DCIT, CHENNAI V. M/s. Symbiotic Info Tech Pvt. Ltd., CHENNAI

ITA 3130/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8178 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 29-12-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 10-11-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R. DURAI PANDIAN
• Keywords: Permanent establishment; Non-deduction of tax
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 40(a)(ia); 251; 13

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI . . . , .. ' #$, & '( BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./ ITA NO.3130/MDS/2016 * +* / ASSESSMENT YEAR : 2012-13 THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 6(2), CHENNAI - 600 034. PAN : AAICS 6901 P V. M/S SYMBIOTIC INFO TECH PVT. LTD., NO.1, FLAT NO.2, SUNDARAM ILLAM, CHELLAMMAL STREET, SHENOY NAGAR, CHENNAI - 600 030. (-./ APPELLANT) (/0-./ RESPONDENT) -. 1 2 / APPELLANT BY : SHRI R. DURAI PANDIAN, JCIT /0-. 1 2 / RESPONDENT BY : SHRI M. KARUNAKARAN, ADVOCATE ' 1 3& / DATE OF HEARING : 29.12.2016 45+ 1 3& / DATE OF PRONOUNCEMENT : 13.01.2017 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) 15, CHEN NAI, DATED 10.08.2016 AND PERTAINS TO ASSESSMENT YEAR 2012-13. 2 I.T.A. NO.3130/MDS/16 2. THE FIRST ISSUE ARISES FOR CONSIDERATION IS WITH REGARD TO DISALLOWANCE OF ` 55,12,070/- UNDER SECTION 40(A)(IA) OF THE INCOME- TAX ACT, 1961 (IN SHORT 'THE ACT'). 3. SHRI R. DURAI PANDIAN, THE LD. DEPARTMENTAL REPR ESENTATIVE, SUBMITTED THAT THE ASSESSEE HAS DEDUCTED TAX AT ` 1,16,29,880/- INSTEAD OF ` 1,21,81,087/-. ACCORDING TO THE LD. D.R., THE ASSE SSEE WAS EXPECTED TO DEDUCT TAX AT 10% BUT THE ASSESSEE HAS DEDUCTED LESSER TAX THAN THE APPLICABLE RATE. THEREFORE, TH E ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE UNDER SECTION 40(A)(IA) OF THE ACT. HOWEVER, THE CIT(APPEALS) BY PLACING RELIANCE ON THE ORDER OF THIS TRIBUNAL IN ACIT V. LEATHER INDIA IN I.T.A. NO .115/MDS/2013 DATED 11.06.2013 AND JUDGMENT OF CALCUTTA HIGH COUR T IN CIT V. S.K. TEKRIWAL (15 TAXMAN.COM 289), ALLOWED THE CLAI M OF THE ASSESSEE. ACCORDING TO THE LD. D.R., EVEN SHORT DE DUCTION MAY BE SUBJECT MATTER OF DISALLOWANCE UNDER SECTION 40(A)( IA) OF THE ACT. 4. ON THE CONTRARY, SHRI M. KARUNAKARAN, THE LD.COU NSEL FOR THE ASSESSEE, SUBMITTED THAT WHAT WAS CONTEMPLATED IN S ECTION 40(A)(IA) OF THE ACT IS NON-DEDUCTION OF TAX AND NO T SHORT DEDUCTION OF TAX. ACCORDING TO THE LD. COUNSEL, IT IS NOT TH E CASE OF THE REVENUE THAT THE ASSESSEE HAS NOT DEDUCTED TAX AT A LL. INSTEAD OF 3 I.T.A. NO.3130/MDS/16 10%, THE ASSESSEE HAS DEDUCTED AT LESSER RATE. IT DOES NOT AMOUNT TO NON-DEDUCTION OF TAX. THEREFORE, ACCORDING TO T HE LD. COUNSEL, THE CIT(APPEALS) HAS RIGHTLY PLACED HIS RELIANCE ON THE DECISION OF THE ORDER OF THIS TRIBUNAL AND ALLOWED THE CLAIM OF THE ASSESSEE. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. WE HAVE CAREFULLY GONE THROUGH THE PROVISIONS OF SECTION 20 1(1A) OF THE ACT. SECTION 201(1A) OF THE ACT ENABLES THE ASSESSING OF FICER TO LEVY INTEREST ON THE TAX WHICH WAS NOT DEDUCTED BY THE A SSESSEE. WE HAVE ALSO CAREFULLY GONE THROUGH THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT, WHICH DOES NOT SAY THAT EVEN FOR SHORT DEDUCTION OR PART DEDUCTION, DISALLOWANCE HAS TO BE MADE PROPORTIONAT ELY. WHEN THE PARLIAMENT IN THEIR WISDOM PROVIDES FOR LEVY OF INT EREST ON THE PART OF THE TAX WHICH WAS NOT DEDUCTED, WHEREAS OMITTED TO INCLUDE ENABLING PROVISION FOR LEVY OF INTEREST OR DISALLOW ANCE IN SECTION 40(A)(IA) OF THE ACT. IN OTHER WORDS, THE PROVISIO NS OF SECTION 40(A)(IA) OF THE ACT DOES NOT ENABLE THE ASSESSING OFFICER TO DISALLOW ANY PROPORTIONATE AMOUNT FOR SHORT DEDUCTI ON OR LESSER DEDUCTION OF TAX AT SOURCE. IN FACT, THIS BENCH OF THE TRIBUNAL IN M/S ROCA BATHROOM PRODUCTS PVT. LTD. IN I.T.A. NO.586/M DS/2014 4 I.T.A. NO.3130/MDS/16 EXAMINED THIS ISSUE AND BY AN ORDER DATED 18.12.201 5, FOUND THAT THERE CANNOT BE ANY DISALLOWANCE FOR SHORT DEDUCTIO N OF TAX. IN VIEW OF THE ABOVE ORDER OF THIS TRIBUNAL, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY AND ACCORDINGLY THE SAME IS CONFIRMED. 6. THE REVENUE HAS TAKEN ONE MORE GROUND WITH REGAR D TO DISALLOWANCE OF CONTENT DEVELOPMENT CHARGES OF ` 88,31,257/-. REFERRING TO THE ORDER OF THE CIT(APPEALS), SHRI R. DURAI PANDIAN, THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE CIT(APPEALS) REMANDED THE MATTER BACK TO THE FILE O F THE ASSESSING OFFICER. THE ASSESSEE CLAIMED BEFORE THE ASSESSING OFFICER THAT SERVICES WERE RENDERED OUTSIDE INDIA AND THE RECIPI ENT OF THE AMOUNT HAS NO PERMANENT ESTABLISHMENT IN INDIA. TH EREFORE, THIS ISSUE WAS REMITTED BACK TO THE FILE OF THE ASSESSIN G OFFICER BY THE CIT(APPEALS), WHICH IS BEYOND HIS JURISDICTION. AC CORDING TO THE LD. D.R., UNDER SECTION 251(1) OF THE ACT, THE CIT(APPE ALS) HAS NO AUTHORITY TO REMIT BACK THE MATTER TO THE FILE OF T HE ASSESSING OFFICER. 7. ON THE CONTRARY, SHRI M. KARUNAKARAN, THE LD.COU NSEL FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSEE SPECIFICALLY CLAIMED BEFORE THE ASSESSING OFFICER AS WELL AS THE CIT(APPEALS) T HAT THE SERVICES 5 I.T.A. NO.3130/MDS/16 WERE RENDERED OUTSIDE INDIA AND THE PERSON WHO RECE IVED THE PAYMENT DOES NOT HAVE ANY PERMANENT ESTABLISHMENT I N INDIA. THEREFORE, THE AMOUNT RECEIVED FROM THE ASSESSEE IS NOT TAXABLE IN THE HANDS OF THE RECIPIENT IN INDIA, HENCE, TAX IS NOT DEDUCTIBLE. THE CIT(APPEALS), ACCORDING TO THE LD. COUNSEL, DIRECTE D THE ASSESSING OFFICER TO VERIFY THE MATERIAL THAT MAY BE FILED BY THE ASSESSEE, THEREFORE, THERE IS NO ERROR IN THE ORDER OF THE CI T(APPEALS). 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. WE HAVE ALSO CAREFULLY GONE THROUGH THE PROVISIONS OF SECTION 25 1 OF THE ACT. IN RESPECT OF THE PAYMENT SAID TO BE MADE OUTSIDE INDI A, THE CIT(APPEALS) DIRECTED THE ASSESSING OFFICER TO VERI FY THE DOCUMENTS THAT MAY BE FILED BY THE ASSESSEE AND THEREAFTER DE CIDE IN ACCORDANCE WITH LAW. SECTION 251 OF THE ACT DOES N OT ENABLE THE CIT(APPEALS) TO REMAND THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER. THE CIT(APPEALS) HAS TO HIMSELF EXAMINE T HE MATTER AND DISPOSE OF THE ISSUE RAISED BY THE ASSESSEE. IN TH E CASE BEFORE US, NO MATERIAL IS AVAILABLE ON RECORD TO SUGGEST THAT THE SERVICES WERE RENDERED OUTSIDE INDIA AND THE RECIPIENT HAS NO PER MANENT ESTABLISHMENT IN INDIA. THEREFORE, WE ARE UNABLE T O UPHOLD THE 6 I.T.A. NO.3130/MDS/16 ORDER OF THE ORDER OF THE CIT(APPEALS). THE ISSUE RAISED BY THE ASSESSEE NEEDS RECONSIDERATION BY THE ASSESSING OFF ICER. ACCORDINGLY, THIS TRIBUNAL IS OF THE CONSIDERED OPI NION THAT THE ASSESSING OFFICER HAS TO RECONSIDER THE ISSUE. ACC ORDINGLY, THE ORDER OF THE CIT(APPEALS) IS MODIFIED AND THE ENTIR E ISSUE RAISED BY THE ASSESSEE IS REMITTED BACK TO THE FILE OF THE AS SESSING OFFICER. THE ASSESSING OFFICER SHALL EXAMINE THE DOCUMENTS T HAT MAY BE FILED BY THE ASSESSEE AND THEREAFTER DECIDE THE ISS UE IN ACCORDANCE WITH LAW, AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 13 TH JANUARY, 2017 AT CHENNAI. SD/- SD/- ( . . ' #$ ) ( . . . ) (D.S. SUNDER SINGH) (N.R.S. GANESAN) & / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 7 /DATED, THE 13 TH JANUARY, 2017. KRI. 1 /3#8 98+3 /COPY TO: 1. -. /APPELLANT 2. /0-. /RESPONDENT 3. ' :3 () /CIT(A)-15, CHENNAI 4. PRINCIPAL CIT-6, CHENNAI 5. 8; /3 /DR 6. * < /GF.