ACIT 18(1), MUMBAI V. DEZENS PRODUCTS, MUMBAI

ITA 5503/MUM/2012

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9379 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: L
• Next Hearing Date: 18-07-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 31-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M V RAJGURU
• Keywords: Double taxation relief; Opportunity of cross examination; Deemed to accrue or arise in india; Non-deduction of tax; Accommodation entries; Onus to prove
• Section: 142(1); 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL L BENCH, MUMBAI BEFORE S/ SHRI B.R. BASKARAN (AM) & RAMLAL NEGI (JM) I.T.A. NO. 5503 /MUM/20 12 (ASSESSMENT YEAR 20 07 - 08 ) ACIT 18(1) 1 ST FLOOR, PIRAMAL CHAMBERS, LALBAUG MUMBAI - 400 012. VS. M/S. DEZENS PRODUCTS 1 01 - D/A, POONAM CHAMBERS, DR.A.B. ROAD WORLI, MUMBAI - 400 018. PAN : AACFD4578L ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI SHAILESH PARMAR DEPARTMENT BY S HRI M.V. RAJGURU DATE OF HEARING 0 5 . 10 . 201 7 DATE OF PRONOUNCEMENT 05 . 10 . 201 7 O R D E R PER B.R. BASKARAN (AM) : - THE APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 29.6.2012 PASSED BY THE LEARNED CIT(A) - 29, MUMBAI AND IT RELATES TO A.Y. 2007 - 08 . THE REVENUE IS AGGRIEVED BY THE DECISION RENDERED BY THE LEARNED CIT(A) ON FOLLOWING ISSUES : - (A) DISALLOWANCE OF COMMISSION EXPENSES : ` 48.94 LAKHS (B) DISALLOWANCE OF LEGAL EXPENSES U/S. 40(A)(IA) OF THE ACT : ` 45.97 LAKHS 2. WE HEARD THE PARTIES AND PERUSED THE RECORD. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF ADVERTISING AGEN CY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS PAID COMMISSION TO A CONCERN NAMED M/S INORBIT ADVERTISING TO THE TUNE OF ` 48.94 LAKHS. THE ASSESSING OFFICER NOTICED THAT ABOVE SAID CONCERN BELONGED TO ONE MR. SANDEEP SITANI IN WHOSE HANDS SEARCH WAS TAKEN U/S. 132 OF THE ACT. DURING THE COURSE OF SEARCH PROCEEDINGS, MR. SANDEEP SITANI HAD ADMITTED THAT HE IS NOT DOING ANY REAL BUSINESS IN HIS CONCERN S AND WAS PROVIDING ONLY ACCOMMODATION ENTRIES. ACCORD INGLY, THE ASSESSING OFFICER TOOK THE VIEW THAT COMMISSION EXPENDITURE CLAIMED TO HAVE BEEN PAID TO INORBIT ADVERTISING IS BOGUS AND ACCORDINGLY DISALLOWED THE SAME. M/S. DEZENS PRODUCTS 2 3. BEFORE THE LEARNED CIT(A), THE ASSESSEE CONTENDED THAT IT HAS DISCHARGED ITS ONUS TO PROVE THE GENUINENESS OF THE PAYMENT OF COMMISSION BY FURNISHING ALL THE REQUIRED DETAILS . THE ASSESSEE FURTHER SUBMITTED THAT INORBIT ADVERTISING HAS PROCURED B U S IN E SS TO THE TUNE OF ` 290.70 LAKHS AND T HE ASSESSEE HAS PAID COMMISSION @ 15% AS PER TRADE PRACTICE. IT WAS S U BMITTED THAT THE ASSESSEE HAS COLLECTED SERVICE TAX ON SUCH COMMISSION AND HAS ALSO DEDUCTED TAX AT SOURCE. IT WAS FURTHER ARGUED THAT INORBIT ADVERTISING WAS NOT OPERATING FROM THE ADDRESS BELONGING TO MR. SANDEEP SITANI , FROM WHERE HE WAS OPERATING SEVERAL CONCERNS . IN THE STATEMENT GIVEN BY MR. SANDEEP SITANI, THERE WAS NO SPECIFIC ALLEGATION AGAINST THE ASSESSEE. THE ASSESSEE HAS ALSO SUBMITTED BEFORE THE LEARNED CIT(A) THAT IT HAD ASKED FOR CROSS EXAMINING MR. SANDEEP SITANI , SINCE T HE ASSESSING OFFICER HAD PLACED HIS RELIANCE ON THE STATEMENT GIVEN BY HIM , BUT THE ASSESSING OFFICER DID NOT PROVIDE FOR THE SAME. 4. THE LEARNED CIT(A) DURING THE COURSE OF APPELLATE PROCEEDINGS DIRECTED THE ASSESSING OFFICER TO ALLOW THE ASSESSEE TO CROSS EXAMINE THE DIRECTOR OF INORBIT ADVERTISING. THE ASSESSING OFFICER REPLIED THAT THE ASSESSEE WAS PROVIDED OPPORTUNITY TO CROSS EXAMINE ON A PARTICULAR DATE, BUT ON THAT DATE MR. SANDEEP SITANI DID NOT APPEAR AND HENCE OPPORTUNITY FOR CROSS EXAMINATIO N COULD NOT BE GIVEN. THE LEARNED CIT(A), AFTER CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, DELETED THE ADDITION. 5. LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAS FAILED TO DISCHARGE THE ONUS PLACED UPON HIM TO PROVE THE GE NUINENESS OF THE EXPENDITURE. HE SUBMITTED THAT THE DIRECTOR OF INORBIT ADVERTISING HAS CATEGORICALLY ADMITTED BEFORE THE TAX AUTHORITIES THAT HE HAS PROVIDED ONLY ACCOMMODATION ENTRIES IN THE FORM OF COMMISSION EXPENDITURE . HE FURTHER SUBMITTED THAT INORB IT ADVERTISING IS ALSO ENGAGED IN THE SAME LINE OF BUSINESS OF ADVERTISING AND HENCE IT D EFIES THE LOGIC THAT THE ASSESSEE COULD HAVE OBTAINED BUSINESS FROM ITS COMPETITOR . HE FURTHER SUBMITTED THAT THE ASSESSEE FAILED TO EXPLAIN THE NATURE OF SERVICE PROV IDED BY INORBIT ADVERTISING. LEARNED DEPARTMENTAL REPRESENTATIVE ALSO SUBMITTED THAT THE ASSESSING OFFICER HAD M/S. DEZENS PRODUCTS 3 ISSUED NOTICE U/S. 143(2) AND 142(1) OF THE ACT WAY BACK IN 2008, BUT THE ASSESSEE SOUGHT FOR THE CROSS EXAMINATION ONLY IN THE MONTH OF DECEMBER 2009 I.E. AT THE FAG END OF THE ASSESSMENT PROCEEDINGS. LEARNED DEPARTMENTAL REPRESENTATIVE FURTHER SUBMITTED THAT THE COORDINATE BENCH HAS CONSIDERED AN IDENTICAL IS SUE IN THE CASE OF R.W. PROMOTION S PVT. LTD. VS. ACIT (2013) 35 CCH 0491 (MUM) AND HAS CO NFIRMED THE DISALLOWANCE OF CO MMISSION EXPENDITURE MADE TO VERY SAME PARTY, VIZ., M/S INORBIT ADVERTISING. 6. ON THE CONTRARY, LEARNED AR SUBMITTED THAT THE ASSES SEE IN THE CASE OF R.W. PROMOTION S PVT. LTD. (SUPRA) HAS FAILED TO DISCHARGE THE ONUS PLACED UPON IT TO PROVE THE GENUINENE SS OF THE EXPENDITURE AND HENCE DISALLOWANCE WAS CONFIRMED BY THE COORDINATE BENCH ON THIS LEGAL GROUND. LEARNED AR SUBMITTED THAT THE ASSESSEE HAD SET UP SIGN BOARDS AT VARIOUS PLACES IN MUMBAI AND THE PARTIES WERE INTRODUCE D FOR THOSE SIGN BOARDS BY M/S INORBIT ADVERTISING. HE SUBMITTED THAT THE ASSESSEE HAS GIVEN ALL THE DETAILS TO THE AO IN ORDER TO PROVE THE GENUINENESS OF THE COMMISSION EXPENDITURE . THE ASSESSEE HAD GENERATED INCOME OF ` 290.70 LAKHS FROM OUT OF THE SIG N BOARDS AND THE ASSESSEE PAID COMMISSION TO M/S INORBIT @ 15%. HE SUBMITTED THAT THE ASSESSEE HAS COLLECTED SERVICE TAX FROM INORBIT ADVERTISING AND HAS ALSO DEDUCTED TAX AT SOURCE FROM THE COMMISSION PAYMENT. LEARNED AR FURTHER S U BMITTED THAT THE ASSESSE E HAS FURNISHED COP IES OF BILLS RAISED UPON THE ASSESSEE BY INORBIT ADVERTISING AND ALSO FURNISHED DETAILS OF PAYMENT MADE TO THEM, COPY OF TDS CERTIFICATE S . LEARNED AR FURTHER SUBMITTED THAT INORBIT ADVERTISING HAS FILED RETURN OF INCOME FOR THE YEAR UNDE R CONSIDERATION DULY DISCLOSING PAYMENTS RECEIVED FROM THE ASSESSEE AND HAS ALSO CLAIMED TDS DEDUCTED BY THE ASSESSEE. THE LEARNED AR FURTHER SUBMITTED THAT THE ASSESSING OFFICER HAS PLACED RELIANCE ON THE GENERAL STATEMENT GIVEN BY MR. SANDEEP SITANI. HE SUBMITTED THAT MR. SANDEEP SITANI DID NOT SPECIFICALLY IMPLICATE THE ASSESSEE. HE SUBMITTED THAT THE ASSESSING OFFICER HAS NOT BROUGHT ANY MATERIAL ON THE RECORD TO DISPROVE THE CLAIM OF COMMISSION PAYMENT. FURTHER SUBMITTED THAT THE ASSESSEE HAD ASKED FOR THE OPPORTUNITY OF CROSS EXAMINATION , BUT THE SAME WAS NOT GIVEN BY THE ASSESSING OFFICER DURING M/S. DEZENS PRODUCTS 4 THE COURSE OF ASSESSMENT PROCEEDINGS. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE LEARNED CIT(A) DIRECTED THE ASSESSING OFFICER TO AFFORD OPPORTUNITY TO C ROSS EXAMINE BUT T H E ASSESSING OFFICER COULD NOT PROVIDE THE SAME AS MR. SANDEEP SITANI FAILED TO APPEAR BEFORE HIM ON THE APPOINTED DATE. ACCORDINGLY, THE LEARNED AR SUBMITTED THAT THE ASSESSEE HAS DISCHARGED ONUS PLACED UPON IT TO PROVE THE GENUINENESS O F THE COMMISSION PAYMENT AND HENCE THE LEARNED CIT(A) WAS JUSTIFIED IN DELETING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. 7. HAVING HEARD THE RIVAL SUBMISSIONS, WE ARE OF THE VIEW THAT THE ORDER PASSED BY THE LEARNED CIT(A) ON THIS ISSUE DOES NOT CA LL FOR ANY INTERFERENCE. FOR THE SAKE OF CONVENIENCE, WE EXTRACT BELOW THE OPERATIVE PORTION OF THE ORDER PASSED BY THE LEARNED CIT(A) ON THIS ISSUE. 3.8 I HAVE CONSIDERED THE FACTS OF THE CASE THE ARGUMENTS OF THE AUTHORISED REPRESENTATIVE AND THE RE ASONING OF THE ASSESSING OFFICER. HOWEVER I FIND THAT ON THE GIVEN FACTS THE ADDITION MADE BY THE ASSESSING OFFICER CANNOT BE SUSTAINED FOR THE FOLLOWING REASONS. 1. THE ASSESSING OFFICER WAS DIRECTED TO ALLOW CROSS EXAMINATION TO THE APPELLANT SUMMONING THE DEPARTMENTAL WITNESS, ASSESSING OFFICER HAS REPLIED BY THE LETTER DATED 26/06/12 THAT THE WITNESS HAS NOT APPEARED. MR SANDIP SITANI THE SO CALLED FACILITATOR OF THE SPURIOUS BILLS HAVE NOT APPEARED BEFORE THE AO. 2. THE PAYMENTS TO LNORBIT ADVERTISING & MA RKETING SERVICES PVT. LTD. HAVE BEEN DONE BY A/C PAYEE CHEQUES. THE COMPANY HAS FILED RETURN FOR A.Y.2007 - 08 AND HAS REFLECTED THE RECEIPTS IN ITS P&L A/C. THE GROSS RECEIPTS OF THE COMPANY FOR THE YEAR AMOUNTS TO RS.2,87,40,572 / - . NECESSARY TDS HAS BEEN D EDUCTED AGAINST THE PAYMENT. THE COMPANY HAS FILED RETURN OF INCOME WITH PAN AABCI 38181 G. 3. THE ASSESSING OFFICER HAS POINTED OUT THAT THE DUBIOUS COMPANIES ARE FROM THE ADDRESS 3 TATA NAGAR, SAKI VIHAR, MUMBAI. THE ADDRESS OF INORBIT ADVERTISING IS NOT OF THIS PLACE. IT IS AT 7, LAXMAN NAGAR, KURAR VILLAGE MALAD (E), MUMBAI. 4. IT IS A FACT THAT MR.SITANI IS ASSOCIATED WITH 25 COMPANIES, THE LIST OF WHICH WAS GIVEN DURING SURVEY PROCEEDINGS. HOWEVER THE A.O. HAS LISTED UP ONLY 20 COMPANIES TO BE OF DOUBTF UL ANTECEDENT. M/S. DEZENS PRODUCTS 5 5. NOWHERE IN THE STATEMENTS GIVEN BY MR.SITANI THE NAME OF APPELLANT COMPANY HAS BEEN MENTIONED. NO INCRIMINATING MATERIALS RELATING TO IN THE COMMISSION PAID OR BILLS RAISED HAVE BEEN FOUND DURING THE COURSE OF SEARCH. 6. THE ONLY THING TO BE SEEN IS WHETHER THE PAYMENTS WERE REASONABLE AND AGAINST SERVICES RENDERED. THE APPELLANT HAS PAID AN AMOUNT OF RS.48,94,225 / - AGAINST THE BILL AMOUNT OF RS.2.97 CRORES. THE COMMISSION HAS BEEN CHARGED AT 15@ OF THE BIL L AMOUNT. THE SPECIFIC DETAILS OF A DVERTISEMENT ORDERS OBTAINED FROM VARIOUS PARTIES HAVE BEEN FILED. IT IS ARGUED THAT PROCURING ORDERS FOR ADVERTISEMENT IN A COMPETITIVE MARKET IS NOT POSSIBLE WITHOUT PAYMENT OF COMMISSION TO AGENCIES. IT IS ARGUED THAT THE COMPANY INORBIT ADVERTISING IS IN THE BUSINESS OF ADVERTISING AND HAS PROCURED THEM THE SPECIFIC ORDERS. THEY HAVE BEEN PAID FOR INTRODUCING THE CLIENT. THEY HAVE CONFIRMED THE RECEIPTS BY FILING SPECIFIC CONFIRMATION. THE PAYMENT IS A BUSINESS NECESSITY AND IS ALSO REASONABLE IN AMO UNT. THE EXPLANATION OF THE APPELLANT APPEARS TO BE IN HARMONY WITH MARKET REALITIES. 7. THERE IS NO EVIDENCE THAT LNORBIT ADVERTISING HAS ISSUED FICTITIOUS BILLS AND HAD PASSED BACK CASH AMOUNT TO THE APPELLANT. NEITHER SUCH EVIDENCE HAS BEEN FOUND DURING S EARCH NOR HAS BEEN FOUND BY THE ASSESSING OFFICER. 