ITO, New Delhi V. Sh. Attar Singh, Delhi

ITA 5880/DEL/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3385 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC 1
• Next Hearing Date: 11-08-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 29-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVI KANT GUPTA SENIOR
• Keywords: Services rendered outside India

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A : NEW DELHI) BEFORE HONBLE PRESIDENT, SHRI G.D. AGRAWAL AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.5880/DEL./2015 (ASSESSMENT YEAR : 2011-12) ITO, WARD 47 (3), VS. SHRI ATTAR SINGH, NEW DELHI. PROP. M/S. MEET EXPORTS, 646, 1 ST FLOOR, GALI GHANTESHWAR, KATRA NEEL, CHANDNI CHOWK, DELHI 110 066. (PAN : AMMPS0771Q) (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SHRI RAVI KANT GUPTA, SENIOR DR DATE OF HEARING : 06.02.2018 DATE OF ORDER : 19.02.2018 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : THE APPELLANT, INCOME-TAX OFFICER, WARD 47 (3), NEW DELHI, BY FILING THE PRESENT APPEAL, SOUGHT TO SET ASIDE T HE IMPUGNED ORDER DATED 06.08.2015 PASSED BY LD. CIT(APPEALS)-16, NEW DELHI QUA THE ASSESSMENT YEAR 2006-07 ON THE GROUNDS INTER AL IA THAT :- 1. WHETHER THE COMMISSION PAYMENT OF RS.32,97,4961- CAN BE ALLOWED EVEN WHEN THESE PAYMENTS WERE MADE WITHOUT OBTAINING NO- DEDUCTION CERTIFICATE U/S 197 OF THE I. T. ACT? ITA NO.5880/DEL./2015 2 2. WHETHER THE COMMISSION PAYMENTS MADE WITHOUT TDS BEING DEDUCTED CAN BE ALLOWED TO THE AGENTS WHO HAVE BUSINESS CONNECTION IN INDIA AND ARE SUBJECT T O TAX DEDUCTION AT SOURCE U/S 195 OF THE ACT? 3. WHETHER THE LD. CIT(A) WAS CORRECT IN FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW IN DELETING TH E ADDITION ON ABOVE ACCOUNTS.? 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICA TION OF THE CONTROVERSY AT HAND ARE : ASSESSING OFFICER NOTICED FROM PROFIT & LOSS ACCOUNT THAT THE ASSESSEE HAD CLAIMED TO HAVE PAID COMMISSION OF RS.32,97,446/- TO ONE OF THE FOREIGN AGENT, NAMELY, SHRI ATTEQUALLA, AN AFGHAN NATIONAL (FOREIGN COMMIS SION AGENT). HOWEVER, DECLINING THE CONTENTIONS RAISED BY THE AS SESSEE, AO PROCEEDED TO CONCLUDE THAT THE PROVISIONS CONTAINED U/S 195 OF THE ACT ARE APPLICABLE AND THE ASSESSEE WAS OBLIGED TO DEDUCT TAX AT SOURCE AND THEREBY DISALLOWED THE AMOUNT OF RS.32,9 7,446/- AND MADE ADDITION THEREOF TO THE TOTAL INCOME OF THE AS SESSEE. 3. ASSESSEE CARRIED THE MATTER BY WAY OF FILING APP EAL BEFORE THE LD. CIT (A) WHO HAS DELETED THE ADDITION BY ALL OWING THE APPEAL. FEELING AGGRIEVED, THE REVENUE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEALS. 4. ASSESSEE HAS NOT PREFERRED TO PUT IN APPEARANCE DESPITE ISSUANCE OF THE NOTICE AND CONSEQUENTLY, WE PROCEED ED TO DECIDE ITA NO.5880/DEL./2015 3 THE PRESENT APPEAL WITH THE ASSISTANCE OF THE LD. D R AS WELL AS ON THE BASIS OF DOCUMENTS AVAILABLE ON THE FILE. 5. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATIV E FOR THE REVENUE TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 6. FROM THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E ORDER PASSED BY THE REVENUE AUTHORITIES BELOW AND GROUNDS OF APPEAL RAISED, THE SOLE QUESTION ARISES FOR DETERMINATION IN THIS CASE IS :- AS TO WHETHER ASSESSEE WAS UNDER OBLIGATION TO DED UCT THE TAX AT SOURCE UNDER SECTION 195 OF THE ACT QUA THE PAYMENT OF RS.32,97,446/- MADE TO SHRI ATTEQUALLA, AN AFGHAN NATIONAL? 7. UNDISPUTEDLY, THE ASSESSEE, A FOREIGN NATIONAL H AS RENDERED SERVICES TO THE ASSESSEE OUTSIDE INDIA AND WHO HAS ALSO RECEIVED PAYMENT OUTSIDE INDIA. HONBLE SUPREME COURT IN ID ENTICAL CASE OF COMMISSION OF INCOME-TAX VS. TOSHOKU LTD. - 125 ITR 525 A NSWERED THE QUESTION IN THE NEGATIVE I.E. IN FAVOUR OF THE ASSESSEE , THE OPERATIVE PART OF THE JUDGMENT IS REPRODUCED BE LOW FOR READY PERUSAL :- (II) THAT THE NON-RESIDENTS DID NOT CARRY ON ANY BUSINESS OPERATION IN THE TAXABLE TERRITORIES: THEY ACTED AS SELLING AGENTS OUTSIDE INDIA. THE RECEIPT IN INDIA OF THE SALE PROCEEDS OF TOBACCO REMITTED OR C AUSED ITA NO.5880/DEL./2015 4 TO BE REMITTED BY THE PURCHASERS FROM ABROAD DID NO T AMOUNT TO AN OPERATION CARRIED OUT BY THE NON-RESIDENTS IN INDIA AS CONTEMPLATED BY CL. ( A) OF THE EXPLANATION TO S.9(1)(I) OF THE I.T. ACT, 1961. THE COMMISSION AMOUNTS WHICH WERE EARNED BY THE NON- RESIDENTS FOR SERVICES RENDERED OUTSIDE INDIA COULD NOT BE DEEMED TO BE INCOME WHICH HAD EITHER ACCRUED OR ARISEN IN INDIA. 8. FOLLOWING THE DECISION RENDERED BY THE HONBLE S UPREME COURT IN COMMISSION OF INCOME-TAX VS. TOSHOKU LTD. (SUPRA), THE LD. CIT (A) HAS RIGHTLY DELETED THE ADDITION. WHEN A FOREIGN NATIONAL HAS SOLD GOODS ON BEHALF OF THE ASSESSEE A S A COMMISSION AGENT OUTSIDE INDIA AND REMITTED THE SALE PROCEEDS FROM ABROAD TO INDIA, THE COMMISSION PAID TO HIM CANNOT BE TAXED I N INDIA BECAUSE THE BUSINESS BY HIM HAS NOT BEEN CARRIED OUT IN IND IA. SO CONSEQUENTLY, FINDING NO ILLEGALITY OR PERVERSITY I N THE IMPUGNED ORDER PASSED BY THE LD. CIT (A), THE PRESENT APPEAL FILED BY THE REVENUE IS HEREBY DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 19 TH DAY OF FEBRUARY, 2018. SD/- SD/- (G.D. AGRAWAL) (KULDIP SINGH) PRESIDENT JUDICIAL MEMBER DATED THE 19 TH DAY OF FEBRUARY, 2018 TS ITA NO.5880/DEL./2015 5 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-16, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.