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

ITA 3664/MUM/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1943 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2015
• Appeal Filed By: Department
• Bench Allotted: I
• Next Hearing Date: 02-12-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 09-05-2013
• Court: TRIBUNAL
• Department Lawyers: ADAGIRI
• Assessee Lawyers: MADHAV NANDGAOKAR
• Section: 143(3)

Judgement Text

, , I , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES I, MUMBAI , , , BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER, AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO.3664/MUM/2013 ASSESSMENT YEAR: 2009-10 DCIT CC 1 KALIAN 1 ST FLOOR, MOHAN PLAZA, WAYALE NAGAR, KHADADKPADA KALYAN / VS. M/S. INDO A MINES LTD. W-38 & 39 PHASE II, MIDC DOMBIVALI (E) MUMBAI- (REVENUE) (RESPONDENT) P.A. NO. AAAC1374A REVENUE BY SHRI B. YADAGIRI (DR) RESPONDENT BY SHRI MADHAV NANDGAOKAR (AR) / DATE OF HEARING : 02/12/2015 / DATE OF ORDER: 18/12/2015 / O R D E R PER ASHWANI TANEJA (ACCOUNTANT MEMBER): THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A GAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEAL S)-I, MUMBAI {(IN SHORT CIT(A)}, DATED 21.12.2012 FOR T HE INDO AMINES LTD. 2 ASSESSMENT YEAR 2009-10, PASSED AGAINST THE ASSESSM ENT ORDER PASSED BY THE ASSESSING OFFICER (IN SHORT AO ) U/S 143(3) OF THE ACT, ON THE FOLLOWING GROUNDS: '1.ON THE FACTS AND CIRCUMSTANCES OF THE CASE, 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 FO R INDIAN COMPANY IS NOT CHARGEABLE TO TAX IN INDIA OVERLOOKING THE FACT THAT SUCH INCOME IS DEEMED TO ACCRUE IN INDIA OR ARISE IN INDIA AND IS TAXABLE IN VIEW OF THE SPECIFIC PROVISION OF SEC.5(2)(B) R.W.S. 9(1 )(I) AS THE RIGHT TO RECEIVE THE COMMISSION WOULD ARISE IN INDI A WHEN THE ORDER IS EXECUTED BY THE INDIAN COMPANY FR OM INDIA. 2.ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN HOLDING THAT PROVISION OF SEC.1 95 ARE NOT APPLICABLE AND CONSEQUENTLY NO DISALLOWANCE U/S. 40(A)(I) COULD BE MADE AND WHILE DOING SO HE H AS FAILED TO CONSIDER THE RATIO OF THE DECISION OF THE SUPREME COURT IN THE CASE OF TRANSMISSION CORPN. OF A.P., VS. CIT 239 ITR 587.' 2. DURING THE COURSE OF HEARING, ARGUMENTS WERE MADE BY SHRI MADHAV NANDGAOKAR, AUTHORISED REPRESENTATIVE (AR) O N BEHALF OF THE ASSESSEE AND BY SHRI B. YADAGIRI, DEPARTMENT AL REPRESENTATIVE (DR) ON BEHALF OF THE REVENUE. INDO AMINES LTD. 3 3. THIS APPEAL HAS BEEN FILED BY THE REVENUE AGITATIN G THE ACTION OF LD. CIT(A) IN HOLDING THAT TAX WAS NOT RE QUIRED TO BE DEDUCTED AT SOURCE AGAINST THE PAYMENT OF COMMISSIO N AMOUNTING TO RS.1,60,94,636/- MADE TO NON-RESIDENT COMPANIES ON ACCOUNT OF EXPORTS SALE MADE BY THE A SSESSEE DURING THE YEAR UNDER CONSIDERATION. DURING THE COU RSE OF HEARING, LD. DR HAS RELIED UPON THE ORDER OF THE AO . ON THE OTHER HAND, LD. COUNSEL OF THE ASSESSEE HAS RELIED UPON THE DETAILED FINDINGS OF THE LD. CIT(A) AND STATED THAT THIS ISSUE IS NOW COVERED WITH VARIOUS JUDGMENT IN FAVOUR OF THE ASSESSEE. HE PLACED RELIANCE UPON THE CASE RELIED UPON BY LD. CIT(A) IN HIS ORDER WHILE DECIDING THIS ISSUE IN FAVOUR OF TH E ASSESSEE AND ALSO PLACED RELIANCE ON THE JUDGMENTS OF HONBL E MADRAS HIGH COURT IN THE CASE OF CIT VS. FAIZAN SHOES PVT. LTD. 367 ITR 155 (MAD). 3.1. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH TH E ORDERS OF LOWER AUTHORITIES, MATERIAL PLACED BEFORE US AS WELL AS JUDGMENTS PLACED BEFORE US ON THIS ISSUE. THE BR IEF FACTS ARE THAT THE ASSESSEE COMPANY WAS ENGAGED IN THE BU SINESS OF MANUFACTURING AND SALE OF CHEMICALS DURING THE YEAR UNDER CONSIDERATION. DURING THE COURSE OF ASSESSMENT PROC EEDINGS, IT WAS NOTED BY ASSESSEE THAT THE ASSESSEE HAD PAID CO MMISSION TO NON-RESIDENT PERSONS FOR EXPORT SALES BUT DID NO T DEDUCT TDS UPON THESE PAYMENTS AS ENVISAGED U/S 195 OF THE ACT. IN REPLY, THE ASSESSEE STATED THAT THE ASSESSEE WAS NO T REQUIRED TO DEDUCT TDS ON THE AMOUNT OF COMMISSION PAID TO N ON- INDO AMINES LTD. 4 RESIDENT AS NEITHER ANY SERVICES WERE RENDERED IN I NDIA NOR THE NON-RESIDENT AGENT PROVIDED ANY MANAGERIAL OR TECHN ICAL SERVICES. THE ASSESSEE SUBMITTED LIST OF EXPORTS SA LES ON WHICH COMMISSION WAS PAID AND 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 AGREEMENTS, IT IS NOTED BY U S THAT THE ROLE OF AGENT WAS TO LOCATE DIFFERENT CUSTOMERS FOR THE ASSESSEE WHO WERE INTERESTED IN PURCHASING PRODUCTS OF THE A SSESSEE 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 T HESE AGENTS ON A PRE-DECIDED FIXED PERCENTAGE ON THE AMO UNT OF EXPORTS SALES DONE BY THE ASSESSEE COMPANY WITH THE HELP OF CONCERNED AGENTS. IT IS FURTHER NOTED THAT NO AS PE R TERMS OF THE AGREEMENT, NO SERVICE WAS TO BE PROVIDED IN IND IA. AS PER FACTS BROUGHT BEFORE US, NO SERVICES WERE PROVIDED IN INDIA BY THESE NON-RESIDENT AGENTS. IT IS FURTHER NOTED FROM THE PERUSAL OF THESE AGREEMENTS THAT NO MATERIAL OR TECHNICAL S ERVICES WERE 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 THAT POSITION OF LAW IN THE AFORESAID FACTS IS WELL SETT LED. IT HAS BEEN HELD IN VARIOUS JUDGMENTS THAT THE TDS IS NOT REQUI RED TO BE DEDUCTED AS PER LAW ON THE PAYMENTS MADE TO FOREIGN AGENTS FOR THE PROCUREMENT OF SALES ORDER, IN THE GIVEN FA CTS. IT IS NOTED THAT THE LD. COUNSEL HAS RIGHTLY PLACED RELIA NCE UPON INDO AMINES LTD. 5 THE JUDGMENT OF HONBLE MADRAS HIGH COURT IN THE CA SE OF CIT VS. FAIZAN SHOES PVT. LTD. (SUPRA) WHEREIN HONBLE HIGH COURT CONSIDERED THE POSITION OF LAW IN DETAILED MANNER A ND 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 H ELD THAT: WHERE THE ASSESSEE SIMPLY PAID A COMMISSION SIMPLI CITER TO NON-RESIDENT AGENT OUTSIDE INDIA FOR PROCURING E XPORT ORDERS FROM OVERSEAS BUYERS AND THE NON-RESIDENT AG ENT DID NOT PROVIDE ANY TECHNICAL SERVICES FOR PURPOSE OF RUNNING BUSINESS OF ASSESSEE IN INDIA, ASSESSEE WAS NOT LIABLE TO DEDUCT TAX ON SOURCE ON SUCH COMMISSION P AID. 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 ISSU E. IT IS FURTHER NOTED THAT REVENUE HAS RELIED UPON IN ITS G ROUNDS, JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF TRANSMISSION CORPORATION OF A.P. LTD. VS CIT 239 I TR 58. IT IS NOTED THAT THIS JUDGMENT HAS BEEN CONSIDERED AND DISTINGUISHED IN DETAIL BY HONBLE MADRAS HIGH COUR T IN THE CASE OF FAIZAN SHOES PVT. LTD. (SUPRA). NO OTHER CO NTRARY JUDGMENT HAS BEEN BROUGHT TO OUR NOTICE. INDO AMINES LTD. 6 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 REQUIR ED TO DEDUCTED TAX AT SOURCE WHILE MAKING PAYMENT OF COMM ISSION TO NON-RESIDENT AGENTS. THUS, IN VIEW OF ALL THE FA CTS AND CASE LAWS, WE FIND NO FORCE IN THE GROUNDS OF THE REVENU E AND THESE ARE DISMISSED. THE ORDER PASSED BY LD. CIT(A) IS UP HELD. 4. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH DECEMBER, 2015. SD/- (SANJAY GARG ) SD/- (ASHWANI TANEJA) ! / JUDICIAL MEMBER ' ! / ACCOUNTANT MEMBER MUMBAI; ' DATED : 18/12/2015 CTX? P.S/. .. #$%&'(')% / COPY OF THE ORDER FORWARDED TO : 1. $ %& / THE APPELLANT 2. '(%& / THE RESPONDENT. 3. * ( $ ) / THE CIT, MUMBAI. 4. * / CIT(A)- , MUMBAI 5. -. ' /0 , $ /01 , / DR, ITAT, MUMBAI 6. 2 3 / GUARD FILE. / BY ORDER, ( -$ ' //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI