The ITO, Ward-11(3), Ahmedabad V. Shri Rameshbhai Ranchhodbhai Patel, Ahmedabad

ITA 298/AHD/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67668 (ITAT-AHMEDABAD)
• Duration Of Justice: 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 20-08-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 01-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P BATHEJA
• Keywords: Double taxation relief; Additional evidence; Permanent establishment; Advance ruling

Judgement Text

, , , , A, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, A BENCH . .. . . .. . , !' !' !' !', , , , #$ %&'( #$ %&'( #$ %&'( #$ %&'(, , , , )* + ) ' )* + ) ' )* + ) ' )* + ) ' BEFORE S/SHRI G.C. GUPTA, VICE-PRESIDENT AND ANIL CHATURVEDI, ACCOUNTANT MEMBER) ITA NO.298/AHD/2013 [ASSTT.YEAR : 2009-2010] ITO, WARD-11(3) AHMEDABAD. /VS. RAMESHBHAI RANCHHODBHAI PATEL M/S.GAYATRI TEXTILE 17, HARSHAD ESTATE, MARGHA FAR ROAD BAPUNAGAR ROAD, AHMEDABAD 380 024. PAN : ABJPP 9128 J ( (( (-. -. -. -. / APPELLANT) ( (( (/0-. /0-. /0-. /0-. / RESPONDENT) + 1 2 )/ REVENUE BY : SHRI O.P. BATHEJA, SR.DR 4& 1 2 )/ ASSESSEE BY : SHRI SANJAY R. SHAH 5 1 &(*/ DATE OF HEARING : 20 TH AUGUST, 2013 678 1 &(*/ DATE OF PRONOUNCEMENT : 5.9.2013 )9 / O R D E R PER G.C. GUPTA, VICE-PRESIDENT : THIS APPEAL BY THE REVENUE FOR THE ASSESSMENT YEAR 2009-2010, IS DIREC TED AGAINST THE ORDER OF THE CIT(A), VALSAD, DATED 20.11.2012. 2. THE GROUND NO.1 OF THE APPEAL OF THE REVENUE IS AS UNDER: ITA NO.298/AHD/2013 -2- 1. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONSIDERING THE ADDITIONAL EVIDENCES PRODUCED BY AS SESSEE AND DELETING THE ADDITION MADE ON ACCOUNT OF EXPORT COMMISSION EXPENSES OF RS.18,61,720/- ATTRIBUTABLE TO NON- DEDUCTION OF TDS FROM REMITTANCES MADE TOT HE FOREI GN COMMISSION AGENTS WITHOUT CONSIDERING THE FINDINGS OF THE AO. 3. THE LEARNED DR HAS SUBMITTED THAT THE ASSESSEE H AS NOT DEDUCTED TAX ON EXPORT COMMISSION EXPENSES MADE TO FOREIGN COMMISSION AGENTS, AND THEREFORE, THE ADDITION WAS RIGHTLY MADE BY THE AO. HE SUBMITTED THAT THE CIT(A) HAS ALLOWE D RELIEF TO THE ASSESSEE ON THE BASIS OF CIRCULAR ISSUED BY THE CBDT, AND HAS IGNORED THAT THE SAID CIRCULAR OF THE CBDT HAS BEEN WITHDRAWN BY THE CBDT ITSELF W.E.F. 22.10.2009. HE RELIED ON THE DECISION OF THE AUTHORITY FOR ADVANCE RULINGS (INCOME TAX) D ATED 22.2.2012 IN SKF BOILERS AND DRIVERS P. LTD., AAR N O.983-984 OF 2010, AND ALSO, IN THE CASE OF RAJIV MALHOTRA DA TED 3.7.2006 IN AAR NO.671 OF 2005 IN SUPPORT OF HIS ARGUMENTS. TH E LEARNED COUNSEL FOR THE ASSESSEE HAS OPPOSED THE SUBMISSION S OF THE LEARNED DR. HE SUBMITTED THAT THE CIRCULAR OF THE CBDT WITHDRAWN FROM 22.10.2009 CANNOT APPLY TO THE CASE OF THE ASSESSEE RELEVANT TO THE FINANCIAL YEAR 2008-2009, AS THE SAID WITHDRAWAL COULD NOT BE CONSTRUED AS RETROSPECTIVE IN NATURE. HE SUBMITTED THAT THE DECISION OF AAR (INCOME TAX) ARE BINDING ONLY ON THE CONCERNED PARTIES, AND NOT TO THE OTHER ASSESSEES, AND THEREFORE, DECISION IN RAJIV MALHOTRA (SUPRA) DOES NOT APPLY TO THE CASE OF THE ASSESSEE. WITH REGARD TO OTHER DEC ISION, IN AAR (INCOME TAX) IN SKF BOILERS AND DRIVERS P. LTD, HE SUBMITTED ITA NO.298/AHD/2013 -3- THAT THE SAME RELATES TO THE ACCOUNTING PERIOD AFTE R THE WITHDRAWAL OF THE CIRCULAR OF THE CBDT ON 22.10.2009. HE RELI ED ON THE DECISIONS IN THE CASE OF COMMISSIONER OF INCOME-TAX VS EON TECHNOLOGY P. LTD., 343 ITR 366 (DELHI) AND HARSHEN DU UPENDRE KAKA VS INCOME-TAX OFFICER, 249 ITR 612 (B OM) IN SUPPORT OF HIS ARGUMENTS. 4. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE AO AND THE CIT(A). WE FIND THAT THE CBDT HAS WITHDRAWN ITS EARLIER CIRCULAR EXEMPTING THE ASSESS EE IN CERTAIN CONDITIONS FROM DEDUCTION OF TAX AT SOURCE ON 22.10 .2009. THE RELEVANT ACCOUNTING PERIOD OF THE ASSESSEE BEFORE U S IS FINANCIAL YEAR 2008-2009, AND THEREFORE, THE SAID WITHDRAWAL OF THE CIRCULAR BEING NOT RETROSPECTIVE IN NATURE, SHALL NOT APPLY TO THE FACTS OF THE CASE OF THE ASSESSEE. THE DECISIONS RELIED UPO N BY THE LEARNED COUNSEL FOR THE ASSESSEE SUPPORTS THE CASE OF THE A SSESSEE. WE FIND THAT THE CIT(A) HAS GIVEN A FINDING THAT THE P ARTY TO WHOM THE EXPORT COMMISSION WAS PAID BY THE ASSESSEE IS R EGISTERED AND LOCATED IN VIETNAM AND DOES NOT HAVE ANY PERMANENT ESTABLISHMENT (PE) IN INDIA AND IN TERMS OF DTAA BE TWEEN INDIA AND VIETNAM, THE SAID ENTITY HAS RIGHT TO OFFER ITS GLOBAL INCOME IN VIETNAM. THE CIT(A) HAS GIVEN A FINDING THAT IN TH E ABSENCE OF A PE IN INDIA, THE EXPORT COMMISSION PAYMENT TO VIETN AM PARTLY WOULD NOT FALL WITHIN THE PURVIEW OF SECTIONS 5 AND 9 OF THE ACT, AND CONSEQUENTLY, WOULD NOT ATTRACT APPLICABILITY O F TDS PROVISIONS INVOKED BY THE AO, AND THEREFORE, THE AD DITION MADE BY THE AO COULD NOT BE SUSTAINED. THERE BEING NO C ONTRARY ITA NO.298/AHD/2013 -4- MATERIAL BROUGHT ON RECORD ON BEHALF OF THE REVENUE , WE HOLD THAT THERE IS NO MISTAKE IN THE ORDER OF THE CIT(A) , WHICH IS ACCORDINGLY, CONFIRMED AND THE GROUND NO.1 OF THE R EVENUE IS DISMISSED. 5. THE GROUND NO.2 OF THE REVENUES APPEAL IS AS UN DER: 2. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION MADE ON ACCOUNT OF CLOSING ST OCK OF RS.1,23,379/- EVEN THOUGH ASSESSEE FAILED TO FURNIS H STOCK REGISTER VIS-A-VIS QUANTITY-WISE DETAILS OF THE CLO SING STOCK, JUSTIFICATION OF VALUE ADOPTED. 6. THE LEARNED DR SUBMITTED THAT THE ASSESSEE COULD NOT PRODUCE STOCK REGISTER OR DETAILS OF CLOSING STOCK, AND THEREFORE, THERE WAS NO JUSTIFICATION FOR VALUATION OF CLOSING STOCK MADE BY THE ASSESSEE, AND THE ADDITION MADE WAS JUSTIFIED. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT NECESSARY D ETAILS OF CLOSING STOCK HAVE BEEN FILED BEFORE THE AO, AND CO PY THEREOF HAS BEEN PLACED AT PAGE NO.13 OF THE COMPILATION BEFORE THE TRIBUNAL. HE SUBMITTED THAT THE ASSESSEE IS DEALING IN LARGE NUMBER OF MACHINERY ITEMS, AND THEREFORE, IT IS NOT POSSIBLE TO MAINTAIN STOCK REGISTER IN THE LINE OF TRADE. 7. WE HAVE CONSIDERED RIVAL SUBMISSIONS, AND HAVE P ERUSED THE ORDERS OF THE AO AND THE CIT(A) AND ALSO DETAIL S OF THE CLOSING STOCK FILED IN THE COMPILATION BEFORE THE T RIBUNAL. WE FIND THAT THE ASSESSEE HAS FILED THE COMPLETE DETAI LS OF MACHINE PARTS BEFORE US, AND HAS SUBMITTED THAT THE SAME WE RE FILED BEFORE ITA NO.298/AHD/2013 -5- THE AO AND CIT(A) ALSO. THE ASSESSEE IS DEALING IN NUMBER OF MACHINE PARTS AND SPARES ITEMS, AND THEREFORE, THE MAINTENANCE OF STOCK REGISTER MAY NOT BE FEASIBLE IN THE LINE OF T RADE OF THE ASSESSEE. NO OTHER DEFECT IN THE VALUATION OF THE CLOSING STOCK COULD BE POINTED OUT ON BEHALF OF THE REVENUE. IN THESE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT SINCE THE ASSESSEE HAS FILED COMPLETE DETAILS OF THE CLOSING STOCK OF MACHINERY PARTS AND OTHER SPARE ITEMS, AND NO UNDER STATEMENT IN THE VALUATION THEREOF COULD BE POINTED OUT ON BEHAL F OF THE REVENUE, THE CIT(A) WAS JUSTIFIED IN DELETING THE A DDITION MADE IN THE VALUATION OF CLOSING STOCK, WHICH IS ACCORDI NGLY CONFIRMED, AND THE GROUND NO.2 OF THE REVENUE IS DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( %&'( %&'( %&'( %&'( / ANIL CHATURVEDI) )* + )* + )* + )* + /ACCOUNTANT MEMBER ( . .. . . .. . /G.C. GUPTA) !' !' !' !' /VICE-PRESIDENT C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD