Dy. C.I.T.-1, Agra V. M/s Virola International, Agra

ITA 256/AGR/2013

• Counselvise Citation: 25620314 RSA 2013
• Duration Of Justice: 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 11-02-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 19-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: WASEEM ARSHAD
• Assessee Lawyers: S P SATSANGI
• Keywords: Double taxation relief; Deemed to accrue or arise in india; Retrospective amendment; Permanent establishment; Non-deduction of tax
• Section: 143(3); 5(2)

Judgement Text

I.T.A. NO.: 256/AGRA/2013 ASSESSMENT YEAR: 2008-09 PAGE 1 OF 7 IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA [CORAM : BHAVNESH SAINI JM AND PRAMOD KUMAR AM] I.T.A. NO.: 256 /AGR/2013 ASSESSMENT YEAR: 2008-09 DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 1, AGRA .APPELLANT VS. VIROLA INTERNATIONAL .RESPONDENT [PAN : AAGFV5465L] APPEARANCES BY: WASEEM ARSHAD, FOR THE APPELLANT S P SATSANGI, FOR THE RESPONDENT DATE OF HEARING OF THE APPEAL : FEBRUARY 12, 20 14 DATE OF PRONOUNCING THE ORDER : FEBRUARY 14, 2014 O R D E R PER PRAMOD KUMAR: 1. BY WAY OF THIS APPEAL, THE ASSESSEE APPELLANT HA S CHALLENGED THE CORRECTNESS OF LEARNED COMMISS IONER (APPEALS)S ORDER DATED 21 ST MARCH 2013, IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFER RED TO AS THE ACT) FOR THE ASSESSMENT YEAR 2008-09. 2. GRIEVANCE RAISED BY THE ASSESSING OFFICER IS THA T, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LEARNED COMMISSIONER (AP PEALS) ERRED IN DELETING THE DISALLOWANCE OF RS 51,98,819, MADE UNDER SECTION 40 (A)(IA) OF THE ACT, WITH RESPECT TO FOREIGN REMITTANCES, FOR DESIGN AND DEVE LOPMENT EXPENSES, WITHOUT DEDUCTING TAX AT SOURCE. 3. TO ADJUDICATE ON THIS APPEAL, ONLY A FEW MATERIA L FACTS NEED TO BE TAKEN NOTE OF. THE ASSESSEE BEFORE US IS AN EXPORTER OF L EATHER FOOTWEAR AND FOOTWEAR UPPERS. DURING THE COURSE OF SCRUTINY ASSESSMENT PR OCEEDINGS, THE ASSESSING I.T.A. NO.: 256/AGRA/2013 ASSESSMENT YEAR: 2008-09 PAGE 2 OF 7 OFFICER NOTICED THAT THE ASSESSEE HAS, INTER ALIA, MADE PAYMENTS AGGREGATING TO RS 51,98,819 TO VARIOUS NON-RESIDENTS, WITHOUT DED UCTING ANY TAXES AT SOURCE, TOWARDS DESIGN AND DEVELOPMENT EXPENSES. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE WAS UNDER AN OBLIGATION TO D EDUCT TAX AT SOURCE FROM THESE PAYMENTS, AS REQUIRED UNDER SECTION 195 R.W.S . 9(1)(VII) OF THE ACT, AND THAT THE ASSESSEE HAVING FAILED TO COMPLY WITH THES E TAX WITHHOLDING REQUIREMENTS, THESE PAYMENTS WERE RENDERED INELIGI BLE FOR BUSINESS DEDUCTION IN VIEW OF THE PROVISIONS OF SECTION 40(A)(I) OF TH E ACT. IT WAS IN THIS BACKDROP THAT THE ASSESSEE WAS REQUIRED TO SHOW CAUSE AS TO WHY THE AMOUNT OF RS 51,98,819 NOT BE DISALLOWED UNDER SECTION 40(A)(I) OF THE ACT. ELABORATE SUBMISSIONS WERE MADE BY THE ASSESSEE TO THE EFFECT THAT THE PAYMENTS SO MADE ARE NOT IN THE NATURE OF FEES FOR TECHNICAL SERVICE S WITHIN MEANINGS OF THAT EXPRESSION UNDER SECTION 9(1)(VII) OF THE ACT OR UN DER THE APPLICABLE DOUBLE TAXATION AVOIDANCE AGREEMENT. IT WAS ALSO SUBMITTED THAT SINCE NONE OF THESE PERSONS HAD ANY PERMANENT ESTABLISHMENT IN INDIA, T HE AMOUNTS IN QUESTION COULD NOT BE BROUGHT TO TAX IN INDIA AS BUSINESS PR OFIT EITHER. THE ASSESSEE SUBMITTED THAT SINCE NONE OF THESE AMOUNTS WERE TAX ABLE IN INDIA, AND AS HELD BY HONBLE SUPREME COURT IN THE CASE OF GE INDIA TECHNOLOGY CENTRE PVT LTD VS CIT (327 ITR 456) , THE ASSESSEE DID NOT HAVE ANY OBLIGATION TO DEDU CT TAX AT SOURCE IN INDIA. IT WAS THUS ARGUED THAT SINCE THER E WAS NO FAILURE ON THE PART OF THE ASSESSEE IN DEDUCTING TAX AT SOURCE, DISALLOWAN CE UNDER SECTION 40(A)(I) COULD NOT BE INVOKED. NONE OF THESE SUBMISSIONS, H OWEVER, IMPRESSED THE ASSESSING OFFICER. HE REJECTED THE EXPLANATION OF T HE ASSESSEE, HELD THE AMOUNTS SO PAID TO THE NON- RESIDENTS WERE IN THE NATURE OF FEES FOR TECHNICAL SERVICES UNDER THE ACT, AS ALSO UNDER THE APPLICABLE TAX TRE ATIES, HELD THAT THE ASSESSEE WAS, UNDER SECTION 195, HAD AN OBLIGATION TO WITHHO LD TAX AT SOURCE FROM THESE PAYMENTS, AND, ACCORDINGLY, PROCEEDED TO MAKE THE D ISALLOWANCE UNDER SECTION 40(A)(I). 4. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LEARNED CIT(A) WHO HELD THAT NONE OF THE AMOUNTS SO PAID BY THE ASSESSEE WAS ACTUALLY TAXABLE IN INDIA. LEARNED CIT(A) DELETED THE DISALL OWANCE ON THE GROUND THAT NO I.T.A. NO.: 256/AGRA/2013 ASSESSMENT YEAR: 2008-09 PAGE 3 OF 7 TAX WAS DEDUCTIBLE FROM THESE AMOUNTS AND FURTHER HELD THAT EVEN IF, BY ANY STRETCH OF IMAGINATION, SUCH PAYMENTS ARE CONSIDERE D AS FTS, NO TDS WAS REQUIRED TO BE MADE AT THE TIME OF CREDIT/ PAYMENT AS PER THE LAW EXISTING AT THAT TIME BECAUSE SERVICES WERE NOT RENDERED IN INDIA . THE DISALLOWANCE WAS THUS DELETED. THE ASSESSING OFFICE R IS AGGRIEVED AND IS IN APPEAL BEFORE US. 5. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTUAL MATRIX OF THE CASE AS ALSO THE APPLICABLE LEGAL POSITION. 6. HONBLE SUPREME COURT, IN THE CASE OF ISHIKAWAJIMA HARIMA HEAVY INDUSTRIES LTD VS DIT (288 ITR 408) , HAD HELD THAT IN ORDER TO BRING A FEES FOR TECHNICAL SERVICES TO TAXABILITY IN INDIA, NOT ONLY THAT SUCH SERVICES SHOULD BE UTILIZED IN INDIA BUT THESE SERVICES SHOULD ALSO BE RENDERED IN INDIA. ANALYZING THIS LEGAL POSITION, HONBLE BOMBAY HIGH COURT HAS, IN THE CASE OF CLIFFORD CHANCE VS DCIT (318 ITR 237), OBSERVED AS FOLLOWS: 'THE APEX COURT HAD OCCASION TO CONSIDER THE ABOVE QUESTION IN THE CASE OF ISHIKAWAJMA-HARIMA HEAVY INDUSTRIES LTD. VS. DIRECTOR OF IT (2007) 288 ITR 408 (SC), WHEREIN, WHILE INTERPRETING THE PROVISIONS OF S. 9(1)(VII)(C) OF THE ACT, THE SUPREME COURT HELD AS UNDER (P. 444): SEC. 9(1)(VII)(C) OF THE ACT STATES THAT A PERSON WHO IS A NON -RESIDENT, WHERE THE FEES ARE PAYABLE IN RESPECT OF SERVICES UTILIZED IN A BUSINESS OR PROFESSION CARRIED ON BY SUCH PERSON IN INDIA, OR FOR THE PURPOSES OF MAKING OR EARNING ANY INCOME FROM ANY SOURCE OF INDIA. READING THE PROVISION IN ITS PLAIN SENSE, AS PER THE APEX COURT IT REQUIRES TWO CONDITIONS TO BE MET THE SERVICES WHICH ARE THE SOURCE OF THE INCOME THAT IS SOUGHT TO BE TAXED, HAS TO BE RENDERED IN INDIA, AS WELL AS UTILIZED IN INDIA, TO BE TAXABLE IN INDIA. BOTH THE ABOVE CONDITIONS HAVE TO BE SATISFIED SIMULTANEOUSLY. THUS FOR A NON-RESIDENT TO BE TAXED ON INCOME FOR SERVICES, SUCH A SERVICE NEEDS TO BE RENDERED WITHIN INDIA, AND HAS TO BE PART OF A BUSINESS OR PROFESSION CARRIED ON BY SUCH PERSON IN INDIA. IN THE ABOVE JUDGMENT, THE APEX COURT OBSERVED THAT (P. 444) : SEC. 9(1)(VII) OF THE ACT MUST BE READ WITH S. 5 THEREOF, WHICH TAKES WITHIN ITS PURVIEW THE TERRITORIAL NEXUS ON THE BASIS WHEREOF TAX IS REQUIRED TO BE LEVIED, NAMELY, (A) RESIDENT; AND (B) RECEIPT OF ACCRUAL OF INCOME. I.T.A. NO.: 256/AGRA/2013 ASSESSMENT YEAR: 2008-09 PAGE 4 OF 7 ACCORDING TO THE APEX COURT, THE GLOBAL INCOME OF A RESIDENT ALTHOUGH IS SUBJECTED TO TAX, THE GLOBAL INCOME OF A NON-RESIDENT MAY NOT BE. THE ANSWER TO THE QUESTION WOULD DEPEND UPON THE NATURE OF THE CONTRACT AND THE PROVISIONS OF THE DTAA. WHAT IS RELEVANT IS RECEIPT OR ACCRUAL OF INCOME, AS WOULD BE EVIDENT FROM A PLAIN READING OF S. 5(2) OF THE ACT SUBJECT TO THE COMPLIANCE WITH 90 DAYS RULE. AS PER THE ABOVE JUDGMENT OF THE APEX COURT, THE INTERPRETATION WITH REFERENCE TO THE NEXUS TO TAX TERRITORIES ALSO ASSUMES SIGNIFICANCE. TERRITORIAL NEXUS FOR THE PURPOSE OF DETERMINING THE TAX LIABILITY IS AN INTERNATIONALLY ACCEPTED PRINCIPLE. AN ENDEAVOUR SHOULD, THUS, BE MADE TO CONSTRUE THE TAXABILITY OF A NON-RESIDENT IN RESPECT OF INCOME DERIVED BY IT. HAVING REGARD TO THE INTERNATIONALLY ACCEPTED PRINCIPLE AND THE DTAA, NO EXTEN DED MEANING CAN BE GIVEN TO THE WORDS INCOME DEEMED TO ACCRUE OR ARISE IN INDIA AS EXPRESSED IN S. 9 OF THE ACT. SEC. 9 INCORPORATES VARIOUS HEADS OF INCOME ON WHICH TAX IS SOUGHT TO BE LEVIED BY THE REPUBLIC OF INDIA. WHATEVER IS PAYABLE BY A RESIDENT TO A NON-RESIDENT BY WAY OF FEES FOR SERVICES, THUS, WOULD NOT ALWAYS COME WITHIN THE PURVIEW OF S. 9(1)(VII) OF THE ACT. IT MUST HAVE SUFFICIENT TERRITORIAL NEXUS WITH INDIA SO AS TO FURNISH A BASIS FOR IMPOSITION OF TAX. WHEREAS A RESIDENT WOULD COME WITHIN THE PURVIEW OF S. 9(1)(VII) OF THE ACT, A NON-RESIDENT WOULD NOT, AS SERVICES OF A NON-RESIDENT TO A RESIDENT UTILIZED IN INDIA MAY NOT HAVE MUCH RELEVANCE IN DETERMINING WHETHER THE INCOME OF THE NON-RESIDENT ACCRUES OR ARISES IN INDIA. IT MUST HAVE A DIRECT LINK BETWEEN THE SERVICES RENDERED IN INDIA. WHEN SUCH A LINK IS ESTABLISHED, THE SAME MAY AGAIN BE SUBJECTED TO ANY RELIEF UNDER THE DTAA. A DISTINCTION MAY ALSO BE MADE BETWEEN RENDITION OF SERVICES AND UTILIZATION THEREOF. WITH THE ABOVE UNDERSTANDING OF LAW LAID DOWN BY THE APEX COURT, IF ONE TURNS TO THE FACTS OF THE CASE IN HAND AND EXAMINES THEM ON THE TOUCHSTONE, S. 9(1)(VII)(C) WHICH CLEARLY STATES....... WHERE THE FEES ARE PAYABLE IN RESPECT OF SERVICES UTILIZED IN A BUSINESS OR PROFESSION CARRIED ON BY SUCH PERSON IN INDIA OR FOR THE PURPOSES OF MAKING OR EARNING ANY INCOME FROM ANY SOURCE IN INDIA. IT IS THUS, EVIDENT THAT S. 9(1)(VII)(C), READ IN ITS PLAIN , ENVISAGES THE FULFILMENT OF TWO CONDITIONS : SERVICES, WHICH ARE SOURCE OF INCOME SOUGHT TO BE TAXED IN INDIA MUST BE (I) UTILIZED IN INDIA, AND (II) RENDERED IN INDIA. IN THE PRESENT CASE, BOTH THESE CONDITIONS HAVE NOT BEEN SATISFIED SIMULTANEOUSLY.' 7. THE LAW LAID DOWN BY HONBLE SUPREME COURT, IN THE CASE OF ISHIKAWAJMA-HARIMA HEAVY INDUSTRIES LTD. VS. DIRECT OR OF INCOME TAX (SUPRA), BINDS EVERYONE UNDER ARTICLE 141 OF THE CONSTITUTI ON OF INDIA. THE LEGAL POSITION THUS WAS THAT UNLESS THE SERVICES ARE REND ERED IN INDIA, THE SAME CANNOT BE BROUGHT TO TAX AS FEES FOR TECHNICAL SER VICES UNDER SECTION 9. I.T.A. NO.: 256/AGRA/2013 ASSESSMENT YEAR: 2008-09 PAGE 5 OF 7 HOWEVER, THIS LEGAL POSITION DID UNDERGO A CHANGE W HEN FINANCE ACT 2010 RECEIVED ASSENT OF THE PRESIDENT OF INDIA ON 8 TH MAY 2010. EXPLAINING THE SCOPE OF THIS AMENDMENT, A COORDINATE BENCH OF THIS TRIBU NAL, IN THE CASE OF ASHAPURA MINICHEM LTD VS ADIT (131 TTJ 291) , HAS EXPLAINED THUS: (THIS LEGAL POSITION) DOES NO LONGER HOLD GOOD IN VIEW OF RETROSPECTIVE AMENDMENT W.E.F. 1ST JUNE, 1976 IN S. 9 BROUGHT OUT BY THE FINANCE ACT, 2010. UNDER THE AMENDED EXPLANATION TO S. 9(1), AS IT EXISTS ON THE STATUTE NOW, IT IS SPECIFICALLY STATED THAT THE INCOME OF THE NON-RESIDENT SHALL BE DEEMED TO ACCRUE OR ARISE IN INDIA UNDER CL. (V) OR CL. (VI) OR CL. (VII) OF S. 9(1), AND SHALL BE INCLUDED IN HIS TOTAL INCOME, WHETHER OR NOT (A) THE NON- RESIDENT HAS A RESIDENCE OR PLACE OF BUSINESS OR BUSINESS CONNECTION IN INDIA; OR (B) THE NON-RESIDENT HAS RENDERED SERVICES IN INDIA. IT IS THUS NO LONGER NECESSARY THAT, IN ORDER TO ATTRACT TAXABILITY IN INDIA, THE SERVICES MUST ALSO BE RENDERED IN INDIA. AS THE LAW STANDS NOW, UTILIZATION OF THESE SERVICES IN INDIA IS ENOUGH TO ATTRACT ITS TAXABILITY IN INDIA. TO THAT EF FECT, RECENT AMENDMENT IN THE STATUTE HAS VIRTUALLY NEGATED THE JUDICIAL PRECEDENTS SUPPORTING THE PROPOSITION THAT RENDITION OF SERVICES IN INDIA IS A SINE QUA NON FOR ITS TAXABILITY IN INDIA . 