RELIANE GENERAL INSURANCE CO. LTD., MUMBAI V. D.C.I.T. CIRCLE 3(3), MUMBAI

ITA 2209/MUM/2012

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5804 (ITAT-MUMBAI)
• Duration Of Justice: 6 year(s) 8 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 29-01-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 03-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHAITANYA ANJARIA
• Keywords: TDS; Set aside
• Section: 40(a)(ia); 201(1); 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D , MUMBAI BEFORE S HRI R.C. SHARMA ( AM ) AND SHRI RAM LAL NEGI (JM) ITA NO. 2209/MUM/2012 ASSESSMENT Y EAR: 2009 - 10 M/S RELIANCE GENERAL INSURANCE CO. LTD., 570, RECTIFIER HOUSE, 1 ST FLOOR, NAIGAUM CROS S, NEXT TO ROYAL IND. ESTATE, WADALA (W), MUMBAI - 400031 PAN: AABCR6747B VS. THE DY. COMMISSIONER OF INCOME TAX, CIRCLE 3(3), MUMBAI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI JITENDRA SANGHAVI (AR) REVENUE BY : SHRI CHAITANYA ANJARIA (D R) DATE OF HEARING: 10 / 09 /201 8 DATE OF PRONOUNCEMENT: 06 / 12 /201 8 O R D E R PER RAM LAL NEGI, JM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER DATED 20.12.2011 PASSED BY TH E COMMISSIONER OF INCOME TAX (APPEALS) - 7 (FOR SHORT THE CIT (A) ) , MUMBAI, FOR THE ASSESSMENT YEAR 2009 - 10 , WHEREBY THE LD. CIT (A) HAS DISMISSED THE APPEAL FILED BY THE ASSESSEE AGAINST THE ASSESSMENT ORDER PASSED U/S 143 (3) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT). 2. IN THE PRESENT CASE , THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION DECLARING CURRENT YEARS LOSS OF RS.53,62,71,857/ - . THE AO MADE DISALLOWANCE OF RS. 60,74,169/ - U/S 40(A)(IA) OF THE ACT, F OR THE REASON THAT THE ITO(TDS) - 2 MUMBAI, IN ITS ORDER DATED 31.03.2010 PASSED U/S 201(I)/201(IA) OF THE ACT HAS OBSERVED THAT IN THE 2 ITA NO. 2209 / MUM/2012 ASSESSMENT YEAR : 2009 - 10 FINANCIAL YEAR 2008 - 09 RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE HAD MADE CERTAIN PAYMENTS TO M/S FAIR ISAAC INTERNATIONAL CORPORATION , USA TOWARDS LICENSE FEES AND FEES FOR TRAINING AND MAINTENANCE AND THE ITO AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE , HELD THE ASSESSEE AS ASSESSEE IN DEFAULT FOR NO T DEDUCTING TAX IN RESPECT OF PAYMENTS MADE TO M/S FAIR ISAAC CORPORATION. IN VIEW OF THE AFORESAID FACTS, THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE EXPENDITURE CLAIMED IN RESPECT OF PAYMENT MADE AFORESAID SHOULD NOT BE DISALLOWED U/S 40(A)(I) OF THE ACT. THE ASSESSEE SUBMITTED THAT IT H AS FILED APPEAL AGAINST THE ORDER PASSED BY THE ITO. HOWEVER, THE AO REJECTING THE S UBMISSIONS DISALLOWED THE DEDUCTION CLAIMED BY THE ASSESSEE IN RESPECT OF PAYMENT MADE BY THE ASSESSEE ON ACCOUNT OF LICENSE FEE AND TRAINING AND MAINTENANCE TO THE TUNE OF RS. 60,74,169/ - AND MADE ADDITION OF THE SAID AMOUNT TO THE INCOME OF THE ASSESSEE. 3. AGAINST THE SAID ORDER, THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT (A) . THE LD. CIT(A) AFTER HEARING THE ASSESSEE DISMISSED THE APPEAL AND CONFIRMED THE DISALLOWANC E OF RS. 60,74,169/ - MADE BY THE AO U/S 40(A)(IA) OF THE ACT. THE ASSESSEE IS IN APPEAL AGAINST THE SAID FINDINGS OF THE LD. CIT (A). 