DCIT Corporate Circle 1(1), CHENNAI V. Aban Offshore Limited, CHENNAI

ITA 3490/CHNY/2019

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 5104 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-04-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2011-2012
• Appeal Filed On: 29-12-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P. MURALI MOHAN
• Keywords: Double taxation relief; Deemed to accrue or arise in india; TDS; Set aside

Judgement Text

आयकर अपील सं./ITA No.3490/Chny/2019 िनधा रण वष /Assessment Year: 2011-12 The Dy. Commissioner of- Income Tax Corporate Circle-1(1), Chennai v. M/s.Aban Offshore Ltd., 113, Janpriya Crest, Pantheon Road, Egmore, Chennai-600 008. [PAN: AAACA 3012 H] (अपीलाथ /Appellant) ( यथ /Respondent) Department by : Mr.G.Johnson, Addl.CIT Assessee by : Mr.P.Murali Mohan, CA सुनवाई क तारीख/Date of Hearing : 25.01.2022 घोषणा क तारीख /Date of Pronouncement : 06.04.2022 आदेश / O R D E R PER G. MANJUNATHA, ACCOUNTANT MEMBER: This appeal filed by the Revenue is directed against the order of the Commissioner of Income Tax (Appeals)-1, Chennai, dated 30.09.2019 and pertains to assessment year 2011-12. 2. The Revenue has raised the following grounds of appeal: 1. The order of the learned CIT(A) is contrary to law, facts and circumstances of the case. 2. The learned CIT(A) erred in giving relief on the issue of disallowance made u/s 40(a)(i) in connection with the amount paid to M/s.Haledon International Corporation, by placing reliance on order of Hon'ble ITAT in assessee's own case आयकर अपीलीय अिधकरण, ’डी’ यायपीठ, चे ई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘D’ BENCH: CHENNAI ी वी. दुगा राव, माननीय ाियक सद एवं ी जी. मंजूनाथा, माननीय लेखा सद के सम BEFORE SHRI V. DURGA RAO, HON’BLE JUDICIAL MEMBER AND SHRI G. MANJUNATHA, HON’BLE ACCOUNTANT MEMBER ITA No.3490/Chny/2019 :: 2 :: for AY 2012-13 without appreciating the fact that in AY 2012-13 Hon'ble ITAT has remitted the issue to AO to verify afresh and after due verification by AO the addition on similar issue was sustained by AO? 3. For these and other grounds that may be adduced at the time of hearing, it is prayed that the order of the learned CIT(A) may be set aside and that of the Assessing Officer restored. 3. The only issue that came up for our consideration from Ground No.2 of the assessee’s appeal is disallowance of professional and consultancy fees paid to M/s.Haledon International Corporation u/s.40(a)(i) of the Act. The AO has disallowed the payment made to M/s.Haledon International Corporation, towards drilling service and management fees amounting to Rs.8,61,33,985/- u/s.40(a)(i) of the Act, on the ground that the impugned payment comes under the definition of fee for technical services u/s.9(1)(vii) of the Act. It was the explanation of the assessee before the lower authorities that payment made to M/s.Haledon International Corporation, Dubai, was towards operation expenditure incurred in respect of operation of rigs in Iran and further, the services were rendered outside India and the payments were also made in outside India. Therefore, unless the impugned payment made to non-resident is taxable in India, the assessee does not require to deduct TDS u/s.195 of the Act, and consequently, impugned payment cannot be disallowed u/s.40(a)(i) of the Act. 4. We have heard both the parties, perused the materials available on record and gone through orders of the authorities below. An identical issue has been considered by the Tribunal, in the assessee’s own case for the AY ITA No.3490/Chny/2019 :: 3 :: 2015-16 in IT (TP) A No.86/Chny/2019 for the AY 2015-16, wherein, the Tribunal by following its earlier decision for the AY 2012-13, held that twin conditions of rendering services in India and utilization of such services in India are not satisfied to bring the impugned payment within the definition of fee for technical services as per Sec.9(1)(vii) of the Act read with explanation and thus, the question of deduction of TDS on said payments does not arise. The relevant findings of the Tribunal are as under: 31. The similar issue has been considered by the Co-ordinate Bench of the Tribunal in assessee’s own case for AY 2012-13 in ITA No.450/Mds/2017 dated 19.06.2017, wherein the Hon’ble Tribunal has remitted the matter back to the file of AO by observing as under: “12. We have heard both the parties and perused the material on record. The Explanation incorporated in Section 9 declares that “where the income is deemed to accrue or arise in India under clause (v), (vi) and (vii) and sub-sec.(1), such income shall be included in the total income of the non- resident, whether or not be resident as a residence or place of business or business connection in India”. The plain reading of the said provisions suggests that criterion of residence, place of business or business connection of a non-resident in India has been done away with for fastening the tax liability. However, the criteria of rendering service in India and the utilization of the service in India to attract tax liability u/s.9(i)(vii) remained untouched and unaffected by the Explanation to Section 9 of the Act and outside India. Therefore, the twin criterion of rendering of services in India and utilization of services in India become evidently necessary condition to deduct tax. However, in respect of the said payments, the rendering of services being purely off shore and outside India, the whatever paid towards the said services does not attract tax liability. 12.1 In view of the above, we are inclined to remit the issue to the file of the Assessing Officer to examine the issue afresh in the light of the above order along with the concerned DTAA and decide thereupon. The issue is partly allowed for statistical purposes.” 32. In view of the above, we respectfully following the order of Co-ordinate Bench of the Tribunal, we set aside the order passed by the AO and remit the matter back to the AO and direct the AO to follow the above decision of the Co- ordinate Bench of the Tribunal in assessee’s own case and pass assessment order thereupon. 5. In this view of the matter and consistent with view taken by the co- ordinate Bench, we set aside the issue to the file of the AO and direct the ITA No.3490/Chny/2019 :: 4 :: AO to re-consider the issue in light of the directions given by the Tribunal for the earlier years and decide the issue in accordance with law. 6. In the result, appeal filed by the Revenue is dismissed. Order pronounced on the 06 th day of April, 2022, in Chennai. Sd/- ( वी. दुगा राव) (V. DURGA RAO) याियक सद य/JUDICIAL MEMBER Sd/- (जी. मंजूनाथा) (G. MANJUNATHA) लेखा सद य/ACCOUNTANT MEMBER चे ई/Chennai, दनांक/Dated: 06 th April, 2022. TLN आदेश क ितिलिप अ ेिषत/Copy to: 1. अपीलाथ /Appellant 4. आयकर आयु /CIT 2. यथ /Respondent 5. िवभागीय ितिनिध/DR 3. आयकर आयु (अपील)/CIT(A) 6. गाड! फाईल/GF