M/s. Royal Touch Fablon Pvt. Ltd., , Kolkata V. JCIT, Range - 4, Kolkata , Kolkata

ITA 2386/KOL/2017

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 0847 (ITAT-KOLKATA)
• Duration Of Justice: 10 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 27-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M K BISWAS
• Assessee Lawyers: S M SURANA
• Keywords: Permanent establishment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH D, KOLKATA BEFORE SH. J.SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SH. S.S.VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO.2386/KOL/2017 [ASSESSMENT YEAR: 2011-12] M/S. ROYAL TOUCH FABLON PVT.LTD., 4, SYNAGOGUE STREET, KOLKATA-700001. PAN-AABCR5842F VS JCIT, RANGE-4, P-7, CHOWRINGHEE SQUARE, AAYAKAR BHAWAN, KOLKATA-700069. (APPELLANT) (RESPONDENT) APPELLANT BY SH. S.M.SURANA, ADV. RESPONDENT BY SH. M.K.BISWAS, ADDL. CIT DATE OF HEARING 04.09.2018 DATE OF PRONOUNCEMENT 05 .10.2018 ORDER PER J.SUDHAKAR REDDY, ACCOUNTANT MEMBER THIS APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 06.11.2017 PASSED BY CIT(A)-2, KOLKATA FOR AY 2011-12 ON THE FOLLOWING EFFECTIVE GROUND:- 2. FOR THAT THE LD. CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF RS.4,68,563/- UNDER SECTION 40(A)(I) FOR NON DEDUCTION OF TAX AT SOURCE ON REMITTANCE OF SERVICE CHARGES TO NON-RESIDENT PARTY WHEN THE SAID PARTY DID NOT HAVE ANY PERMANENT ESTABLISHMENT IN INDIA, NO INCOME ACCRUED OR AROSE TO THE NON-RESIDENT PARTY IN INDIA AND THEREFORE THE ASSESSEE WAS NOT LIABLE TO DEDUCT TAX AT SOURCE. 2. AFTER HEARING RIVAL CONTENTIONS, WE FIND THAT THE ISSUE IN QUESTION IS COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE THAT THE DECISION OF HONBLE C BENCH OF THE TRIBUNAL IN THE CASE OF DCIT, CIRCLE-11, KOLKATA VS BONIE APPARELS P.LTD. IN ITA NO.896/KOL/2015 DATED 06.09.2017. THE ASSESSEE IN THIS CASE APPOINTED A FOREIGN AGENT TO COLLECT FOREIGN DEBT. THE SERVICES IN QUESTION WERE RENDERED BY THE AGENT OUTSIDE INDIA. THE FOREIGN AGENT DOES NOT HAVE ANY PERMANENT ESTABLISHMENT IN INDIA. IT FILED A CONFIRMATION CERTIFICATE, THAT IT IS LOCATED IN SWITZERLAND. IN THOSE ITA NO.2386/KOL/2017 [ASSESSMENT YEAR: 2011-12] PAGE | 2 CIRCUMSTANCES, NO INCOME WAS ARISING IN INDIA, IN THE HANDS OF THE FOREIGN AGENT. THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE ITAT, C BENCH, KOLKATA IN ITA NO.896/KOL/2015 IN DCIT VS M/S BONIE APPARELS (P.) LTD. DATED 06.09.2018. THE HONBLE SUPREME COURT IN THE CASE OF G.E.INDIA TECHNOLOGY CENTRE P. LTD. VS CIT [2010] 327 ITR 456(SC) , HAS HELD THAT NO TAX SHOULD BE DEDUCTED AT SOURCE IF THERE IS NO ELEMENT OF INCOME CHARGEABLE TO TAX IN THE AMOUNT BEING REMITTED PAID TO PARTY. LD.CIT(A) CONFIRMED THE ADDITION ON THE WRONG GROUND, THAT THE ASSESSEE SHOULD PROOF THE NEGATIVE I.E. THAT IT DOES NOT HAVE THE PERMANENT ESTABLISHMENT IN INDIA. IN VIEW OF THE ABOVE DISCUSSION, WE ALLOW THIS APPEAL OF THE ASSESSEE. 3. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 05.10.2018. SD/- SD/- (S.S.VISWANETHRA RAVI) (J.SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE:- 05.10.2018 *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT- M/S. ROYAL TOUCH FABLON PVT.LTD., 4, SYNAGOGUE STREET, KOLKATA-700001. 2. RESPONDENT-JCIT, RANGE-4, P-7, CHOWRINGHEE SQUARE, AAYAKAR BHAWAN, KOLKATA-700069. 3. CIT-KOLKATA 4. CIT(APPEALS)-KOLKATA 5. DR: ITAT-KOLKATA BENCHES SR.P.S./H.O.O ITAT, KOLKATA