8. MR SANDIP SITANI HAS LISTED OUT THE ENTITIES TO WHOM HE HAS GIVEN/ ISSUED NON - GENUINE BILLS. THE NAME OF THE APPELLANT IS NOT INCLUDED IN THAT LIST. 9. ON THE OTHER HAND THE APPELLANT HAS SUBMITTED ALL POS SIBLE EVIDENCE IN SUPPORT OF ITS CLAIM. THE APPELLANT HAS FILED COPY OF CONFIRMATION FROM INORBIT ADVERTISING CERTIFYING THE RECEIPT OF COMMISSION. THERE IS PAYMENT THROUGH BANK, TO AN ASSESSABLE ENTITY, DEDUCTION OF TAX, REFLECTION OF THE AMOUNT BY THE RE CIPIENT IN ITS RETURN OF INCOME, CONFIRMATION BY THE PARTY, ABSENCE OF ANY DIRECT INCRIMINATING MATERIAL REGARDING BOGUS NATURE OF THE BILL, EVIDENCE OF SERVICES RENDERED, INABILITY OF THE ASSESSING OFFICER TO ALLOW CROSS EXAMINATION, AND FINALLY REASONABL ENESS OF THE PAYMENT OF COMMISSION AGAINST BUSINESS PROCURED. HENCE ON THE BASIS OF GIVEN FACTS THE DISALLOWANCE MADE BY THE ASSESSING OFFICER CANNOT BE SUSTAINED. AS THERE IS NO OTHER ADVERSE EVIDENCE THE DISALLOWANCE OF RS 48, 94,225 IS DELETED . M/S. DEZENS PRODUCTS 6 8. W E NOTICED THAT THE ASSESSEE HAS FURNISHED ALL THE DETAILS RELATING TO THE CLAIM OF COMMISSION EXPENDITURE , VIZ., BILLS RAISED BY INORBIT ADVERTISING, DETAILS OF PAYMENT MADE TO THEM, COPY OF TDS CERTIFICATE S , COPY OF RETURN OF INCOME FILED BY INORBIT ADVER TISING, DETAILS OF ADVERTISING ORDERS PROCURED BY INORBIT ADVERTISING AND DETAILS OF SIGN BOARDS AGAINST WHICH ORDER WAS PROCURED BY INORBIT ADVERTISING. WE NOTICED THAT THE ASSESSING OFFICER DID NOT FIND FAULT WITH THE DOCUMENTS FILED BY THE ASSESSEE. HE NCE WE ARE OF THE VIEW THAT IT CANNOT SAID THAT THE ASSESSEE HAS FAILED TO PROVE THE GENUINENESS OF THE COMMISSION EXPENDITURE. ON THE CONTRARY, ASSESSING OFFICER HAS PLACED ON THE GENERAL STATEMENT GIVEN BY MR. SANDEEP SITANI. WE ALSO NOTICED THAT MR. SAN DEEP SITANI DID NOT IMPLICATE THE ASSESSEE SPECIFICALLY IN HIS STATEMENT . FURTHER, THE CROSS EXAMINATION ASKED FOR BY THE ASSESSEE COULD NOT BE PROVIDED BY THE AO. WE NOTICED THAT THE LEARNED CIT(A) HAS ADDRESSED ALL THE POINTS RAISED BY THE ASSESSING OFFICER WHILE DISALLOWING THIS EXPENDITURE. NO OTHER MATERIAL WAS PLACED BEFORE US BY THE REVENUE TO CONTRADICT THE FINDINGS GIVEN BY THE LEARNED CIT(A). THE D ECISION RELIED UPON BY LEARNED DEPARTMENTAL REPRESENTATIVE NAMELY R.W. PROMOTERS PVT. LTD. (SUPRA ) HAVE BEEN RENDERED ON THE BASIS OF FACTS AVAI LABLE IN THAT CASE AND HENCE IT IS DISTINGUISHABLE. ACCORDINGLY, WE ARE OF THE VIEW THAT THE ORDER PASSED BY THE LEARNED CIT(A) ON THIS ISSUE DOES NOT CALL FOR ANY INTERFERENCE. 9. NEXT ISSUE RELATES TO DISALL OWANCE OF PAYMENT OF LEGAL FEES OF ` 45.97 LAKHS. THE ASSESSEE HAS PAID LEGAL FEES TO THE FIRM M/S. CORDATO PARTNERS , WHICH IS AN AUSTRAL IAN LEGAL FIRM. THE ASSESSEE HAD ENGAGED THE ABOVE SAID FIRM IN CONNECTION WITH LEGAL DISPUTE THAT AROSE BETWEEN THE AS SESSEE AND M/S. LBM, AN AUSTRALIAN CONCERN. THUS, THE S ERVICE S OF M/S. CORDATO PARTNERS W ERE OFFERED IN AUSTRALIA. THE ASSESSING OFFICER TOOK THE VIEW THAT THE ASSESSEE SHOULD HAVE DEDUCTED TAX AT SOURCE FROM THE PAYMENT MADE TO M/S. CORDATO PARTNERS U/S. 195 OF THE ACT. SINCE THE ASSESSEE HAD FAILED TO DEDUCT TDS, ASSESSING OFFICER DISALLOWED THE EXPENDITURE, BY INVOKING PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. M/S. DEZENS PRODUCTS 7 10. BEFORE THE LEARNED CIT(A), THE ASSESSEE SUBMITTED THAT THE LEGAL CHARGES RECEIVED BY M/S . CORDATO PARTNERS IS NOT TAXABLE IN INDIA IN TERMS OF ARTICLE 14 OF DOUBLE TAXATION AVOIDANCE AGREEMENT BETWEEN INDIA AND AUSTRALIA. ACCORDINGLY, HE SUBMITTED THAT THERE IS NO REQUIREMENT TO DEDUCT TAX AT SOURCE U/S. 195 OF THE ACT. THE LEARNED CIT(A) WAS CONVINCED WITH THE CONTENTION S OF THE ASSESSEE AND ACCORDINGLY DELETED THE ADDITION WITH FOLLOWING OBSERVATIONS: - 5.3 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, ARGUMENTS OF THE ASSESSING OFFICER AND THE WRITTEN SUBMISSIONS OF THE AUTHORISED REP RESENTATIVE OF THE APPELLANT. THE DISALLOWANCE MADE BY THE ASSESSING OFFICER CANNOT BE SUSTAINED FOR THE FOLLOWING REASONS. (I) THE PROFESSIONAL SERVICES BY M/S CORDATO PARTNERS HAVE BEEN RENDERED IN AUSTRALIA. THE ENTITY DOES NOT HAVE A PERMANENT ESTABLISHME NT IN INDIA. INDIA AND AUSTRALIA HAVE DOUBLE TAXATION AVOIDANCE AGREEMENT BETWEEN THEMSELVES. ACCORDING TO ARTICLE XIV OF DTAA BETWEEN INDIA AND AUSTRALIA THE PROFESSIONAL FEE PAID WILL NOT TAXABLE IN INDIA. (II) THE DECISION RELIED UPON BY THE ASSESSING OFFICER I.E, SRK CONSULTING ENGINEERS 230 ITR 206(AAR) IS NOT APPLICABLE TO THE CASE OF THE APPELLANT. IN THE CITED CASE THE SERVICES OF SRK CONSULTING ENGINEERS WERE UTILISED IN INDIA BY TISCO IN A BUSINESS OR PROFESSION CARRIED ON BY THE PAYER IN INDIA F OR THE PURPOSE OF EARNING ANY INCOME FROM A SOURCE IN INDIA. HOWEVER IN THE PRESENT CASE THE SERVICES OF THE NON - RESIDENT ENTITY ARE UTILIZED OUTSIDE INDIA FOR FIGHTING A LEGAL BATTLE. (III) THE ASSESSING OFFICER HAS RELIED UPON CIT VS. SAMSUNG ELECTRONICS (KARN ATAKA) WHERE IT WAS HELD THAT ONLY WAY TO ESCAPE THE LIABILITY BY THE PAYER WAS TO MAKE AN APPLICATION TO THE ASSESSING OFFICER UNDER SECTION 195(2) FOR NON - DEDUCTION OF TAX OR FOR DEDUCTION AT A LOWER RATE. HOWEVER THIS DECISION HAS BEEN OVERRULED BY THE SUPREME COURT IN THE CASE OF GE (INDIA) TECHNOLOGY CENTRE 327 ITR 456 (SC). IT HAS BEEN HELD THAT WHERE A PERSON RESPONSIBLE FOR DEDUCTION IS FAIRLY CERTAIN THEN, HE CAN MAKE HIS OWN DETERMINATION AS TO WHETHER TAX IS DEDUCTIBLE AT SOURCE. HENCE SAMSUNG EL ECTRONICS IS NO MORE GOOD LAW. (IV) SIMILAR ISSUES HAVE BEEN CONSIDERED RECENTLY BY KOLKATA ITAT IN THE CASE OF ANDAMAN SEA FOOD PVT. LTD. IN ITA M/S. DEZENS PRODUCTS 8 NO.1412/KOL/2011 DATED 19.6.2012. IN THIS CASE TRIBUNAL EXAMINED THE ISSUE THAT CONSULTANCY FEES PAID TO A SINGA PORE BASED FOREIGN COMPANY WERE NOT CHARGEABLE TO TAX IN INDIA. THE ITAT ALSO EXAMINED APPLICABILITY OF SECTION 40(A)(IA) FOR FAILURE TO DEDUCT TAX U/S.195. UNDER SIMILAR CIRCUMSTANCES THE TRIBUNAL HELD THAT WHEN RECIPIENT OF INCOME DOES NOT HAVE PRIMARY T AX LIABILITY IN RESPECT OF AN INCOME THE PAYER CANNOT HAVE VICARIOUS TAX WITHHOLDING LIABILITY EITHER. IN VIEW OF THE ABOVE THE PAYMENT OF RS.45,97,135/ - MADE TO COREDATO PARTNERS CANNOT BE DISALLOWED UNDER 40(A)A). THE DISALLOWANCE IS DELETED. 11. WE HEARD THE PARTIES ON THIS ISSUE. WE NOTICED THAT THE LEARNED CIT(A) HAS FOLLOWED THE DECISION RENDERED BY HON'BLE SUPREME COURT IN THE CASE OF GE (INDIA) TECHNOLOGY CENTRE (327 ITR 456) TO DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE. LEARNED AR ALSO PLACE D RELIANCE ON THE DECISION RENDERED BY THE COORDINATE BENCH IN THE CASE OF ACIT VS. VILAS N. TAMHANKAR (2015) 68 SOT 124. FOR THE SAKE OF CONVENIENCE WE EXTRACT BELOW THE HEAD - NOTE OF THE ABO V E SAID CASE. SECTION 9, READ WITH SECTION 195, OF THE INCOME - T AX ACT, 1961, READ WITH ARTICLE 7 OF THE MODEL OECD CONVENTION - INCOME - DEEMED TO ACCRUE OR ARISE IN INDIA (BUSINESS PROFITS/COMMISSION) - ASSESSMENT YEAR 2009 - 10 - ASSESSEE MADE CERTAIN PAYMENT TO ONE 'S', A RESIDENT OF CANADA AS COMMISSION AND SERVICE CHARGES ON ACCOUNT OF MARKETING AND SALES SUPPORT SERVICES - REVENUE HAD NO CHARGE THAT PAYEE HAVING ANY PLACE OF BUSINESS OR OTHERWISE BUSINESS CONNECTION IN INDIA - FURTHER, SERVICES HAD BEEN RENDERED BY PAYER WHOLLY OUTSIDE INDIA - WHETHER, NO TAX LIABI LITY AROSE UNDER SECTION 195 AND, THUS, SECTION 40(A)(I) WERE NOT ATTRACTED AND BUSINESS DISALLOWANCE MADE WAS TO BE DELETED - HELD, YES [PARAS 4 AND 5] [IN FAVOUR OF ASSESSEE] IDENTICAL VIEW H AS ALSO BEEN EXPRESSED BY THE COORDINATE BENCH IN THE CASE OF ACIT VS. PAHILAJRAI JAIKISHIN (157 ITD 1187). SINCE DECISION RENDERED BY THE LEARNED CIT(A) HAS FOLLOWED THE DECISION RENDERED BY HONBLE SUPREME COURT, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER PASSED BY THE LEARNED CIT(A) ON THIS ISSUE. M/S. DEZENS PRODUCTS 9 12 . IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 05 . 10 .201 7. SD/ - SD/ - (RAMLAL NEGI ) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 05 / 10 / 20 1 7 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( DY./ASSTT. REG ISTRAR) PS ITAT, MUMBAI