ACIT, CHENNAI V. M/s. Ajapa Integrated Project Management, CHENNAI

ITA 578/CHNY/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61249 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 07-06-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 19-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: V S JAYAKUMAR
• Keywords: Bonafide belief; Services rendered outside India; Deemed to accrue or arise in india; Non-deduction of tax
• Section: 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI [BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER] I.T.A.NO.349/MDS/2012 ASSESSMENT YEAR : 2008-09 M/S AJAPPA INTEGRATED PROJECT MANAGEMENT CONSULTANTS P. LTD 47, VELACHERY ROAD, LITTLE MOUNT, SAIDAPET, CHENNAI 600 015 VS THE ACIT COMPANY CIRCLE I(2) CHENNAI [PAN AAFCA 5848L] (APPELLANT) (RESPONDENT) I.T.A.NO.578/MDS/2012 ASSESSMENT YEAR : 2008-09 THE ACIT COMPANY CIRCLE I(2) CHENNAI VS M/S AJAPPA INTEGRATED PROJECT MANAGEMENT CONSULTANTS P. LTD 47, VELACHERY ROAD, LITTLE MOUNT, SAIDAPET, CHENNAI 600 015 (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI V.S.JAYAKUMAR, ADVOCATE DEPARTMENT BY : SHRI SHAJI P. JACOB, ADDL. CIT DATE OF HEARING : 07-06-2012 DATE OF PRONOUNCEMENT : 25-06-2012 I.T.A.NOS.349 & 578/12 :- 2 -: O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER THESE ARE CROSS APPEALS FILED BY THE AS SESSEE AND REVENUE AGAINST THE ORDER OF THE CIT(A)-III, CHENNAI, DATED 21.12.2011, PASSED IN ASSESSMENT YEAR 2008-09. 2. IN THE ASSESSEES APPEAL, THE ASSESSEE HAS TAKE N THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE CIT(A) IS CONTRARY TO THE LAW, FAC TS AND CIRCUMSTANCES OF THE CASE IN SO FAR AS THE SAME IS DECIDED AGAINST THE ASSESSEE. 2. THE CIT(A) ERRED IN CONFIRMING THE DISALLOWANC E OF ` 61,19,632/- UNDER SEC.40(A)(I) TOWARDS CONSULTANCY CHARGES/ FEE FOR TECHNICAL SERVICE PAID TO A NON-RE SIDENT INDIVIDUALS OF INDIAN ORIGIN WORKING IN OFF SHORE O IL AND GAS EXPLORATION PROJECTS IN INDIA. 3. THE CIT(A) ERRED IN HOLDING THAT THE PROPORTIO NATE DISALLOWANCE IS CALLED FOR AS THE RATE OF TDS APPL IED WAS ONLY 11.33 % INSTEAD OF 33.99% ON PAYMENTS MADE TO NON-RESIDENTS FOR SERVICES RENDERED IN INDIA. 4. THE CIT(A) FAILED TO NOTE THAT SEC.44BB OF THE ACT IS ATTRACTED TO THE FACTS OF THE CASE AND SO THE APPRO PRIATE RATE OF TAX WOULD BE ONLY 3.399% WHEREAS THE APPEL LANT HAS DEDUCTED MORE TAX AT THE RATE OF 11.33% WHICH I N ANYWAY DOES NOT WARRANT ANY PROPORTIONATE DISALLOW ANCE IN THE MANNER DONE BY THE ASSESSING OFFICER. 5. THE CIT(A)OUGHT TO HAVE APPRECIATED THAT THE A PPELLANT HAD ENGAGED THE SERVICES OF NINE NRI'S WHO ARE NOT LIABLE TO TAX IN INDIA AND THE ONLY ISSUE RELATES TO THE RATE OF TDS TO BE APPLIED. I.T.A.NOS.349 & 578/12 :- 3 -: 6. THE CIT(A) HAS NOT GIVEN DUE TO WEIGHTAGE TO THE VARIOUS ARGUMENTS ADVANCED BY THE ASSESSEE WITH REG ARD TO THE SCOPE OF SEC. 44BB AS APPLICABLE TO BUSINESS OR PROFESSION. 7. THE APPELLANT CRAVES LEAVE TO ADDUCE ADDITIONA L GROUNDS OF APPEAL AT THE TIME OF HEARING. 3. THE SOLE ISSUE INVOLVED IN THE ABOVE GROUNDS OF A PPEAL RELATES TO DISALLOWANCE OF ` 61,19,632/- U/S 40(A)(I) TOWARDS CONSULTANCY CHARGES/FEE FOR TECHNICAL SERVICES PAID TO NON-RESI DENT INDIVIDUALS OF INDIAN ORIGIN WORKING IN OFF-SHORE OIL AND GAS EXPL ORATION PROJECTS IN INDIA. 4. THE ASSESSING OFFICER, WHILE MAKING THE DISALLOWA NCE, HAS HELD AS UNDER: 3.1 IN RESPECT OF PAYMENTS MADE TO NON-RESIDENTS FO R SERVICES RENDERED IN INDIA THAT THE ASSESSEE OUGHT TO HAVE D EDUCTED TAXES @ 33.99% AS APPLICABLE FOR NON-RESIDENT INDIVIDUALS SINCE THE ASSESSEE HAD DEDUCTED TAXES ONLY @ 11.33%, PROPORTI ONATE DISALLOWANCE HAS TO BE MADE FOR THE SHORT DEDUCTION OF TAX. NAME OF THE NON- RESIDENT AMOUNT PAID TDS DEDUCTED RATE AT WHICH DEDUCTED TDS TO BE DEDUCTED RATE A T WHICH TO BE DEDUCTED PRO P O RTI O N- ATE DIS- A LL OW A NCE . S/SHRI ` ` ` ` BHUSHAN 7 , 45 , 673 8 1 , 6 7 1 11 . 33% 2 , 45 , 0 13 33 . 99 % 4 , 9 7 ,115 JANARDHAN PANNIR 8 , 7 8 , 8 14 7 6 , 0 9 0 11 . 33% 2 , 92,645 33 . 99% 5 , 86 , 168 JAVED AHMED 9 ,93, 000 1 , 1 2 , 5 07 11 . 33 % 3,37 , 5 2 0 33 . 99% 6 , 62 , 331 J. MUTHUKUMAR 9 ,37 , 082 1 , 4 7 , 419 1 1 . 3 3 % 3 , 1 8 ,514 33 . 99% 6 , 25 , 033 MADHAV TILKULKAR 11 , 66,000 1 , 3 2, 108 11 . 3 3% 3 , 96 , 3 23 33.99% 7,77 , 722 SHASHIKANTH 4 , 09 , 500 4 6 , 396 1 1 . 33 % 1,39,189 33.99% 2,73 , 000 UMAMAHESHWAR 2 , 60 , 000 5 3, 520 1 1.3 3 % 88 , 374 33.99 % 1 , 73 , 333 HARSH 5 , 02 . 127 5 2 , 02 4 1 0 . 3 % 1 , 70 , 672 33 . 99% 3 , 51 , 489 I.T.A.NOS.349 & 578/12 :- 4 -: JAIMANOHAR DANIEL 4 , 44 , 17 5 3 9 , 286 1 0 . 3% 1 , 5 0,975 33 . 99 % 3 , 10 , 922 J. MUTHUKUMAR 13 , 5 7 , 776 1 , 5 3 , 836 11 . 3 3% 4 , 61,508 33 . 99 % 9 , 05 , 184 MADHAV TILKULKAR 14 , 36 , 00 3 1 , 62 , 699 11 . 3 3% 4 , 88,097 33 . 99 % 9 , 57 , 335 61 ,1 9 , 632 ACCORDINGLY, AN AMOUNT OF ` 61 ,19,632 IS DISALLOWED U/S 40(A)(I) AND ADDED BACK TO THE TOTAL INCOME RETURNED. 3.2 THE SAME ISSUE CAME UP FOR CONSIDERATION IN TH E PREVIOUS AY 2007 08 AND THE DISALLOWANCE MADE HAS BEEN SUSTAINED BY THE CIT(A), CHENNAI, AS PER 1.T.A.NO.527/09-10/A.III DT 28.9.2010. 5. ON APPEAL BEFORE THE CIT(A), THE ASSESSEE CONTEND ED THAT PROVISIONS OF SECTION 44BB ARE APPLICABLE IN THE HA NDS OF THE NON- RESIDENT PAYEES. ACCORDING TO THAT SECTION, THE AC TUAL RATE OF TAX WILL BE WORKED OUT ON A SUM EQUAL TO 10% OF THE AGGREGAT E OF THE AMOUNTS SPECIFIED IN SUB-SECTION (2) OF SECTION 44B B AND ON IT THE RATE OF TAX, IF APPLIED, WOULD BE ONLY 3.399%. HOWEVER, THE ASSESSEE HAS DEDUCTED TAX @ 11.33% U/S 194J WHICH EXCEEDS THE R ATE OF TAX PRESCRIBED U/S 44BB AND HENCE, THERE IS QUESTION O F INVOKING THE PROPORTIONATE DISALLOWANCE U/S 40(A)(I). THE ASS ESSEE FURTHER STATED THAT THE 9 PERSONS TO WHOM THE IMPUGNED PAYMENTS WE RE MADE ARE NON-RESIDENTS AND ARE ALSO NOT EMPLOYEES OF THE AS SESSEE. THEY ARE PROFESSIONALLY QUALIFIED IN THE FIELD OF EXTRACTION OR PRODUCTION OF MINERAL OILS ETC IN OFF-SHORE AREAS IN INTERNATIONA L WATERS. SOME OF THEM HAVE ALSO DONE PROFESSIONAL SERVICES OUTSIDE INDIA. THE ASSESSEE FURTHER STATED THAT THE WORD BUSINESS IS ONE OF WIDE IMPORT I.T.A.NOS.349 & 578/12 :- 5 -: AND IT MEANS AN ACTIVITY CARRIED ON CONTINUOUSLY AN D SYSTEMATICALLY BY A PERSON WITH A VIEW TO EARN AN INCOME. ALL THE N ON-RESIDENTS TO WHOM PAYMENTS WERE MADE ARE ENGAGED IN THE BUSINESS OF PROVIDING SERVICES WHOSE INCOME ARE CHARGEABLE TO TAX UNDER T HE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION. THE ASSESSE E FURTHER SUBMITTED THAT IF THE PROVISIONS OF SECTION 44BB ARE CONSIDER ED AS INAPPLICABLE, THEN IN ABSENCE OF ANY EXCLUSION OF THE CATEGORIES OF PERSONS STATED ABOVE, A BENEFICIAL INTERPRETATION OF SECTION 44BB WAS CALLED FOR, SINCE IT IS OPEN TO THOSE NON-RESIDENT TO CONTEND THAT TH EY SHOULD BE FASTENED WITH THE RATE OF TAXATION WHICH IS LOWER T HAN THOSE FALLING IN ANY OF THE PROVISIONS OF ACT, SUCH AS SECTION 194J OR 195. IN VIEW OF THIS, PROVISIONS OF SECTION 40(A)(I) CANNOT BE INVO KED TO MAKE ANY PROPORTIONATE DISALLOWANCE OF THE EXPENSES INCURRED BY ASSESSEE FOR THERE IS NO GUIDELINES GIVEN EITHER IN SECTION 40(A )(I) OR U/S 44BB OR IN CHAPTER XVIIB. THE CONCEPT OF PROPORTIONATE DISAL LOWANCE IS EXTRANEOUS TO THE SCHEME OF INCOME-TAX ACT, FOR, TH E HON'BLE SUPREME COURT HAS TIME AND AGAIN STATED THAT THE PROVISIONS OF TDS ARE NOT IN THE NATURE OF AN ASSESSMENT PROCEEDINGS BUT IT IS I N THE NATURE OF COLLECTION AND RECOVERY AS ASSESSEE ACTS ONLY AS AN AGENT/TRUSTEE FOR THE GOVERNMENT TO COLLECT THE TAX AND REMIT IT TO T HE ACCOUNT OF THE CENTRAL GOVERNMENT. IT WAS FURTHER ARGUED THAT IT IS NOT THE CASE OF ASSESSEE THAT THOSE NINE NRIS ARE NOT LIABLE TO IN COME TAX IN INDIA. I.T.A.NOS.349 & 578/12 :- 6 -: THE ONLY QUESTION RELATES TO THE RATE OF TAX FOR TH E PURPOSE OF TDS, IN THE IMPUGNED YEAR IN QUESTION. IT WAS THEREFORE, S UBMITTED THAT THERE WAS NO VIOLATION OF ANY OF THE PROVISIONS CONTAINED IN CHAPTER XVIIB OF THE INCOME-TAX ACT WARRANTING ANY DISALLOWANCE MUCH LESS A PROPORTIONATE DISALLOWANCE IN THE MANNER INDICATED BY THE ASSESSING OFFICER IN THE IMPUGNED ORDER IN QUESTION. 6. THE CIT(A), AFTER CONSIDERING THE SUBMISSIONS OF T HE ASSESSEE, CONFIRMED THE ACTION OF THE ASSESSING OFF ICER ON THE GROUND THAT IN ASSESSMENT YEAR 2007-08 IN ASSESSEES OWN CASE, THE CIT(A) HAD CONFIRMED THE ADDITION AND DISMISSED THE GROUND OF APPEAL OF THE ASSESSEE. 7. THE A.R OF THE ASSESSEE FILED A COPY OF THE ORDER OF THE CHENNAI BENCH OF THE TRIBUNAL IN ASSESSEES OWN CA SE FOR ASSESSMENT YEAR 2007-08 IN I.T.A.NO.2169/MDS/2010 AND C.O.NO.2 9/MDS/2011, DATED 22.6.2011. HE SUBMITTED THAT IN THAT YEAR, T HE ASSESSEE HAD NOT PRESSED THIS GROUND OF APPEAL BEFORE THE TRIBUN AL AND HENCE, THE GROUND CAME TO BE DISMISSED FOR WANT OF PROSECUTION . HE SUBMITTED THAT IN THIS YEAR, HE IS ARGUING THE GROUNDS OF APP EAL FOR DECISION OF THE TRIBUNAL IN RESPECT OF THE ISSUE ON MERITS AND RELIED ON THE SUBMISSIONS MADE BEFORE THE CIT(A). I.T.A.NOS.349 & 578/12 :- 7 -: 8. THE DR, ON THE OTHER HAND, RELIED ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF GE INDIA TECHNOLOGY C ENTRE PVT. LTD. VS CIT, 327 ITR 356, AND SUBMITTED THAT SECTION 195 I MPOSES STATUTORY OBLIGATION ON EVERY PAYER TO DEDUCT TAX AT SOURCE W HENEVER PAYMENT OR CREDIT OF ANY AMOUNT CHARGEABLE UNDER THE ACT IS MADE IN FAVOUR OF THE NON-RESIDENTS AND SECTION 195(1) CONSISTS OF TH E WORDS CHARGEABLE UNDER THE PROVISIONS OF THE ACT AND SECTION 195(2) IS BASED ON THE PRINCIPLE OF PROPORTIONALITY. IN OTHER WORDS, TH E SUB-SECTION GETS ATTRACTED ONLY IN CASES WHERE THE PAYMENT MADE IS A COMPOSITE PAYMENT IN WHICH A CERTAIN PROPORTION OF PAYMENT HA S AN ELEMENT OF INCOME CHARGEABLE TO TAX IN INDIA. HENCE, HE SUPPO RTED THE ORDER OF THE ASSESSING OFFICER IN MAKING PROPORTIONATE DISAL LOWANCE OF EXPENDITURE FOR SHORT DEDUCTION OF TAX AT SOURCE BY THE ASSESSEE. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. THE ISSUE BEFORE US IS WHETHER DEDUCTION OF TAX AT SOURCE @ 1 1.33% IN CASE OF PAYMENTS MADE TO NINE NON-RESIDENTS ENGAGED IN REND ERING SERVICES IN CONNECTION WITH OIL EXPLORATION BUSINESS WHICH ARE TAXABLE UNDER THE INCOME-TAX ACT AS PER THE PROVISIONS OF SECTION 44B B, IS SUFFICIENT COMPLIANCE OF SECTION 40(A)(I) OF THE ACT OR ANY DI SALLOWANCE OUT OF SUCH PAYMENT IS WARRANTED U/S 40(A)(I) OF THE ACT. WE FIND THAT THE I.T.A.NOS.349 & 578/12 :- 8 -: ISSUE IS DECIDED BY THIS TRIBUNAL IN THE CASE OF FR ONTIER OFFSHORE EXPLORATION (INDIA) LTD VS DCIT, (2011) 10 TAXMAN.C OM 250 (CHENNAI) WHEREIN THE TRIBUNAL, AFTER TAKING INTO CONSIDERATI ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF GE INDIA TECHN OLOGY CENTRE PVT. LTD (SUPRA) RELIED UPON BY THE DR BEFORE US, HAS H ELD AS UNDER: 6. . SECTION 44BB IS A SPECIAL PROVISI ON AS IT IS MENTIONED IN THE CAUSE TITLE TO THE SAID PROVISION ITSELF. AS PER THE PROVISIONS OF SECTION 44BB(1) A SUM EQUAL TO 10 PER CENT OF THE AGGREGATE OF THE AMOUNT SPECIFIED IN SUB-SECTIO N (2) IS DEEMED TO BE THE PROFITS AND GAINS OF SUCH BUSINESS CHARGEABLE TO TAX UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION'. IT IS BECAUSE THE PROVISION OF SECT ION 44BB HAS QUANTIFIED THE DEEMED INCOME OF THE NON-RESIDENT AS SESSEE AT 10 PER CENT, IT HAS OPENED WITH THE CLAUSE 'NOTWITH STANDING ANYTHING TO THE CONTRARY' CONTAINED IN SECTIONS 28 TO 41 AND SECTIONS 43 AND 43A. THE AGGREGATE AMOUNTS ARE QUAN TIFIED IN SUB-SECTION (2) OF SECTION 44BB TO BE THE AMOUNT PA ID OR PAYABLE, RECEIVED OR DEEMED TO BE RECEIVED ETC. AS PER THE SUB-SECTION (3) OF SECTION 44BB THE NON-RESIDENT CA N CLAIM A LOWER PROFIT. IT IS FOR THE PURPOSE OF CLAIMING LOW ER PROFITS THAT THE NON-RESIDENT MUST FILE A RETURN AND PROVE THE S AME WITH SUPPORT OF HIS REGULAR BOOKS OF ACCOUNT AND OTHER D OCUMENTS AND BY COMPLYING WITH OTHER CONDITIONS SPECIFIED TH EREIN. IF NO RETURN IS FILED, SECTION 44BB(1) DEEMS THAT THE PRO FITS AND GAINS OF THE BUSINESS OF THE NON-RESIDENT AT 10 PER CENT OF THE GROSS RECEIPTS. A PERUSAL OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF GE INDIA TECHNOLOGY CENTRE (P.) LTD., ( SUPRA ) CLEARLY SHOWS THAT THE HONBLE SUPREME COURT HAS CATEGORICALLY HELD THAT THE OBLIGATION TO DEDUCT TD S IS LIMITED TO THE APPROPRIATE PORTION OF INCOME CHARGEABLE UNDER THE ACT FORMING PART OF THE GROSS SUMS OF MONEY PAYABLE TO THE NON- RESIDENT. THE HONBLE SUPREME COURT WHILE DECIDING THE ISSUE HAD CATEGORICALLY RECOGNIZED THAT AS PER THE PROVIS IONS OF SECTION 195 THE WORDS USED WERE 'ANY OTHER SUMS CHA RGEABLE UNDER THE PROVISIONS OF THIS ACT' AS AGAINST THE TE RM 'ANY SUM' USED IN THE OTHER PROVISIONS FALLING IN CHAPTER XVI I OF THE INCOME-TAX ACT, 1961. OBVIOUSLY, WHAT THE ASSESSING OFFICER IS DEMANDING IS THAT TDS IS LIABLE TO BE MADE UNDER TH E PROVISIONS OF SECTION 195 OF THE ACT. IF THE PROVIS IONS OF SECTION 195 ARE TO BE INVOKED, IT IS ONLY SUCH SUM WHICH IS CHARGEABLE I.T.A.NOS.349 & 578/12 :- 9 -: TO TAX UNDER THE INCOME-TAX ACT, 1961 ON WHICH TDS CAN BE MADE. A QUESTION NOW ARISES AS TO HOW MUCH OF THE A MOUNTS PAID BY THE ASSESSEE TO THE NON-RESIDENT IS THE INC OME CHARGEABLE TO TAX UNDER THE INCOME-TAX ACT, 1961 FO R THE PURPOSE OF SECTION 195. IT IS TRUE THAT THE ASSESSE E CANNOT QUANTIFY THE INCOME OF THE NON-RESIDENT. THIS IS WH ERE THE SPECIAL PROVISION OF SECTION 44BB COMES INTO PLAY. WHERE THE STATUTE HAS PROVIDED A SPECIAL PROVISION FOR DEALIN G WITH A SPECIAL TYPE OF INCOME SUCH A PROVISION WOULD EXCLU DE A GENERAL PROVISION DEALING WITH THE INCOME ACCRUING OR ARISING OUT OF ANY BUSINESS CONNECTION. THIS VIEW OF OURS F INDS SUPPORT FROM THE DECISION OF THE HONBLE JURISDICTIONAL HIG H COURT IN THE CASE OF COPES VULCAN INC., REFERRED TO SUPRA . SECTION 44BB IS A SPECIAL PROVISION TO THE EXCLUSION OF ALL THE CONTR ARY PROVISIONS PROVIDED IN SECTIONS 28 TO 41 AND 43 AND 43A OF THE ACT. ONCE THE PROVISIONS OF SECTIONS 28 TO 41 AND SECTIONS 43 & 43A STAND EXCLUDED, THE METHOD OF COMPUTING THE BUSINESS INCO ME OF THE NON-RESIDENT ON THE BASIS OF THE BOOKS OF ACCOUNT G OES OUT OF THE PICTURE. THEN IT IS ONLY THE PROVISIONS OF SECT ION 44AD, 44AE & 44AF WHICH COULD BE APPLIED AND THE SAME OBVIOUSL Y DO NOT APPLY TO THE INCOME OF THE NON-RESIDENT COMPANIES. THE HONBLE SUPREME COURT WHILE DEALING WITH ITS OWN DE CISION IN THE CASE OF TRANSMISSION CORPN. OF A.P. LTD., ( SUPRA ) HAS CATEGORICALLY EXPLAINED THAT THE TAX WAS LIABLE TO BE DEDUCTED BY THE PAYER OF THE GROSS AMOUNT IF SUCH PAYMENT INCLU DED IN IT AN AMOUNT WHICH WAS EXIGIBLE TO TAX IN INDIA. THIS IS NOT SO IN THE PRESENT CASE. HERE ON ACCOUNT OF THE SPECIAL PROVIS IONS OF SECTION 44BB, 10 PER CENT OF THE GROSS AMOUNT PAYAB LE TO THE NON-RESIDENTS DEEMED AS THE INCOME CHARGEABLE TO TA X IN INDIA. IN THE PRESENT CASE IT IS NOTICED THAT THE ASSESSEE HAS DEDUCTED TAX AT THE SPECIFIED RATE ON THE 10 PER CENT OF THE BARE BOAT CHARGES PAID TO THE NORWAY COMPANY WHO IS THE NON-R ESIDENT, COMPUTED AS PER THE PROVISIONS OF SECTION 44BB. IN THE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THERE IS NO VIOLATION OF THE PROVISIONS OF SECTION 195 IN THE ASSESSEES CAS E WHICH CALLS FOR A DISALLOWANCE BY INVOKING THE PROVISIONS OF SE CTION 40( A )( I ) OF THE ACT. IN THE CIRCUMSTANCES, THE FINDING OF TH E LEARNED CIT(A) AND THAT OF THE ASSESSING OFFICER STANDS REV ERSED. 10. WE FIND THAT THE CIT(A) HAS NOT TAKEN INTO CONSIDER ATION THE ABOVE DECISION OF THE TRIBUNAL FOR DECIDING THE ISS UE. WE, THEREFORE, SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND R ESTORE THE MATTER BACK TO THE FILE OF THE CIT(A) FOR DECIDING THE ISS UE AFRESH AFTER TAKING I.T.A.NOS.349 & 578/12 :- 10 -: INTO CONSIDERATION THE ABOVE CITED DECISION OF THE CHENNAI BENCH OF THE TRIBUNAL AND AFTER ALLOWING REASONABLE OPPORTUNITY OF HEARING TO BOTH THE PARTIES. THUS, THE GROUNDS OF APPEAL OF THE A SSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 11. IN THE REVENUES APPEAL, THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE LEARNED CIT(A) IS CONTRARY TO LAW AND FACTS AND CIRCUMSTANCES OF THE CASE. 2.1. THE LEARNED CIT(A) ERRED IN DELETING THE DISAL LOWANCE U/S 40(A)(I) IT RESPECT OF CONSULTANCY CHARGES/FEES FOR TECHNICAL SERVICES PAID TO NOT RESIDENCE WORKING IN OVERSEAS OFF SHORE OIL AND GAS EXPLORATION PROJECTS IT NIGERIA. 2.2. IT IS SUBMITTED THAT THE DECISION OF THE ITAT, IN ITA NO.2169/MDS/2010 DATED 22.6.2011. IN THE ASSESSEE'S OWN CASE FOR THE A.Y.2007-08 HAS NO BEEN ACCEPTED BY TH E DEPARTMENT AND AN APPEAL BEFORE THE HON'BLE HIGH C OURT IS PENDING. 2.3. THE CIT(A) OUGHT TO HAVE APPRECIATE THAT THE A SSESSEE DID NOT HAVE ANY BRANCH OR PE OUTSIDE INDIA AND CANNOT, IN STRICT SENSE OF THE TERM, BE SAID TO BE HAVING THE BUSINESS OUTSIDE INDIA. IN THE CIRCUMSTAECES, IT IS NOT OPEN FOR THE ASSESSEE TO CONCLUDE SUO-MOTO THAT THE PROVISIONS OF SECTION 9(1)(VII)(B) WOULD BE APPLICABLE TO PAYMENTS MADE TO NON-RESIDENTS AND THE PROPER COURSE FOR THE ASSESSEE WOULD BE TO MAKE AN APPLICATION U/S 195(2) TO THE CONCERNED ASSESSING OFFICER, IN THE ABSENCE OF WHIC H THE ASSESSEE OUGHT TO HAVE DEDUCTED TAX AT 33.99%. 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. I.T.A.NOS.349 & 578/12 :- 11 -: 12. THE SOLE ISSUE INVOLVED IN THE ABOVE GROUNDS OF APP EAL OF THE REVENUE IS THAT THE CIT(A) ERRED IN DELETING TH E DISALLOWANCE OF ` 4,76,58,976/- U/S 40(A)(I) OF THE ACT FOR NON-DEDUC TION OF TAX ON CONSULTANCY CHARGES/FEE FOR TECHNICAL SERVICES PAID TO NON-RESIDENTS WORKING IN OVERSEAS OFF SHORE OIL AND GAS EXPLORATI ON PROJECTS IN NIGERIA. 13. THE BRIEF FACTS OF THE CASE, AS OBSERVED BY THE ASS ESSING OFFICER, ARE THAT AN AMOUNT OF ` 10,22,97,112/- WAS CLAIMED AS CONSULTANCY FEES PAID BY THE ASSESSEE BOTH TO RESI DENTS AND TO NON- RESIDENTS. HE ALSO FOUND THAT THE TAXES WERE NOT D EDUCTED FOR CERTAIN PAYMENTS MADE TO NON-RESIDENTS TO THE EXTENT OF ` 4,76,58,976/-. THE ASSESSING OFFICER ALSO OBSERVED THAT PROVISIONS OF SECTION 9(1)(VII)(B) EXCLUDE ONLY THE FEES PAID IN RESPECT OF SERVICES U TILIZED IN A BUSINESS CARRIED ON BY THE ASSESSEE OUTSIDE INDIA AND DID N OT HAVE ANY BRANCH OUTSIDE INDIA AND THEREFORE, INCOME WOULD BE DEEMED TO ACCRUE IN INDIA. THE ASSESSING OFFICER FURTHER OBSERVED THAT THE HON'BLE SUPREME COURT IN THE CASE OF GE INDIA TECHNOLOGY CE NTRE PVT. LTD VS CIT, 327 ITR 356, HAS NOT CATEGORICALLY DECIDED THE ISSUE BUT HAD ONLY REMITTED BACK THE MATTER TO HIGH COURT FOR DE NOVO CONSIDERATION ON MERITS. HE ALSO REFERRED TO THE PROVISIONS OF SECT ION 195 AND DISALLOWED ` 4,76,58,976/- U/S 40(A)(I) OF THE ACT. I.T.A.NOS.349 & 578/12 :- 12 -: 14. ON APPEAL, BEFORE THE CIT(A), THE ASSESSEE STRONGL Y ARGUED AGAINST THE ABOVE DISALLOWANCE MADE BY THE ASSESSIN G OFFICER U/S 40(A)(I). THE ASSESSEE FILED WRITTEN SUBMISSIONS AND CONTENDED THAT ADDITION ON SIMILAR ISSUE WAS DELETED BY THE CIT(A) IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2007-08 AND ON FURTHER APP EAL BY THE DEPARTMENT, THE TRIBUNAL DISMISSED THE GROUND OF AP PEAL OF THE REVENUE. 15. THE CIT(A), FOLLOWING THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2007-08, IN I.T.A.NO. 2169/MDS/2010, ORDER DATED 22.6.2011, ALLOWED THIS GROUND OF APPEA L OF THE ASSESSEE. 16. THE DR FAIRLY CONCEDED BEFORE US THAT THIS ISSUE IS COVERED BY THE ORDER OF THE TRIBUNAL AGAINST THE REVENUE IN ASSESSMENT YEAR 2007-08 IN I.T.A.NO. 2169/MDS/2010 AND C.O.NO.29/MD S/2011, ORDER DATED 22.6.2011. 17. ON THE OTHER HAND, THE A.R OF THE ASSESSEE RELIED ON THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A SSESSMENT YEAR 2007-08. I.T.A.NOS.349 & 578/12 :- 13 -: 18. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUSIN G THE ORDERS OF THE LOWER AUTHORITIES AND MATERIALS AVAIL ABLE ON RECORD, WE FIND THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF RENDERING TECHNICAL CONSULTANCY SERVICES FOR OIL AND EXPLORAT ION INDUSTRIES IN INDIA AND ABROAD. DURING THE YEAR UNDER CONSIDERATION, T HE ASSESSEE RECEIVED CONSULTANCY FEES OF ` 12,33,75,833/- AGAINST WHICH IT CLAIMED TO HAVE PAID CONSULTANCY FEES OF ` 10,22,97,112/-. FROM THE DETAILS FILED BY THE ASSESSEE, THE ASSESSING OFFICER FOUND THAT FOR THE FOLLOWING NON-RESIDENTS, TDS HAD NOT BEEN DEDUCTED, CLAIMING THAT THE SERVICES OF THE CONSULTANTS HAVE BEEN UTILIZED BY T HE RESIDENT COMPANY IN A BUSINESS LOCATED OUTSIDE INDIA. ACCORDING TO THE ASSESSING OFFICER, THE ASSESSEE-COMPANY OUGHT TO HAVE DEDUCTED TDS @ 3 3.99% ON THE FOLLOWING AMOUNTS PAID: SHRI AMOUNT PAID BHUSHAN 75,62,974 HARSH 17,97,142 JANARDHAN PANNIR 55,37,687 JAVED AHMED 15,88,000 JAYAMANOHAR DANIEL 5,35,305 J. MUTHUKUMAR 1,11,14,105 NAIDU BAKAM 10,83,000 SHASIKANTH 72,98,683 UMAMAHESHWAR 1,11,42,080 4,76,58,976 19. THE ASSESSING OFFICER OBSERVED THAT SAME ISSUE HAD COME UP FOR CONSIDERATION IN ASSESSMENT YEAR 2007-08 AND ON APPEAL BY THE I.T.A.NOS.349 & 578/12 :- 14 -: ASSESSEE IN I.T.A.NO. 527/09-10/A.III, CHENNAI, VID E HIS ORDER DATED 28.9.2010, DELETED THE ADDITION. HE ALSO OBSERVED THAT THE CIT(A) PLACED RELIANCE ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF GE INDIA TECHNOLOGY CENTRE PVT. LTD VS CIT, 327 ITR 356 AND OBSERVED THAT SECTION 195(2) SPRINGS INTO ACTION ON LY WHEN THE PAYMENT TO THE RECIPIENT CONTAINS AN ELEMENT OF INC OME CHARGEABLE TO TAX IN INDIA. SINCE THE SUM IS NOT CHARGEABLE TO T AX IN INDIA, THE PROVISIONS OF SECTION 195(2) ARE NOT ATTRACTED AND DISALLOWANCE U/S 40(A)(I) WOULD NOT ARISE. THE ASSESSING OFFICER OB SERVED THAT OBJECTING TO THE ORDER OF THE CIT(A)-III, CHENNAI D ATED 28.9.2010 FOR ASSESSMENT YEAR 2007-08, THE DEPARTMENT APPROACHED THE TRIBUNAL BY WAY OF AN APPEAL AND THE ISSUE HAS NOT ATTAINED FIN ALITY. THEREFORE, HE DISALLOWED THE PAYMENT OF CONSULTANCY FEES OF ` 4,76,58,976/- BY INVOKING THE PROVISIONS OF SECTION 40(A)(I) OF THE ACT. 20. ON APPEAL, THE CIT(A) ALLOWED THE APPEAL OF THE AS SESSEE FOLLOWING THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2007-08 IN I.T.A.NO. 2169/MDS/2010, DATED 22.6.2011. 21. THE DR HAS FAIRLY CONCEDED THAT THIS ISSUE IS COV ERED AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE BY THE SAID ORDER I.T.A.NOS.349 & 578/12 :- 15 -: OF THE TRIBUNAL. WE FIND THAT THE TRIBUNAL, WHILE DECIDING THE ISSUE IN ASSESSMENT YEAR 2007-08, HAS HELD AS UNDER: 11. VIDE ITS GROUND NO.3, REVENUE IS AGAIN AGGRIEV ED REGARDING DELETION OF DISALLOWANCE MADE UNDER SECTI ON 40(A)(I) OF THE ACT BY THE ASSESSING OFFICER. BUT, HERE, THE PAYMENTS MADE BY THE ASSESSEE TO NON-RESIDENTS WERE IN RESPECT OF PROJECTS IN NIGERIA. 12. SHORT FACTS APROPOS ARE THAT ASSESSEE HAD PAID CONSULTANCY FEES TO ONE SHRI SASHI KANT AND SHRI UMAMAHESHWAR FOR CONSULTANCY SERVICES RENDERED IN N IGERIA. WHEN PUT ON NOTICE REGARDING NON-DEDUCTION OF TAX A T SOURCE, REPLY OF THE ASSESSEE WAS THAT THE SAID CONSULTANTS WERE USED IN THE BUSINESS OF THE ASSESSEE IN NIGERIA AND THEREFORE, SUB- CLAUSE (B) OF CLAUSE (VII) OF SUB-SECTION (1) OF SECTION 9 WOULD APPLY. ASSESSEE SUBMITTED BEFORE THE A.O. THAT THE PAYMENTS WERE FOR SERVICES RENDERED BY THE CONSULTANTS ON AC COUNT OF ITS BUSINESS ABROAD AND HENCE, THE INCOME OF SUCH N ON- RESIDENTS COULD NOT BE DEEMED TO ACCRUE OR ARISE IN INDIA. HOWEVER, THE A.O. WAS NOT IMPRESSED. HE, FOLLOWING THE DIRECTIONS OF ACIT UNDER SECTION 144A OF THE ACT, H ELD THAT ASSESSEE WAS NOT CARRYING ANY SEPARATE BUSINESS OUT SIDE INDIA AND IT DID NOT HAVE ANY BRANCHES OUTSIDE INDI A. THEREFORE, ACCORDING TO A.O., ASSESSEE WAS NOT LIAB LE FOR TAX IN NIGERIA AND THE PAYMENTS CONSTITUTED INCOME IN I NDIA OF THE CONCERNED NON-RESIDENTS. HE, THEREFORE, CONSIDERED THE AMOUNTS AS INCOME OF THE NON-RESIDENTS ACCRUING IN INDIA AND FOR NON-DEDUCTION OF TAX AT SOURCE, DISALLOWANCE OF ` 60,95,311/- WAS MADE RELYING ON SECTION 40(A)(I) OF THE ACT. 13. IN ITS APPEAL BEFORE LD. CIT(APPEALS), ARGUMENT OF THE ASSESSEE WAS THAT THE PAYMENTS WERE NOT CHARGEABLE TO TAX IN INDIA AND SECTION 195(1) OF THE ACT WOULD MAKE IT O BLIGATORY TO DEDUCT TAX AT SOURCE ONLY FROM THE INCOME CHARGEABL E TO TAX AS PER THE PROVISIONS OF THE ACT IN INDIA, IN THE H ANDS OF THE CONCERNED NON-RESIDENTS. LD. CIT(APPEALS) DELETING THE DISALLOWANCE HELD AS UNDER:- 5.2.1 AS PER SEC. 9(1)(VII)(B) INCOME BY WAY OF FEES FOR TECHNICAL SERVICES PAYABLE BY A RESIDENT SHALL BE D EEMED TO ACCRUE OR ARISE IN INDIA EXCEPT WHERE THE FEES ARE P AYABLE IN RESPECT OF SERVICES UTILIZED IN A BUSINESS OR PROFE SSION CARRIED ON BY SUCH PERSON OUTSIDE INDIA OR FOR THE PURPOSES OF MAKING OR EARNING ANY INCOME FROM ANY SOURCES OU TSIDE I.T.A.NOS.349 & 578/12 :- 16 -: INDIA. AS RIGHTLY OBSERVED BY THE ADDL. CIT IF THE RESIDENT ASSESSEE UTILIZES THE SERVICES OF NON-RESIDENT, IN ITS BUSINESS OUTSIDE INDIA, IT IS COVERED UNDER THE EXCEPTION GI VEN IN THE SECTION ITSELF AND THE PAYMENT RECEIVED BY THE NON- RESIDENT CANNOT BE DEEMED TO ACCRUE OR ARISE IN INDIA. HAVI NG HELD SO, HE COULD NOT HAVE PRESSED INTO SERVICE THE MISCHIEF OF SECTION 40(A)(I) BECAUSE THE APPELLANT DID NOT MAKE APPLICATION U/S 195(2). FOR THIS HE HAS RELIED ON THE DECISION OF THE KARNATAKA HIGH COURT IN THE CASE OF SAMSUNG ELECTRONICS (SUPRA). HOWEVER, THE HON'BLE SUPREME COURT IN ITS RECENT RULING IN GE INDIA TECHNOLOGY CENTRE PVT . LTD. V. CIT & OTHERS IN CIVIL APPEAL NOS. 7541-4542 OF 2010 DATED 09.09.2010 HELD AS UNDER: SECTION 195 USES THE WORD PAYER AND NOT THE WORD ASSESSEE. THE PAYER IS NOT AN ASSESSEE. THE PAY ER BECOMES AN ASSESSEE-IN-DEFAULT ONLY WHEN HE FAILS T O FULFILL THE STATUTORY OBLIGATION UNDER SECTION 195(1) . IF THE PAYMENT DOES NOT CONTAIN THE ELEMENT OF INCOME, THE PAYER CANNOT BE MADE LIABLE. HE CANNOT BE DECLARED TO BE AN ASSESSEE-IN DEFAULT. FURTHER IT HELD IN OUR VIEW, SECTION 195(2) IS BASED ON THE PRINCIPL E OF PROPORTIONALITY. THE SAID SUB-SECTION GETS ATTRACTED IN CASES WHERE THE PAYMENT MADE IS COMPOSITE PAYMENT IN WHICH CERTAIN PORTION OF THE PAYMENT HAS AN ELEMENT OF INCOME CHARGEABLE TO TA X IN INDIA. IT ALSO STATED THIS INTERPRETATION OF THE HIGH COURT COMPLETELY L OSES SIGHT OF THE PLAIN WORDS OF SECTION 195(1) WHICH IN C LEAR TERMS LAYS DOWN THAT TAX AT SOURCE IS DEDUCTIBLE ONL Y FROM SUMS CHARGEABLE UNDER THE PROVISIONS OF THE ACT, I.E. CHARGEABLE UNDER SECTIONS 4, 5 AND 9 OF THE INCOME-TAX ACT, 1961. I.T.A.NOS.349 & 578/12 :- 17 -: IT IS ABSOLUTELY CLEAR FROM THE ABOVE RULING OF THE APEX COURT THAT SECTION 195(2) SPRINGS INTO ACTION ONLY WHEN THE PAYMENT TO THE RECIPIENT CONTAINS AN ELEMENT OF INCOME CHARGEABLE TO TAX IN INDIA. IT HA S ALREADY BEEN DISCUSSED ABOVE THAT THE PAYMENTS MADE TO THE NON-RESIDENTS FOR SERVICES RENDERED OUTSIDE INDIA WOULD NOT AMOUNT TO INCOME ACCRUED OR ARISING IN INDIA. SINCE THE SUM IS NOT CHARGEABLE TO TAX IN IN DIA, PROVISIONS OF SEC. 195(2) ARE NOT ATTRACTED. HENCE, THE DISALLOWANCE U/S 40(A)(I) WOULD ALSO NOT ARISE. ACCORDINGLY THE AO IS DIRECTED TO DELETE THE ADDITI ON. THIS GROUND IS ACCORDINGLY ALLOWED . 14. NOW BEFORE US, LEARNED D.R., STRONGLY ASSAILING THE ORDER OF LD. CIT(APPEALS), SUBMITTED THAT THE ASSESSEE CO ULD NOT BE GIVEN FREEDOM TO DECIDE WHETHER TAX IS TO BE DEDUCT ED AT SOURCE OR NOT. ACCORDING TO HIM, THE ASSESSEE-COMPANY HAD MADE PAYMENTS DIRECTLY FROM INDIA AND NOT FROM NIGERIA A ND WHETHER SECTION 9(1)(VII)(B) OF THE ACT WOULD APPLY OR NOT WAS NOT CLEAR. 15. PER CONTRA, LEARNED D.R. SUPPORTED THE ORDER OF LD. CIT(APPEALS). 16. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL CONTENTIONS. THIS ISSUE IS SLIGHTLY DIFFERENT FROM THE ISSUE RAISED BY THE REVENUE IN ITS GROUND NO.2. HERE, THE PAYME NTS MADE BY THE ASSESSEE WERE TO NON-RESIDENTS INDIAN WHO WERE WORKING ABROAD. ASSESSEE HAD MADE NO DEDUCTION OF TAX AT S OURCE WHATSOEVER. AS PER THE ASSESSEE, THEY WERE WORKING FOR ITS BUSINESS CARRIED ON IN NIGERIA AND HENCE, BY VIRTUE OF SECTION 9(1)(VII)(B) OF THE ACT, THE FEES PAYABLE TO SUCH N ON-RESIDENTS COULD NOT BE CONSIDERED AS INCOME ACCRUING OR ARISI NG TO THEM IN INDIA. WE FIND THAT THAT THE ACIT IN HIS DIRECTION S UNDER SECTION 144A OF THE ACT, HAD STATED AS UNDER:- S 9(1)(VII)(B) ITSELF PROVIDES THE EXCEPTION. IF THE RESIDENT- ASSESSEE UTILIZES THE SERVICES OF THE NON-RESIDENT, IN ITS BUSINESS OUTSIDE INDIA, IT IS COVERED UNDER THE EXCE PTION GIVEN IN THE SECTION ITSELF AND THE PAYMENT RECEIVE D BY THE NON-RESIDENT CANNOT BE DEEMED TO ACCRUE OR ARISE IN INDIA. HERE, THE ASSESSEE COMPANY, UTILIZED THE SERVICES O F TWO NON- RESIDENT IN ITS BUSINESS OUTSIDE INDIA, I.E. IN NIG ERIA. I.T.A.NOS.349 & 578/12 :- 18 -: THEREFORE, THOUGH ASSESSEE COMPANY HAS SHOWN THAT T HE PAYMENTS ARE DIRECTLY RELATED TO THE NIGERIAN PROJE CT, THE FACT THAT THE PAYMENTS WERE MADE FROM INDIA AND NOT FROM NIGERIA LEAVES SOME AMBIGUITY IN DETERMINING WHETHE R THE EXCEPTION PROVIDED TO THE NON-RESIDENT ON UTILIZATIO N OF SERVICES OUTSIDE INDIA WOULD DIRECTLY APPLY TO THE SAID NON- RESIDENT CONSULTANTS AND WHETHER THE INCOME ACCRUE TO THEM IN INDIA OR ABROAD, AS SECTION 9(1)(VII)(B) IS A DEE MING PROVISION. (EMPHASIS SUPPLIED) . 17. IT IS CLEAR FROM THE ABOVE THAT THE PAYMENTS MA DE BY THE ASSESSEE TO NON-RESIDENT CONSULTANTS, WERE DIRECTLY RELATED TO THE NIGERIAN PROJECTS OF THE ASSESSEE. ASSESSEE BEING ENGAGED IN CONSULTANCY BUSINESS, THE FEES PAID TO SUCH CONSULT ANTS ON ITS PROJECTS ABROAD HAS TO BE CONSIDERED AS FEES PAID F OR SERVICES UTILIZED IN THE BUSINESS OF THE ASSESSEE OUTSIDE IN DIA. THEREFORE, CLEARLY SECTION 9(1)(VII)(B) OF THE ACT APPLIED AND THE INCOME EARNED BY SUCH NON-RESIDENTS CANNOT BE DEEMED TO AC CRUE OR ARISING IN INDIA. THEREFORE, ASSESSEE HAD EVERY RE ASON TO HOLD A BONAFIDE BELIEF THAT NO PART OF THE PAYMENT HAD ANY ELEMENT OF INCOME WHICH WAS CHARGEABLE TO TAX IN INDIA. WHEN THE ASSESSEE HELD SUCH A BONAFIDE BELIEF, IT IS CLEARLY COVERED BY THE DECISION OF HON'BLE APEX COURT IN GE INDIA TECHNOLO GY CENTRE PVT. LTD. (SUPRA) AND DECISION OF SPECIAL BENCH OF THIS TRIBUNAL IN PRASAD PRODUCTIONS LTD. (SUPRA). THIS BEING SO, AS SESSEE COULD NOT BE PUT IN A POSITION WHERE IT CAN BE VISITED WI TH THE RIGOURS ASSOCIATED WITH NON-DEDUCTION OF TAX AT SOURCE. IT CANNOT BE FASTENED WITH ANY LIABILITY ASSOCIATED WITH NON-DED UCTION OF TAX AT SOURCE ON SUCH PAYMENTS. IN THESE CIRCUMSTANCES, A PPLICATION OF SECTION 40(A)(I) OF THE ACT WAS NOT CALLED FOR. LD. CIT(APPEALS) WAS RIGHT IN DELETING THE ADDITION. N O INTERFERENCE IS CALLED FOR. GROUND NO.3 RAISED BY THE REVENUE I S DISMISSED. 22. THE FACTS BEING IDENTICAL, RESPECTFULLY FOLLOWING T HE ORDER OF THE TRIBUNAL FOR ASSESSMENT YEAR 2007-08 IN ASSESS EES OWN CASE, WE DISMISS THE GROUNDS OF APPEAL OF THE REVENUE. I.T.A.NOS.349 & 578/12 :- 19 -: 23. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES AND THAT OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED ON MONDAY, THE 25 TH OF JUNE, 2012, AT CHENNAI. SD/- SD/- (V. DURGA RAO) JUDICIAL MEMBER (N.S.SAINI) ACCOUNTANT MEMBER DATED: 25 TH JUNE, 2012 RD COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR