PARTIES HAVE AGREED 11 WOCKHARDT LTD. THAT THE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRI BUNAL IN THE PRECEDING ASSESSMENT YEAR S . IT IS NOTICED , IDENTICAL DISPUTE AROSE IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR S 2001 02, 2002 03, 2003 04, 2004 05 AND 2005 06. IN THE LATEST ORDER PASSED FOR THE ASSESSMENT YEAR 2007 08, IN ITA NO.5557/ MUM. /2012, DATED 5 TH JANUARY 2018, THE TRIBUNAL, FOLLOWING ITS OWN DECISION FOR THE EARLIER ASSESSMENT YEAR S , HAS UPHELD THE DECISION OF LEARNED COMMISSIONER (APPEALS) BY DISMISSING THE GROUND RAISED BY THE REVENUE. FACTS BEING IDENTICAL, RESPECTFULLY FOLLOWIN G THE CONSISTENT VIEW OF THE TRIBUNAL IN THE PRECEDING ASSESSMENT YEAR S IN ASSESSEES OWN CASE, WE UPHOLD THE DECISION OF LEARNED COMMISSIONER (APPEALS) BY DISMISSING THE GROUND. 18 . IN VIEW OF OUR DECISION ON THE ISSUE RAISED IN ASSESSEES APPEAL IN THE EARL IER PART OF THE ORDER , NO SEPARATE ADJUDICATION ON GROUND NO.3, RAISED BY THE REVENUE IS REQUIRED. 19 . IN GROUND NO.4, THE REVENUE HAS CHALLENGED THE DELETION OF DISALLOWANCE MADE UNDER SECTION 40(A)(I) OF THE ACT FOR FAILURE TO DEDUCT TAX AT SOURCE. 20 . BRIEF F ACTS ARE, DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS MADE PAYMENT AN AMOUNT OF ` 3.60 CRORE TO NON RESIDENT S ON ACCOUNT OF PILOT BIO S TUDY, CLINICAL 12 WOCKHARDT LTD. RESEARCH, ETC., WITHOUT WITHHOLDING / DEDUCTING TAX AT SOURCE . T HEREFORE, HE CALLED UPON THE ASSESSEE TO EXPLAIN WHY THE AMOUNT SHOULD NOT BE DISALLOWED UNDER SECTION 40(A)(I) OF THE ACT. IN RESPONSE, THE ASSESSEE SUBMITTED ITS REPLY STATING THAT AS PER THE DOUBLE TAXATION AVOIDANCE AGREEMENT BETWEEN INDIA CANADA, IND IA UK AND INDIA USA, THE PAYMENTS MADE TO THE RESIDENT S OF THESE COUNTRIES CANNOT BE CONSIDERED AS FEE FOR TECHNICAL SERVICES, HENCE, THERE IS NO LIABILITY ON THE ASSESSEE TO DEDUCT TAX AT SOURCE UNDER SECTION 195 OF THE ACT. THE ASSESSING OFFICER, HOWEVER, DID NOT FIND MERIT ON THE SUBMISSIONS OF THE ASSESSEE. RELYING UPON THE ORDER PASSED BY HIM UNDER SECTION 201 AND 201(1A) OF THE ACT FOR THE ASSESSMENT YEAR 2005 06, HE HELD THAT THE PAYMENT MADE BY THE ASSESSEE IS IN THE NATURE OF FEE FOR TECHNICAL SERVICES, HENCE, THE ASSESSEE WAS REQUIRED TO DEDUCT TAX AT SOURCE. ACCORDINGL Y, HE DISALLOWED AN AMOUNT OF ` 2,14,20,270, UNDER SECTION 40(A)(I) OF THE ACT. WHILE DECIDING ASSESSEES APPEAL ON THE ISSUE, LEARNED COMMISSIONER (APPEALS) FOLLOWED THE DECISION OF THE TRIBUNAL ON IDENTICAL ISSUE ARISING IN EARLIER YEARS AND DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. 21 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE LEARNED COUNSEL S APPEARING FOR BOTH THE PARTIES HAVE AGREED BEFORE US THAT THE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE 13 WOCKHARDT LTD. ASSESSEE BY THE TRI BUNAL IN THE PRECEDING ASSESSMENT YEAR. IT IS OBSERVED , WHILE DECIDING THE APPEAL ARISING OUT OF AN ORDER PA SSED UNDER SECTION 201 AND 201(1 A) OF THE ACT IN ASSESSMENT YEAR 2007 08 FASTENING LIABILITY ON THE ASSESSEE DUE TO NON DEDUCTION OF TAX UNDER SECTI ON 195 OF THE ACT ON SIMILAR PAYMENTS MADE BY THE ASSESSEE TO THE NON RESIDENT, THE TRIBUNAL IN ITA NO.4757/2009, DATED 30 TH JULY 2010, HAS HELD THAT THE PAYMENT MADE BY THE ASSESSEE TO THE NON RESIDENT S CANNOT BE TREATED AS FEE FOR TECHNICAL SERVICES. HEN CE , THE ASSESSEE WAS NOT REQUIRED TO DEDUCT TAX AT SOURCE UNDER SECTION 195 OF THE ACT. THE SAME VIEW WAS EXPRESSED BY THE TRIBUNAL WHILE DECIDING THE APPEAL FOR THE ASSESSMENT YEAR 2005 06 IN ITA NO.6323/MUM./2010, DATED 13 TH APRIL 2012. RESPECTFULLY FOLL OWING THE CONSISTENT VIEW OF THE TRIBUNAL, AS REFERRED TO ABOVE, WE UPHOLD THE DECISION OF LEARNED COMMISSIONER (APPEALS) ON THE ISSUE. GROUND RAISED IS DISMISSED. 22 . IN THE RESULT, APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 23 . TO SUM UP, ASSESSEES AP PEAL IS ALLOWED FOR STATISTICAL PURPOSES AND REVENUES APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN C OURT ON 12.06.2019 SD/ - RAJESH KUMAR ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 12.06.2019 14 WOCKHARDT LTD. COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY ( ASSISTANT REGISTRAR ) ITAT, MUMBAI