DCIT, CHENNAI V. M/s. Pierce & Leslie Travel Pvt.Ltd., CHENNAI

ITA 2678/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7577 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-03-2017
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 15-09-2016
• Court: TRIBUNAL
• Department Lawyers: MOHAMMED MUSTAFA
• Assessee Lawyers: G VARDINI KARTHIK
• Keywords: Condonation of delay
• Section: 143(3); 142(1); 115JB

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . , . , BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER & SHRI DUVVURU R L REDDY , JUDICIAL MEMBER ./ I T.A. NO. 2678 /MDS/201 6 / ASSESSMENT YEAR :20 12 - 13 THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 5 ( 2 ), CHENNAI 600 034 . VS. M/S. PEIRCE & LESLIE TRAVEL PRIVATE LIMITED, NO. 37, DR. P.V. C HERIAN CRESCENT ROAD, EGMORE, CHENNAI 600 008 . [PAN:AA D C P5444K ] ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI MOHAMMED MUSTAFA, JCIT / RESPONDENT BY : MS. G. VARDINI KARTHIK , A D VO CATE / DATE OF HEARING : 08 . 1 2 .201 6 / DATE OF P RONOUNCEMENT : 03 . 0 3 .201 7 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMIS SIONER OF INCOME TAX ( APPEALS ) 3 , CHENNAI , DATED 24 . 0 6 .201 6 RELE VANT TO THE ASSESSMENT YEAR 20 12 - 13 . THE ONLY EFFECTIVE GROUND RAISED IN THE APPEAL OF THE REVENUE IS THAT THE LD. CIT(A) HAS ERRED IN DIRECTING TO DELET E THE DISALLOWANCE MADE UNDER SECTION 4 0(A)( I A ) OF THE INCOME TAX ACT, I.T.A. NO. 2678 /M/16 2 1961 [ ACT IN SHORT] ON THE GROUND THAT THE PAYMENTS MADE TO THE FOREIGN ENTITIES ARE NOT LIABLE TO TDS . 2. T HE APPEAL OF THE REVENUE IS FOUND TO HAVE BEEN FILED LATE BY TWO DAYS IN FILING THE APPEAL. THE ASSESSING OFFIC ER HAS FILED AN AFFIDAVIT FOR CONDONATION OF DELAY AND BY REFERRING TO THE AFFIDAVIT, THE LD. DR HAS SUBMITTED THAT THE DELAY WAS NEITHER WILFUL NOR WANTON AND REQUESTED FOR CONDONING THE DELAY AND TO ADMIT THE APPEAL S FOR HEARING. THE LD. COUNSEL FOR THE ASSESSEE DID NOT OBJECT TO THE SUBMISSIONS OF THE LD. DR. ACCORDINGLY, WE CONDONE THE DELAY IN FILING THE APPEAL AND ADMIT THE APPEAL FOR HEARING. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A TOUR OPERATOR IN THE BUSINESS OF PROVIDING CUSTOMIZED TOUR PACKAGE. THE ASSESSEE FILED ITS RETURN OF INCOME ON 28.09.2012 ADMITTING A TOTAL INCOME OF .1,78,63,930/ - AND BOOK PROFIT ADMITTED UNDER SECTION 115JB OF THE ACT WAS .1,52,72,194/ - . THE RETURN FILED BY THE ASSESSEE WAS SELECTED FOR SCRUTINY AND NOT ICE UNDER SECTION 143(2) OF THE ACT DATED 21.08.2013 WAS ISSUED AND SERVED ON THE ASSESSEE. A NOTICE UNDER SECTION 142(1) OF THE ACT ALONG WITH QUESTIONNAIRE WAS ALSO ISSUED ON 16.10.2014. IN RESPONSE THERETO, THE ASSESSEE PRODUCED THE BOOKS OF ACCOUNTS AN D OTHER DETAILS AS SOUGHT FOR. AFTER VERIFICATION OF DETAILS FILED BY THE ASSESSEE, THE ASSESSING OFFICER HAS COMPLETED THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT ASSESSING TOTAL INCOME OF THE ASSESSEE AT .2,53,13,990/ - AFTER MAKING DISALLOWANCE OF .74,50,060/ - I.T.A. NO. 2678 /M/16 3 UNDER SECTION 40(A)(IA) OF THE ACT. 4 . THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). AFTER CONSIDERING THE WRITTEN SUBMISSIONS OF THE ASSESSEE AS WELL AS BY FOLLOWING HIS OWN ORDER FOR THE ASSESSMENT YEAR 2011 - 12, WHEREIN, THE DECISION OF THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. FAIZAN SHOES (P) LTD. [2014] 48 TXMANN.COM 48 HAS BEEN FOLLOWED, DIRECTED THE ASSESSING OFFICER TO DELETE THE ADDITION MADE UNDER SE CTION 40(A)(IA) OF THE ACT. 5 . ON BEING AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. THE LD. DR HAS SUBMITTED THAT THE PAYMENTS MADE BY THE ASSESSEE TO THE FOREIGN ENTITIES ARE NOT IN THE NATURE OF FEES FOR TECHNICAL SERVICES AND MOREOVER , HE HAS NOT CONSIDERED THE EXPLANATION 2 TO SECTION 9(1)(VII) OF THE ACT, WHEREIN IT WAS CLEARLY PROVIDED THAT FEES FOR TECHNICAL SERVICES INCLUDES CONSULTANCY SERVICES. 6 . ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ISSU E IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. FAIZAN SHOES (P) LTD. (SUPRA). 7 . WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WITH REGARD TO THE ISSUE AS TO WHETHER THE TDS HAS TO BE DEDUCTED OR NOT WHEN THE COMMISSION I.T.A. NO. 2678 /M/16 4 PAYMENT MADE TO THE OVERSEAS AGENTS, WE FIND THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HON BLE JURI SDICTIONAL HIGH COURT IN THE CASE OF CIT V. FAIZAN SHOES PVT. LTD. [2014] 367 ITR 155, WHEREIN BY DISMISSING THE APPEAL OF THE REVENUE, THE HON BLE HIGH COURT HAS HELD AS UNDER: HELD, DISMISSING THE APPEAL, THAT ON A READING OF SECTION 9(1)(VII), COM MI SSION PAID BY THE ASSESSEE TO THE NON - RESIDENT AGENTS WOULD NOT COME UNDER THE TERM 'FEES FOR TECHNICAL SERVICES'. FOR PROCURING ORDERS FOR LEATHER BUSI NESS FROM OVERSEAS BUYERS, WHOLESALERS OR RETAILERS, AS THE CASE MAY BE, THE NON - RESIDENT AGENT WAS PAI D 2.5 PER CENT COMMISSION ON FREE ON BOARD BASIS. THIS WAS A COMMISSION SIMPLICITER. WHAT WAS THE NATURE OF TECHNICAL SERVICE THAT THE NON - RESIDENT AGENTS HAD PROVIDED ABROAD TO THE ASSESSEE WAS NOT CLEAR FROM THE ORDER OF THE ASSESSING OFFICER. THE OPENING OF LETTERS OF CREDIT FOR THE PURPOSE OF COMPLETING THE EXPORT OBLIGATION WAS AN INCIDENT OF EXPORT AND, THEREFORE, THE NON - RESIDENT AGENT WAS UND ER AN OBLIGATION TO RENDER SUCH SERVICES TO THE ASSESSEE, FOR WHICH COMMISSION WAS PAID. THE NON - RESIDENT AGENT DID NOT PROVIDE TECHNICAL SERVICES FOR THE PURPOSES OF RUNNING OF THE BUSINESS OF THE ASSESSEE IN INDIA. THEREFORE, THE COMMISSION PAID TO THE N ON - RESIDENT AGENTS WOULD NOT FALL WITHIN THE DEFINITION OF 'TEES FOR TECHNICAL SERVICES' AND THE ASSESSEE WAS NOT LIABLE TO DEDUCT TAX AT SOURCE ON PAYMENT OF COMMISSION. 8. BY FOLLOWING THE ABOVE JUDGEMENT OF THE HON BLE JURISDICTIONAL HIGH COURT IN T HE CASE OF CIT V. FAIZAN SHOES PVT. LTD. (SUPRA), THE LD. CIT(A) HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2011 - 12 AND THE SAME HAS BEEN FOLLOWED FOR THE ASSESSMENT YEAR UNDER CONSIDERATION I.E. 2012 - 13. THUS, WE FIND NO REASO N TO INTERFERE WITH THE I.T.A. NO. 2678 /M/16 5 ORDERS OF THE LD. CIT(A) AND ACCORDINGLY, THE GROUND RAISED BY THE REVENUE IS DISMISSED. 9 . IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED ON THE 03 RD MARCH, 201 7 AT CHENNAI. SD/ - SD/ - (A. MOHAN ALANKAMONY ) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 03 . 03 .201 7 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.