DCIT CIR 1, KALYAN V. INDO AMINES LTD, MUMBAI

ITA 3039/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8767 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 20-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PREMANAND J
• Assessee Lawyers: M N NANDGAOKAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'C' BENCH, MUMBAI BEFORE SHRI JASON P. BOAZ, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI , JUDICIAL MEMBER ITA NOS. 3038 & 3039/MUM/2015 (ASSESSMENT YEARS: 2010-11 & 2011-12) DCIT, CIRCLE 1 VS. M/S. INDO AMINES LTD. 1 ST FLOOR, MOHAN PLAZA WAYALE NAGAR KHADAKPADA, KALYAN 421301 W - 38 & 39, PHASE - II, MIDC DOMBIVALI (E) - 421203 PAN AAACI1374A APPELLANT RESPONDENT APPELLANT BY: SHRI PREMANAND J. RESPONDENT BY: SHRI M.N. NANDGAOKAR DATE OF HEARING: 17.01.2017 DATE OF PRONOUNCEMENT: 18.01.2017 O R D E R PER JASON P. BOAZ, A.M. THESE APPEALS BY THE REVENUE ARE DIRECTED AGAINST T HE ORDERS OF THE CIT(A)-2, THANE BOTH DATED 10.02.2015 FOR ASSESSMEN T YEARS 2010-11 & 2011-12. THESE APPEALS RAISING COMMON ISSUES WERE H EARD TOGETHER AND ARE BEING DISPOSED OFF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE IDENTICAL/SIMILAR GROUNDS RAISED BY REVENUE FOR BOTH THESE ASSESSMENT YEARS ARE AS UNDER: - ASSESSMENT YEARS 2010-11 & 2011-12 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE CIT(A) HAS ERRED IN HOLDING THAT INCOME ARISING TO THE NON- RESIDENTS ON ACCOUNT OF COMMISSION PAID TO THEM BY THE ASSESSEE FOR SOLICITING EXPORT ORDER FOR INDIAN IS NOT CHARG EABLE TO TAX IN INDIA OVERLOOKING THE FACT THAT SUCH COMPANY INCOME IS DEEMED TO ACCURATE IN INDIA OR ARISE IN INDIA AND IS TAXAB LE IN VIEW OF THE SPECIFIC PROVISIONS OF SEC. 5(2)(B) R.W.S. 9(1)(I) AS THE RIGHT TO RECEIVE THE COMMISSION WOULD ARISE IN INDIA WHEN TH E ORDER IS EXECUTED BY THE INDIAN COMPANY FROM INDIA. ITA NOS. 3038 & 3039/MUM/2015 M/S. INDO AMINES LTD. 2 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE CIT(A) HAS ERRED IN HOLDING THAT PROVISIONS OF SEC. 195 ARE NOT APPLICABLE AND CONSEQUENTLY NO DISALLOWANCE U/S. 40 (A)(I) COULD BE MADE AND WHILE DOING SO THE CIT(A) HAS FAILED TO CONSIDER THE RATIO OF THE DECISION OF THE SUPREME COURT IN THE C ASE OF TRANSMISSION CORPN. OF A.P. VS. CIT 239 ITR 587. 3.1 AT THE OUTSET OF THE HEARING THE LEARNED A.R. O F THE ASSESSEE SUBMITTED THAT IN THE ASSESSEES OWN CASE FOR A.Y. 2009-10, W HEREIN SIMILAR/IDENTICAL GROUNDS WERE PREFERRED, REVENUES APPEAL WAS DISMIS SED BY A COORDINATE BENCH OF THE TRIBUNAL VIDE ITS ORDER IN IT NO. 3664 /MUM/2013 DATED 18.12.2005. IT WAS PRAYED THAT SINCE THE ISSUES IN APPEALS (SUPRA) ARE IDENTICAL AND THE SAME ARE COVERED IN FAVOUR OF THE ASSESSEE, REVENUES APPEALS FOR BOTH ASSESSMENT YEARS ARE LIABLE TO BE DISMISSED. THE LEARNED D.R. FAIRLY CONCEDED THAT THE ISSUES IN APPEAL ARE COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE AFORESAID D ECISION OF THE COORDINATE BENCH IN THE ASSESSEES OWN CASE FOR A.Y . 2009-10. 3.2.1 WE HAVE HEARD BOTH THE PARTIES IN THE MATTER AND PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD, INCLUD ING THE JUDICIAL PRONOUNCEMENTS CITED. WE FIND THAT THE IDENTICAL IS SUES TO THOSE RAISED IN BOTH REVENUES APPEAL FOR ASSESSMENT YEARS 2010-11 AND 2011-12 (SUPRA) WERE RAISED BY REVENUE AND CONSIDERED AND ADJUDICAT ED UPON BY A COORDINATE BENCH OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR A.Y. 2009- 10. IN ITS ORDER IN ITA NO. 3664/MUM/2013 DATED 18. 12.2015, THE COORDINATE BENCH HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AND AGAINST REVENUE; HOLDING AS UNDER AT PARAS 3.1 TO 3 .4 THEREOF: - 3.1. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH TH E ORDERS OF LOWER AUTHORITIES, MATERIAL PLACED BEFORE US AS WEL L AS JUDGMENTS PLACED BEFORE US ON THIS ISSUE. THE BRIEF FACTS ARE THAT THE ASSESSEE COMPANY WAS ENGAGED IN THE BUSINESS OF MANUFACTURIN G AND SALE OF CHEMICALS DURING THE YEAR UNDER CONSIDERATION. DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTED BY ASSESSEE TH AT THE ASSESSEE HAD PAID COMMISSION TO NON-RESIDENT PERSONS FOR EXP ORT SALES BUT DID NOT DEDUCT TDS UPON THESE PAYMENTS AS ENVISAGED U/S 195 OF THE ACT. IN REPLY, THE ASSESSEE STATED THAT THE ASSESSE E WAS NOT REQUIRED TO DEDUCT TDS ON THE AMOUNT OF COMMISSION PAID TO N ON- RESIDENT AS NEITHER ANY SERVICES WERE RENDERED IN INDIA NOR THE NON-RESIDENT AGENT PROVIDED ANY MANAGERIAL OR TECHNICAL SERVICES . THE ASSESSEE SUBMITTED LIST OF EXPORTS SALES ON WHICH COMMISSION WAS PAID AND ITA NOS. 3038 & 3039/MUM/2015 M/S. INDO AMINES LTD. 3 COPIES OF AGENT AGREEMENTS. FROM THESE DETAILS, IT IS NOTED THAT COMMISSION HAS BEEN PAID TO VARIOUS PARTIES LOCATED IN THE DIFFERENT COUNTRIES ALL OVER THE WORLD. FROM THE AGENCY AGREE MENTS, IT IS NOTED BY US THAT THE ROLE OF AGENT WAS TO LOCATE DIFFEREN T CUSTOMERS FOR THE ASSESSEE WHO WERE INTERESTED IN PURCHASING PRODUCTS OF THE ASSESSEE COMPANY AND PROMOTE THE PRODUCTS OF THE ASSESSEE CO MPANY INTO EUROPEAN MARKETS. IT IS FURTHER NOTED THAT FOR THIS PURPOSE COMMISSION WAS PAYABLE BY THE ASSESSEE TO THESE AGENTS ON A PR E-DECIDED FIXED PERCENTAGE ON THE AMOUNT OF EXPORTS SALES DONE BY T HE ASSESSEE COMPANY WITH THE HELP OF CONCERNED AGENTS. IT IS FU RTHER NOTED THAT NO AS PER TERMS OF THE AGREEMENT, NO SERVICE WAS TO BE PROVIDED IN INDIA. AS PER FACTS BROUGHT BEFORE US, NO SERVICES WERE PR OVIDED IN INDIA BY THESE NON-RESIDENT AGENTS. IT IS FURTHER NOTED FROM THE PERUSAL OF THESE AGREEMENTS THAT NO MATERIAL OR TECHNICAL SERVICES W ERE PROVIDED BY THE AGENT TO THE ASSESSEE COMPANY. 3.2. DURING THE COURSE OF HEARING, NOTHING HAS BEEN BRO UGHT BEFORE US BY THE LD. DR TO CONTROVERT THESE FACTS. WE FIND TH AT POSITION OF LAW IN THE AFORESAID FACTS IS WELL SETTLED. IT HAS BEEN HE LD IN VARIOUS JUDGMENTS THAT THE TDS IS NOT REQUIRED TO BE DEDUCT ED AS PER LAW ON THE PAYMENTS MADE TO FOREIGN AGENTS FOR THE PROCURE MENT OF SALES ORDER, IN THE GIVEN FACTS. IT IS NOTED THAT THE LD. COUNSEL HAS RIGHTLY PLACED RELIANCE UPON THE JUDGMENT OF HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. FAIZAN SHOES PVT. LTD. (SUPRA) WHEREIN HONBLE HIGH COURT CONSIDERED THE POSITION OF LAW IN DETAIL ED MANNER AND ALSO VARIOUS AMENDMENTS MADE IN THE LAW TIME TO TIME AND ALSO CONSIDERED THE JUDGMENTS OF HONBLE SUPREME COURT I N THE CASE OF CIT VS. TOSHOKU LTD. 125 ITR 526 (SC) AND HELD THAT: WHERE THE ASSESSEE SIMPLY PAID A COMMISSION SIMPLI CITER TO NON-RESIDENT AGENT OUTSIDE INDIA FOR PROCURING EXPO RT ORDERS FROM OVERSEAS BUYERS AND THE NON-RESIDENT AGENT DID NOT PROVIDE ANY TECHNICAL SERVICES FOR PURPOSE OF RUNNI NG BUSINESS OF ASSESSEE IN INDIA, ASSESSEE WAS NOT LIABLE TO DE DUCT TAX ON SOURCE ON SUCH COMMISSION PAID. 3.3. WE FURTHER FIND THAT SIMILAR VIEW HAS BEEN TAKEN I N THE JUDGMENTS RELIED UPON BY LD. CIT(A) IN HIS ORDER. I T IS FURTHER NOTED THAT HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS EON TECHNOLOGY PVT LTD 343 ITR 366 HAS TAKEN A SIMILAR VIEW AFTER CONSIDERING VARIOUS ASPECT CONNECTED WITH THIS ISSUE. IT IS FUR THER NOTED THAT REVENUE HAS RELIED UPON IN ITS GROUNDS, JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF TRANSMISSION CORPORATION OF A. P. LTD. VS CIT 239 ITR 58. IT IS NOTED THAT THIS JUDGMENT HAS BEEN CON SIDERED AND DISTINGUISHED IN DETAIL BY HONBLE MADRAS HIGH COUR T IN THE CASE OF FAIZAN SHOES PVT. LTD. (SUPRA). NO OTHER CONTRARY J UDGMENT HAS BEEN BROUGHT TO OUR NOTICE. 3.4. THEREFORE, KEEPING IN VIEW THE FACTS OF THIS CASE AND WELL SETTLED POSITION OF LAW AS DISCUSSED ABOVE, WE FIND THAT LD . CIT(A) HAS RIGHTY HELD THAT ASSESSEE WAS NOT REQUIRED TO DEDUCTED TAX AT SOURCE WHILE ITA NOS. 3038 & 3039/MUM/2015 M/S. INDO AMINES LTD. 4 MAKING PAYMENT OF COMMISSION TO NON-RESIDENT AGENTS . THUS, IN VIEW OF ALL THE FACTS AND CASE LAWS, WE FIND NO FORCE IN THE GROUNDS OF THE REVENUE AND THESE ARE DISMISSED. THE ORDER PASSED B Y LD. CIT(A) IS UPHELD. 3.2.2 FOLLOWING THE AFORESAID DECISION OF THE COORD INATE BENCH OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE FOR A.Y. 2009-1 0 IN ITA NO. 3664/ MUM/2013 DATED 18.12.2015, WE FIND NO MERIT IN THE GROUNDS RAISED BY REVENUE AND DISMISS THE SAME. CONSEQUENTLY, THE ORD ERS PASSED BY THE LEARNED CIT(A) FOR ASSESSMENT YEARS 2010-1 & 2011-1 2 DATED 10.02.2015 ARE UPHELD. 4. IN THE RESULT, REVENUES APPEALS FOR ASSESSMENT YEA RS 2010-11 & 2011-12 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH JANUARY, 2017. SD/ - SD/ - (RAL LAL NEGI) (JASON P. BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 18 TH JANUARY, 2017 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -2, THANE 4. THE CIT - 2, THANE 5. THE DR, C BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.