DCIT, New Delhi V. M/s. Maan Aluminum Ltd., New Delhi

ITA 4883/DEL/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 4155 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 05-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALKA GAUTAM
• Keywords: Residential status; Permanent establishment
• Section: 143(3); 14A; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E NEW DELHI BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 4883/DEL/2014 AY: 2010-11 DY.COMMISSIONER OF INCOME TAX, VS MAAN ALUMIN IUM LTD., CIRCLE 6(1), BUILDING NO. 3/8, IIND F LOOR, NEW DELHI. ASAF ALI ROAD, NEW DELHI-110002 (PAN: AAFCM0088C) (APPELLANT) (RESPONDENT) APPELLANT BY : MS ALKA GAUTAM, SR. DR RESPONDENT BY: SHRI SATISH AGGARWA L, CA DATE OF HEARING: 03.01.2018 DATE OF PRONOUNCEMENT: 10.01.2018 ORDER PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER THIS APPEAL HAS BEEN PREFERRED BY THE REVENUE AGAI NST THE ORDER DATED 10.06.2014 PASSED BY THE LD. COMMISSION ER OF INCOME TAX (A)-IX, NEW DELHI, WHEREIN VIDE THE IMPU GNED ORDER, THE LD. COMMISSIONER OF INCOME TAX (A) HAS DELETED DISALLOWANCE MADE BY THE AO U/S 40(A)(I) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED 'THE ACT') AMOUNTING TO RS. 34, 63,534/- ON ACCOUNT OF COMMISSION PAID TO NON-RESIDENT COMMISSI ON AGENTS BY THE ASSESSEE. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF ALUMINI UM PROFILES, ITA NO. 4883/DEL/2014 ASSESSMENT YEAR 2010-11 2 SECTION AND TRADING OF ALUMINIUM INGOT AND BILLETS. THE RETURN OF INCOME WAS FILED DECLARING INCOME OF RS. 2,96,86,07 7/- AND THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT AT A N INCOME OF RS. 34,63,634/- AFTER MAKING A DISALLOWANCE U/S 40( A)(I) OF THE ACT ON THE GROUND OF NON-DEDUCTION OF WITHHOLDING T AX ON PAYMENT OF COMMISSION TO TWO NON-RESIDENT AGENTS. A DISALLOWANCE OF RS. 9,09,274/- UNDER THE PROVISIONS OF SECTION 14A OF THE ACT WAS ALSO MADE BY THE AO. 2.1 ON APPEAL BY THE ASSESSEE BEFORE THE COMMISSION ER OF INCOME TAX(A), THE LD. CIT(A) ALLOWED BOTH THE GROU NDS OF THE ASSESSEE AND NOW THE DEPARTMENT IS IN APPEAL AND HA S CHALLENGED THE DELETION OF ADDITION OF RS. 34,63,63 4/- U/S 40(A)(I) OF THE ACT BY RAISING THE FOLLOWING GROUNDS OF APPE AL:- 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE & IN LAW, THE LD. CIT(A) ERRED IN DELETING ME DISALLOWANCE OF RS.34,63,534/- ON ACCOUNT OF COMMISSION PAID TO NON-RESIDENT COMMISSION AGENTS B Y WRONGLY DISTINGUISHED THE DECISION OF THE HON'BLE A PEX COURT IN THE CASE OF TRANSMISSION CORPORATION OF AP LIMITED VS. CIT AND ALSO IGNORING THE FACT THAT THE COMMISSION PAID TO THE NON-RESIDENT AGENTS WHICH ACCRUE OR ARISE IN INDIA LIABLE FOR DEDUCTION OF WITHHOLDING TAX FROM SUCH PAYMENT TO NON-RESIDENTS? 2. THAT THE ORDER OF THE LD. CIT (A) IS ERRONEOUS AND IS NOT TENABLE ON FACTS AND IN LAW. 3. THAT THE GROUNDS OF APPEAL ARE WITHOUT PREJUDIC E TO EACH OTHER. ITA NO. 4883/DEL/2014 ASSESSMENT YEAR 2010-11 3 4. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR FOREGO ANY GROUND(S) OF THE APPEAL RAISED ABOVE AT THE TIME OF THE HEARING. 3. THE LD. DEPARTMENTAL REPRESENTATIVE READ OUT E XTENSIVELY FROM THE ASSESSMENT ORDER AND SUBMITTED THAT THE AS SESSEE HAD PAID COMMISSION OF RS. 34,63,634/- TO M/S ALPINE EN TERPRISE LLC AND SHRI BIPIN PARMAR IN FOREIGN CURRENCY FOR RECEI PT OF EXPORT ORDERS. SHE UNDERLINED THE FACT THAT THE ASSESSING OFFICER HAD SPECIFICALLY MENTIONED THAT NO INFORMATION REGARDIN G THE RESIDENTIAL STATUS AND OTHER PARTICULARS AND TRANSA CTION DETAILS WITH THE TWO PARTIES WAS SUBMITTED BEFORE THE ASSES SING OFFICER. THE LD. DEPARTMENTAL REPRESENTATIVE ALSO SUBMITTED THAT THE LD. CIT (A) HAD ERRED IN DELETING THE DISALLOWANCE BY I GNORING THE FACT THAT THE SAID COMMISSION HAD ACCRUED/ARISEN IN INDI A AND, THEREFORE, WAS LIABLE FOR DEDUCTION OF TAX PRIOR TO THE MAKING OF PAYMENT TO THE NON-RESIDENTS. 4. IN RESPONSE, THE LD. AR SUBMITTED THAT THE ASS ESSEE COMPANY WAS NOT LIABLE TO DEDUCT ANY TAX AT SOURCE ON THE I MPUGNED COMMISSION IN TERMS OF PROVISIONS OF SECTION 195 OF THE ACT AS THE FOREIGN RESIDENT AGENTS HAD PROVIDED SERVICES OUTSI DE INDIA AND, THEREFORE, AS PER SECTION 9 OF THE ACT, COMMISSION PAID TO THEM ITA NO. 4883/DEL/2014 ASSESSMENT YEAR 2010-11 4 WAS NOT CHARGEABLE IN INDIA. IT WAS SUBMITTED THAT THE IMPUGNED PAYMENTS WERE MADE FOR PROCURING EXPORT ORDERS AND THE PAYMENTS WERE MADE TO NON-RESIDENTS IN FOREIGN CURR ENCY AND, FURTHER, SINCE THE NON-RESIDENTS DID NOT HAVE ANY B USINESS CONNECTION OR PERMANENT ESTABLISHMENT IN INDIA, THE INCOME OF THE RECIPIENTS CANNOT BE DEEMED TO HAVE ACCRUED OR ARISEN IN INDIA. IT WAS SUBMITTED THAT M/S ALPINE ENTERPRISE S WAS A RESIDENT OF DUBAI WHEREAS SHRI BIPIN PARMAR WAS A R ESIDENT OF UK. IT WAS ALSO SUBMITTED THAT THE CBDT HAD PRESCR IBED FORM 15CA AND 15CB AS PER RULE 37(BB) OF THE INCOME TAX RULES, 1962 IN ACCORDANCE WITH SECTION 195(6) OF THE ACT W HICH IS TO BE SUBMITTED BY THE REMITTER TO ITS BANK FOR MAKING RE MITTANCE IN FOREIGN EXCHANGE. THE LD. AR SUBMITTED THAT THE AS SESSEE HAD FOLLOWED THE PROCEDURE LAID DOWN UNDER SECTION 195( 6) AND FURNISHED THE REQUIRED FORM 15CA AND 15CB TO THE BA NK. OUR ATTENTION WAS DRAWN TO A COPY OF THE SAME DATED 22. 12.09 AND PLACED ON RECORD. IT WAS SUBMITTED THAT IT WAS THE ASSESSEES DUTY TO SUBMIT THE FORM TO THE BANK AND IT WAS OPEN TO THE ASSESSING OFFICER TO MAKE INQUIRY ON THE ISSUE WHIC H WAS NOT SO DONE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. ITA NO. 4883/DEL/2014 ASSESSMENT YEAR 2010-11 5 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL AVAILABLE ON RECORD. THE UNDISPUTED FACT IS THAT THE ASSESSEE HAD PAID COMMISSION TO TWO NON-RESIDENTS O N EXPORT ORDERS PROCURED BY THEM. IT IS ALSO UNDISPUTED THA T THE NON- RESIDENT AGENTS DID NOT HAVE ANY PERMANENT ESTABLIS HMENT OR PERMANENT PLACE IN INDIA AND THE AGENTS OPERATED FR OM OUTSIDE INDIA. IT IS ALSO UNDISPUTED THAT THE COMMISSION W AS PAID FOR SERVICES PROVIDED TO THE ASSESSEE OUT OF INDIA WHIC H WAS REMITTED DIRECTLY OUTSIDE INDIA AND WAS NOT RECEIVED BY THEM OR ON THEIR BEHALF BY ANY THIRD PARTY. IT IS ALSO A MATTER OF RECORD THAT THE ASSESSEE HAS FURNISHED FORM 15CA IN TERMS OF RULE 3 7(BB) OF THE INCOME TAX RULES WHICH IS ON RECORD. IT IS A SETTL ED LAW THAT INCOME OF NON-RESIDENT AGENTS CANNOT BE CONSIDERED TO ACCRUE OR ARISE OR DEEMED TO BE RECEIVED IN INDIA WHEN THE SE RVICES RENDERED BY THE NON-RESIDENTS AND THE AGENTS WERE O UTSIDE INDIA AND THE COMMISSION WAS ALSO PAYABLE OR PAID TO THEM OUTSIDE INDIA. IT IS ALSO SETTLED LAW THAT IN ABSENCE OF P ERMANENT ESTABLISHMENT IN INDIA, THERE IS NO LIABILITY TO WI THHOLD DEDUCTION OF PAYMENT OF COMMISSION TO THE FOREIGN AGENTS. TH EREFORE, IN VIEW OF THE SETTLED LEGAL POSITION AS WELL AS THE F ACT THAT THE ASSESSEE HAD DULY DISCHARGED ITS DUTY IN FILING THE REQUIRED FORM ITA NO. 4883/DEL/2014 ASSESSMENT YEAR 2010-11 6 15CA WITH RESPECT TO THE FOREIGN REMITTANCES, WE FI ND NO REASON TO INTERFERE WITH THE FINDINGS OF THE LD. CIT (A) AND WE DISMISS THE GROUNDS RAISED BY THE DEPARTMENT. 6. IN THE RESULT, THE APPEAL OF THE DEPARTMENT ST ANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10.01.2 018. SD/- SD/- (R.S. SYAL) (SUDHANSHU SRIVASTAVA) VICE PRESIDENT JUDIC IAL MEMBER DT. 10 TH JANUARY 2018 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER ASSTT. REGISTRAR