Adient India Private Limited, Pune V. Deputy Commissioner of Income Tax, Pune

ITA 688/PUN/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8328 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 23-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHABANA PARVEEN
• Assessee Lawyers: PINKESH JAIN
• Keywords: Non-deduction of tax; TDS
• Section: 143(3); 195; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE . , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.688/PUN/2017 / ASSESSMENT YEAR : 2006-07 ADIENT INDIA PRIVATE LIMITED, PLOT NO.1, S.NO.235 & 245 HINJEWADI, TALUKA: MULSHI, PUNE-411057. PAN : AAACT6342D ....... / APPELLANT / V/S. DCIT, CIRCLE-14, PUNE. / RESPONDENT ASSESSEE BY : SHRI PINKESH JAIN REVENUE BY : SMT. SHABANA PARVEEN / DATE OF HEARING : 13.06.2019 / DATE OF PRONOUNCEMENT : 04.07.2019 / ORDER PER D. KARUNAKARA RAO, AM: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A)- 7, PUNE DATED 18.11.2016 FOR THE ASSESSMENT YEAR 2006-07. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER :- 1. THE LEARNED CIT(A) ERRED IN DISALLOWING REIMBURSEMENT OF SALARY COSTS TO THE EXTENT OF RS. 69,12,276 UNDER SECTION 40(A)(I) OF THE ACT FOR NON-DEDUCTION OF TAX AT SOURCE. 2. THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THAT THE APPELLANT WAS ISSUED NIL WITHHOLDING TAX CERTIFICATES FOR SIMILAR PAYMENTS AND THEREFORE, THE REIMBURSEMENT OF RS. 69,12,276, BEING OF THE SAME NATURE, OUGHT TO HAVE BEEN NOT DISALLOWED UNDER SECTION 40(A)(I) OF THE ACT. 3. WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED CIT(A) FURTHER ERRED IN NOT APPRECIATING THAT REIMBURSEMENT OF SALARY COSTS PAID TO JOHNSON CONTROLS AUTOMOTIVE PTE. LTD, SINGAPORE IS NOT CHARGEABLE TO TAX IN INDIA AND THEREFORE, THERE IS NO LIABILITY OF THE APPELLANT TO DEDUCT TAX UNDER SECTION 195 OF THE ACT. 2 ITA NO.688/PUN/2017 4. THE APPELLANT CRAVES LEAVE TO ADD, TO AMEND, TO ALTER, TO SUBSTITUTE, AND TO WITHDRAW ANY OR ALL OF THE ABOVE GROUNDS OF APPEAL. INVALID REVISION ORDER FINDING OF THE TRIBUNAL 3. BEFORE US, LD. COUNSEL FOR THE ASSESSEE, AT THE OUTSET, INFORMED THAT THE ASSESSING OFFICER MADE FRESH ASSESSMENT DATED 13.10.2015 GIVING EFFECT TO THE DIRECTION OF THE PR. CIT-6, PUNE VIDE REVISION ORDER U/S 263 OF THE ACT. ON THE VALIDITY OF THE SAID REVISIONAL ORDER OF THE PR.CIT, TRIBUNAL PASSED AN ORDER QUASHING THE SAID ORDER OF THE CIT. IN SUPPORT OF THE SAME, LD. COUNSEL FILED A COPY OF THE RELEVANT ORDER OF THE TRIBUNAL DATED 18.04.2018 VIDE ITA NO.785/PUN/2015 FOR THE ASSESSMENT YEAR 2006-07. FILING THE COPY OF THE ORDER OF THE TRIBUNAL (SUPRA) AND BRINGING OUR ATTENTION TO PARA 10 OF THE SAID ORDER OF THE TRIBUNAL (SUPRA), LD. COUNSEL SUBMITTED THAT PRESENT FRESH ASSESSMENT DOES NOT HAVE LEGS TO STAND AND HENCE, THE APPEAL OF THE ASSESSEE SHOULD BE ALLOWED ON TECHNICAL GROUND ITSELF. 4. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE RELIED DUTIFULLY ON THE ORDERS OF THE REVENUE AUTHORITIES I.E. REVISION ORDER AND THE FRESH ASSESSMENT ORDER MADE U/S 263 R.W.S. 143(3) OF THE ACT. 5. ON HEARING BOTH THE SIDES, ON THE VALIDITY OF THE REVISION ORDER AND THE CONSEQUENT FRESH ASSESSMENT ORDER, WE FIND THE CONTENTS OF PARA 10 OF THE ORDER OF THE TRIBUNAL (SUPRA) ARE RELEVANT FOR EXTRACTING AND THE SAME READS HEREUNDER :- 10. WE HEARD BOTH THE PARTIES AND PERUSED THE ORDER OF THE CIT AS WELL AS THE WRITTEN SUBMISSIONS FILED BY THE ASSESSEE. IT IS AN UNDISPUTED FACT 3 ITA NO.688/PUN/2017 THAT THE ASSESSEE INCURRED TOTAL SUM OF RS.2.06 CRORES (ROUNDED OFF) TOWARDS THE SERVICES RENDERED BY THE EXPATRIATES OF THE COMPANY AT SINGAPORE. THIS IS NOT SUBJECTED TO TAX IN INDIA WHICH IS EVIDENT FROM THE FACT THAT THE AO ALREADY GRANTED NIL TDS CERTIFICATE BENEFIT TO THE ASSESSEE IN RESPECT OF THE MAJOR PORTION OF US$ 3,08,675.33 OUT OF GROSS PAYMENT OF US$ 4,55,033.27. FOR THE BALANCE AMOUNT OF US$ 1,46,357.94 ASSESSEE COULD NOT FOLLOW IT UP WITH THE AO FOR GETTING THE NIL TDS CERTIFICATE FOR THIS AMOUNT ALSO DUE TO CHANGES IN THE MANAGEMENT OF THE COMPANY. CONCERNED OFFICIALS HAVE LEFT THE COMPANY. IT IS NOT THE CASE OF THE CIT THAT THE SAID PAYMENTS ARE CHARGEABLE TO TAX IN INDIA. AS SUCH, THERE IS ALREADY AN OPINION OF AO IN EXISTENCE TO DEMONSTRATE THAT THE SAID PAYMENTS ARE PRIMA-FACIE NOT CHARGEABLE TO TAX IN INDIA . THE SAME IS EVIDENT FROM THE FACT THAT THE AO ISSUED NIL TDS CERTIFICATES IN RESPECT OF SIMILAR PAYMENTS. CONSIDERING THE SAID FACTS, WE ARE OF THE OPINION THAT THE CIT IS NOT PROPER IN REVIEWING AND DIRECTING THE AO TO GO FOR THE FRESH ASSESSMENT WITHOUT CRYSTALLISING ABOUT THE CHARGEABILITY OF THE SAID RECEIPTS IN INDIA. IN OUR VIEW, THE CIT FAILED TO GIVE A CLEAR FINDING TO THE FACTUAL OR LEGAL ERRORS IN THE DECISION OF THE AO IN DROPPING THE RE-OPENING OF THE RE-ASSESSMENT PROCEEDINGS. FURTHER, WE FIND THE FINDING OF CIT IN STATING THAT THE AO FAILED TO CONDUCT PROPER ENQUIRIES IS TOO GENERAL AND CASUAL. SUCH FINDINGS OF CIT WITHOUT WELL REASONED ORDER OF EACH OF THE ISSUES GIVEN ABOVE, ARE UNSUSTAINABLE. THUS, THE CIT IS PREVENTED FROM INVOKING THE PROVISIONS OF SECTION 263 OF THE ACT, WHICH IN PRESENT CASE, IS AIMED AT CONDUCTING MERE ROVING ENQUIRIES WITHOUT SPECIFYING THE ERRONEOUS ASSUMPTION OF LAW OR FACT BY THE AO. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 6. THUS, THE TRIBUNAL INVALIDATED THE REVISION ORDER OF THE CIT. THEREFORE, AS PER LD. AR, THE FRESH ASSESSMENT ORDER, WHICH IS THE PRODUCT OF THE SAID ORDER OF THE CIT, NEEDS TO BE HELD INVALID TOO. CONSIDERING THE ABOVE ORDER OF THE TRIBUNAL ON THE REVISION ORDER OF THE CIT IN ASSESSEES OWN CASE (SUPRA), THE FRESH ASSESSMENT ORDER OF THE ASSESSING OFFICER DATED 13.10.2015 HAS NO LEGS TO STAND. ACCORDINGLY, ON THIS PRELIMINARY ISSUE RAISED BY THE ASSESSEE, NEEDS TO BE ALLOWED. CONSEQUENTLY, CONSIDERING THE SAID RELIEF ON TECHNICAL GROUNDS, WE ARE OF THE OPINION THAT THE ADJUDICATION OF THE GROUND OF THE ASSESSEE ON THE MERITS OF THE ADDITIONS, BECOMES AN ACADEMIC EXERCISE ONLY. ACCORDINGLY, THE SAID GROUNDS NO.1 TO 3 ARE DISMISSED AS ACADEMIC. THE GROUND NO.4 IS GENERAL IN NATURE AND HENCE THE SAME IS DISMISSED AS GENERAL. 4 ITA NO.688/PUN/2017 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED AS INDICATED ABOVE. ORDER PRONOUNCED ON 04 TH DAY OF JULY, 2019. SD/- SD/- ( /VIKAS AWASTHY) ( . /D. KARUNAKARA RAO) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; / DATED : 04 TH JULY, 2019. SUJEET / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(A)-7, PUNE. 4. THE CCIT, PUNE. 5. , , , / DR, ITAT, A BENCH, PUNE. 6. / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE.