ACIT, CHENNAI V. M/s. Tamil Nadu Newsprints & Papers Ltd., CHENNAI

ITA 2035/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57999 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-03-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2005-2006
• Appeal Filed On: 12-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K E B RENGARAJAN JUNIOR
• Assessee Lawyers: R VIJAYARAGHAVAN
• Keywords: Retrospective amendment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER I.T.A. NO. 2035/MDS/2011 (ASSESSMENT YEAR : 2005-06) THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE III(1), CHENNAI - 600 034 . (APPELLANT) V. M/S TAMIL NADU NEWSPRINTS & PAPERS LTD., 67, ANNA SALAI, GUINDY, CHENNAI - 600 032. PAN : AAACT2935J (RESPONDENT) APPELLANT BY : SHRI K.E.B. RENGARAJAN, JUNIOR STANDING COUNSEL RESPONDENT BY : SHRI R. VIJAY ARAGHAVAN, ADVOCATE DATE OF HEARING : 27.02.2012 DATE OF PRONOUNCEMENT : 02.03.2012 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL FILED BY THE REVENUE, IT HAS TAKEN FOUR GROUNDS IN TOTAL, OF WHICH, GROUND NOS.1 AND 4 ARE GENERAL NEE DING NO ADJUDICATION. VIDE ITS GROUND NO.2, THE GRIEVANCE IS THAT THE CIT(APPEALS) DIRECTED THE ASSESSING OFFICER TO WORK OUT THE I.T.A. NO. 2035/MDS/11 2 DEDUCTION UNDER SECTION 80-IA OF INCOME-TAX ACT, 19 62 (IN SHORT 'THE ACT') WITHOUT SETTING OFF LOSSES ON NOTIONAL BASIS. 2. IT IS FAIRLY ADMITTED BY LEARNED D.R. THAT THE C ASE HAS TO BE DECIDED AGAINST THE REVENUE BY VIRTUE OF THE DECISI ON OF HONBLE MADRAS HIGH COURT IN THE CASE OF VELAYUDHASWAMY SPI NNING MILLS V. ACIT (231 CTR 368). HOWEVER, AS PER THE LEARNED D .R., AN SLP AGAINST THE SAID DECISION OF HONBLE MADRAS HIGH CO URT STOOD ADMITTED BY THE HONBLE APEX COURT. 3. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL SUBMISSIONS. LEARNED D.R. HAS BEEN UNABLE TO PRODUCE ANY DECISIO N OF HONBLE APEX COURT THAT WENT AGAINST THE HONBLE MADRAS HIG H COURTS DECISION IN THE CASE OF VELAYUDHASWAMY SPINNING MIL LS (SUPRA). LEARNED D.R. HIMSELF HAS AGREED THAT LD. CIT(APPEAL S) HAD FOLLOWED THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT I N THE CASE OF VELAYUDHASWAMY SPINNING MILLS (SUPRA) WHERE IT WAS HELD THAT THERE CANNOT BE ANY SETTING OFF LOSS ON NOTIONAL BASIS FO R WORKING OUT DEDUCTION UNDER SECTION 80-IA OF THE ACT. WE ARE, THEREFORE, OF THE OPINION THAT THIS GROUND IS DEVOID OF ANY MERITS. I.T.A. NO. 2035/MDS/11 3 4. VIDE ITS GROUND NO.3, GRIEVANCE RAISED BY THE RE VENUE IS THAT LD. CIT(APPEALS) DELETED THE DISALLOWANCE ON AGENCY COMMISSION PAID TO NON-RESIDENTS WHEN SUCH A DISALLOWANCE WAS BASED ON SECTION 40(A)(I) OF THE ACT. 5. LEARNED D.R. ADMITTED THAT THIS ISSUE ALSO STOOD COVERED BY A DECISION OF CO-ORDINATE BENCH OF THIS TRIBUNAL IN A SSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2006-07 IN I.T.A. NO. 554/MDS/2 011. IT WAS HELD BY THE BENCH IN ITS DECISION DATED 30 TH JUNE, 2011 AT PARA 8 AS UNDER:- 8. WE HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW AND HEARD THE RIVAL CONTENTIONS. THERE IS NO DOUBT THAT ASSESSEE HAD PAID THE COMMISSION TO OVERSEAS PARTIES AND THE RE IS ALSO NO DISPUTE THAT SUCH OVERSEAS AGENTS HAD NO PE IN IND IA. THERE IS NO DISPUTE ALSO THAT SUCH OVERSEAS AGENTS RENDERED SERVICES OUTSIDE INDIA FOR PROCURING EXPORT ORDERS. AMENDM ENT HARPED ON BY THE REVENUE IN SECTION 9(1) OF THE ACT MAY BE SUBSTITUTION OF EXPLANATION COMING UNDER SUB-SECTION (2) OF SEC. 9 BY FINANCE ACT, 2010 WITH RETROSPECTIVE EFFECT ON 01.06.1976. THIS IS THE ONLY AMENDMENT MADE IN SEC.9 BY FINANCE ACT, 2010. SUCH SUBSTITUTED EXPLANATION READS AS UNDER:- EXPLANATION- FOR THE REMOVAL OF DOUBTS, IT IS HER EBY DECLARED THAT FOR THE PURPOSES OF THIS SECTION, INC OME OF A NON-RESIDENT SHALL BE DEEMED TO ACCRUE OR ARISE I N INDIA UNDER CLAUSE(V) OR CLAUSE (VI) OR CLAUSE(VII) OF SU B- SECTION(1) AND SHALL BE INCLUDED IN THE TOTAL INCOM E OF THE NON-RESIDENT, WHETHER OR NOT, - (I) THE NON-RESIDENT HAS A RESIDENCE OR PLACE OF BUSINESS OR BUSINESS CONNECTION IN INDIA; OR I.T.A. NO. 2035/MDS/11 4 (II) THE NON-RESIDENT HAS RENDERED SERVICES IN INDIA. HERE IN THE CASE BEFORE US, THERE IS NOTHING ON REC ORD SHOWN BY THE REVENUE FOR COMING TO A CONCLUSION THAT THE CONCERNED NON-RESIDENT AGENTS HAD RENDERED ANY SERVICES IN IN DIA OR HAD A RESIDENCE OR PLACE OF BUSINESS OR BUSINESS CONNEC TION IN INDIA. ASSESSEE HAVING FOUND THAT INCOME OF THE NON -RESIDENTS WERE NOT CHARGEABLE TO TAX IN INDIA WAS JUSTIFIED I N MAKING THE REMITTANCES WITHOUT ANY DEDUCTION OF TAX AT SOURCE. IT IS FULLY SUPPORTED IN THIS REGARD BY THE DECISION OF HONBLE APEX COURT IN THE CASE OF GE TECHNOLOGY CENTRE PVT. LTD (SUPRA ). WE THEREFORE, DO NOT FIND ANY INFIRMITY IN THE ORDER O F THE COMMISSIONER OF INCOME TAX(A) IN DELETING THE DISAL LOWANCE. GROUND NO.3 OF THE REVENUE STANDS DISMISSED. 6. THE PARTY TO WHICH COMMISSION WAS PAID AND FACTS RELEVANT TO IMPUGNED ASSESSMENT YEAR ARE ALSO SIMILAR. NOTHING HAS BEEN BROUGHT ON RECORD BY LEARNED D.R. TO TAKE A DIFFERE NT VIEW FOR THE IMPUGNED ASSESSMENT YEAR. THUS, GROUND NO.3 IS ALS O DEVOID OF ANY MERITS. 7. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. THE ORDER WAS PRONOUNCED IN THE COURT ON 2 ND MARCH, 2012. SD/- SD/- (VIKAS AWASTHY) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 2 ND MARCH, 2012. KRI. COPY TO: APPELLANT/RESPONDENT/CIT(A)-III, CHENNAI/ CIT, CHENNAI-I, CHENNAI/D.R./GUARD FILE