DDIT, New Delhi V. M/s. Clifford Chance London Limited, Gurgaon

ITA 2641/DEL/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6413 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 27-01-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 01-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B R R KUMAR SENIOR
• Keywords: Business income
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH B : NEW DELHI) BEFORE SHRI A.T. VARKEY, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO.2641/DEL./2014 (ASSESSMENT YEAR : 2009-10) DDIT, CIRCLE 1 (1), VS. M/S. CLIFFORD CHANCE LONDO N LTD., INTERNATIONAL TAXATION, C/O PWC (P) LIMITED, NEW DELHI. BUILDING NO.10, 17 TH FLOOR, TOWER C, CYBER CITY, GURGAON. (PAN : AADCC6555G) CO NO.57/DEL/2015 (IN ITA NO.2641/DEL./2014) (ASSESSMENT YEAR : 2009-10) M/S. CLIFFORD CHANCE LONDON LTD., VS. DDIT, CIRCLE 1 (1), C/O PWC (P) LIMITED, INTERNATIONAL TAXATION, BUILDING NO.10, 17 TH FLOOR, NEW DELHI. TOWER C, CYBER CITY, GURGAON. (PAN : AADCC6555G) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI PAWAN KUMAR, ADVOCATE REVENUE BY : SHRI B.R.R. KUMAR, SENIOR DR O R D E R PER A.T. VARKEY, JUDICIAL MEMBER : ITA NO.2641/DEL./2014 2 THE APPEAL FILED BY THE REVENUE AND THE CROSS OBJEC TION FILED BY THE ASSESSEE ARE AGAINST THE ORDER OF THE CIT (APPEALS) -XXIX, NEW DELHI DATED 10.02.2014 FOR THE ASSESSMENT YEAR 2009-10. 2. THE SOLE GROUND OF APPEAL IS REGARDING DELETION OF DISALLOWANCE OF RS.1,39,03,187/- MADE BY AO U/S 40(A)(III) OF THE I NCOME-TAX ACT, 1961 (HEREINAFTER THE ACT). 3. THE BRIEF FACTS AS NOTED BY CIT (A) ARE THAT THE ASSESSEE IS A NON- RESIDENT COMPANY INCORPORATED UNDER LAWS OF UNITED KINGDOM (UK) AND IS ENGAGED IN PROVIDING LEGAL ADVISORY SERVICES. THE ASSESSEE HAD ENTERED INTO AN AGREEMENT WITH AZB AND PARTNERS FOR SECONDMENT OF ITS EMPLOYEES TO INDIA FOR PROVING ADVISORY SERVICES ON INTERNATIONA L LAW. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD SECONDED TWO OF ITS EMPLOYEES (SHRI INDER CHOITRAM AND KIRAN SINGH) TO AZB & PARTNERS U NDER AN AGREEMENT WITH THEM. FOR ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE HAS SHOWN RECEIPT OF RS.1,65,44,425/- AS BUSINESS INCOME AGAI NST WHICH SALARY COST OF RS.1,39,03,187/- PAID TO TWO SECONDED EMPLOYEES HAS BEEN CLAIMED AS DEDUCTION. THE ASSESSEE FILED ITS ORIGINAL RETURN ELECTRONICALLY ON 30.09.2009 DECLARING TOTAL INCOME OF RS.26,41,238/- WHICH IS N ET PROFIT AND CLAIMING A REFUND OF RS.59,57,599/-. THE AO ASSESSED THE TOTA L INCOME OF THE ASSESSEE AT RS.1,65,44,425/- AS AGAINST RETURNED INCOME OF RS.2 6,41,238/- BY DISALLOWING SALARY EXPENSES U/S 40(A)(III). ACCORDINGLY, A TAX DEMAND OF RS.81,15,346/- ITA NO.2641/DEL./2014 3 (INCLUDING INTEREST AMOUNTING TO RS.22,16,827/- U/S 234B OF THE ACT) WAS RAISED ON THE ASSESSEE. 4. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE T HE CIT (A). THE CIT (A) ALLOWED THE APPEAL OF THE ASSESSEE BY RELYING O N THE DECISION OF THE TRIBUNAL IN IDENTICAL CASE I.E. DCIT VS. DOLPHIN DR ILLING LTD. (2009) 28 SOT 141 (DELHI). AGAINST THE SAID ORDER OF THE CIT (A), THE REVENUE IS IN APPEAL BEFORE US. 5. LD. DR RELIED ON THE ORDER OF THE AO AND WANTS U S TO REVERSE THE ORDER OF THE CIT (A). ON THE OTHER HAND, THE LD. AR POIN TED OUT THAT BEFORE THE RETURN WAS FILED BY THE ASSESSEE, THE TDS OF BOTH T HE EMPLOYEES ALONG WITH INTEREST WAS PAID BY THE ASSESSEE, SO DISALLOWANCE U/S 40(A)(III) IS NOT ATTRACTED. SO, LD. AR DOES NOT WANT US TO INTERFERE WITH THE REASONED ORDER OF THE LD. CIT (A). 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORD. WE FIND THAT ORIGINAL RETURN AS FILED BY THE ASSESSEE ELECTRONIC ALLY ON 30.09.2009 AND THE ASSESSEE HAD REMITTED IN GOVERNMENT TREASURY, TDS I N RESPECT OF SHRI KIRAN SINGH ON 04.06.2009 AND IN RESPECT OF SHRI INDER CH OITRAM ON 29.09.2009. SO, UNDISPUTEDLY, TDS ALONG WITH INTEREST FOR LATE PAYMENT HAS BEEN REMITTED BY THE ASSESSEE BEFORE THE ROI WAS FILED. SO, THE QUESTION OF DISALLOWANCE U/S 40(A)(III) DOES NOT ARISE, SINCE THE ASSESSEE ADMIT TEDLY HAS DEDUCTED THEREON FROM UNDER CHAPTER XVII-B. THEREFORE, THE LD. CIT (A) HAS RIGHTLY RELIED ON ITA NO.2641/DEL./2014 4 AN IDENTICAL CASE DECIDED BY THE TRIBUNAL IN DOLPHI N DRILLING LTD. AND DELETED THE ADDITION. SO, WE DO NOT FIND ANY INFIRMITY IN THE ORDER AND WE UPHOLD THE ORDER OF THE LD. CIT (A) AND DISMISS THE APPEAL OF THE REVENUE. 7. THE CROSS OBJECTION PREFERRED BY THE ASSESSEE HA S BECOME INFRUCTUOUS AND SO, THE SAME IS DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE AND THE CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 16 TH DAY OF MARCH, 2016. SD/- SD/- (PRASHANT MAHARISHI) (A.T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 16 TH DAY OF MARCH, 2016 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XXIX, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.