8. IT IS THUS CLEAR THAT TILL 8 TH MAY 2010, THE PREVAILING LEGAL POSITION WAS THAT UNLESS THE TECHNICAL SERVICES WERE RENDERED IN INDI A, THE FEES FOR SUCH SERVICES COULD NOT BE BROUGHT TO TAX UNDER SECTION 9(1)(VII) . THE LAW AMENDED WAS UNDOUBTEDLY RETROSPECTIVE IN NATURE BUT SO FAR AS T AX WITHHOLDING LIABILITY IS CONCERNED, IT DEPENDS ON THE LAW AS IT EXISTED AT T HE POINT OF TIME WHEN PAYMENTS, FROM WHICH TAXES OUGHT TO HAVE BEEN WITHH ELD, WERE MADE. THE TAX- DEDUCTOR CANNOT BE EXPECTED TO HAVE CLAIRVOYANCE OF KNOWING HOW THE LAW WILL CHANGE IN FUTURE. A RETROSPECTIVE AMENDMENT IN LAW DOES CHANGE THE TAX LIABILITY IN RESPECT OF AN INCOME, WITH RETROSPECTI VE EFFECT, BUT IT CANNOT CHANGE THE TAX WITHHOLDING LIABILITY, WITH RETROSPECTIVE E FFECT. THE TAX WITHHOLDING OBLIGATIONS FROM PAYMENTS TO NON-RESIDENTS, AS SET OUT IN SECTION 195, REQUIRE THAT THE PERSON MAKING THE PAYMENT AT THE TIME OF CREDIT OF SUCH INCOME TO THE ACCOUNT OF THE PAYEE OR AT THE TIME OF PAYMENT THER EOF IN CASH OR BY THE ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE, WHICHEVER I S EARLIER, DEDUCT INCOME-TAX THEREON AT THE RATES IN FORCE . WHEN THESE OBLIGATIONS ARE TO BE DISCHARGED AT T HE POINT OF TIME WHEN PAYMENT IS MADE OR CREDITED, WHI CHEVER IS EARLIER, SUCH I.T.A. NO.: 256/AGRA/2013 ASSESSMENT YEAR: 2008-09 PAGE 6 OF 7 OBLIGATIONS CAN ONLY BE DISCHARGED IN THE LIGHT OF THE LAW AS IT STANDS THAT POINT OF TIME. SECTION 40(A)(I) PROVIDES THAT, INTER ALIA , NOTWITHSTANDING ANYTHING TO THE CONTRARY IN SECTIONS 30 TO 38, ANY AMOUNT PAYAB LE OUTSIDE INDIA, OR PAYABLE IN INDIA TO A NON-RESIDENT, SHALL NOT BE DEDUCTED I N COMPUTING THE INCOME CHARGEABLE UNDER THE HEAD PROFITS AND GAINS OF BUS INESS OR PROFESSION ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVI I-B AND SUCH TAX HAS NOT BEEN DEDUCTED '. THE DISALLOWANCE UNDER SECTION 40(A)(I) IS NOT F OR THE PAYMENTS MADE TO NON-RESIDENTS, WHICH ARE TAXABLE I N INDIA, BUT FOR THE PAYMENTS ON WHICH TAX WAS DEDUCTIBLE AT SOURCE BUT TAX HAS NOT BEEN DEDUCTED, AND SUCH DEDUCTIBILITY OF TAX AT SOURCE, AS WE HAVE DISCUSSED ABOVE, HAS TO BE IN THE LIGHT OF THE LEGAL POSITION AS IT STOOD AT THE POINT OF TIME WHEN PAYMENT WAS MADE OR CREDITED- WHICHEVER IS EARLIER . CLEARLY, T HEREFORE, THE DISALLOWANCE UNDER SECTION 40(A)(I) CAN COME INTO PLAY ONLY WHEN THE ASSESSEE HAD AN OBLIGATION TO DEDUCT TAX AT SOURCE FROM PAYMENTS TO NON-RESIDENTS, AND THE ASSESSEE FAILS TO COMPLY WITH SUCH AN OBLIGATION. I N VIEW OF THESE DISCUSSIONS, SO FAR AS PAYMENTS MADE BEFORE 8 TH MAY 2010 ARE CONCERNED, THE ASSESSEE DID NOT HAVE ANY TAX WITHHOLDING LIABILITIES FROM FOREIGN R EMITTANCES FOR FEES FOR TECHNICAL SERVICES UNLESS SUCH SERVICES WERE RENDER ED IN INDIA, AND A FORTIORI NO DISALLOWANCE CAN BE MADE UNDER SECTION 40(A)(I) FOR ASSESSEES FAILURE TO DEDUCT TAX AT SOURCE FROM SUCH PAYMENTS. 9. IN THE CASE BEFORE US, THERE IS NO MATERIAL WHAT SOEVER TO DEMONSTRATE AND ESTABLISH THAT THE DESIGN AND DEVELOPMENT SERVICES, FOR WHICH IMPUGNED PAYMENTS WERE MADE, WERE RENDERED IN INDIA. THEREFO RE, THE ASSESSEE DID NOT HAVE ANY LIABILITY UNDER SECTION 195 R.W.S. 9(1)(VI I) TO DEDUCT TAX AT SOURCE FROM THESE PAYMENTS. ONCE WE COME TO THE CONCLUSION THAT THE ASSESSEE DID NOT HAVE ANY OBLIGATION TO DEDUCT TAX AT SOURCE FROM THESE P AYMENTS, IN THE LIGHT OF THE ABOVE DISCUSSIONS AND AS COROLLARY THERETO, NO DISA LLOWANCE CAN BE MADE IN RESPECT OF THESE PAYMENTS. AS WE HAVE COME TO THESE CONCLUSIONS IN THE LIGHT OF THE PROVISIONS OF THE DOMESTIC LAW, I.E. INCOME TAX ACT, ITSELF, THERE IS NO NEED TO DEAL WITH THE TAXABILITY OF INCOMES EMBEDDED IN THE SE PAYMENTS UNDER THE PROVISIONS OF THE APPLICABLE TAX TREATIES. THAT WOU LD BE RELEVANT WITH RESPECT TO I.T.A. NO.: 256/AGRA/2013 ASSESSMENT YEAR: 2008-09 PAGE 7 OF 7 TAXABILITY OF THESE PAYMENTS IN THE HANDS OF THE RE CIPIENTS, BUT, FOR THE REASONS SET OUT ABOVE AND IN THE LIGHT OF THE LEGAL POSITIO N DISCUSSED ABOVE, WILL BE ACADEMIC IN THE PRESENT CONTEXT. AS REGARDS LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENT RELIANCE ON A DECISION OF CHENNAI A BENCH OF THIS TRIBUNAL IN THE CASE OF ACIT VS EVOLV CLOTHING PVT LTD [(2013) 33 TAXMANN.COM 309] WHEREIN ON THE BASIS OF TAXABILITY OF INCOME ALON E, THE COORDINATE BENCH HAS CONFIRMED THE DISALLOWANCE UND ER SECTION 40(A)(I), WE CAN ONLY SAY THAT A DECISION CANNOT BE AN AUTHORITY FOR A LEGAL QUESTION WHICH HAS NOT BEEN DEALT WITH IN THAT DECISION, OR NOT HA VING BEEN RAISED IN THAT CASE. 10. IN VIEW OF THESE DISCUSSIONS, AS ALSO BEARING I N MIND ENTIRETY OF THE CASE, WE UPHOLD THE CONCLUSIONS ARRIVED AT BY THE LEARNED CIT(A) AND DECLINE TO INTERFERE IN THE MATTER. AS WE HAVE DECIDED THIS AP PEAL ON THIS SHORT LEGAL POINT REGARDING SCOPE OF SECTION 40(A)(I) R.W.S SECTION 1 95, WE SEE NO NEED TO DEAL WITH OTHER ERUDITE CONTENTIONS OF THE PARTIES AS AL SO FINDINGS OF THE LEARNED CIT(A), WHICH, GIVEN OUR ADJUDICATION ON THIS LEGAL ISSUE, ARE NOW RENDERED ACADEMIC IN THE PRESENT CONTEXT. 11. IN THE RESULT, THE APPEAL IS DISMISSED. PRONOUN CED IN THE OPEN COURT TODAY ON 14 TH DAY OF FEBRUARY, 2014. SD/XX SD/XX BHAVNESH SAINI PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) AGRA, THE 14 TH DAY OF FEBRUARY, 2014 COPIES TO : (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ETC SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA