ACIT, CHENNAI V. Forward Leather Co., CHENNAI

ITA 318/CHNY/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9709 (ITAT-CHENNAI)
• Duration Of Justice: 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-04-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 06-04-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 15-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN
• Assessee Lawyers: MRS S VIDYA
• Keywords: Double taxation relief; Services rendered outside India; Permanent establishment; Non-deduction of tax

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , A B ENCH, CHENNAI . . . , . , % BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.318/MDS/2016 ( / ASSESSMENT YEAR: 2011-12) THE ASSISTANT COMMISSIONER OF INCOME TAX, NON-CORPORATE CIRCLE-4, 611 ANNA SALAI, KANNAMMAI BUILDING, CHENNAI-600 006. VS M/S. FORWARD LEATHER CO., 37/50, RAJA MUTHIAH ROAD, PERIAMET, CHENNAI-600 003. PAN: AAAFF1046M ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. P.RADHAKRISHNAN, JCIT /RESPONDENT BY : MRS. S.VIDYA, C.A. /DATE OF HEARING : 6 TH APRIL, 2016 /DATE OF PRONOUNCEMENT : 7 TH APRIL, , 2016 / O R D E R PER A. MOHAN ALANKAMONY, AM: THIS APPEAL IS FILED BY THE REVENUE AGGRIEVED BY TH E ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS)- 5, CHENNAI DATED 16.12.2015 IN ITA NO.10/CIT(A)-5/1 4-15 PASSED UNDER SECTION143(3) R.W.S. 250(6) OF THE AC T. 2. THE REVENUE HAS RAISED SEVERAL GROUNDS IN ITS AP PEAL, HOWEVER, THE CRUX OF THE ISSUE IS THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN D IRECTING THE LEARNED ASSESSING OFFICER TO DELETE THE ADDITIO N OF 2 ITA NO.318/MDS/2016 RS.49,26,837/- MADE UNDER SECTION 40(A)(I) OF THE A CT ON ACCOUNT OF NON-DEDUCTION OF TAX AT SOURCE ON THE PA YMENTS MADE TO OVERSEAS COMMISSION AGENTS. 3. AT THE OUTSET, THE LEARNED AUTHORIZED REPRESENTA TIVE SUBMITTED BEFORE US THAT IN THE REVENUES APPEAL IN THE CASE OF DCIT VS. MATRIMONY.COM PVT. LTD IN ITA NO.1484/MDS./2015 VIDE ORDER DATED 13.01.2016 ON TH E IDENTICAL ISSUE, THE BENCH HAS HELD FOLLOWING THE D ECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE O F M/S.FAIZAN SHOES PVT LTD., REPORTED IN 367 ITR 155 (MAD.) THAT, ANY PAYMENT MADE OUTSIDE INDIA, FOR SERVICES RENDERED OUTSIDE I NDIA, WILL NOT BE TAXABLE IN INDIA. HENCE, PROVISIONS OF SECT ION 40(A)(I) OF THE ACT CANNOT BE INVOKED. THE LEARNED DEPARTMEN TAL REPRESENTATIVE COULD NOT CONTROVERT TO THE SUBMISSI ONS OF THE LEARNED AUTHORIZED REPRESENTATIVE. 4. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY PE RUSED THE MATERIALS AVAILABLE ON RECORD AND THE DECISION OF THE TRIBUNAL CITED HEREIN ABOVE. WE FIND MERIT IN THE SUBMISSIONS OF THE LEARNED AUTHORIZED REPRESENTATIVE. AS ARGUE D BY THE 3 ITA NO.318/MDS/2016 LEARNED AUTHORIZED REPRESENTATIVE ON THE IDENTICAL ISSUE IN THE CASE OF MATRIMONY.COM PVT. LTD., CITED SUPRA, I T HAS BEEN CATEGORICALLY HELD BY FOLLOWING THE THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF M/S.FAIZAN SHOES PVT LTD. , REPORTED IN 367 ITR 155 (MAD.) THAT, WHEN PAYMENTS ARE MADE OUTSIDE INDIA, FOR SERVICES RENDERED OUTSIDE INDIA, WILL NO T BE TAXABLE IN INDIA. ACCORDINGLY PROVISIONS OF SECTION 40(A)(I A) OF THE ACT CANNOT BE INVOKED, BECAUSE THE PROVISIONS OF TAX DE DUCTED AT SOURCE UNDER SECTION 195 WILL NOT BE APPLICABLE. T HE RELEVANT PORTION OF THE ORDER IS REPRODUCED BELOW FOR REFERE NCE:- 6. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS EVIDENT FROM THE FACTS OF THE CASE THAT THE ASSESSEE HAD MADE PAYMENTS FOR WEBHOS TING CHARGES AND MARKETING EXPENSES OUTSIDE INDIA AND FO R SERVICES RENDERED OUTSIDE INDIA. THESE EXPENSES WERE EARLIER MADE BY THE ASSESSEE SUBSIDIARY AND LATER IT WAS REIMBURSED BY THE ASSESSEE. THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF M/S.FAIZAN SHOES PVT LTD., REPORTED IN 367 ITR 155 (MAD.), HAS HELD THAT ANY PAYMENT MADE OUTSIDE INDIA FOR SERVIC ES RENDERED OUTSIDE INDIA WILL NOT BE TAXABLE IN INDIA. FROM TH E FACTS OF THE CASE, IT IS ALSO EVIDENT THAT THE ASSESSEE HAS NOT MADE ANY PAYMENT TOWARDS ROYALTY OR TECHNICAL SERVICES RENDE RED OUTSIDE INDIA. THEREFORE THE CASE OF THE ASSESSEE FALLS OUT SIDE THE SCOPE OF DTAA. THE PARTIES, WHO HAVE RENDERED SERVICES T O THE ASSESSEE OUTSIDE INDIA, DO NOT HAVE ANY PERMANENT ESTABLISHMENT (PE) IN INDIA. IN THESE CIRCUMSTANCE S, TAKING INTO CONSIDERATION OF THE HONBLE JURISDICTIONAL HIGH CO URT IN THE CASE 4 ITA NO.318/MDS/2016 ITO VS. FAIZAN SHOES PVT. LTD., (SUPRA), WE HEREBY CONFIRM THE ORDER OF THE LD. CIT (A). ACCORDINGLY, ADDITION MA DE BY LD. ASSESSING OFFICER STANDS DELETED. FOLLOWING THE DECISION OF THE TRIBUNAL IN THE CASE OF DCIT VS. MATRIMONY.COM PVT.LTD., CITED SUPRA AND THE DEC ISION BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE O F M/S.FAIZAN SHOES PVT LTD., REPORTED IN 367 ITR 155 (MAD.) , WE HEREBY DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE. 5. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON THE 7 TH APRIL, 2016 SD/- SD/- ( . . . ) ( . ) (N.R.S.GANESAN) ( A.M OHAN ALANKAMONY ) # % / JUDICIAL MEMBER % / ACCOUNTANT MEMBER # /CHENNAI, ( /DATED 7 TH APRIL, 2016 SOMU *+ ,+ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. - () /CIT(A) 4. - /CIT 5. + 1 /DR 6. /GF .