ACIT, CHENNAI V. M.M.Forgings Ltd., CHENNAI

ITA 2679/CHNY/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90484 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2011-2012
• Appeal Filed On: 24-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KRISHNAMURTHY
• Keywords: Depreciation; Bonafide belief; Deemed to accrue or arise in india; Permanent establishment; Advance ruling; Unabsorbed depreciation
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI , ! ' , # $% BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER & SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./ I.T.A. NO.2679/MDS/2014 ( / ASSESSMENT YEAR : 2011 -2012) THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE IV(3), CHENNAI ( &' /APPELLANT) VS M/S. M.M. FORGINGS LTD, GUINDY HOUSE, NO.95, ANNA SALAI, CHENNAI 600 032. [PAN:AAACM 2164L] ( '(&' /RESPONDENT) / APPELLANT BY : SHRI. KRISHNAMURTHY, CIT / RESPONDENT BY : SHRI. PHILIP GEORGE, ADVOCATE /DATE OF HEARING : 04.06.2015 ! /DATE OF PRONOUNCEMENT : 19.06.2015. ) / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL BY REVENUE IS DIRECTED AGAI NST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-IV, CHENNAI, D ATED 30.07.2014 FOR THE ASSESSMENT YEAR 2011-2012. I.T.A.NO.2679/MDS/2014. :- 2 -: 2. THE FIRST GROUND IN THIS APPEAL IS WITH REGARD TO D ELETING THE RESTRICTION OF DEDUCTION U/S.80IA TO THE EXTENT OF C62,26,739/- ON WINDMILL POWER GENERATION. 3. THE FACTS OF THE ISSUE ARE THAT THE ASSESSEE COMPA NY ENGAGED IN THE MANUFACTURE AND EXPORT OF STEEL FORGINGS, HA S PLANTS MANUFACTURE OF STEEL FORGINGS AND HAS FOR THE GENER ATION OF ELECTRICITY BY WINDMILL LOCATED IN NAGERCOIL DISTRICT AND THE E NTIRE ELECTRICITY GENERATED WAS FOR SELF CONSUMPTION AND NO PART OF T HE SAME WAS SOLD. THE ASSESSEE FILED ITS RETURN FOR THE ASSESSMENT YE AR 2011-12 ON 30.09.2011 DECLARING AN INCOME OF C25,47,94,827/- A ND THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF TH E ACT DETERMINING TAX DEMAND AT C33,55,41,210/- BY RESTRI CTING DEDUCTION U/S.80IA(4) FROM C5,28,75,459/- TO C4,63,48,720/- A ND DISALLOWANCE OF C7,42,19,641/- ON FOREIGN AGENCY COMMISSION AND WAR EHOUSING AND OTHER CHARGES INCURRED OVERSEAS U/S.40(A)(I). 3.1 THE ASSESSING OFFICER ON THE OTHER HAND HAS OBSE RVED THAT AS PER 80LA(5), THE PROFITS AND GAINS OF ELIGI BLE BUSINESS TO WHICH THE PROVISIONS OF SUBSECTION(1) APPLY SHALL, FOR THE PURPOSES OF DETERMINING THE QUANTUM OF DEDUCTION UN DER THE SUB-SECTION FOR THE ASSESSMENT YEAR OR ANY SUBSEQUE NT ASSESSMENT YEAR NEEDS TO BE COMPUTED AS IF SUCH ELI GIBLE I.T.A.NO.2679/MDS/2014. :- 3 -: BUSINESS WERE THE ONLY SOURCE OF INCOME OF THE ASSE SSEE DURING THE PREVIOUS YEAR RELEVANT TO THE INITIAL ASSESSMEN T YEAR AS IN THE INSTANT CASE, THE WIND ENERGY GENERATION FROM THE W INDMILL UNITS AND THE ENTIRE BUSINESS PROFITS/LOSS ARE SOURCED FR OM THIS BUSINESS WHICH FORMS THE BASIS FOR THE COMPUTATION O F DEDUCTION. A UNIT-WISE CLAIM OF DEDUCTION DOES NOT STAND IN LIN E WITH THE CONNOTATION OF THE TERM ELIGIBLE BUSINESS AND HENCE THE ACTIVITY OF WIND ENERGY GENERATION THROUGH WIND MILL UNITS W AS TO BE TREATED AS ONE ELIGIBLE BUSINESS AND BROUGHT FORWAR D LOSSES ARE TO BE ADJUSTED AGAINST PROFITS AND GAINS FOR THE PU RPOSE OF DEDUCTION U/S 80IA. 3.2. FURTHER, THE ASSESSING OFFICER OBSERVED THAT SINCE ALLOWABILITY OF DEDUCTION U/S 801A(4) IS GOVERNED B Y THE PROVISIONS OF SEC 801A(5).THE DEDUCTION U/S 80IA WOU LD BE ELIGIBLE ONLY ON SUCH SURPLUS PROFITS AFTER SETTING OFF OF THE BROUGHT FORWARD LOSSES AND UNABSORBED DEPRECIATION. THE AO HAS RELIED ON THE DECISION OF THE SPECIAL BENCH OF ITAT, AHMEDABAD IN THE CASE OF ACIT VS. GOLD MINE AND SHARES & FINANCE PVT. LTD. (2008) 113 ITD 20 9 AS WELL AS THE ITAT, HYDERABAD IN THE CASE OF HYDERABAD CHEMICALS SUPPLIES LTD. VS. ACIT, HYDERABAD IN SUPPORT OF HER CONTENTION AND AS SUCH THE I.T.A.NO.2679/MDS/2014. :- 4 -: DEDUCTION U/S 80IA WAS RECOMPUTED AFTER ADJUSTING T HE BROUGHT FORWARD LOSSES OF EARLIER YEARS AND THE ELIGIBLE BU SINESS PROFIT ON WHICH THE ASSESSEE WAS ENTITLED TO CLAIM DEDUCTION H AS ACCORDINGLY BEEN RESTRICTED FROM C5,28,75,459/- AS RETURNED BY THE ASSESSEE AND RESTRICTED TO C4,63,48,720/-. AGGR IEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE COMMISSIONE R OF INCOME TAX (APPEALS). 4. THE COMMISSIONER OF INCOME TAX (APPEALS) PLACING R ELIANCE ON THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN T HE CASE OF VELAYUDHASWAMY SPINNING MILLS (P) LTD VS. ACIT 340 ITR 477, WHEREIN HELD OBSERVED THAT .FROM A READING OF SE. 80IA(5), IT IS CLEAR THAT THE ELIGIBLE BUSINESS WERE THE ONLY SOUR CE OF INCOME, DURING THE PREVIOUS YEAR RELEVANT TO THE INITIAL ASSESSMENT YEAR AND EVERY SUBSEQUENT ASSESSMENT YEARS. WHEN THE ASSESSMENT EXERCISES THE OPTION, THE ONLY LOSSES OF THE YEARS BEGINNING FROM INITIAL ASSESSMENT YEAR ALONE ARE TO BE BROUGH T FORWARD AND NO LOSSES OF EARLIER YEARS WHICH WERE ALREADY SET OFF AGAINST THE INCOME OF THE ASSESSEE. LOOKING FORWARD TO A PERIOD OF TEN YEARS FROM THE INITIAL ASSESSMENT IS CONTEMPLATED. IT DOES NOT ALL OW THE REVENUE TO LOOK BACKWARD AND FIND OUT IF THERE IS ANY LOSS OF EARLIER YEARS AND BRING FORWARD NOTIONALLY EVEN THOUGH THE SAME WERE SET OFF AGAINS T OTHER INCOME OF THE ASSESSEE AND THE SET OFF AGAINS T THE CURRENT INCOME OF THE ELIGIBLE BUSINESS. ONCE THE SET OFF IS TAKEN PLACE IN EARLIER YEAR AGAINST THE OTHER INCOME OF THE ASSESSEE, THE REVENUE CANNOT REWORK THE SET OFF AMOUNT AND BRING IT NOTIONALLY. A FICTION CREATED IN SUB-SECTION DOES NOT CONTEMPLATE S TO BRING SET OFF AMOUNT NOTIONALLY. THE FICTION IS CREATED ONLY FOR THE LIMITED PURPOSE AND THE SAME I.T.A.NO.2679/MDS/2014. :- 5 -: CANNOT BE EXTENDED BEYOND THE PURPOSE FOR WHICH IT IS CREATED. THE COMMISSIONER OF INCOME TAX (APPEALS) ALLOWED TH E CLAIM OF THE ASSESSEE. AGAINST THIS, THE REVENUE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL AVAILABLE ON RECORD. THE ISSUE IS SQUARELY COVERE D BY THE JUDGMENT OF JURISDICTIONAL HIGH COURT IN THE CASE OF VELAYUDHASWAMY SPINNING MILLS (P) LTD (CITED SUPRA) . BEING SO, WE ARE INCLINED TO CONFIRM THE ORDER O F THE COMMISSIONER OF INCOME TAX (APPEALS) ON THIS IS SUE. THIS GROUND OF THE REVENUE IS DISMISSED. 6. THE NEXT GROUND IS WITH REGARD TO DELETING THE DISALLOWANCE OF C7,42,19,641/- MADE U/S.40(A)(I) R.W.S 195 OF TH E INCOME TAX ACT. 7. THE FACT OF THE ISSUE ARE THAT THAT THE ASSESSEE HAS INCURRED FOREIGN AGENCY COMMISSION OF C4,47,37,475/- AND WARE HOUSING AND OTHER CHARGES INCURRED OVERSEAS OF C3,00,82,166 /-, DURING THE YEAR. IT HAS BEEN SUBMITTED BY THE LD. AUTHORIS ED REPRESENTATIVE FOR ASSESSEE THAT IN THE PRESENT CA SE, THE AGENTS WERE OPERATING OUTSIDE THE TAXABLE TERRITORI ES AND THE COMMISSION RECEIVED ALSO WERE OUTSIDE THE TAXABLE TER RITORIES AND IT HAD NO AUTHORITY TO ENTER INTO ANY CONTRACT O N BEHALF OF I.T.A.NO.2679/MDS/2014. :- 6 -: THE LOCAL MANUFACTURERS AND HAD NO AUTHORITY TO BIN D THE PRINCIPAL BY THEIR ACT WITHOUT THE WRITTEN CONFIRMATIO N FROM THE PRINCIPAL, AND THE COMMISSION PAID TO THE NON-RESIDE NTS HAS NO RELEVANCE TO THE PROFITS EARNED BY THE RESIDENT BUT IS LINKED WITH THE RECEIPT OF FULL PAYMENT BY T HE CUSTOMERS TO THE PRINCIPALS. AS SUCH THE QUESTION OF NON-RESIDENT HAVING BUSINESS CONNECTION IN INDIA DOES NOT ARISE. 7.1 THE ASSESSING OFFICER ON THE OTHER HAND, DISALL OWED C7,42,19,641/- U/S.40(A)(I) ON FOREIGN COMMISSION A ND WAREHOUSING AND OTHER CHARGES BROADLY FOR THE FOLLOWING REASONS :- (I) NO TAX WAS DEDUCTED ON THE COMMISSION PAID TO THE FOREIGN AGENTS AS REQUIRED UNDER SECTION 195 OF T HE ACT. (II) BOARDS CIRCULARS NO.23 DATED 23.07.1969, CIRCULAR NO.163 DATED 29.05.1975 AND CIRCULAR NO.786 DATED 07.02.20 00 ALLOWING FOREIGN AGENT COMMISSION WITHOUT DEDUCTION OF TAX UNDER SECTION 195 WAS WITHDRAWN BY CIRCULAR NO. 7 DATED 22.10.2009. (III) THE ASSESSING OFFICER HAS RELIED ON THE HON BLE AUTHORITY FOR ADVANCE RULING IN THE CASE OF SKF BOILERS AND DRIERS PVT. LTD WHEREIN IT HAS BEEN HELD THAT 'SECTIONS 5 AND 9 OF THE ACT THUS PROCEED ON THE ASSUMPTION THAT INCOME HAS A SITUS AND THE SITUS HAS TO BE DETERMINED ACCORDING TO THE GENERAL PRINCIPLES OF LAW. THE WORDS 'ACCRUE' OR 'ARISE' OCCURRING IN SECTION 5 HAVE MORE OR LESS A SYNONYMOUS SENSE AND INCOME IS SAID TO ACCRUE OR ARISE WHEN THE RIGHT TO RECEIVE IT COMES INTO EXISTENCE. NO DOUBT THE AGENTS RENDERED SERVICES ABROAD AND HAVE SOLICITED ORDERS, BUT THE RIGHT TO RECEIVE THE COMMISSION ARISES IN I.T.A.NO.2679/MDS/2014. :- 7 -: INDIA WHEN THE ORDER IS EXECUTED BY THE APPLICANT IN INDIA. THE FACT THAT THE AGENTS HAVE RENDERED SERVICES ABROAD IN THE FORM OF SOLICITING THE ORDERS AND THE COMMISSION IS TO BE REMITTED TO THEM ABROAD ARE WHOLLY IRRELEVANT FOR THE PURPOSE OF DETERMINING THE SITUS OF THEIR INCOME. WE FOLLOW THE RULING OF THIS AUTHORITY IN (RAJIVE MALHOTRA MR 671 OF 2005, 284 JTR 564). WE THEREFORE HOLD THAT THE INCOME ARISING ON ACCOUNT OF COMMISSION PAYABLE TO THE TWO AGENTS IS DEEMED TO ACCRUE AND ARISE IN INDIA, AND IS TAXABLE UNDER THE ACT IN VIEW OF THE SPECIFIC PROVISION OF SECTION 5(2)(B) READ WITH SECTION 9(1)(1) OF THE ACT. THE PROVISION OF SECTION 195 WOULD APPLY, AD THE RATE OF TAX WILL BE AS PROVIDED UNDER THE FINANCE ACT FOR THE RELEVANT YEAR.' 7.2 THE ASSESSING OFFICER HAS ALSO RELIED ON THE DECISI ON OF THE HON'BLE SUPREME COURT IN THE CASE OF TRANSMISSION C ORPORATION OF AP LTD. V. CIT 105 TAXMAN 742 , WHEREIN IT HAS BEEN HELD THAT THE ASSESSEE HAS AN OBLIGATION TO OBTAIN NIL DEDUCTI ON CERTIFICATE FROM THE AO EVEN WHEN THE ASSESSEE FEELS THAT THE P AYMENT IS NOT LIABLE TO TDS, WHICH THE ASSESSEE FAILED TO DO IN THIS CASE. THE ASSESSING OFFICER DISALLOWED A SUM OF C7,42,19,6 41/- AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL. 8. ON APPEAL THE COMMISSIONER OF INCOME TAX (APPE ALS) OBSERVED THAT THE FOLLOWING FACTS OF THE CASE, WHI CH ARE UNDISPUTED THAT THE AGENTS WERE NON-RESIDENTS THE NON-RESIDENT AGENTS WERE OPERATING THEIR I.T.A.NO.2679/MDS/2014. :- 8 -: BUSINESS ACTIVITIES OUTSIDE INDIA THE COMMISSION PAID RELATE TO SERVICES PROVIDED OUTSIDE INDIA, NAMELY, PROCURING EXPORT ORDERS WAREHOUSING AND FOLLOW UP OF PAYMENTS THE NON-RESIDENT AGENTS DID NOT HAVE ANY PERMANENT ESTABLISHMENT OR PERMANENT BUSINESS PLACE IN INDIA THE COMMISSION WAS REMITTED TO THE NON-RESIDENTS DIRECTLY OUTSIDE INDIA. 9. HE RELIED ON THE JUDGMENT OF SUPREME COURT IN THE CASE OF GE INDIA TECHNOLOGY CENTRE P. LTD. V CIT (2010) 327 ITR 456 WHEREIN IT WAS HELD THAT TAX DEDUCTED AT SOURCE OBLI GATIONS U/S 195(1) ARISES ONLY IF THE PAYMENT IS CHARGEABLE TO TAX IN THE HANDS OF THE NON-RESIDENT RECIPIENT. THEREFORE, MER ELY BECAUSE A PERSON HAS NOT DEDUCTED TAX AT SOURCE OR A REMITTAN CE ABROAD IT CANNOT BE INFERRED THAT THE PERSON MAKING THE REMITTA NCE, NAMELY THE ASSESSEE IN THE INSTANT CASE, HAS COMMITT ED A DEFAULT IN DISCHARGING HIS TAX WITHHOLDING OBLIGATIONS BECAU SE SUCH OBLIGATIONS COME INTO EXISTENCE ONLY WHEN THE RECIP IENT HAS A TAX LIABILITY IN INDIA. THE UNDERLYING PRINCIPLE WAS THA T TAX WITHHOLDING LIABILITY OF THE PAYER WAS INHERENTLY A VICARIOUS LIABILITY ON BEHALF OF THE RECIPIENT AND THEREFORE WHEN THE RECIPIENT DOES NOT HAVE THE PRIMARY LIABIL ITY TO BE TAXABLE IN RESPECT OF INCOME EMBEDDED IN THE RECEIPT , THE I.T.A.NO.2679/MDS/2014. :- 9 -: VICARIOUS LIABILITY OF THE PAYER CANNOT BUT BE INEF FECTUAL. THIS VICARIOUS TAX WITHHOLDING LIABILITY CANNOT BE INVOK ED, UNLESS PRIMARY TAX LIABILITY OF THE RECIPIENT IS ESTABLISH ED. 10. FURTHER, THE COMMISSIONER OF INCOME TAX (APPEALS) OBSERVED THAT JUST BECAUSE THE PAYER HAS NOT OBTAIN ED A SPECIFIC DECLARATION FROM THE REVENUE AUTHORITIES TO THE EFF ECT THAT THE RECIPIENT IS NOT LIABLE TO BE TAXED IN INDIA IN RESPE CT OF THE INCOME EMBEDDED IN THE PARTICULAR PAYMENT, THE AO CANNOT PR OCEED ON THE BASIS THAT THE PAYER HAS AN OBLIGATION TO DEDUCT TAX AT SOURCE. HE STILL HAS TO DEMONSTRATE AND ESTABLISH THAT THE P AYEE HAS A TAX LIABILITY IN RESPECT OF THE INCOME EMBEDDED IN THE IM PUGNED PAYMENT 11. IN THE INSTANT CASE, IT IS SEEN, ADMITTEDLY, THAT TH E NON- RESIDENT AGENTS WERE ONLY PROCURING ORDERS AND WARE HOUSING FOR THE ASSESSEE AND NO OTHER SERVICES WERE RENDERED OT HER THAN THE ABOVE. AS THE NON- RESIDENTS WERE NOT PROVIDING ANY TECHNICAL SERVICES TO THE ASSESSEE THE COMMISSION PAYMENT MADE TO NON- RESIDENTS DOES NOT FALL INTO THE CATEGORY OF 'FEES OF TECHNICAL SERVICES' AND THEREFORE EXPLANATION [2] TO SECTION 9(1)(VII) HAS NO APPLICATION TO THE FACTS OF THE ASSESSEE'S CASE EIT HER. I.T.A.NO.2679/MDS/2014. :- 10 -: 12. THE COMMISSIONER OF INCOME TAX (APPEALS) FURTHER OBSERVED THAT THE HON'BLE SUPREME COURT IN THE CAS E CITED SUPRA HAS HELD THAT THE ASSESSEE IS NOT LIABLE TO DEDUCT TDS WHEN THE NON-RESIDENT AGENTS PROVIDED SERVICES OUTSI DE INDIA AND AS SUCH COMMISSION PAYMENTS MADE TO THEM CANNOT BE TREATED AS INCOME DEEMED TO ACCRUE OR ARISE IN INDIA AND THEREFORE THE PROVISIONS OF SEC.195 HAS NO APPLICATI ON IN SUCH CASES; AND IN ORDER TO INVOKE THE PROVISIONS OF SEC.19 5 OF THE ACT INCOME SHOULD BE CHARGEABLE TO TAX IN INDIA, WHICH IS C LEARLY NOT SO IN THE INSTANT CASE. IN VIEW OF THE ABOVE DISCUSSIO N AND RESPECTFULLY FOLLOWING THE JUDGEMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF GE INDIA TECHNOLOGY CENTRE P. LTD. V CIT 327 ITR 456, HE DIRECTED THE ASSESSING OFFICER TO DELETE THE ADDITION MADE TOWARDS FOREIGN AGENCY COMMISSION, WAREHO USING AND OTHER CHARGES U/S 40(A)(I) OF THE ACT. ACCORDING, THE COMMISSIONER OF INCOME TAX (APPEALS) ALLOWED THIS GR OUND. AGAINST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. 13. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATERI AL ON RECORD. IN OUR OPINION, THIS ISSUE IS SQUARELY COV ERED BY THE EARLIER ORDER OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FO R THE ASSESSMENT I.T.A.NO.2679/MDS/2014. :- 11 -: YEAR 2010-2011 IN ITA NO.2311/MDS/2013 VIDE ORDER DATED 28.03.2014 . IN THE SAID ORDER, THE TRIBUNAL OBSERVED AS UNDER :- 5. WE HAVE HEARD BOTH PARTIES AND GONE THROUGH TH E CASE FILE. AS ALREADY STATED HEREINABOVE, THE CIT(A), WHILST D ELETING THE IMPUGNED ADDITION U/S 40(A)(I) PERTAINING TO OVERSE AS PAYMENTS MADE BY THE ASSESSEE ON ACCOUNT OF COMMISSION, WARE HOUSING AND OTHER CHARGES, HAS FOLLOWED ORDER OF THE 'TRIBU NAL'(SUPRA) QUA THE VERY ISSUE. ON BEING GRANTED OPPORTUNITY, THE REVENUE HAS FAILED TO PROVE THAT THESE EXPENSES ARE LIABLE TO BE TAXED IN INDIA AS INCOME IN THE HANDS OF CONCERNED PAYEES OR ANY SERVICES HAD BEEN RENDERED IN INDIA. THE REVENUE SU BMITS THAT THE 'TRIBUNAL'S ORDER HAS NOT BEEN BECOME FINAL AN D ITS APPEAL IS PENDING BEFORE THE HON'BLE HIGH COURT. IN OUR CONSI DERED OPINION, MERE PENDENCY OF AN APPEAL INVOLVING THE S AME ISSUE AGAINST THE ORDER OF THE 'TRIBUNAL' IS NO GROUND TO ADOPT A DIFFERENT APPROACH IN THE IMPUGNED ASSESSMENT YEAR. THUS, WE AGREE WITH THE FINDINGS OF THE CIT(A) UNDER CHALLEN GE AND REJECT GROUNDS RAISED BY THE REVENUE. SIMILAR VIEW WAS ALSO TAKEN BY THE MUMBAI BENCH IN THE CASE OF VILAS N. TAMHANKAR IN ITA NO.4522/MUM/2013 FOR THE ASSESSMENT YEAR 2009-2010, VIDE ORDER DATED 21.11.2014 , AND SAME VIEW WAS ALSO TAKEN BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. FAIZAN SHOES PVT. LTD, 367 ITR 155 (MAD) AND FURTHER IN THE CASE OF BRAKES INDIA LTD. VS. DCIT (LTU) (144 ITD 403) THE CO-ORD INATE BENCH OF THE TRIBUNAL, IT WAS HELD THAT 47. IN OUR OPINION, NATURE OF SERVICES MENTIONED AB OVE WILL COME NOT WITHIN THE DEFINITION OF FEES FOR TE CHNICAL SERVICES GIVEN UNDER EXPLANATION 2 TO SECTION 9(1) (VII) OF THE ACT. BY VIRTUE OF SUCH SERVICES, THE CONCERNED RECIPIENTS HAD NOT MADE AVAILABLE TO THE ASSESSEE A NY NEW TECHNIC OR SKILL WHICH ASSESSEE COULD USE IN ITS BU SINESS. THE SERVICES RENDERED BY THE SAID PARTIES RELATED T O CLEARING, WAREHOUSING AND FREIGHT CHARGES, OUTSIDE INDIA. THE LOGISTICS SERVICE RENDERED WAS ESSENTIALLY WAREHOUSING FACILITY. IN OUR OPINION, THIS CANNOT B E I.T.A.NO.2679/MDS/2014. :- 12 -: EQUATED WITH MANAGERIAL, TECHNICAL OR CONSULTANCY SERVICES. EVEN IF IT IS CONSIDERED AS TECHNICAL SER VICE, THE FEE WAS PAYABLE ONLY FOR SERVICES UTILIZED BY THE A SSESSEE IN THE BUSINESS OR PROFESSION CARRIED ON BY THE SAI D NON- RESIDENTS OUTSIDE INDIA. SUCH BUSINESS OR PROFESSIO N OF THE NON-RESIDENTS, EARNED THEM INCOME OUTSIDE INDIA. TH US, IT WOULD FALL WITHIN THE EXCEPTION GIVEN UNDER SUB-CLA USE (B) OF SECTION 9(1) OF THE ACT. IN ANY CASE, UNDER SECT ION 195 OF THE ACT, ASSESSEE IS LIABLE TO DEDUCT TAX ONLY W HERE THE PAYMENT MADE TO NON-RESIDENTS IS CHARGEABLE TO TAX UNDER THE PROVISIONS OF THE ACT. IN THE CIRCUMSTANCES MEN TIONED ABOVE, ASSESSEE WAS JUSTIFIED IN HAVING A BONAFIDE BELIEF THAT THE PAYMENTS DID NOT WARRANT APPLICATION OF SE CTION 195 OF THE ACT. IN SUCH CIRCUMSTANCES, WE ARE OF TH E OPINION THAT IT COULD NOT HAVE BEEN SADDLED WITH TH E CONSEQUENCES MENTIONED UNDER SECTION 40(A)(I) OF TH E ACT. DISALLOWANCES WERE RIGHTLY DELETED BY THE LD. CIT(APPEALS). NO INTERFERENCE IS CALLED FOR. 14. BEING SO, IN OUR OPINION THE ISSUE WAS SQUARELY COV ERED BY ASSESSEES OWN CASE AND OTHER JUDGMENT (CITED SUPRA ), WE ARE INCLINED TO DISMISS THIS GROUND RAISED BY THE REVENUE. 15. IN THE RESULT, THE APPEAL OF THE REVENUE IN IT A NO.2679/MDS/2014 IS DISMISSED. ORDER PRONOUNCED ON FRIDAY, THE 19TH DAY OF J UNE, 2015, AT CHENNAI. SD/- SD/- ( ! ' ) (CHALLA NAGENDRA PRASAD) # / JUDICIAL MEMBER ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER '# /CHENNAI. $% /DATED:19.06.2015. KV %& '( )( /COPY TO: 1. * APPELLANT 2. / RESPONDENT 3. + ( )/CIT(A) 4. + /CIT 5. (,- . /DR 6. -/ 0 /GF. I.T.A.NO.2679/MDS/2014. :- 13 -: