ITO, CHENNAI V. Comex Exports Pvt Limited, CHENNAI

ITA 628/CHNY/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77239 (ITAT-CHENNAI)
• Duration Of Justice: 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 14-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHAJI P JACOBADDL
• Assessee Lawyers: A S SRIRAMAN
• Keywords: Services rendered outside India; Permanent establishment

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . , , !' # , $ % BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./ I.T.A.NO.628/MDS./2014 ( / ASSESSMENT YEAR : 2010-11) INCOME TAX OFFICER, COMPANY WARD-I(1), CHENNAI 600 034. VS. M/S.COMEX EXPORTS PVT. LTD., 286,THIRUVOTTIYUR HIGH ROAD, CHENNAI 600 021. PAN AABCC 1301 N ( &' / APPELLANT ) ( #(&' / RESPONDENT ) / APPELLANT BY : SHRI SHAJI P JACOB,ADDL. CIT DR / RESPONDENT BY : SHRI A.S.SRIRAMAN, ADVOCATE / DATE OF HEARING : 08.05.2014 ! /DATE OF PRONOUNCEMENT : 09.05.2014 ) / O R D E R PER A.MOHAN ALANKAMONY , ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE REVENUE, AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(A)-II, CHENN AI DATED ITA NO. 628/MDS/2014 2 28.10.2013 IN ITA NO.387/2013-14 PASSED UNDER SECT ION143(3 ) READ WITH SECTION SEC. 250 OF THE ACT. 2. THE REVENUE HAS RAISED THREE ARGUMENTATIVE & EL ABORATE GROUNDS IN ITS APPEAL, HOWEVER THE CRUX OF THE ISSU E IS THAT THE REVENUE IS AGGRIEVED BY THE ORDER OF THE LD. CIT (A ), WHO HAD ALLOWED THE PAYMENT OF COMMISSION TO FOREIGN AGENTS ABROAD FOR THE SERVICES RENDERED OUTSIDE INDIA FOR ` 47,38,372/- AS DEDUCTION WHICH WAS DISALLOWED BY THE LD. ASSESSING OFFICER BY INVO KING SEC.40(A)(IA) OF THE ACT. 3. AT THE OUTSET THE LD. A.R. POINTED OUT THAT TH E ISSUE IS COVERED BY THE DECISION OF THIS TRIBUNAL IN ITA NO.478/MDS /2013, VIDE ORDER DATED 25.04.2014 IN THE ASSESSEES OWN CASE FOR TH E ASSESSMENT YEAR 2009-10 ON IDENTICAL FACTS. THE LD. D.R. COULD NOT CONTROVERT THE SUBMISSIONS OF THE LD. A.R. 4. AFTER HEARING BOTH SIDES AND PERUSING THE ORDE R OF THE TRIBUNAL, WE FIND THAT THE ISSUE IS COVERED BY THE DECISION O F THE TRIBUNAL AS ITA NO. 628/MDS/2014 3 POINTED OUT BY THE LD. A.R. THE RELEVANT PARA OF TH E TRIBUNAL ORDER IS REPRODUCED HEREIN BELOW FOR REFERENCE:- 4. WE HAVE HEARD BOTH PARTIES AND GONE THROUGH TH E CASE FILE AND PERUSED THE CASE LAWS QUOTED BY THE ASSESSEE I.E. M /S.EAGLE PRESS (P) LTD. ITA NO.776/MDS./2008 DATED 6.06.2011, M/S. FARIDA SHOES PRIVATE LTD ITA NO.359/MDS./2013 DATED 2008-09. TH E REVENUES ONLY GRIEVANCE IS THAT THE AFORESAID FOREIGN AGENCY COMMISSION PAID BY THE ASSESSEE TO THE NON RESIDENTS/PAYEE ATTRACTS DISALLOWANCE U/S. 40(A)(I) FOR NON DEDUCTION OF TDS. IT IS MADE CLEAR THAT IN SUPPORT OF THIS PLEA, NO COGENT EVIDENCE HAS BEEN P RODUCED BEFORE US. IT TRANSPIRES FROM THE CASE FILE THE ASSESSEE HAS PAID FOREIGN EXCHANGE COMMISSION TO THEIR NON-RESIDENT AGENTS WH O DO NOT HAVE ANY PERMANENT ESTABLISHMENT IN INDIA. THERE IS NO M ATERIAL TO PROVE THAT THESE PAYMENTS HAVE ARISEN OUT OF AN AGREEMENT EXECUTED IN INDIA. NOR THERE IS ANY EVIDENCE TO CONCLUDE THAT T HE NON- RESIDENT/PAYEE HAS RENDERED ANY TECHNICAL SERVICE T O THE ASSESSEE. THE REVENUE ALSO FAILS TO PROVE THE PAYMENTS TO HAV E BEEN ACCRUED, ARISEN OR PAID IN INDIA SO AS TO MAKE IT T AXABLE UNDER THE PROVISIONS OF THE ACT . TAKING INTO CONSIDERATION ALL THESE CIRCUMSTANCES AND ALSO THE AFORESAID CASE LAW ECHOI NG THE SAME PRINCIPLE, WE HOLD THAT THE ASSESSEE WAS NOT LIABLE TO DEDUCT TDS QUA ABOVE STATED COMMISSION PAID TO ITS NON-RESIDEN T PAYEES. ACCORDINGLY, THE LD. CIT (A)S FINDINGS STAND AFFIR MED. FOLLOWING THE DECISION OF THIS TRIBUNAL, WE HEREBY CONFIRM THE ORDER OF THE LD. CIT (A) WHO HAD DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDING THAT THE COMMISSION PAID TO FOREIGN AGEN TS CANNOT BE SAID ITA NO. 628/MDS/2014 4 TO HAVE ACCRUED OR ARISEN IN INDIA. THEREFORE, THE LD. ASSESSING OFFICER IS HEREBY DIRECTED TO ALLOW THE EXPENDITURE INCURRED BY THE ASSESSEE FOR PAYMENTS MADE TO THE FOREIGN AGENTS O UTSIDE INDIA FOR THE SERVICES RENDERED OUTSIDE INDIA, SINCE THE PROV ISIONS OF SEC.195 OF THE ACT WILL NOT BE APPLICABLE IN THE CASE OF TH E ASSESSEE AND ACCORDINGLY SEC.40(A)(IA) OF THE ACT CANNOT BE INVO KED. 5. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSE D. ORDER PRONOUNCED ON 9 TH MAY, 2014 AT CHENNAI. SD/- SD/- (CHALLA NAGENDRA PRASAD ) (A.MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 9 TH MAY, 2014. K S SUNDARAM. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE