ITO 12(3)(4), MUMBAI V. ARMAYESH GLOBAL, MUMBAI

ITA 5887/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78765 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-04-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 22-04-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 23-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RA JEEV WAGLAY
• Keywords: Permanent establishment; Non-deduction of tax

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'A' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ITA NO. 5887/MUM/2011 (ASSESSMENT YEAR: 2008-09) INCOME TAX OFFICER - 12(3)(4) M/S. ARMAYESH GLOBAL ROOM NO. 123, AAYAKAR BHAVAN M.K. ROAD, MUMBAI 400020 VS. KAMANWALA CHAMBERS, 2ND FLOOR P.M. ROAD, FORT, MUMBAI 400001 PAN - AAEFA8213H APPELLANT RESPONDENT APPELLANT BY: SHRI GANESH BARE RESPONDENT BY: SHRI RAJEEV WAGLAY DATE OF HEARING: 22.04.2014 DATE OF PRONOUNCEMENT: 22.04.2014 O R D E R PER D. MANMOHAN, V.P. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A)-23, MUMBAI AND IT PERTAINS TO A.Y. 2008-09. 2. THOUGH NUMBER OF GROUNDS WERE URGED BEFORE US, THE ISSUE PERTAINS TO DISALLOWANCE OF AN AMOUNT OF ` 28,57,620/- IN RESPECT OF COMMISSION PAID BY THE ASSESSEE TO FOREIGN AGENT; THE CASE OF THE REVE NUE IS THAT THE AMOUNT WAS PAID IN THE FORM OF MANAGERIAL SERVICES/TECHNIC AL SERVICES ON WHICH ASSESSEE IS LIABLE TO DEDUCT TAX AT SOURCE AND IN T HE ABSENCE OF DEDUCTION OF TAX, SECTION 40(A)(I) IS APPLICABLE. IN THE OPINION OF THE AO, M/S. INDIJACK LTD. IS OFFERING SERVICES TO THE ASSESSEE, WHICH ARE MAN AGERIAL IN NATURE. IN THIS REGARD THE AO DISCUSSED THE PROVISIONS OF SECTION 1 95/40(A)(I)/9(1)(VII) READ WITH EXPLANATION 2 AND BY PLACING RELIANCE UPON THE DECISION OF THE ITAT MUMBAI BENCHES IN THE CASE OF ANCHOR HEALTH AND BEA UTY CARE PVT. LTD. (ITA NO. 7164/MUM/2008) HE CONCLUDED THAT THE ASSES SEE WAS LIABLE TO DEDUCT TAX AT SOURCE AND UPON FAILURE TO DEDUCT TAX PROVISIONS OF SECTION 40(A)(I) STAND ATTRACTED. ITA NO. 5887/MUM/2011 M/S. ARMAYESH GLOBAL 2 3. IT DESERVES TO BE NOTICED THAT SIMILAR ISSUE AROSE IN ASSESSEES OWN CASE FOR A.Y. 2007-08 WHEREIN THE AO ADOPTED THE SA ME APPROACH BUT THE ITAT SET ASIDE THE DISALLOWANCE VIDE ITS ORDER DATE D 04.05.2012 (ITA 8822/MUM/2010). ON AN APPEAL FILED BY THE ASSESSEE THE LEARNED CIT(A) EXTRACTED THE ORDER OF THE ITAT IN ASSESSEES OWN C ASE FOR EARLIER YEAR TO HOLD THAT IN THE PRESENT CASE THE OVERSEAS AGENT DID NOT RENDER ANY SERVICE IN INDIA AND IT HAD NO PERMANENT ESTABLISHMENT IN INDI A. THE ORDERS WERE SENT DIRECTLY BY THE FOREIGN PURCHASERS REMITTED TO THE ASSESSEE IN INDIA AND EVEN PAYMENT FOR EXPORT WAS RECEIVED BY THE ASSESSEE IN FOREIGN CURRENCY DIRECTLY FROM FOREIGN PURCHASERS AND COMMISSION WAS PAID TO FOREIGN AGENT THEREAFTER. IT WAS, THEREFORE, CONCLUDED THAT THE P AYMENT MADE TO OVERSEAS COMMISSION AGENT WAS NOT FOR TECHNICAL/MANAGERIAL S ERVICES AND HENCE PROVISIONS OF SECTION 195 ARE NOT ATTRACTED AND CON SEQUENTLY THERE IS NO CASE FOR DISALLOWANCE UNDER SECTION 40(A)(I) OF THE ACT. AGGRIEVED, REVENUE IS IN APPEAL BEFORE US. 4. THE LEARNED COUNSEL FOR THE ASSESSEE PLACED RELIANC E UPON THE ORDER OF THE ITAT A BENCH, MUMBAI IN ASSESSEES OWN CASE F OR EARLIER YEAR (SUPRA). 5. THE LEARNED D.R. COULD NOT CONTROVERT THE FINDINGS OF THE LEARNED CIT(A) AS WELL AS THE ITAT IN THE AFOREMENTIONED CA SE BUT MERELY RELIED UPON THE ORDER PASSED BY THE AO. 6. HAVING REGARD TO THE RIVAL SUBMISSIONS WE ARE OF TH E VIEW THAT THE ORDER PASSED BY THE LEARNED CIT(A) DOES NOT CALL FO R ANY INTERFERENCE. WE, THEREFORE, UPHOLD THE ORDER PASSED BY THE CIT(A) AN D DISMISS THE APPEAL FILED BY THE REVENUE. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND APRIL, 2014. SD/- SD/- (N.K. BILLAIYA) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI, DATED: 22 ND APRIL, 2014 ITA NO. 5887/MUM/2011 M/S. ARMAYESH GLOBAL 3 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 23, MUMBAI 4. THE CIT 12, MUMBAI CITY 5. THE DR, A BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.