ACIT, CHENNAI V. Kamil Leathers, CHENNAI

ITA 2260/CHNY/2014

• Counselvise Citation: 226021714 RSA 2014
• Duration Of Justice: 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 25-05-2015
• Assessment Year: 2011-2012
• Appeal Filed On: 10-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N MADHAVAN
• Assessee Lawyers: B RAGHAV PRASAD
• Keywords: Non-deduction of tax

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI . . . , . !'# ! , % !& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO.2260/MDS/2014 ( )( / ASSESSMENT YEAR : 2011-12 THE ASSISTANT COMMISSIONER OF INCOME TAX, BUSINESS CIRCLE XI, CHENNAI - 600 006. V. M/S KAMIL LEATHERS, 23, KARPURA STREET, PERIAMET, CHENNAI - 600 003. PAN : AADFK 4054 B (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : SHRI N. MADHAVAN, JCIT -.+, / 0 / RESPONDENT BY : SHRI B.RAGHAV PRASAD, CA 1 / 2% / DATE OF HEARING : 25.05.2015 3') / 2% / DATE OF PRONOUNCEMENT : 19.06.2015 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEAL S) IV, CHENNAI, DATED 25.04.2014 AND PERTAINS TO ASSESSMEN T YEAR 2011- 12. 2 I.T.A. NO.2260/MDS/14 2. SHRI N. MADHAVAN, THE LD. DEPARTMENTAL REPRESENT ATIVE, SUBMITTED THAT THE ONLY ISSUE ARISES FOR CONSIDERAT ION IS WITH REGARD TO ADDITION OF ` 26,37,197/- MADE ON ACCOUNT OF NON-DEDUCTION OF TAX AT SOURCE TOWARDS THE PAYMENT MADE BY THE ASSESSEE UNDER SECTION 40(A)(IA) OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). THE LD. D.R. FURTHER POINTED OUT THAT THE ASSESSING OFFICER FOUND THAT THE NON-RESIDENT COLLECTED ALL INFORMATION ABO UT THE FASHION TREND AND COMMUNICATED THE SAME TO THE ASSESSEE SO AS TO ENABLE THE ASSESSEE TO DEVELOP ITS PRODUCT ACCORDING TO TH E LATEST TREND PREVAILING OUTSIDE THE COUNTY. THE ASSESSEE HAS AL SO MADE ARRANGEMENTS FOR COLLECTION OF ORDERS OUTSIDE THE C OUNTRY AND PAID COMMISSION. SINCE THE ASSESSEE RECEIVED INFORMATIO N WITH REGARD TO LATEST FASHION TREND, WHICH WAS AT LAST FOR DEVE LOPMENT OF ITS PRODUCTION, ACCORDING TO THE LD. D.R., WHAT WAS PAI D BY THE ASSESSEE WAS NOT A MERE COMMISSION IT WOULD AMOUNT TO FEES FOR TECHNICAL SERVICE. THEREFORE, THE CIT(APPEALS) IS NOT CORRECT IN ALLOWING THE CLAIM OF THE ASSESSEE. 3. ON THE CONTRARY, SHRI B. RAGHAV PRASAD, THE LD. REPRESENTATIVE FOR THE ASSESSEE, SUBMITTED THAT MER E FURNISHING OF INFORMATION ABOUT LATEST TREND IN THE FASHION DOES NOT AMOUNT TO PROVIDING ANY TECHNICAL SERVICE. ACCORDING TO THE LD. 3 I.T.A. NO.2260/MDS/14 REPRESENTATIVE, WHAT WAS PAID BY THE ASSESSEE IS A COMMISSION FOR THE ORDERS PROCURED BY THE NON-RESIDENT OUTSIDE IND IA. THEREFORE, THE CIT(APPEALS) HAS RIGHTLY ALLOWED THE CLAIM OF T HE ASSESSEE. THE LD. REPRESENTATIVE PLACED HIS RELIANCE ON THE DECIS ION OF THIS BENCH OF THE TRIBUNAL IN ACIT V. T. ABDUL WAHID TANNERIES PVT. LTD. IN I.T.A. NO.2123/MDS/2013 DATED 2.06.2014 AND SUBMITT ED THAT ON IDENTICAL SET OF FACTS, THIS TRIBUNAL FOUND THAT TH E ASSESSEE IS NOT LIABLE TO DEDUCT TAX. THE LD. REPRESENTATIVE HAS A LSO FILED A COPY OF THE AGREEMENT ENTERED BETWEEN THE ASSESSEE AND THE NON-RESIDENT FOR THE SERVICES SAID TO BE PROVIDED TO THE ASSESSE E. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE ONLY OBJECTION OF THE REVENUE IS THAT LATEST TREND IN THE FASHION WAS COM MUNICATED TO THE ASSESSEE SO AS TO ENABLE THE ASSESSEE TO PRODUCE/MA NUFACTURE ITS PRODUCTS IN TUNE WITH LATEST TREND WHICH PREVAILED IN THAT PART OF THE COUNTRY. THIS TRIBUNAL IS OF THE CONSIDERED OPINIO N THAT MERE COMMUNICATION OF LATEST TREND/FASHION PREVAILED IN A PARTICULAR COUNTRY CANNOT AMOUNT TO PROVIDING TECHNICAL SERVIC E. TECHNICAL SERVICE IS SOMETHING WHICH GOES IN THE MANUFACTURIN G PROCESS BY APPLYING THE TECHNIQUES PROVIDED BY THE NON-RESIDEN T. IN THIS CASE, NO TECHNIQUES WERE PROVIDED BY THE NON-RESIDENT AND WHAT WAS 4 I.T.A. NO.2260/MDS/14 COMMUNICATION IS, ADMITTEDLY, FASHION/TREND PREVAIL ING OUTSIDE INDIA. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINI ON THAT THIS DOES NOT AMOUNT TO PROVIDING ANY TECHNICAL SERVICE. THE REFORE, THIS TRIBUNAL DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(APPEALS) AND ACCORDINGLY THE SAME IS CONFIRMED. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED ON 19 TH JUNE, 2015 AT CHENNAI. SD/- SD/- (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) (. !'# ! ) ( . . . ) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 19 TH JUNE, 2015. KRI. / -267 87)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. 1 92 () /CIT(A)-IV, CHENNAI 4. 1 92 /CIT-IX, CHENNAI 5. 7: -2 /DR 6. ( ; /GF.