ACIT, CHENNAI V. M/s. T.M. Abdul Rahman & Sons, CHENNAI

ITA 2252/CHNY/2013

• Counselvise Citation: 225221714 RSA 2013
• Duration Of Justice: 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 08-05-2014
• Assessment Year: 2010-2011
• Appeal Filed On: 24-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T N BETGERI IRS
• Assessee Lawyers: G SEETHARAMAN
• Keywords: Non-deduction of tax
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI . . . , . . !' , # '$ % BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENTAND SHRI S.S. GODARA, JUDICIAL MEMBER ./ ITA NO. 2252/MDS/2013 # & '& / ASSESSMENT YEAR : 2010-11 THE ASSISTANT COMMISSIONER OF INCOME TAX, BUSINESS CIRCLE XII, CHENNAI - 600 006. V. M/S T.M. ABDUL RAHMAN & SONS, 49, WUTHUCOTTAN STREET, PERIAMET, CHENNAI - 600 003. PAN : AABFT 2029 F ()*/ APPELLANT) (,-)*/ RESPONDENT) )* . / APPELLANT BY : SHRI T.N. BETGERI, IRS, JCIT ,-)* . / RESPONDENT BY : SHRI G. SEETHARAMAN, CA / . 01 / DATE OF HEARING : 8 TH MAY, 2014 2!' . 01 / DATE OF PRONOUNCEMENT : 8 TH MAY, 2014 / O R D E R PER DR.O.K.NARAYANAN, VICE-PRESIDENT THIS APPEAL FILED BY THE REVENUE RELATES TO ASSES SMENT YEAR 2010-11. THE APPEAL IS DIRECTED AGAINST THE O RDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-IV AT CHENNAI, PASSED - - I.T.A. NO. 2252/MDS/13 2 ON 5.9.2013 AND ARISES OUT OF THE ASSESSMENT COMPLE TED UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961. 2. THE ONLY GROUND RAISED BY THE REVENUE IN THE PRE SENT APPEAL IS THAT THE COMMISSIONER OF INCOME TAX (APPE ALS) HAS ERRED IN DELETING THE ADDITION MADE BY THE ASSESSIN G OFFICER UNDER SECTION 40(A)(I) TOWARDS FOREIGN AGENCY COMMI SSION PAYMENTS TO THE TUNE OF ` 1,07,31,928/- FOR NON-DEDUCTION OF TAX AT SOURCE. 3. WE HEARD BOTH SIDES AND PERUSED THE ORDERS OF TH E LOWER AUTHORITIES. 4. IT IS SEEN THAT WHEREVER THE COMMISSIONS WERE PA ID BY THE ASSESSEE TO LOCAL AGENTS, TAXES HAVE BEEN DEDUCTED AT SOURCES AS PER LAW. ONLY IN THE CASE OF NON-RESIDENT AGENT S THAT THE ASSESSEE DID NOT DEDUCT ANY TAX ON THE GROUND THAT THOSE NON- RESIDENT AGENTS DID NOT HAVE ANY INCOME ARISING IN INDIA ON ACCOUNT OF THE COMMISSION PAID BY THE ASSESSEE. 5. IN THE PRESENT CASE, THE DISPUTED AGENTS WERE NO N- RESIDENTS. THOSE NON-RESIDENT AGENTS ARE CARRYING ON THE - - I.T.A. NO. 2252/MDS/13 3 BUSINESS WHOLLY OUTSIDE INDIA. THE ASSESSEE HAD PA ID COMMISSION TO THOSE NON-RESIDENT AGENTS FOR SERVICE S RENDERED BY THEM WHOLLY OUTSIDE INDIA. IT ALSO HAS TO BE SE EN THAT THE NON- RESIDENT AGENTS DID NOT HAVE ANY PERMANENT ESTABLIS HMENT (PE) IN INDIA. THE COMMISSIONS WERE REMITTED BY THE ASS ESSEE DIRECTLY TO THE NON-RESIDENTS OUTSIDE INDIA. 6. IN THE FACTS OF THE CASE AS STATED ABOVE, WE FIN D THAT THE COMMISSIONER OF INCOME TAX (APPEALS) IS JUSTIFIED I N HOLDING THAT THE PAYMENTS OF COMMISSION MADE BY THE ASSESSEE TO THE NON- RESIDENT AGENTS WERE NOT CHARGEABLE TO TAX IN INDIA IN THE HANDS OF THOSE NON-RESIDENT AGENTS. WHEN NO INCOME IS GE NERATED TO THE NON-RESIDENTS WITHIN INDIA, THOSE NON-RESIDENT AGENTS ARE NOT LIABLE FOR ANY LEVY OF INCOME TAX ON ACCOUNT OF THE COMMISSIONS THEY EARNED OUT OF THE SERVICES RENDERED OUTSIDE IN DIA FOR THE ASSESSEE. TDS ARISES ONLY WHERE THERE IS A CORRESP ONDING TAX LIABILITY IN THE HANDS OF THE PAYEE. 7. WE AGREE WITH THE ORDER OF THE COMMISSIONER OF I NCOME TAX (APPEALS) AND DISMISS THE APPEAL OF THE REVENUE . 8. IN RESULT, THE APPEAL FILED BY THE REVENUE IS DI SMISSED. - - I.T.A. NO. 2252/MDS/13 4 ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON THURSDAY, THE 8 TH OF MAY, 2014 AT CHENNAI. SD/- SD/- (S.S. GODARA) (DR. O.K. NARAYANAN) ( . . !') ( . . . ) # '$ /JUDICIAL MEMBER /VICE-PRESIDENT /CHENNAI, 4' /DATED, THE 8 TH MAY, 2014. KRI. '5 . ,#067 87'0 /COPY TO: 1. )* /APPELLANT 2. ,-)* /RESPONDENT 3. / 90 () /CIT(A)-IV, CHENNAI 4. / 90 /CIT-IX, CHENNAI 5. 7: ,#0# /DR 6. & ; /GF.