4. THE ASSESSEE HAS CHALLENGED THE IMPUGNED ORDER PASSED BY THE LD. CIT (A) BY RAISING THE FOLLOWING EFFECTIVE GROUNDS : 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 7, MUMBAI [CIT (A)] ERRED IN CONFIRMING THE DISALLOWANCE U/S 40(A)(I) OF THE INCOME TAX ACT AMOUNTING TO RS. 60,74,169/ - IN RESPECT OF LICENSE FEE, TRAINING AND MAINTENANCE FEES. 2. THE LEARNED CIT (A) ERRED IN RELYING UPON THE ORDER OF CIT (A) IN RESPECT OF THE ORDER U/S 201(1) PASSED BY THE TDS OFFICER IN WHICH THE APPELLANT WAS HELD TO BE AN ASSESSEE IN DEFAULT AND THEREBY CONFIRMING THE DISALLOWANCE U/S 40(A)(I) OF THE ACT. 3 ITA NO. 2209 / MUM/2012 ASSESSMENT YEAR : 2009 - 10 YOUR APPELLANT SUBMITS THAT TH E APPEAL AGAINST THE ORDER OF CIT (A) IN THE PROCEEDINGS U/S 201(1) ARE PENDING BEFORE THE APPELLATE TRIBUNAL AND THEREFORE THE DISALLOWANCE U/S 40(A)(I) IS WRONGLY CONFIRMED AND THE SAME OUGHT TO BE DELETED. 5. AT THE OUTSET, THE LD. COUNSEL FOR THE ASS ESSEE SUBMITTED THAT THE ITAT, MUMBAI HAS ALLOWED THE APPEAL OF THE ASSESSEE FILED AGAINST THE ORDER PASSED BY THE LD. CIT (A) CONFIRMING THE ORDER PASSED BY THE AO U/S 201 (1) AND 201 (IA) OF THE ACT AND SET ASIDE THE FINDINGS OF THE LD. CIT (A) HOLDING T HAT THE ASSESSEE WAS NOT REQUIRED TO DEDUCT TAX AT SOURCE WHILE MAKING PAYMENT S TO M/S FAIR ISAAC INTERNATIONAL CORPORATION, USA FOR GRANT OF LICENSE TO THE ASSESSEE AND FOR MAKING PAYMENTS TOWARDS MAINTENANCE FEES , UNDER THE INDIA USA TAX TREATY . THE LD. COUNSEL FURTHER SUBMITTED THAT SINCE, THE ITAT HAS SET ASIDE THE DECISION OF THE LD. CIT(A) AND HELD THAT THE ASSESSEE HAS WRONGLY BEEN HELD TO BE THE ASSESSEE IN DEFAULT WITHIN THE MEANING OF THE PROVISIONS OF SECTION 201 OF THE ACT , THE DISALLOWANCE MADE U/S 40(A)(IA) DOES NOT SURVIVE . THE LD. COUNSEL HAS ALSO PLACED ON RECORD, THE COPY OF ORDER DATED 23.08.2018 PASSED BY THE ITAT, MUMBAI IN ITA NO. 8184/MUM/2011. 6. ON THE OTHER HAND, T HE LD. DEPARTMENTAL REPRESENTATIVE (DR) FAIRLY ADMITTED THAT THE I TAT, MUMBAI HAS SE T ASIDE THE ORDER PASSED BY THE CIT (A) CONFIRMING THE ORDER PASSED BY AO U/S 201 (1) AND 201 (IA) OF TH E ACT. 7. WE HAVE CAREFULLY PERUSED THE ENTIRE MATERIAL ON RECORD INCLUDING THE ORDER OF THE COORDINATE BENCH IN THE LIGHT OF THE SUB MISSIONS MADE BY THE LD. COUNSEL FOR THE ASSESSEE. THE COORDINATE BENCH, VIDE ITS ORDER DATED 23.08.2018 RENDERED IN ITA NO. 8184/MUM/2011 PERTAINING TO THE ASSESSMENT YEAR UNDER CONSIDERATION HAS HELD THAT SINCE THE ASSESSEE WAS NOT LIABLE TO DEDUCT TAX A T SOURCE IN RESPECT OF PAYMENTS MADE TO FAIR ISAAC 4 ITA NO. 2209 / MUM/2012 ASSESSMENT YEAR : 2009 - 10 INTERNATIONAL CORPORATION, USA FOR LICENSE FEES AND TRAINING AND MAINTENANCE FEES, THE ASSESSEE CANNOT BE TREATED AS ASSESSEE IN DEFAULT WITHIN THE MEANING OF SECTION 201 OF THE ACT. SINCE, THE ASSESSEE WA S NOT REQUIRED TO DEDUCT THE TAX AT SOURCE, THE ASSESSEE CANNOT BE THE ASSESSEE IN DEFAULT. THEREFORE, T HE ADDITION OF RS. 60,74,169/ - CONFIRMED BY THE LD. CIT (A) DOES NOT SUSTAIN. HENCE, WE ALLOW THE APPEAL OF THE ASSESSEE AND SET ASIDE THE ORDER PASSED BY THE LD. CIT (A). ACCORDINGLY, WE DIRECT THE AO TO DELETE THE ADDITION CONFIRMED BY THE LD. CIT (A) ON ACCOUNT OF DISALLOWANCE MADE U/S 40(A)(IA) OF THE ACT . IN THE RESULT, APPEAL FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 2009 - 2010 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH DECEMBER , 2018. SD/ - SD/ - ( R.C. SHARMA ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMB ER MUMBAI ; DATED: 06 / 12 / 201 8 ALINDRA, PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI