M/s. Poddar Pigments Ltd., New Delhi V. ACIT, New Delhi

ITA 5662/DEL/2015

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 0088 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2012-2013
• Appeal Filed On: 06-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Double taxation relief; Set aside
• Section: 195; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: E NEW DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBE R & SHRI O.P. KANT, ACCOUNTANT MEMBER ITA NO. 5662/DEL/2015 ASSESSMENT YEAR: 2012-13 PODDAR PIGMENTS LTD. A-283, GROUND FLOOR, OKHLA INDUSTRIAL AREA, PHASE-1, NEW DELHI. PAN NO. AAACP1125E VS ACIT CIRCLE 20(1) NEW DELHI. APPELLANT RESPONDENT ASSESSEE BY SH. P.C. PARWAL, FCA REVENUE BY MS. RINKU SINGH, SR. DR ORDER PER SHRI BHAVNESH SAINI, J.M. THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST T HE ORDER OF LD.CIT(APPEALS)-7, NEW DELHI DATED 6 TH AUGUST, 2015 FOR AY 2012-13 ON THE FOLLOWING GROUND: 1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE ACTION OF THE AO IN MAKING DISALLOWANCE OF RS. 18,36,101/- U/S 40(A)(I) BY HOLDING THAT PAYMENT MADE TO DR. WERNER SITBAL IS A PAYMENT TOWARDS FEES FOR TECHNICAL SERVICES AS PER EXPLANATION 2 TO SECTION 9(1)(VII) AND THUS LIABLE FOR DEDUCTION OF TAX AT S OURCE U/S 195. HE HAS FURTHER ERRED IN NOT ACCEPTING THE DATE OF HEARING 20.03.2019 DATE OF PRONOUNCEMENT 01.04.2019 2 ITA NO. 5662/DEL /2015 PODDAR PIGMENTS LTD. CONTENTION OF THE ASSESSEE THAT PAYMENT IS FOR INDEPENDENT SCIENTIFIC ACTIVITY COVERED BY THE AR TICLE 14 OF THE DTAA WITH SWITZERLAND AND THUS NOT LIABLE FOR DEDUCTION OF TAX AT SOURCE U/S 195. 2. THE ASSESSING OFFICER ON THE ABOVE ISSUE FOLLOWI NG HIS ORDER FOR AY 2007-08 MADE THE DISALLOWANCE. THE AO ALSO NOTED THAT SIMILAR DISALLOWANCES HAVE BEEN MADE IN AYS 2008-09 TO 2011-12 AND THE CIT(A) HAS DISMISSED THE APPEAL OF THE ASSE SSEE BY HOLDING THAT THE PAYMENT FALLS UNDER THE CATEGORY FEE FOR TECHNICAL SERVICES. THE AO, ACCORDINGLY, MADE ADDITION OF R S. 18,36,101/- U/S 40(A)(I) OF THE I.T. ACT. THE LD. CIT(A) FOLLO WED HIS ORDER FOR AY 2011-12 ON THE IDENTICAL FACTS AND DISMISSED THE AP PEAL OF ASSESSEE. 3. LD. COUNSEL FOR ASSESSEE, AT THE OUTSET, SUBMITT ED THAT IDENTICAL ISSUES HAVE BEEN DECIDED BY ITAT F BENC H IN THE CASE OF THE SAME ASSESSEE FOR AYS 2008-09 TO 2011-12, VIDE ORDER DATED 23 RD AUGUST, 2018. COPY OF THE ORDER IS PLACED ON RECO RD. HE HAS SUBMITTED THAT IN AY 2009-10 IN ITA NO. 5084/2014 T HE TRIBUNAL HAS CONSIDERED THE IDENTICAL ISSUE AND IN PARA 28 A LLOWED THE APPEAL OF THE ASSESSEE. PARA 28 OF THE APPELLATE O RDER DATED 23 RD AUGUST, 2018 (SUPRA) IS REPRODUCED AS UNDER: 28. THERE ARE ALSO SIMILAR CONDITION IN INDO SWISS DTAA IN ARTICLE 12(5)(B) EXCLUDING PROFESSIONAL SERVICES UNDER ARTICLE 14 AND 15 OF THAT DTAA. THEREFORE, IT IS A PPARENT THAT THE SERVICES ARE COVERED UNDER ARTICLE 14 OF T HE DTAA AND NOT UNDER ARTICLE 12 OF DTAA. FURTHER IT IS NO T THE CASE OF THE REVENUE THAT THE SERVICES PROVIDED BY T HE SWISS RESIDENT IS NOT PROFESSIONAL SERVICES AS DEFI NED UNDER ARTICLE 14(2) OF DTAA. FURTHER, IT IS NOT TH E CASE OF 3 ITA NO. 5662/DEL /2015 PODDAR PIGMENTS LTD. THE REVENUE THAT SUCH SERVICES ARE PROVIDED BY HIM FROM ITS FIXED BASE IN INDIA OR HE HAS STAYED FOR MORE T HAN 183 DAYS IN INDIA. THEREFORE, WE HOLD THAT NO TAX IS R EQUIRED TO BE DEDUCTED ON PAYMENT MADE TO DR. WERNER STIBAL WH O IS A RESIDENT OF SWISS CONFEDERATION AND RENDERED THE PROFESSIONAL SERVICES WITH RESPECT TO THE SIMILAR S ERVICES AS PROVIDED BY DR. U THIELE, THEREFORE, THOSE SERVI CES ARE INDEPENDENT, PERSONAL SERVICES IN THE NATURE OF INDEPENDENT SCIENTIFIC SERVICES WHICH SHALL BE TAXA BLE ONLY IN SWISS CONFEDERATION. HENCE, NO TAX IS REQUIRED TO BE DEDUCTED ON SUM PAID BY THE ASSESSEE TO DR. WERNER STIBAL U/S 195 OF THE ACT. IN VIEW OF THIS GROUND NO. 1 OF THE APPEAL OF THE ASSESSEE IS ALLOWED. 4. LD. DR ONGOING THROUGH THIS ORDER ACCEPTED THAT ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE. 5. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PA RTIES, WE ARE OF THE VIEW THAT ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY ORDER OF ITAT F BENCH IN THE CASE OF ASSESSEE ITSELF IN WHICH THE APPEAL OF ASSESSEE HAS BEEN ALLOWED IN SEVERAL YEARS ON TH E SAME ISSUE FROM AYS 2008-09 TO 2011-12. FOLLOWING THE REASONS FOR DECISION OF THE TRIBUNAL DATED 23 RD AUGUST, 2018 (SUPRA), WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE ADDI TION. 6. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 01/04/2019 SD/- SD/- (O.P. KANT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 01.04.2019 *KAVITA ARORA 4 ITA NO. 5662/DEL /2015 PODDAR PIGMENTS LTD. COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT TRUE COPY ASSISTANT REGISTRAR ITAT NEW DELHI DATE OF DICTATION 27/03/2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 28/03/2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P S/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 01 /04/19 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 01 /04/19 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT 01/04/19 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 0 1/04/19 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER