ACIT, New Delhi V. Sh. Mukesh Bhasin, New Delhi

ITA 5934/DEL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 3909 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 03-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Non-deduction of tax

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : E : NEW DELHI BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.5934/DEL/2014 ASSESSMENT YEAR : 2010-11 ACIT, CIRCLE 26(1), NEW DELHI. VS. MUKESH BHASIN, E-21, 1 ST FLOOR, RAJOURI GARDEN, NEW DELHI. PAN: AAMPB8009J (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G.N. GUPTA, AR DEPARTMENT BY : SHRI ARUN KUMAR YADAV, SR. DR DATE OF HEARING : 23.10.2017 DATE OF PRONOUNCEMENT : 24.10.2017 ORDER PER R.S. SYAL, VP: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE LD. CIT(A) ON 29.08.2014 IN RELATION TO THE ASS ESSMENT YEAR 2010-11. ITA NO.5934/DEL/2014 2 2. THE ONLY ISSUE RAISED IN THIS APPEAL IS AGAIN ST THE DELETION OF DISALLOWANCE OF RS.55,97,200/-, BEING, THE AMOUNT PAID AS COMMISSION TO NON-RESIDENT WITHOUT DEDUCTION OF TAX AT SOURCE. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE PAID COMMISSION OF RS.55,97,200/- TO A FOREIGN AGENT, NAMELY, MS ASMA MALIK DOHAN. SUCH COMMISSION WAS PAID IN RESPECT O F EXPORT OF BLACK PACKED TEA TO STATE COMPANY FOR FOODSTUFF TRADING, MINISTRY OF TRADE, BAGHDAD, IRAQ. EXPORT TO THIS PARTY WAS EFFECTED T HROUGH MS ASMA MALIK DOHAN. THE ASSESSING OFFICER MADE DISALLOWAN CE U/S 40(A)(I) ON THE GROUND THAT THE ASSESSEE FAILED TO DEDUCT TAX A T SOURCE BEFORE MAKING PAYMENT TO THIS PARTY. THE LD. CIT(A) DELETED THE DISALLOWANCE. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS AN ADMITTED POSITION THA T THE AMOUNT OF COMMISSION WAS PAID TO A NON-RESIDENT FOR RENDERING SERVICES OUTSIDE INDIA. DISALLOWANCE U/S 40(A)(I) PRE-SUPPOSES THE OTHERWISE GENUINENESS OF THE TRANSACTION, BUT, THE MAKING OF DISALLOWANCE FOR NON-DEDUCTION OF TAX AT SOURCE. SECTION 195 PROVIDES THAT ANY PERSO N RESPONSIBLE FOR ITA NO.5934/DEL/2014 3 PAYING TO A NON-RESIDENT, NOT BEING A COMPANY OR TO A FOREIGN COMPANY, ANY SUM CHARGEABLE UNDER THE PROVISIONS OF THIS ACT , SHALL, AT THE TIME OF CREDIT OF SUCH INCOME TO THE ACCOUNT OF PAYEE OR AT THE TIME OF PAYMENT THEREOF, WHICHEVER IS EARLIER, DEDUCT INCOME-TAX TH EREON AT THE RATES IN FORCE. THE PRE-REQUISITE FOR INVOKING SECTION 195 IS THAT THE AMOUNT SHOULD BE CHARGEABLE UNDER THE PROVISIONS OF THIS ACT. IF AN AMOUNT IS NOT CHARGEABLE TO TAX IN THE HANDS OF RECIPIENT UND ER THE PROVISIONS OF THE ACT, THERE CAN BE NO QUESTION OF APPLICABILITY OF S ECTION 195 AND, IN TURN, DISALLOWANCE U/S 40(A)(I). THE HONBLE SUPREME COU RT IN GE INDIA TECHNOLOGY CENTRE P. LTD. VS. CIT & ANR. (2010) 327 ITR 456 (SC) HAS HELD THAT IF THE REMITTANCE TO NON-RESIDENT IS NOT TAXABLE, THERE IS NO QUESTION OF TAX AT SOURCE BEING DEDUCTED. WE ARE C ONFRONTED WITH A SITUATION IN WHICH THE ASSESSEE PAID COMMISSION TO A NON-RESIDENT AGENT FOR RENDERING SERVICES ABROAD. SUCH A COMMISSION I S OBVIOUSLY NOT CHARGEABLE TO TAX IN THE HANDS OF THE RECIPIENT AS HAS BEEN HELD BY THE HON'BLE ALLAHABAD HIGH COURT IN CIT VS. ALLIED EXIM (2014) 363 ITR 62 (ALL). THIS DECISION HAS BEEN RENDERED AFTER CONSIDERING THE WITHDRAWAL OF CIRCULAR NO.786. SIMILAR VIEW HAS BEEN TAKEN BY THE HON'BLE ITA NO.5934/DEL/2014 4 BOMBAY HIGH COURT IN DIT VS. WIZCRAFT INTERNATIONAL ENTERTAINMENT P. LTD. (BOM) (2014) 89 CCH 84 MUMHC. IN OUR CONSIDERED OPINION, THE LD. CIT(A) HAS TAKEN AN UNIMPEACHABLE VIEW IN DELET ING THE DISALLOWANCE. WE, THEREFORE, UPHOLD THE SAME. 5. IN THE RESULT, THE APPEAL FILED BY THE REV ENUE IS DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 24.10.201 7. SD/- SD/- [KULDIP SINGH] [R.S. SYAL] JUDICIAL MEMBER VICE PRESIDENT DATED, 24 TH OCTOBER, 2017. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.