Pakkar Leather Export Company , CHENNAI V. ACIT NCC-5 , CHENNAI

ITA 2015/CHNY/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7902 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2012-2013
• Appeal Filed On: 21-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS S VIJAYA PRABHA
• Keywords: Retrospective amendment

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH: CHENNAI . , .. , ' BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI DUVVURU R.L.REDDY, JUDICIAL MEMBER ./ ITA NO.2015/CHNY/2017 $% % /ASSESSMENT YEAR: 2012-13 M/S.PAKKAR LEATHER EXPORT CO., 11/23, VEPERY HIGH ROAD, D.NO.8, 2 ND FLOOR, PERIAMET, CHENNAI-03. VS. THE ASST. COMMISSIONER OF- INCOME TAX, NON-CORPORATE CIRCLE-5, CHENNAI-03. [PAN: AAAFP 6536 A ] ( ( /APPELLANT) ( )*( /RESPONDENT) ( + / APPELLANT BY : MR.VIKRAM VIJAYARAGHAVAN, ADV. )*( + /RESPONDENT BY : MRS.S.VIJAYAPRABHA, DCIT + /DATE OF HEARING : 31.07.2018 + /DATE OF PRONOUNCEMENT : 18.09.2018 / O R D E R PER DUVVURU R.L.REDDY, JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF THE COMMISSIONER OF INCOME TAX(A)-5, CHENNAI, IN ITA NO .11/CIT(A)-5/15-16 DATED 14.06.2017 FOR THE AY 2012-13. 2. THE ASSESSEE RAISED ONLY ONE EFFECTIVE GROUND VI Z., LD.CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF OVERSEAS EX PORT COMMISSION OF ITA NO.2015/CHNY/2017 :- 2 -: RS.13,99,203/- PAID TO NON-RESIDENTS U/S.40(A)(IA) OF THE INCOME TAX ACT, 1961. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED ITS RETURN OF INCOME FOR THE AY 2012-13 DECLARING TOTAL INCOME OF RS.54,11,910/-. THE AO HAS COMPLETED THE SCRUTINY ASSESSMENT U/S.143(3) DATED 27.02.2015 DETERMINING THE TOTAL INCOME OF RS.68,21,417/-. DU RING THE COURSE OF SCRUTINY ASSESSMENT U/S.143(3) OF THE ACT, FROM THE P&L A/C, THE AO NOTICED THAT THE ASSESSEE HAS CLAIMED OVERSEAS EXPO RT COMMISSION PAYMENT FOR RS.13,99,203/-. SINCE THE ASSESSEE HAS NOT PRODUCED ANY AGREEMENT WITH FOREIGN BUYERS, THE AO WAS OF THE OP INION THAT THE PAYMENT WAS MADE ONLY FOR THE PURPOSE OF SALE OF TH E GOODS OUTSIDE INDIA, BY MEANS OF ENGAGING AGENTS AS PER SEC.917 O F THE ACT ANY PAYMENT MADE FOR THE PURPOSE OF MANAGERIAL SERVICES OUTSIDE INDIA SHALL BE CONSIDERED ONLY AS THE PAYMENT FOR FEE FOR TECHN ICAL SERVICES. THE AO CONCLUDED THAT THE EXPLANTION-4 TO SEC.9(1)(I) AND EXPLANATION-2 TO SEC.195(1) INTRODUCED BY THE FINANCE ACT, 2012 WITH RETROSPECTIVE EFFECT FROM 01.04.1962, WHICH IS CLEARLY APPLIES TO THE PR ESENT CASE AND HELD THAT THE COMMISSION PAYMENT OF RS.13,99,203/- ATTRA CTS PROVISIONS OF TDS U/S.195 OF THE ACT. 4. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD.CIT(A) AND CHALLENGED THE DISALLOWANCE OF EXPORT COMMISSION PA ID TO THE NON- ITA NO.2015/CHNY/2017 :- 3 -: RESIDENT. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE LD.CIT(A) HAS CONFIRMED THE ADDITION MADE BY THE AO. 5. ON BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BE FORE THE TRIBUNAL AND THE LD.COUNSEL FOR THE ASSESSEE HAS SUBMITTED T HAT THIS CASE IS CLEARLY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION I N THE CASE OF M/S.FAIZAN SHOES (P) LTD., REPORTED IN 367 ITR 155 (MAD) AND PRAYED THAT THE SAME SHOULD BE FOLLOWED. ON THE OTHER HAND, THE LD.DR H AS SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. 6. WE HAVE HEARD BOTH THE SIDES AND GONE THROUGH TH E MATERIALS PLACED ON RECORD. 7. WITH REGARD TO THIS ISSUE, AS TO WHETHER THE TDS HAS TO BE DEDUCTED OR NOT WHEN THE COMMISSION PAYMENT MADE TO THE OVER SEAS AGENCIES, WE FIND THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR O F THE ASSESSEE BY THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT I N THE CASE OF CIT VS. FAIZAN SHOES (P) LTD., WHEREIN, IT WAS HELD THAT WH ERE THE ASSESSEE SIMPLY PAID COMMISSION SIMPLICITOR TO NON-RESIDENT AGENT O UTSIDE INDIA FOR PROCURING EXPORT ORDERS FROM OVERSEAS BUYERS AND TH E NON-RESIDENT AGENTS DID NOT PROVIDE ANY TECHNICAL SERVICES FOR THE PURP OSE OF RUNNING BUSINESS OF ASSESSEE IN INDIA, THE ASSESSEE WAS NOT LIABLE T O DEDUCT TAX AT SOURCE ON SUCH COMMISSION PAID. THEREFORE, THE COMMISSION PAID TO THE NON- RESIDENT AGENT WOULD NOT FALL WITHIN THE DEFINITION OF FEE FOR TECHNICAL ITA NO.2015/CHNY/2017 :- 4 -: SERVICES AND THE ASSESSEE WAS NOT LIABLE FOR TDS ON PAYMENT OF COMMISSION. 8. BY RESPECTFULLY FOLLOWING THE ABOVE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT, THE DISALLOWANCE MADE TO WARDS OVERSEAS EXPORT COMMISSION OF RS.13,99,203/- U/S.40(A)(IA) OF THE A CT IS DELETED. THUS, THE GROUND RAISED BY THE ASSESSEE IS ALLOWED. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THE 18 TH DAY OF SEPTEMBER, 2018 IN CHENNAI. SD/- SD/- ( . ) ( A. MOHAN ALANKAMONY ) 3 /ACCOUNTANT MEMBER ( . . ) ( DUVVURU R.L.REDDY ) $ 3 /JUDICIAL MEMBER /CHENNAI, 4 /DATED: SEPTEMBER 18, 2018. TLN + )$56 76 /COPY TO: 1. ( /APPELLANT 4. 8 /CIT 2. )*( /RESPONDENT 5. 6 )$$ /DR 3. 8 ( ) /CIT(A) 6. % /GF