ACIT, Coimbatore V. Revathi Equipment Limited, Coimbatore

ITA 2491/CHNY/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86231 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-01-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 01-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH IRS

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI .. , , BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ./ I.T.A. NO.2491/MDS/2014 ( ! / ASSESSMENT YEAR : 2010 -2011) THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE I(1), COIMBATORE. ( /APPELLANT) VS. M/S. REVATHI EQUIPMENT LIMITED, NO-331, POLLACHI ROAD, MALUMACHAMPATTI, COIMBATORE 641 021 [PAN : AABCR0624D] ( /RESPONDENT) ' # $ / APPELLANT BY : SHRI. A.V. SREEKANTH, IRS, JCIT. %&' # $ / RESPONDENT BY : NONE ' ( # )* /DATE OF HEARING : 19.01.2015. +,! # )* /DATE OF PRONOUNCEMENT : 19.01.2015. / O R D E R PER B.R. BASKARAN, ACCOUNTANT MEMBER THE REVENUE HAS FILED THIS APPEAL CHALLENGING THE O RDER DATED 23.07.2014 PASSED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS)- I, COIMBATORE WHICH RELATES TO ASSESSMENT YEAR 2010 -2011. I.T.A.NO.2491 /MDS/2014 . :- 2 -: 2. NONE APPEARED ON BEHALF OF THE ASSESSEE. THE ASSES SEE HAS MOVED A PETITION SEEKING ADJOURNMENT OF THE MATTER. HOWEVER, WE NOTICED THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS FOLLOWED THE DECISIONS RENDERED BY THE CO-ORDINATE BENCHES OF THE TRIBUNAL ON THE DISPUTED ISSUE. HENCE, WE REJECTED THE ADJOURNMENT REQUEST AND PROCEEDED TO DISPOSE OF THE APPEAL AFTE R HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE. 3. WE HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTATI VE AND PERUSED THE RECORDS. THE ASSESSEE HAD PAID A SUM O F ?42,77,097/- AS OVERSEAS COMMISSION AND DID NOT DEDUCT TAX AT SOURC E THEREON. HENCE, THE ASSESSING OFFICER DISALLOWED THE SAID CL AIM BY INVOKING PROVISION U/S. 40(A)(I) OF THE ACT. THE LEARNED CO MMISSIONER OF INCOME TAX (APPEALS) HOWEVER, ALLOWED THE CLAIM OF THE ASSESSEE AND HENCE THE REVENUE HAS FILED THIS APPEAL BEFORE US. 4. WE NOTICED THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS FOLLOWED THE DECISIONS RENDERED BY CO -ORDINATE BENCHES ON IDENTICAL ISSUE AND ACCORDINGLY DELETED THE ADDI TION. FOR THE SAKE OF CONVENIENCE, WE EXTRACT THE FOLLOWING OPERATIVE POS ITIONS OF THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) . 6. I HAVE GONE THROUGH THE SUBMISSIONS MADE BY THE APPELLANT I.T.A.NO.2491 /MDS/2014 . :- 3 -: AND ALSO THE ORDER OF THE ASSESSING OFFICER. THE A SSESSING OFFICER HELD THAT THE ACTIVITY CARRIED ON BY THE AGENT ON B EHALF OF THE APPELLANT AS PER THE AGREEMENT, BASED ON THE PROVIS IONS OF INCOME TAX ACT, 1921 U/S.9(1)(VII) SHOULD BE CONSIDERED AS FEE FOR TECHNICAL SERVICES WITHIN THE DEFINITION SPECIFIED IN THE A CT. FURTHER, THE ASSESSING OFFICER HELD THAT IN THE LIGHT OF THE INS ERTION OF EXPLANATION BELOW SECTION 9(2), THE PAYMENT WOULD BE TREATED AS DEEMED TO HAVE ACCRUED OR ARISEN IN INDIA AND HENCE IT SHOULD BE ALLOWED AS TECHNICAL FEES FOR WHICH TAX IS DEDUCTIBLE U/S. 1 95 OF THE INCOME TAX ACT, 1961. 7. AS SEEN FROM THE SUBMISSIONS MADE BY THE A UTHORISED REPRESENTATIVE, THE ACTIVITY OF THE OVERSEAS AGENT IS LIMITED TO CANVASSING THE SALE OF PRODUCTS MANUFACTURE BY THE APPELLANT COMPANY. THE APPELLANT COMPANY AHS ENTERED INTO AN AGREEMENT WITH THE AGENT, WHEREIN IT IS STIPULATED THAT THE A GENT IS ELIGIBLE FOR AGENCY COMMISSION OF 5% ON EX-WORKING VALUE OF THE CONTRACT AND THAT THE PAYMENT SHALL BE EFFECTED IN US DOLLARS. AS PER THE SUBMISSIONS MADE BY THE LEARNED AUTHORISED REPRESEN TATIVE, THE COMMISSION AGENT DOES NOT RENDER ANY MANAGERIAL, TE CHNICAL OR CONSULTANCY SERVICES AND HE DOES NOT HAVE THE REQUI RED QUALIFICATIONS IN ORDER TO RENDER SUCH SERVES. HE HAS NOT PERMANE NT ESTABLISHMENT IN INDIA. HIS BUSINESS OPERATION OF CANVASSING BUS INESS IS CARRIED ON OUTSIDE INDIA. HE IS ELIGIBLE FOR SALES COMMISSION S OF 5% AS PER THE TERMS OF THE AGREEMENT. AS PER THE TERMS OF THE AGR EEMENT AND AS PER THE NATURE OF BUSINESS ACTIVITY CARRIED ON BY T HE OVERSEAS AGENT, THERE IS NO JUSTIFICATION FOR THE ASSESSING OFFICER TO APPLY THE PROVISIONS OF SECTION 9(1)(VII) TO THE COMMISSIONER PAYMENT. IN THE FOLLOWING CASES: (I) ARMAYESH GLOBAL VS ACIT 12(3)[ITAT MUMBAI A BENCH - 21TAXMANN 130]. (II) ITAT CHENNAI D BENCH IN THE CASE OF I.T.O., CO. W ARD-II(1) VS. FAIZAN SHOES (P) LTD. (34 TAXMANN. COM 79) (III) ITAT CHENNAI A BENCH IN THE CASE OF ACIT VS. FARI DA SHOES (P) LTD. [34 TAXMANN.COM 268] (DECISION OF THE CO-O RDINATE BENCH OF ITAT CHENNAI IN THE CASE OF PRAKASH IMPEX VS. ASST. CIT(I.T APPEAL NO.8/MDS OF 2012 DATED 03.03.2 012.) (IV) ITAT CHENNAI A BENCH IN THE CASE OF DCIT, COMPANY CIRCLE II(1), CHENNAI VS FARIDA PRIMA TANNERY (P) LTD-45 TAXMANN.COM 174. IT IS CLEARLY HELD THAT WHERE ASSESSEE A PAID COMMI SSION TO THE OVERSEAS AGENT FOR PROCUREMENT OF EXPORT ORDERS OUT SIDE INDIA, IT I.T.A.NO.2491 /MDS/2014 . :- 4 -: WAS NOT CHARGEABLE TO TAX IN INDIA AS SERVICES WERE RENDERED OUTSIDE INDIA. 8. RESPECTFULLY FOLLOWING THE DECISION OF THE JURISDICTIONAL TRIBUNAL CITED, I DIRECT THE ASSESSING OFFICER TO ALLOW THE CLAIM OF SALES COMMISSION TO THE APPELLANT. THE GROUNDS OF APPEAL ARE ALLOWED. 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE COU LD NOT FURNISH ANY OTHER CONTRARY DECISION BEFORE US. HENCE, WE DO NO T FIND ANY REASON TO INTERFERE THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS). WE DO FOLLOW THE DECISION RENDERED BY T HE CO-ORDINATE BENCHES ON THE IDENTICAL ISSUE. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON THE 19 TH DAY OF JANUARY, 2015, AT CHENNAI. SD/- ( ) (VIKAS AWASTHY) /JUDICIAL MEMBER SD/- ( .. ) (B.R. BASKARAN) ' / ACCOUNTANT MEMBER 1 /DATED:19.01.2015. K.V 2 # %)3 4!) /COPY TO: 1. '/ APPELLANT 2. %&' / RESPONDENT 3. ' 5) ( )/CIT(A) 4. ' 5) /CIT 5. 67 %) 8 /DR 6. 79 :( /GF.