M/s. SPX India Pvt. Ltd., New Delhi V. ACIT, New Delhi

ITA 6370/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97368 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 10-09-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 02-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMRESH BEDI
• Keywords: Transfer pricing

Judgement Text

1 ITA NO.6370&6371/DEL/2013 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: D NEW DELHI BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER AND MS. SUCHITRA KAMBLE , JUDICIAL MEMBER I.T.A .NO.-6370 / DEL/2013 (A. Y 2007-08) I.T.A .NO.-6371 / DEL/2013 (A. Y 2009-10) SPX INDIA PVT. LTD. 415, ANSAL CHAMBER-11, 6, BHIKAJI CAMA PLACE NEW DELHI AAACV3323L (APPELLANT) VS ACIT CIRCLE-9(1) NEW DELHI (RESPONDENT) APPELLANT BY NONE RESPONDENT BY SH AMRESH BEDI, SR. DR ORDER PER SUCHITRA KAMBLE, JM I.T.A .NO.-6371 /DEL/2013 (A. Y 2009-10) THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE O RDER DATED 18/09/2013 PASSED BY CIT(A) XII, NEW DELHI. 2. THE GROUND OF APPEAL RAISED BY THE REVENUE IS AS FOLLOWS: 1. THAT THE LD. CIT(APPEALS) HAS GROSSLY ERRED IN LAW AND ON FACTS AND IN THE CIRCUMSTANCES OF THE ASSESSEES CA SE IN CONFIRMING THE ADDITION ON ACCOUNT OF COMMISSION PA ID TO FOREIGN DATE OF HEARING 10.09.2015 DATE OF PRONOUNCEMENT 15.09.2015 2 ITA NO.6370&6371/DEL/2013 AGENTS FOR THE SERVICES RENDERED OVERSEAS FOR ALLEG ED NON- DEDUCTION OF TAX AT SOURCE. 2. THAT THE LD. CIT(APPEALS) FAILED TO APPRECIATE T HAT THE PROVISIONS OF SECTION 195 OF WITHHOLDING TAX ARE NO T ATTRACTED ON THE FACTS OF THE ASSESSEES CASE. 3. THAT THE LD. CIT(APPEALS) GROSSLY ERRED IN LAW I N NOT FOLLOWING THE ORDER OF HONBLE ITAT IN ASSESSEES O WN CASE ON THIS ISSUE, I.E. PAYMENT OF COMMISSION TO SAME FORE IGN AGENTS IN THE IMMEDIATELY PRECEDING YEAR. 4. THAT THE ORDER PASSED BY THE LD. CIT (APPEALS) IS BAD IN LAW. 3. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUF ACTURE AND SALE OF INDUSTRIAL FILTERS AND FILTER ELEMENTS. DUR ING THE YEAR UNDER CONSIDERATION THE ASSESSE HAD UNDERTAKEN INTERNATIO NAL TRANSACTIONS WITH ITS ASSOCIATED ENTERPRISES. IN TH IS CASE THE ASSESSING OFFICER HAS SIMPLY ADDED THE AMOUNT REVEA LED FOR COMMISSION PAID TO THE PARTIES MENTIONED IN THE ASS ESSMENT ORDER. THE AO HELD THAT THE ASSESSEE HAS NOT DEDUCTED TAX ON THE SAID COMMISSION PAID AND THEREFORE THE SAME WAS DISALLOW ED IN VIEW OF THE PROVISIONS OF SECTION 195 READ WITH EXPLANATION (II) TO SECTION 9 (1) (VI) OF THE INCOME TAX ACT, 1961. THE SAME WAS CHARACTERIZED AS FEE FOR TECHNICAL SERVICES ARISES IN INDIA AND THUS AO ADDED RS.6,35,189/- TO THE INCOME OF THE ASSESSEE. 4. THE CIT(A) UPHELD THE ORDER OF THE ASSESSING OFF ICER STATING THEREBY THAT THE CIRCULAR NO. 23 DATED 23/07/1969 A ND CIRCULAR NO. 786 DATED 7/2/2000 HAVE BEEN WITHDRAWN BY CIRCU LAR NO. 7/2009 DATED 22/10/2009. THE COMMISSION PAID TO FO REIGN AGENT WOULD BE CHARACTERIZE AS FEE FOR TECHNICAL SERVICE S BY THE CIT(A). 3 ITA NO.6370&6371/DEL/2013 NEITHER DID THE AO NOR THE CIT(A) HAS GIVEN ANY PRO PER REASONING AS TO HOW THE COMMISSION PAID TO THE FOREIGN AGENT AMO UNT TO FEE FOR TECHNICAL SERVICES. IN LIGHT OF THE LACK OF REASON ING IN CIT(A)S ORDER, THE MATTER IS RESTORED TO CIT(A) FOR PASSING SPEAKI NG ORDER. 5. IN RESULT, THIS APPEAL IS ALLOWED FOR STATISTICA L PURPOSES. I.T.A .NO.-6370 /DEL/2013 (A. Y 2007-08 ) 6. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER DATED 18/09/2013 PASSED BY CIT(A) XII, NEW DELHI. 7. THE GROUND OF APPEAL RAISED BY THE REVENUE IS AS FOLLOWS: 1. THAT THE LD. CIT(APPEALS) HAS GROSSLY ERRED IN LAW AND ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE IN CONFIRMING THE LEVY OF PENALTY U/S 271(1) (C) OF TH E INCOME TAX ACT. 2. THAT THE LD. CIT(APPEALS) HAS GROSSLY ERRED IN LAW IN HOLDING THAT PROVISIONS OF SECTION 271(1) (C) ARE A PPLICABLE TO THE FACTS OF THE ASSESSEES CASE. THE ORDER PAS SED BY LD. CIT(APPEALS) UPHOLDING THE ORDER OF A.O U/S 271 (1) (C). IS BAD IN LAW. 3. THAT THE LD. CIT(APPEALS) HAS GROSSLY ERRED IN L AW IN UPHOLDING THE LEVY OF PENALTY ON THE TOTAL SUM OF A DDITION ALTHOUGH PART OF THE ADDITION WAS, DIRECTED TO BE D ELETED BY THE HONBLE ITAT. 4. THAT THE LD. CIT(APPEALS) FAILED TO APPRECIATE T HAT EACH ADDITION MADE DOES NOT LED TO LEVY OF PENALTY. 8. THE CIT(A) HAS OVERLOOKED THAT FOR LEVYING PENAL TY FOR FAILURE TO COLLECT TAX AT SOURCE THERE IS SEPARATE PROVISIONS UNDER SECTION 4 ITA NO.6370&6371/DEL/2013 271CA OF THE INCOME TAX ACT, 1961. NEITHER DID THE ASSESSING OFFICER NOR THE CIT(A) HAS TAKEN INTO ACCOUNT THE S AME. THE ASSESSING OFFICER HAS INCORRECTLY LEVIED PENALTY U/ S 271 (1) (C) IN THE PRESENT CASE. THEREFORE, THE PENALTY IS CANCELLED. 9. HENCE, THE APPEAL IS ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 15 TH OF SEPTEMBER 2015. SD/- SD/- ( S.V. MEHROTRA) (SUCHITRA KAMBLE ) ACCOUNTANT MEMBER JUDICIAL ME MBER DATED: 15 /09/2015 *R. NAHEED* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 5 ITA NO.6370&6371/DEL/2013 DATE 1. DRAFT DICTATED ON 10.09.2015 PS 2. DRAFT PLACED BEFORE AUTHOR 10.09.2015 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 11.09.2015 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 14.09.2015 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 15.09.2015 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER. 6 ITA NO.6370&6371/DEL/2013