Raymon Patel Gelatine Pvt.Ltd., Baroda V. The Income tax Officer,Ward-4(2), Baroda

ITA 2078/AHD/2012

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 1141 (ITAT-AHMEDABAD)
• Duration Of Justice: 10 year(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: D
• Next Hearing Date: 19-07-2022
• Assessment Year: 2008-2009
• Appeal Filed On: 16-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Double taxation relief; Non-deduction of tax; Reasonable cause; Tangible material; Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings; TDS
• Section: 147; 148; 143(3); 40(a)(ia); 195

Judgement Text

आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरणआयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण, अहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठअहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठ ‘D’ अहमदाबाद। अहमदाबाद।अहमदाबाद। अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, AHMEDABAD ] ] BEFORE MRS.ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND MISS SUCHITRA KAMBLE, JUDICIAL MEMBER ITA No.1591 and 2078/Ahd/2012 Assessment Year : 2005-06 and 2008-09 M/s.Raymon Patel Gelatine P.Ltd. 61, Haribhakti Extension Old Padra Road Baroda 390 015. PAN : AACCR 4454 L Vs. ITO, Ward-4(2) Vadodara. अपीलाथ / (Appellant) यथ /(Respondent) Assessee by : Shri M.K. Patel, Advocate Revenue by : Shri Atul Pandey, Sr.DR स ु नवाई क तार ख/Date of Hearing : 20/07/2022 घोषणा क तार ख /Date of Pronouncement: 12/10/2022 आदेश/O R D E R PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER Present two appeals have been filed by the assessee against separate orders passed by the ld.Commissioner of Income-Tax (Appeals)-III, Baroda [hereinafter referred to as “ld.CIT(A)”] dated 28.03.2012 and 7.6.2012 under section 250(6) of the Income Tax Act, 1961 ("the Act" for short) pertaining to the Asst.Years 2005-06 and 2008-09 respectively. 2. It was common ground that issue involved in both the appeals was identical.They were therefore taken up for hearing together and are being disposed by this common order, for the sake of convenience. ITA No.1591 and 2078/Ahd/2012 2 3. First we shall take up the appeal in ITA No.1591/Ahd/2012 for Asst.Year 2005-06. 4. At the outset it was noted that the assessee appeal was time barred by 31 days. In this regard an application seeking condonation of delay was filed stating that appellate order was served on the assessee on 20.4.2012 and the appeal before ITAT was required to be filed on or before 19.6.2012, but was filed on 20.7.2012 i.e. after a delay of one month and one day, for the reason that concerned person of the assessee, handling tax matter was placed in Mumbai and in Vadodara where the order of the assessee had been served on the assessee there was only one person handling administrative work. Also the directors were of more than 75 years of age, and therefore, there was no proper staff available to forward the order of the ld.CIT(A) to Mumbai so as to facilitate the filing of the appeal before the Tribunal in time. It is stated in the application that the delay in filing the appeal was for reason beyond the control of the assessee which was unintentional, and therefore, it was pleaded that the same be condoned. The ld.DR on the other hand objected to the same. 5. We have heard both the parties and we are satisfied that the assessee has demonstrated reasonable cause for the delay of small period of 31 days on account of being logistically handicapped in this regard, since its taxation matter was being handled in Mumbai, and the order being received in Vadodara, there was nobody to immediately forward to Mumbai so as to ensure timely filing of the appeal. Noting the fact that despite the logistic disability, the assessee still managed to get the appeal filed by it with a small delay of 31 days, it is evident that the assessee was aware of the statutory limitation prescribed for filing appeal and proactively pursued the ITA No.1591 and 2078/Ahd/2012 3 matter despite limitation at its end. The delay surely is not intentional, and therefore, in the interest of justice we consider it fit to condone the delay. The order was pronounced in the Open Court and hearing of the appeal is being proceeded with. 6. The facts of the present case are that regular assessment under section 143(3) was framed on the assessee for the impugned year on 24.12.2007 determining total income at Rs.16,20,928/-. Thereafter the case of the assessee was reopened on account of non- deduction of tax at source on various expenses. Thereafter by giving due opportunity of hearing to the assessee, order under section 143(3) read with section 147 of the Act was passed on 21.12.2010 determining total income of the assessee at Rs.24,69,256/- making disallowance of legal & professional charges and carriage outward expenses of Rs.5,46,559/- and Rs.2,59,569/- respectively for non- deduction of TDS as per provisions of section 40(a)(ia) of the Act and disallowance of Rs.42,200/- being legal professional charges disallowed for want of proof. The assessee carried the matter in appeal before the ld.CIT(A) where he challenged the validity of the assessment framed under section 147 of the Act and also raised grounds on the merit of the addition/disallowance made. The ld.CIT(A) dismissed the legal ground of the assessee, and further upheld the disallowance for non-deduction of TDS for legal & professional charges amounting to Rs.3,13,859/- while he deleted rest of the disallowance. Aggrieved, the assessee has come up in appeal before the Tribunal. 7. The ground no.1 raised by the assessee reads as under: ITA No.1591 and 2078/Ahd/2012 4 “1. The learned CIT(A) erred in fact and in law in confirming the action of AO in reopening the assessment u/s. 147 of the Income Tax Act, 1961 despite the fact that assessment u/s. 143(3) was already framed in the case of the Appellant.” 8. In the above ground, the assessee has challenged the validity of the assessment framed under section 147 of the Act. Its challenge being on the ground that reopening of the case was a mere change of opinion; that the issue of disallowance under section 40(a)(ia) of the Act was examined by the AO in the assessment framed under section 143(3) of the Act and reopened for the same reason which tantamounted to change of opinion, therefore the same is not allowable as per the law. 9. We have gone through the order of the ld.CIT(A) in this regard on which the ld.DR also relied on heavily at para 4.2 to 4.4 of the order as under: 4.2 I have considered the facts of the case, observation of the AO as well as the submission of the AR. So far as the Reliance upon the decision of honourable Supreme Court in the case of Kelvinator of India is concerned, this decision was interpreted recently by honourable madras High Court in the case of Sri Sakthi Textiles Ltd, [2010] 193 TAXMAN 216 (MAD.). In this decision the court has held as follows: "29. A reading of the above judgment would go to really show that an assessment already completed cannot be reopened for the purpose of redssessment merely on the basis of the change of opinion by the subsequent Assessing Officer. Such reopening is possible only on tangible materials in the event of the Officer finding reasons to believe that there is escapement of income from assessment. In my considered opinion, as I have understood from the judgments cited supra, more particularly, the recent judgment of the Hon'ble Supreme Court cited supra, there is no legal necessity that the materials referred to in section 147 of the Act should be fresh materials collected subsequent to the original assessment orders. Even from out of materials which are already available on record, if the subsequent officer finds reasons to believe that there has been escapement of assessment, surely he can issue notice under section 148 of the Act. Such course, will not, in my considered opinion, amount to reviewing the earlier assessment." 4.3 Thus as per the opinion of this court the tangible material for opening a completed assessment can come from the material already on record if the reopening is within four years of the end of the assessment year. This is ITA No.1591 and 2078/Ahd/2012 5 particularly true if the assessing officer has not made any opinion or has not considered a particular item at the time of passing of original assessment order. This is evident from the following parts of the judgment of honourable Gujarat High Court in the case of Praful Chunilal Patel, [1999] 236 ITR 832 (GUJ.): "In cases where the Assessing Officer has not made an assessment of any item of income chargeable to tax while passing the assessment order in the relevant assessment year, it cannot be said that such income was subjected to an assessment. In the assessment proceedings, the Assessing Officer would ascertain on consideration of all relevant circumstances the amount of tax chargeable to a given taxpayer. The word "assessment" would mean the ascertainment of the amount of taxable income and of the tax payable thereon. In other words, where there is no ascertaining of the amount of taxable income and the tax payable thereon, it can never be said that such income was assessed. Merely because during the assessment proceedings the relevant material was on record or could have been with due diligence discerned by the Assessing Officer for the purpose of assessing a particular item of income chargeable to tax, it cannot be inferred that the Assessing Officer must necessarily have deliberated over it and taken it out while ascertaining the taxable income or that he had formed any opinion in respect thereof. If looking back it appears to the Assessing Officer (albeit within four years of the end of the relevant assessment year) that a particular item even though reflected on tlic rccuid was not subjecLea to assessment and was left out while working out the taxable income and the tax payable thereon, i.e., while making the final assessment order, that would enable him to initiate the proceedings irrespective of the question of non-disclosure of material facts by the assessee. In fact, if there is material placed on record which would show existence of income chargeable to tax and which ordinarily ought to have included in the ascertainment of taxable income made in the assessment order but was not so included, that would itself provide a cause or justification for a belief to the Assessing Officer that such income had escaped assessment and the Assessing Officer in such cases would be ex facie justified in initiating the proceedings on such basis. The cases of non-assessment of an item of income chargeable to tax would warrant formation of requisite belief to initiate the proceedings within four years of the end of the relevant assessment year, even where full disclosures were made and yet an income chargeable to tax had escaped from being included in the final assessment order in which taxable income was worked out. In such cases the Assessing Officer has in fact a duty to exercise his jurisdiction. The Assessing Officer has not to conclusively come to any finding on the facts which prompted his reason to believe, at the stage of the issuance of notice under section 148 pursuant to which the assessee is to be heard; and the order if adverse, can be questioned under the provisions of the Act. ITA No.1591 and 2078/Ahd/2012 6 The cases of underassessment or excessive relief which are deemed cases of escapement of income leave no scope for an argument that they are not cases of income having escaped assessment. If the Assessing Officer prima facie finds or discovers that the case falls in any of the clauses of Explanation 2, then those cases will be deemed cases of income that has escaped assessment and without anything more beyond such finding or discovery, he can initiate the proceedings under section 147 of the Act. On a proper interpretation of section 147 of the Act, it would appear that the power to make assessment or reassessment within four years of the end of the relevant assessment year would be attracted even in cases where .there has been a complete disclosure of all relevant facts upon which a correct assessment might have been based in the first instance, and whether it is an error of fact or law that has been discovered or found out justifying the belief required to initiate the proceedings. In our view, the words "escaped assessment" where the return is filed, are apt to cover the case of discovery of a mistake in the assessment caused by either an erroneous construction of the transaction or due to its non-consideration, or, caused by a mistake of law applicable to such transfer or transaction even where there has been a complete disclosure of all relevant facts upon which a correct assessment could have been based. In cases where the Assessing Officer had overlooked something at the first assessment, there can, in our opinion, be no question of any change of opinion when the income which was chargeable to tax is actually taxed as it ought to have been under the law but was not, due to an error committed at the first assessment. When at the first assessment all the relevant aspects are considered and there is proper applicability of mind for ascertainment of the amount of taxable income and of the tax payable thereon, then in the absence of any error or mistake being discovered or found, the Assessing Officer later on cannot merely for the sake of giving a different opinion, change the earlier opinion. However, in cases where an error or mistake is detected, it can never be said that there is only a mere change of opinion. The mistake or error which is detected and which constituted a valid decision or cause to form a belief in the first assessment as a result of which the income has escaped assessment, would constitute a reason to believe that the income had escaped assessment and such cases where mistakes and errors are detected and which constitute a valid justification or cause to form a belief sought to be corrected cannot be said to be cases of mere change of opinion." 4.4. Similar view has also been taken by the special bench of Chennai ITAT in the case of Mahindra Holidays & Resorts (India) Ltd. [2010] 39 SOT 438 (CHENNAI) (SB), decision of Hon'ble Delhi Court in the case of Dalmia (P) Ltd. v/s CIT Delhi, Taxmann. Com 106 (Delhi) and decision of Hon'ble Kerala High Court in CIT Cochin v/s National Tyres & Rubber Co. of India Ltd. Taxmann. Com 3 (Ker). In the present case, the assessment has been re-opened by issuing the notice u/s. 148 within 4 years from the end of the assessment year. ITA No.1591 and 2078/Ahd/2012 7 The reason"for re-opening was that the TDS had not been deducted on some payments on which it was required to be deducted and hence the disallowance to be made u/s 40(a)(ia) was not made. This issue was not discussed in the original assessment order and hence no opinion was formed on it. Thus, the AO has recorded his reason to believe that the income has escaped assessment and then issued the notice u/s. 148. Hence it is held that the assessment has been re- opened correctly in this case. Hence this ground of appeal is dismissed.” 10. On going through the above, the ld.CIT(A), we find, has given a very categorical finding of the fact that reopening was resorted to on account of certain payment on which TDS was required to be deducted but was not deducted by the assessee, having not being disallowed while computing the income of the assessee, and thus the income relating to the same escaping assessment. The ld.CIT(A) has found that this issue was not discussed in the original assessment order, and no opinion was formed on it, accordingly he rejected the arguments of the assessee raised in this regard, challenging validity of the assessment framed under section 147 of the Act on the ground of reopening being resorted to on change of opinion of the AO. Ld.CIT(A), we have noted, has relied on various decisions of the Hon’ble High Courts and the ITAT including that of the jurisdictional High Court ,in support of the proposition of law that where an issue has not been considered in assessment there can be no question of change of opinion of the AO with regard to the same for the purposes of assuming jurisdiction to initiate reassessment proceedings. The ld.counsel for the assessee was unable to controvert the findings of the ld.CIT(A) both on facts, that this issue was not discussed in the original assessment order by the AO, and on law. In view of the same, we have no hesitation in concurring with the finding of the ld.CIT(A) that reopening in the present case was not change of opinion at all. The challenge raised by the ld.counsel for the assessee against the validity of the assessment framed under ITA No.1591 and 2078/Ahd/2012 8 section 147 of the Act in the present case, therefore, has been rightly held to be not sustainable in law by the ld.CIT(A). The order of theld.CIT(A), upholding the validity of the assessment framed under section 147 of the Act is upheld. Ground no.1 is dismissed. 11. Ground no.2 reads as under: “2. The learned CIT(A) erred in fact and in law in confirming the action of AO by making disallowance of Rs.3,13,859/- on the ground that the Appellant failed to deduct TDS and therefore deduction of the said sum cannot be allowed while computing the total income.” 12. In this regard, the ld.counsel for the assessee pointed out that the assessee is aggrieved by the disallowance of Rs.3,13,859/- made on account of non-deduction of tax at source on expenses related to certification fees paid to Islamic Food and Nutrition Council of America (“IFANCA”), Chicago. The details of which are reproduced at page no.3 of the assessment order as under: 5) Amount paid to IFANCA, Chicago for shipment certification fee 263820 N.A. Ledger attached. Service rendered outside India (copy of their Certificate to this effect attached) No permanent establishment in India. 6) Amount paid to IFANCA, Chicago 50039 N.A. -do- 13. The ld.counsel for the assessee contended thereafter that “IFANCA” was division of Islamic Food and Nutrition Council of America, and a non-profit Islamic Organization incorporated in 1982 in the State of Illinois, USA and remittance was on account of payment of Halal supervision and certificate fees in respect of export ITA No.1591 and 2078/Ahd/2012 9 of Gelatine to USA and European countries. The ld.counsel for the assessee pointed out that the Ld.CIT(A) had held the amount eligible to withholding tax in terms of Article 12(4) of the DTAA with USA, finding the services rendered by IFANCA to qualify as “Included Services” as it involved making available technical knowhow to the assessee. Ld.Counsel for the assessee emphatically denied the possibility of any technical knowledge being made available to the assessee By IFANCA in the process of granting halal certification. He stated that there was no technical input involved at all in halal certification and the entire process involved in the grant of registration was only to ensure that the assessee was halal compliant in manufacturing its products which were being exported to USA. That “halal” merely implied being permissible under Islamic law and there was no technicality involved in it so as to hold that any technical knowledge was made available to the assessee while granting the halal certification. He therefore stated that the services rendered by IFANCA did not qualify as “Included Services” as per Article 12(4) of the applicable DTAA with USA , and therefore no disallowance was warranted as per section 40(a)(ia) of the Act for non deduction of tax at source thereon. The ld.counsel for the assessee heavily relied on the decision of Coordinate Bench of the ITAT, Ahmedabad, in the case of ITO Vs. Veeda Clinical Research P.Ltd. in ITA No.1406/Ahd/2009 order dated 28.6.2013 wherein he pointed out that in-house training of IT staff and medical staff and of market awareness and development training, for which payment was made by the assessee, was held by the ITAT as services being general in nature and not involving any transfer of technology, and accordingly it was held that there was no TDS implication on the payment made for availing such services as per the Indo-US DTAA. ITA No.1591 and 2078/Ahd/2012 10 14. The ld.DR on the other hand drew our attention to the exhaustive findings of the ld.CIT(A) at para 5.2 to 5.2.4 of his order pointing therefrom that the Ld.CIT(A) went through the procedure adopted by IFANCA for certification of halal and found that it involved transfer of technical knowledge so that the Plant becomes Halal compliant. He pointed out that the ld.CIT(A) went through website of “IFANCA” which reiterated his finding that “IFANCA” was “making available” technical expertise to the assessee. The finding of the ld.CIT(A) in this regard are reproduced hereunder: “5.2 I have given my careful consideration to the facts of the case, arguments advanced by the AR as also the observation of the AO. The appellant's basic contention is that the payments made for obtaining different certificates from above mentioned persons cannot be categorized under the head ‘Fee for Technical Services' or where it is so covered it is to be exempted from TDS by provisions of DTAA. This is not correct. The payments have been made for obtaining certificates for medicines being manufactured by the appellant as herbal, inspection and supervision of plants of the appellant etc. Hon'ble Kerala High Court in its decision in the case of Cochin Refinery Ltd, 222 ITR 354 was concerned with similar issue. In that case the assessee had requested a foreign company situated in USA to evaluate whether coke produced from a blend of vacuum bottoms and clarified oil from Bombay High crude was suitable for making anode for aluminium industry. The test was carried out in USA. The court held that the payment made for such purposes would have to be deemed as amounting to "fees for technical services" as per explanation (2) to clause (vii) of sub- section (1) of section 9 of the Act. Hence it is held that all these payments are in the nature of fee for technical services. Now coming to the payments made to thee persons individually. i) . EDQM, France - This payment has been made to an institution of diplomatic origin. Hence the payment received by it is not taxable in India and hence no TDS is required to be made. ii) Payments to 'IFANCA' - There are two types of payments made to this person: Plant Supervision charges and Halal Supervision and Certification fees. The appellant has submitted that as per the provisions of Indo-USA, DTAA, these payments are not covered by the definition of "included Service". It has also been claimed that no technical knowledge, experience, skill or know-how was made available to the appellant by this Institution. There was no transfer of knowledge from the recipient to the payer. In view of the same, the payment would not be considered as fees for technical services as per the DTAA. Further, since the payment cannot be considered as fees for technical services as per the DTAA, the same would be considered as business income and in view of the fact that the ITA No.1591 and 2078/Ahd/2012 11 services are provided from outside India, the same are not attributable to PE, if any, in India and on this count, no TDS is required to be deducted. In this aspect, the appellant was asked to explain the nature of services rendered by this person to the appellant and to submit the copy of agreement with this person. In this aspect, Shri Bhavin Marafatia, C.A., appeared with Shri M. P. Ramdas, Finance Manager and filed a written submission on 15.03.2012. In this submission, it was claimed that IFANCA issued Halal Certificate confirming that our pharmaceutical products 'Gelatine' derived from raw material cattle bones, is a Halal and fit for consumption for Muslims living in Islamic life style. Cattle bone supplied to the factory by the appellant 5.2.1 A perusal of the Halai Product Certificate issued by this organisation states that the Islamic Food and Nutrition Council of America, IFANCA, hereby certifies that the under mentioned products have been produced under IFANCA supervision and are free of any Haram and Mushboob ingredients, byproducts or contamination. These products are certified to be Halal (lawful) and fit for Muslim consumption. The procedure for Halal Product Certification / Supervision states that a confidential agreement is executed by both parties. But despite being asked, the copy of this agreement was not produced before the undersigned. Procedure for Halal Gelatine Certification states that the production plant is inspected by a IFANCA Inspector according to the Plant Inspection - requirements. A copy of it is attached. The Plant Inspection requirements are as follows: "The philosophy of IFANCA's Halal supervision program is to educate the company personnel about Halal requirements so that they can be properly implemented and self monitored by the company, eliminating the need for on site production inspection by the IFANCA staff. 1. Discuss Key elements of the program with the plant management • Islamic Food Laws. What is Halal and what is not? - Critical Ingredients to watch for. • Muslim Markets. Domestic International 2. Review product and other information. • Product Review. List of finished products to be certified Suppliers of critical ingredients Specification sheets for critical ingredients • Process Review. Flow chart of the process « Sanitation Review. Sanitation program Audited by independent auditors? Cleaning procedures Cleaning chemicals 3. Plant Inspection Tour • Ingredient receiving, quality control and storage • Production processes and equipment used • Types of products made on each system • Any pork products handled at this facility » Review product contact surfaces for adequacy of sanitation ITA No.1591 and 2078/Ahd/2012 12 » Review the chances of cross contamination from non- Halal products • Review finished product storage 4. Review the findings with the plant management. 5.2.2 A perusal of the above requirements show that the IFANCA is not merely providing a certificate but is also providing technical knowledge to the appellant so that its plant becomes Halal compliant. This is also evident from the answer provided on the web site of IFANCA regarding question 'what is Halal Certification?' This is as follows: "Halal Certification is the process of having a qualified independent third party supervise the production of consumables, attesting that they were produced in conformity with the preparation and ingredient standards of the halal lifestyle. After successful adoption and performance of halal productivity procedures, the supervisory- third party then issues Halal Certification to the producer attesting to halal conformity on a per product basis. While halal requires foods to be wholesome and pure, Halal Certification has left the issue of food safety to the government regulatory bodies." 5.2.3 Similarly, the benefit of IFANCA Halal Certification has been given as follows on the web site: " What about the producer? What benefits does the producer receive from IFANCA halal certification? Actually, the benefits for the producer are just as great. For starters, a producer gets the expertise of the IFANCA staff in reviewing its products, the ingredients, the preparation and processing and the hygiene and sanitation procedures that are requisite in manufacturing said product. Of course, this is all done confidentially, so there is no concern of competitors learning, anything about the product(s) involved in the certification process. Further, IFANCA halal certification provides an independent third party quality assurance step valued by conscientious consumers. IFANCA has developed a documented procedure for producing halal products. The procedure is consistent with HACCP and other quality assurance standards and is easily implemented. IFANCA works with the producer every step of the way to ensure all questions are answered and halal procedures are integrated into the standard operating procedures effectively and efficiently. IFANCA -provides training in halal policy and procedure to key personnel in the production process who, in turn, pass on this training to other staff, thereby assuring methodical cleanliness and consistency throughout the production process. IFANCA provides consulting on product development, marketing, and quality assurance to help roll out new products for the halal consumer. IFANCA offices are available for this consultation year-round and it is part of the services we provide to client companies. Once a product meets the requirements for halal certification, a certificate is issued. This can be done electronically, if that is preferred. The IFANCA halal certificate has worldwide ITA No.1591 and 2078/Ahd/2012 13 acceptance. From Indonesia, Malaysia and Singapore, to Saudi Arabia, the UAE and the rest of the Middle East, through Europe and North and South America, IFANCA-certified halal products and procedures have delighted and satisfied consumers and producers alike. Once the product is certified, permission is granted to display the IFANCA certification logo, the Crescent M, on the product packaging and label. This is a valuable assurance that the product is an authentic IFANCA halal-certified product meeting the highest quality of halal certification available anywhere in the world." 5.2.4 From all these observations, it is evident that the appellant's claim that IFANCA is a merely certifying agency and is not making available any technical expertise to the appellant is incorrect. In such circumstances, the amount paid to this institution is in the nature of fee for technical knowledge and is accordingly taxable in India. Hence, the appellant was required to deduct IDS on this amount as per the provisions of section 195 of the Act. Since this has not been done, hence, it is held that the A.O. has rightly disallowed payments of Rs.3,13,859/- made to IFANCA.” He therefore stated that certification fee paid to IFANCA amounting to Rs.3,13,859/- had been rightly made by the ld.CIT(A). 15. We have heard rival contentions. The issue before us is with respect to disallowance amounting to Rs.3,13,859/- claimed as expenditure by the assessee and disallowed for non-deduction of tax at source as per section 40(a)(ia) of the Act. The impugned payment was made to an organization, IFANCA, for plant supervision charges and halal supervision/certification charges. Primarily, the payment is made to the said entity for obtaining certification of the product exported by the assessee to USA as halal to enable access to the Islamic market in USA. The contention of the Revenue is that the process of certification of the assessee’s product as halal involves technology being made available to the assessee so that its plant, where it is manufacturing its products, they become halal compliant. The ld.CIT(A) went through the supervision procedure adopted by the IFANCA, and after going through the same he came to the conclusion that entire process of supervision and certification involved making available to the ITA No.1591 and 2078/Ahd/2012 14 assessee specific methods to be adopted in the manufacturing process so as to ensure the products manufactured being halal, and therefore, it involved making available technical knowledge to the assessee so as to be treated as “included services” as per Article 14(2) of the DTAA with USA for the purpose of holding taxes on the same. The ld.counsel for the assessee, on the other hand, opposed to this finding of the ld.CIT(A). After going through the finding of the ld.CIT(A), We are not in agreement with the ld.CIT(A) that certification and supervision services for which IFANCA was paid the impugned amount involved any technology being made available to the assessee with respect to the products being manufactured by it for halal compliant. 16. For this purpose, it is first necessary to understand, what the term “halal” means. halal is an Arabic term/word that means “permissible” in English. In regard to the food, halal is set of standards for determining whether or not a product meets Islamic dietary restrictions. There are varying standards of halal and different understanding of halal law by the Islamic scholars, and that is why, there are multiple halal certifications. But there are three main requirements to consider halal viz. (i) the person performing action must have belief in God, (ii) the person performing action should attend to the act with proper intention and (iii) action should not harm anyone else. In a sense, halal means “permitted and allowed” by law Giver Allah. Islamic law places high importance on the life of animals. In order for food to qualify as halal, end of animals life must be taken only in the name of God. Thus, in a sense, halal certification means “permitted” under the Sharia or Islamic Law, which in sum and substance, implies slaughtering to be done for good intention and in the name of “God”. ITA No.1591 and 2078/Ahd/2012 15 17. This is what the term “halal” is generally considered to imply. There is nothing technical involved in it. All that is required for food items to qualify as “halal” is that they should be prepared in the manner prescribed in Islamic law, i.e with good intention and in the name of Allah, giving due respect to the animals involved in the process. All this is a very general requirement and we fail to understand what technicality is involved in it. Even the procedure which the Ld.CIT(A) noted IFANCA followed for halal certification does not mention what technical knowhow is made available to the assessee. In fact even the same reveals that the entire procedure adopted by IFANCA ensured that proper sanitation and cleanliness procedures are followed by the assessee while manufacturing its products and the product is not so contaminated so as to not qualify as halal. To make the assessee halal compliant the assessee is educated about the meaning and implication of the term, its products and process adopted for manufacturing are reviewed to see that they are halal compliant, sanitation and cleaning procedures are reviewed and so on. The end purpose, we may state at the cost of repetition, being to ensure that the product manufactured by the assessee and the process adopted for manufacturing is such that it can be certified as “halal”. 18. What technicality is involved in halal compliant, has not been pointed out by the Revenue. As per the common meaning of the term “halal”, as noted above by us, we do not find any technicality involved in halal compliant. Therefore, we hold, that the findings of the Ld.CIT(A) that halal certification involved technical knowhow being made available to the assessee, is incorrect on facts. The payment made by the assessee to ITA No.1591 and 2078/Ahd/2012 16 IFANCA therefore for halal certification and supervision charges, amounting to Rs.3,13,859/- did not qualify as “Included Services” in terms of Article 12(4) of the DTAA with USA and the said payment, we hold, did not qualify for withholding tax in terms of the DTAA. The disallowance of the said expenses for non –deduction of tax at source is therefore unwarranted. 19. In view of the above, the disallowance therefore of the amount of certification and supervision paid to the IFANCA amounting to Rs.3,13,859/-is directed to be deleted. Ground no.2 is allowed. 20. Ground No.4 and 5 are as under: “4. The learned CIT(A) erred in fact and in law in charging interest u/s. 234B of the Income Tax Act, 1961. 5. The learned CIT(A) erred in fact and in law in charging interest u/s. 234D of the Income Tax Act, 1961.” 21. These grounds being consequential relating to the charging of interest under section 234B/D are not dealt with by us. They are accordingly disposed off. 22. Now we take ITA No.2078/Ahd/2012 23. The ground no.1 reads as under: 1) That on facts, and in law, the learned CIT(A) has grievously erred in confirming the disallowance of Rs.5,12,500/- being fees paid to ROC. 24. The ld.counsel for the assessee fairly admitted that the issue of disallowance of expenses relating to the fees paid to ROC for increase in authorized share capital was covered against it, and therefore, did not press the said ground. In view of the same, Ground No.1 is dismissed. ITA No.1591 and 2078/Ahd/2012 17 25. Ground No.2 is identical to Ground no.2 in the first appeal, i.e ITA No.1591/Ahd/2012, which we have decided hereinabove. Therefore, for the reason and conclusions given therein, we dispose of this ground no.2 also in the present appeal. 26. In the result, appeals of the assessee are partly allowed. Order pronounced in the Court on 12 th October, 2022 at Ahmedabad. Sd/- Sd/- (SUCHITRA KAMBLE) JUDICIAL MEMBER (ANNAPURNA GUPTA) ACCOUNTANT MEMBER Ahmedabad, dated 12/10/2022 vk*