The ACIT Cir-2(1) Guntur, Guntur V. M/s Rahamankhan Tobacco Enterprises Ltd, Guntur

ITA 224/VIZ/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 56778 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 06-06-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D KOMALI KRISHNA
• Assessee Lawyers: K TIRUMALA RAO
• Section: 5(2)

Judgement Text

ITA NO.224&225/V/2011 RAHAMANKHAN TOBACCO ENT. LTD., GUNTUR 1 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO. 224&225 /VIZAG/ 20 11 ASSESSMENT YEAR : 2005 - 06 & 2006 - 07 ACIT CIRCLE - 2(1) GUNTUR VS. RAHAMANKHAN TOBACCO ENTERPRISES LTD. GUNTUR (APPELLANT) (RESPONDENT) PAN NO.AABCR 5438H APPELLANT BY: SHRI D. KOMALI KRISHNA, SR.DR RESPONDENT BY: SHRI K. TIRUMALA RAO, CA ORDER PER SHRI S.K. YADAV, JUDICIAL MEMBER:- THESE APPEALS ARE PREFERRED BY THE REVENUE AGAINS T THE ORDER OF THE CIT(A) ON COMMON GROUNDS WHICH ARE AS UNDER: 1. THE ORDER OF THE LD. CIT(A) IS ERRONEOUS ON LAW AND FACTS. 2. THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ADDITION MA DE BY THE ASSESSING OFFICER U/S 40(A)(IA) KEEPING IN VIEW OF THE PROVISIONS OF SECTION 5(2) OF THE I.T. ACT BECAUSE THE INCOME OF THE NON-RESIDENT COMPANY HAS ORIGINATED AND AROSE IN INDIA. 3. THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ADDITION MA DE BY THE ASSESSING OFFICER U/S 40(A)(IA) OF THE I.T. ACT FOR VIOLATION OF THE PROVISIONS OF SEC.195 KEEPING IN VIEW OF THE FACT T HAT REMITTANCE OF COMMISSION PAYMENT HAS ORIGINATED IN INDIA BUT WAS NOT REMITTED DIRECTLY ABROAD. 4. ANY OTHER GROUND(S) THAT MAY BE URGED AT THE TIME O F HEARING . 2. DURING THE COURSE OF HEARING, OUR ATTENTION WAS INVITED TO THE ORDER OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE ASS ESSMENT YEAR 2003-04 WITH THE SUBMISSION THAT THE IDENTICAL ISSUE WAS RAISED BEFORE THE TRIBUNAL AND THE TRIBUNAL AFTER ADJUDICATING IT IN DETAIL RESTORED T HE MATTER TO THE FILE OF THE A.O. WITH A DIRECTION TO CONSIDER THE ISSUE IN DISP UTE IN THE LIGHT OF CIRCULAR NO.786 DATED 7.2.2000 ISSUED BY THE CBDT AND THE JU DGEMENTS OF THE APEX ITA NO.224&225/V/2011 RAHAMANKHAN TOBACCO ENT. LTD., GUNTUR 2 COURT IN THE CASE OF G.E. INDIA TECHNOLOGY CENTRE P VT. LTD. VS. CIT 327 ITR 456. THE RELEVANT OBSERVATION OF THE TRIBUNAL ARE EXTRACTED HEREUNDER: NOW WE SHALL TAKE UP THE APPEAL OF THE ASSESSEE. T HE ONLY ISSUE URGED IS WHETHER THE IMPUGNED COMMISSION PAYMENT IS DISALLOWABLE UNDER SECTION 40(A)(IA) OF THE ACT. AS STATED EARL IER, THE LEARNED CIT(A) HAS FOLLOWED THE DECISION OF HONBLE KARNATA KA HIGH COURT IN THE CASE OF SAMSUNG ELECTRONICS, (SUPRA) AND THE DE CISION OF HONBLE SUPREME COURT IN THE CASE OF TRANSMISSION CORPORATI ON OF INDIA, (SUPRA) IN ARRIVING AT THE DECISION AGAINST THE ASS ESSEE. HOWEVER, THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CAS E OF SAMSUNG ELECTRONICS HAS SINCE BEEN REVERSED BY THE APEX COU RT IN THE CASE OF G.E. INDIA TECHNOLOGY CENTRE P. LTD. VS. CIT (2010) (327 ITR 456). HENCE, IN OUR VIEW, THE ISSUE REQUIRES EXAMINATION AFRESH IN THE CONTEXT OF THE DECISION OF HONBLE APEX COURT IN TH E CASE OF G.E. INDIA TECHNOLOGY CENTRE P. LTD. REFERRED (SUPRA). ACCORD INGLY WE SET ASIDE THE ORDER OF THE LEARNED CIT(A) ON THIS ISSUE AND R ESTORE THE SAME TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO CONSIDER THE ISSUE AFRESH IN THE LIGHT OF THE DECISION OF HONBLE APEX COURT REFERRED (SUPRA). THE ASSESSEES RELIANCE IN THIS CONNECTIO N, ON CIRCULAR NO.786 DATED 7.2.2000 ISSUED BY THE CBDT HAS BEEN REJECTED BY THE LEARNED CIT(A) IN VIEW OF THE SUBSEQUENT CIRCULAR NO.7/2009 DATED 22.10.2009 ISSUED BY THE CBDT. HOWEVER, THE ASSESSEE HAS RELI ED UPON FOLLOWING DECISIONS TO CONTEND THAT THE SUBSEQUENT CIRCULAR S HOULD OPERATE ONLY PROSPECTIVELY. (A) CIT VS. N.T. RAMARAO (HUF) (163 ITR 453 (A.P.)) (B) DY. CIT VS. SANJIV GUPTA (2011) (135 TTJ (LUCKNOW) 641). SINCE WE HAVE SET ASIDE THE ISSUE TO THE FILE OF TH E ASSESSING OFFICER, THE ASSESSING OFFICER IS DIRECTED TO CONSI DER THE PRESENT CONTENTION OF THE ASSESSEE WITH REGARD TO THE APPLI CABILITY OF CIRCULAR NO.786 DATED 7.2.2000 TO THE FACTS OF THE INSTANT C ASE WHILE ADJUDICATING THE ISSUE. 3. SINCE THE TRIBUNAL HAS REMANDED THE MATTER BACK TO THE ASSESSING OFFICER FOR ITS RE-ADJUDICATION AND THE MATTER IS S UB-JUDICE, WE DO NOT FIND IT PROPER TO ADJUDICATE THIS ISSUE SPECIFICALLY, BECAU SE IT WILL AFFECT THE INDEPENDENT ADJUDICATION OF THE ISSUE BY THE ASSESS ING OFFICER. WE, THEREFORE, SET ASIDE THE ORDER OF THE CIT(A) IN THI S REGARD AND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER TO ADJU DICATE THE ISSUE AFRESH IN THE ITA NO.224&225/V/2011 RAHAMANKHAN TOBACCO ENT. LTD., GUNTUR 3 LIGHT OF ABOVE SAID CIRCULARS ISSUED BY THE CBDT AN D THE JUDGEMENTS OF THE APEX COURT IN THE CASE OF G.E. INDIA TECHNOLOGY CEN TRE PVT. LTD. (SUPRA). 4. IN THE RESULT, THE APPEALS OF THE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 3.8.2011 SD/- SD/- (BR BASKARAN) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM, DATED 3 RD AUGUST, 2011 COPY TO 1 ACIT, CIRCLE - 2(1), GUNTUR 2 M/S. RAHAMANKHAN TOBACCO ENTERPRISES PVT. LTD., 8 - 24 - 37, PB NO.105, MANGALAGIRI ROAD, GUNTUR 3 THE CI T, GUNTUR 4 THE CIT (A) , GUNTUR 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM