DCIT, New Delhi V. M/s Jetways Travels Pvt. Ltd., New Delhi

ITA 2694/DEL/2011

• Counselvise Citation: 269420114 RSA 2011
• Duration Of Justice: 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 08-11-2011
• Assessment Year: 2008-2009
• Appeal Filed On: 25-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRATIMA KAUSHIK SENIOR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH D : NEW DELHI) BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.2694/DEL./2011 (ASSESSMENT YEAR : 2008-09) DCIT, CIRCLE 4 (1), VS. M/S. JETWAYS TRAVELS PVT . LTD., NEW DELHI. UGF 5, INDRAPRAKASH BUILDING, 21, BARAKHAMBA ROAD, NEW DELHI. (PAN : AAACJ0054A) (APPELLANT) (RESPONDENT) ASSESSEE BY : MS. RANO JAIN, ADVOCATE REVENUE BY : SMT. PRATIMA KAUSHIK, SENIOR DR ORDER PER B.C. MEENA, ACCOUNTANT MEMBER : THE ASSESSEE HAS FILED THIS APPEAL AGAINST THE ORDE R OF CIT (APPEALS)- VII, NEW DELHI DATED 17.03.2011 FOR THE ASSESSMENT YEAR 2008-09 THE GROUNDS OF APPEAL READ AS UNDER :- 01. THE ORDER OF THE LEARNED CIT (APPEALS) IS ERRO NEOUS & CONTRARY TO FACTS & LAW. 02. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT (APPEALS) HAS ERRED IN DELETING THE ADDITIO N OF RS.1,33,94,874/- MADE UNDER SECTION 40(1)(IA) OF TH E I.T. ACT BEING THE PROVISIONS FOR EX-GRACIA TO THE STAFF. 2.1 THE LD. CIT (A) IGNORED THE FINDING RECORDED BY THE AO AND THE FACT THAT THE ADDITION WAS CORRECTLY MADE BY THE AO IN ACCORDANCE WITH ITA NO.2694/DEL./2011 2 THE PROVISIONS OF SECTION 40(A)( IA) READ WITH SECT ION 195(2) OF THE I.T. ACT. 03. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, OR TO AMEND ANY GROUNDS OF THE APPEAL RAISED ABOVE AT THE TIME OF T HE HEARING. 2. IN ALL THESE GROUNDS, THE ISSUE INVOLVED IS DELE TING THE ADDITION OF RS.1,33,94,874/- MADE U/S 40(A)(IA) OF THE INCOME-T AX ACT BEING THE PROVISIONS FOR EX-GRATIA TO THE STAFF. 3. LEARNED DR SUBMITTED THAT THIS ADDITION WAS MADE KEEPING IN VIEW THE PROVISIONS OF SECTION 40(1)(IA) READ WITH SECTION 1 95(2) OF THE INCOME-TAX ACT AND HE RELIED ON THE ORDER OF THE ASSESSING OFFICER . 4. ON THE OTHER HAND, LEARNED AR SUBMITTED THAT CIT (A) HAS GRANTED THE RELIEF ON THE BASIS OF HIS OWN ORDER FOR ASSESSMENT YEAR 2007-08 IN APPEAL NO.106/09-10 DATED 24.05.2010 IN ASSESSEES OWN CAS E WHEREIN THE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE. 5. DURING THE HEARING, IT WAS ALSO PLEADED THAT REV ENUE HAD FILED APPEAL IN ITAT AGAINST THE ORDER OF CIT (A) FOR THE ASSESSMEN T YEAR 2007-08. IT WAS ALSO STATED THAT THE APPEAL HAS BEEN HEARD AND ORDE R IS TO BE PRONOUNCED. THE ORDER WAS PRONOUNCED IN ITA NO.3447/DEL/2010 ON 25. 10.2011. IN THIS ORDER, THE ITAT HAS REJECTED THE REVENUES APPEAL B Y HOLDING AS UNDER :- 8. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS A ND GONE THROUGH THE RECORD CAREFULLY. AS PER THE LATEST DEC ISION OF HON'BLE DELHI HIGH COURT AS WELL AS OF HON'BLE SUPR EME COURT IN THE CASE OF VEN OORD ACZ (INDIA) PVT. LTD., G.E. INDIA TECHNOLOGY (SUPRA), THE AMOUNT PAYABLE BY AN ASSESS EE TO ANY ITA NO.2694/DEL./2011 3 NON-RESIDENT CONTEMPLATES IN SECTION 195 OUGHT TO B E SUM CHARGEABLE UNDER THE PROVISIONS OF THIS ACT. IF IT IS ESTABLISHED THAT SUCH AMOUNT IS NOT CHARGEABLE TO TAX THEN THER E IS NO REQUIREMENT TO DEDUCT THE TDS. IN THE PRESENT CASE, ASSESSEE HAS SUBMITTED ALL THE DETAILS OF FOREIGN TRANSACTIONS, SUMMARY OF FOREIGN REMITTANCE, P & L ACCOUNT, THE DETAILS OF T HE ENTITIES TO WHOM AMOUNTS HAVE BEEN REMITTED, THE DETAILS OF CUS TOMERS FROM WHOM IT HAS RECEIVED MONEY EQUIVALENT TO FOREI GN EXCHANGE REMITTANCE IN INDIAN RUPEES. IT HAS ALSO S UBMITTED AS TO HOW IT TOOK THE FOREIGN EXCHANGE FROM THE AUTHOR IZED DEALERS ON BEHALF OF THOSE CUSTOMERS OUT OF THEIR BASIC TRA VEL QUOTA WHICH IS PROVIDED UNDER RBI/FEMA REGULATIONS. THE C ASE OF THE ASSESSEE IS THAT IT HAS RECEIVED CHARGES FROM T HE CUSTOMERS FOR PROVIDING HOTEL BOOKING SERVICES AND NOT RECEIV ED ANY COMMISSION FROM THE HOTELS. IT HAS POINTED OUT TO T HE ASSESSING OFFICER THAT IT IS NOT WORKING AS AN AGENT OF THE H OTELS. THE CONTROVERSY CAN BE APPRECIATED BY SIMPLE EXAMPLE, N AMELY, A & B ARE TWO RESIDENT INDIANS WANT TO TRAVEL SINGAPORE . A MADE A BOOKING DIRECTLY AND REMITTED THE FOREIGN EXCHANGE ON HIS OWN BEHALF. B TOOK THE HELP OF ASSESSEE WHO BOOKED THE HOTEL ON HIS BEHALF AND COLLECTED THE BOOKING AMOUNT REMITTED BY THE ASSESSEE IN FOREIGN EXCHANGE PLUS SERVICES CHARGES. CAN THE ASSESSING OFFICER SAY THAT A OUGHT TO HAVE DEDUCTED THE TAX WHILE BOOKING THE HOTEL BECAUSE THE AMOUNT PAID TO THE HOTEL IS TAXABLE IN INDIA. IN OUR OPINION, THE REPLY TO THIS QUESTION WOULD BE NO BECAUSE THE FOREIGN HOTELS WERE NOT PROVIDI NG ANY SERVICES TO A IN INDIA OR IT HAS NO BUSINESS CONN ECTION WITHIN THE TERRITORY OF INDIA AND IT IS A A WHO WANTS TO AVAIL THE HOTEL FACILITY OUTSIDE THE INDIAN TERRITORY. IF FOR THE S AKE OF ARGUMENT, WE ACCEPT THE CASE OF THE ASSESSING OFFICER THEN AL L FACILITIES AVAILED BY INDIAN RESIDENTS OUTSIDE INDIA OUGHT TO BE BROUGHT IN THE TAX NET. 9. ASSESSING OFFICER HAS MADE REFERENCE TO THE DECI SION OF THE HON'BLE SUPREME COURT IN THE CASE OF TRANSMISSI ON CORPORATION (SUPRA). THE FACTS IN THIS CASE ARE THA T M/S. TRANSMISSION CORPORATION IS A NON-RESIDENT, IT HAD ENTERED INTO A COMPOSITE CONTRACT WITH THE RESIDENT PARTIES. THE S AID COMPOSITE CONTRACT WAS FOR SUPPLY OF PLANT AND MACHINERY AND EQUIPMENT IN INDIA AS WELL AS ALSO INSTALLATION AND COMMISSIO NING OF THE SAME IN INDIA. IT WAS ADMITTED THAT ERECTING AND CO MMISSIONING OF PLANT AND MACHINERY IN INDIA GAVE RISE TO INCOME TAXABLE IN ITA NO.2694/DEL./2011 4 INDIA. THUS, IT WAS CLEAR EVEN TO THE PAYER THAT PA YMENTS REQUIRED TO BE MADE BY HIM TO THE NON-RESIDENT INCL UDED AN ELEMENT OF INCOME WHICH WAS CHARGEABLE TO TAX IN IN DIA. THE ONLY ISSUE WAS WHETHER TDS WAS APPLICABLE ONLY TO T HE PURE INCOME PAYMENTS OR IT WILL BE APPLICABLE TO COMPOSI TE PAYMENT WHICH HAD AN ELEMENT OF INCOME INCORPORATED IN THEM . IN SUCH SITUATION, IT WAS HELD THAT IF THE PAYER WANTED TO DEDUCT TAX NOT ON THE GROSS AMOUNT BUT ON LESSER AMOUNT I.E. ONLY INCOME COMPONENT OF THE NON-RESIDENT THEN IT WAS NECESSARY FOR THE PAYER TO MAKE AN APPLICATION UNDER SEC. 195(2) OF T HE ACT TO THE ITO AND OBTAIN HIS PERMISSION FOR DEDUCTING THE TAX AT A LESSER AMOUNT. HON'BLE SUPREME COURT IN THE CASE OF G.E. I NDIA TECHNOLOGY WHILE CONSIDERING THIS JUDGMENT HAS OBSE RVED THAT IF THE PAYER HAD A DOUBT AS TO THE AMOUNT TO BE DEDUCT ED AS A TAX, HE COULD APPROACH THE ITO(TDS) TO COMPUTE THE AMOUN T WHICH WAS LIABLE TO BE DEDUCTED AT SOURCE. ACCORDING TO T HE HON'BLE SUPREME COURT, SECTION 195(2) IS BASED ON THE PRINC IPLE OF PROPORTIONATELY. THE SAID SUBSECTION GETS ATTRACTED ONLY IN CASES WHERE PAYMENT MADE IS A COMPOSITE PAYMENT IN WHICH CERTAIN PORTION OF PAYMENT HAS AN ELEMENT OF INCOME CHARG EABLE TO TAX IN INDIA. HON'BLE SUPREME COURT HAS OBSERVED TH AT UNDER SECTION 195, A LIABILITY TO DEDUCT TAX WOULD COME I F THE SUM PAID OR CREDITED BY AN ASSESSEE TO A NON-RESIDENT AND SU CH AMOUNT IS CHARGEABLE TO TAX UNDER THE PROVISIONS OF THE INCOM E-TAX ACT, 1961 THEN TDS HAS TO BE DEDUCTED. IN OTHER WORDS, I F TAX IS NOT SO ASSESSABLE THEN NO TDS OUGHT TO BE DEDUCTED. IN THE PRESENT CASE, ON AN ANALYSIS OF THE REMITTANCE MADE BY THE ASSESSEE TOWARDS HOTEL BOOKING, LEARNED CIT(APPEALS) HAS ARR IVED AT A CONCLUSION THAT REMITTANCE DO NOT REPRESENT SUM CHA RGEABLE TO TAX IN INDIA, IN THE HANDS OF THOSE HOTELS, THEREFO RE, ASSESSEE WAS NOT UNDER AN OBLIGATION TO DEDUCT THE TAX. THE ITAT IN THE CASE OF STAR CRUISE INDIA TRAVEL SERVICES HAS ANALYZED T HIS ISSUE IN DETAIL. IN VIEW OF THE ABOVE DISCUSSION AND RESPECT FULLY FOLLOWING THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF G.E. INDIA TECHNOLOGY CENTRE (P) LTD., WE ARE OF TH E VIEW THAT THERE IS NO MERIT IN THE GROUND RAISED BY THE REVEN UE. LEARNED FIRST APPELLATE AUTHORITY HAS APPRECIATED THE FACTS AND CIRCUMSTANCES IN RIGHT PERSPECTIVE. HENCE, GROUND N O.2 IS REJECTED. ITA NO.2694/DEL./2011 5 THE FACTS OF THIS YEAR BEING SIMILAR AND THE ISSUE IS ALSO THE SAME, THEREFORE RESPECTFULLY FOLLOWING THE DECISION OF ITAT IN ASSE SSEES OWN CASE, WE DISMISS THE REVENUES APPEAL IN THIS YEAR ALSO. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 16 TH DAY OF DECEMBER, 2011. SD/- SD/- (R.P. TOLANI) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 16 TH DAY OF DECEMBER, 2011 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-VII, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.