C.Kalyanam & Co., CHENNAI V. ACIT, CHENNAI

ITA 3484/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4381 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-06-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 01-06-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 28-12-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S SRIDHAR
• Assessee Lawyers: ASHSH TRIPATI
• Keywords: Condonation of delay

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI ... , , # BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ I.T.A. NO. 3484/MDS/2016 / ASSESSMENT YEAR : 2011-12 M/S. C. KALYANAM & CO., 16, MUTHUGRAMANY STREET, PERIAMER, CHENNAI 600 003. VS. ASSISTANT COMMISSIONER OF INCOME TAX, NON-CORPORATE CIRCLE -5, CHENNAI. [PAN: AAAFC 1781G] ( / APPELLANT) ( / RESPONDENT) % & / APPELLANT BY : SHRI ASHSH TRIPATI, JCIT )*% & / RESPONDENT BY : SHRI S. SRIDHAR, ADVOCATE & /DATE OF HEARING : 01.06.2017 & /DATE OF PRONOUNCEMENT : 09.06.2017 /O R D E R PER S. JAYARAMAN, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-5, CHENNAI IN ITA NO. 185/CIT(A)- 5/13-14 DATED 15.09.2016. :-2-: I.T.A. N0. 3484/MDS/2016 2. M/S. C. KALYANAM & CO., A FIRM, ENGAGED IN THE B USINESS OF TANNING AND EXPORTING OF FINISHED LEATHER, SHOE UPPERS AND LEAT HER GOODS. IN THE ASSESSMENT MADE FOR ASSESSMENT YEAR 2011-12, THE AS SESSING OFFICER FOUND THAT THE ASSESSEE PAID RS. 4,75,000/- TOWARDS EFFLU ENT TREATMENT CHARGES TO PALLAVARAM TANNERS INDUSTRIAL EFFLUENT TREATMENT CO . LTD., WITHOUT DEDUCTING TDS AND HENCE HE DISALLOWED THE SAME U/S. 40(A)(IA) . FURTHER, THE ASSESSEE MADE PAYMENT OF RS. 15,79,198/- TOWARDS FOREIGN AGE NCY COMMISSION. THE AO HELD THAT THE SERVICES RENDERED BY THE FOREIGN A GENT HAS THE ELEMENT OF TECHNICAL OR PROFESSIONAL SKILL & KNOWLEDGE AND HEN CE, CONSIDERED THE PAYMENT AS FEE FOR TECHNICAL SERVICES AN INCOME DEE MED TO ACCRUE OR ARISE IN INDIA FOR THE NON-RESIDENT. SINCE, THE ASSESSEE HA S NOT DEDUCTED TDS NOR OBTAINED NIL DEDUCTION CERTIFICATE, THE AO HAS DISA LLOWED RS. 15,79,198/-. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A)-5, CHENNAI. THE CIT(A), ON THE ISSUE OF DISALLOWANCE OF EFFLUENT TR EATMENT CHARGES, FOLLOWING THE JURISDICTIONAL ITAT DECISION IN THE CASE OF SHR I D. UMAPATHY, CHENNAI VS. ITO IN ITA NO. 2435/MDS/2014 FOR ASSESSMENT YEAR 20 08-09 DATED 14.08.2015, UPHELD THE DISALLOWANCE. WITH REGARD T O THE ISSUE OF DISALLOWANCE UNDER THE HEAD OF FOREIGN AGENCY COMMI SSION, THE CIT(A) CALLED FOR A REMAND REPORT FROM THE AO. AFTER CONSIDERING THE REMAND REPORT AND RELYING ON THE ITAT DECISION (SUPRA), HE ALLOWED TH E APPEAL PARTLY. AGGRIEVED AGAINST THE CIT(A) ORDER, THE ASSESSEE FILED THIS A PPEAL BROADLY ON TWO GROUNDS (I) THAT THE CIT(A) ERRED IN HIS FINDING TH AT THE PROVISIONS OF SECTION :-3-: I.T.A. N0. 3484/MDS/2016 40(A)(IA) WOULD APPLY EVEN IN RESPECT OF AMOUNTS W HICH ARE NOT OUTSTANDING AND PAYABLE AS ON 31 ST MARCH AND (II) IN ANY EVENT IN AS MUCH AS THE RECI PIENT HAS ADMITTED SUCH INCOME AND PAID TAX THEREON THE P ROVISIONS OF SECTION 40(A)(IA) WOULD NOT APPLY. 3. THERE IS A DELAY OF 7 DAYS IN FILING THE APPEAL AND THE ASSESSEE FILED A PETITION FOR CONDONATION OF DELAY STATING, INTER AL IA, THAT THE CIT(A) ORDER WAS SENT TO ITS AUTHORISED REPRESENTATIVE SHRI A. SEKAR , CA BY M/S. B.B. NAIDU & CO., IMMEDIATELY ON SUCH RECEIPT. THE SAID AR HAD A HEALTH SET BACK ON ACCOUNT OF CORONARY ARTERY DISEASE AND HOSPITALISED AFTER UNDERGOING CORONARY ANGIOGRAM. THE APPELLATE ORDER WHICH WAS SENT TO H IS RESIDENT WAS MISPLACED BY HIM AND BY THE TIME IT WAS TRACED AND NECESSARY APPEAL PAPERS WERE PREPARED, THE DUE DATE FOR FILING THE APPEAL IS EXP IRED. HOWEVER, THE APPELLANT MANAGED TO FILE THE APPEAL ON 28.02.2016 WITH A DELAY OF 7 DAYS. THE FILING OF APPEAL IS NOT DELIBERATE, UN-INTENTIO NAL, UN-AVOIDABLE AND BEYOND THE CONTROL OF THE PETITIONER. THE PETITIONER WOUL D BE PUT TO EXTREME HARDSHIP AND UNDUE PREJUDICE WOULD BE CAUSED TO HIM IF THE D ELAY IS NOT CONDONED ETC. WE HEARD THE RIVAL CONTENTIONS AND CONDONE THE DELA Y. 4. THE AR CONCEDED THAT THE FIRST GROUND OF APPEAL IS COVERED BY THE SUPREME COURT DECISION IN CIVIL APPEAL NO. 5512 OF 2017 DATED 03.05.2017 IN THE CASE OF M/S. PALAM GAS SERVICE VS. CIT AND HENC E THE GROUND NO. 1 OF THE APPEAL IS DISMISSED. ON THE SECOND ISSUE, THE AR B ASED ON THE DELHI HIGH :-4-: I.T.A. N0. 3484/MDS/2016 COURT DECISION REPORTED IN 377 ITR 655 IN THE CASE OF ANSAL LANDMARK TOWNSHIP PVT. LTD., PLEADED WHEN THE RECIPIENT HAS ADMITTED SUCH INCOME AND PAID TAX THEREON, PROVISIONS OF SECTION 40(A)(IA) W OULD NOT APPLY. 5. WE HEARD THE RIVAL SUBMISSIONS, GONE THROUGH REL EVANT MATERIAL AND FIND MERIT IN THE ARS SUBMISSION. THE AO SHALL VE RIFY AS TO WHETHER THE IMPUGNED RECIPIENTS HAVE ADMITTED SUCH INCOME AND P AID TAX THEREON. THE AO SHALL REQUIRE THE ASSESSEE TO FURNISH RELEVANT M ATERIAL ON THE ABOVE PLEA AND EXAMINE THEM. IF THE IMPUGNED RECIPIENTS HAVE ADMITTED SUCH INCOME AND PAID THE TAXES, THEREON, THEN THE AO SHALL ALLO W SUCH DEDUCTION. TO THIS EXTENT, THIS GROUND IS ALLOWED. 6. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY A LLOWED. ORDER PRONOUNCED ON FRIDAY, THE 9 TH DAY OF JUNE, 2017 AT CHENNAI. SD/- ( . . . ) (N.R.S. GANESAN) ! ' /JUDICIAL MEMBER SD/- ( ) (S. JAYARAMAN) ' /ACCOUNTANT MEMBER /CHENNAI, 0 /DATED: 9 TH JUNE, 2017 JPV & )12 32 /COPY TO: 1. %/ APPELLANT 2. )*% /RESPONDENT 3. 4 ( )/CIT(A) 4. 4 /CIT 5. 2 ) /DR 6. 7 /GF