Bulk Pack Exports Ltd, Indore V. ITO (IT & TP), Bhopal

ITA 708/Ind/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 3426 (ITAT-INDORE)
• Duration Of Justice: 2 year(s) 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-10-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 16-06-2020
• Assessment Year: 2016-2017
• Appeal Filed On: 16-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; TDS
• Section: 90; 206AA; 195; 20

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NOS.707 & 708/IND/2018 ASSESSMENT YEARS:2015-16 & 2016-17 BULK PAC K EXPORTS LTD. 507, B-BLOCK, 5 TH FLOOR, CORPORATE HOUSE, R.N.T. MARG, INDORE / VS. ITO(IT & TP), BHOPAL ( APPELLANT ) ( REVENUE ) P.A. NO. AABCB5569R APPELLANT BY S/SHRI ANIL KAMAL GARG & ARPIT GAU R, ARS REVENUE BY SMT. VINEETA DUBE , SR. DR DATE OF HEARING: 05.10.2020 DATE OF PRONOUNCEMENT: 20.10.2020 / O R D E R PER KUL BHARAT, J.M: THESE TWO APPEALS BY THE ASSESSEE PERTAINING TO ASSESSMENT YEARS 2015-16 & 2016-017 ARE DIRECTED AGAINST THE DIFFERENT ORDER OF LD. COMMISSIONER OF IN COME BULK PACK EXPORTS, LTD. /ITANO.707 & 708 /2018 2 TAX (APPEALS)(IN SHORT LD. CIT(A)-13 AHMEDABAD, DAT ED 29.06.2018. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL IN ITANO.707/IND/2018 FOR A.Y. 2015-16: GROUNDS OF INCOME-TAX APPEAL BEFORE THE HON'BLE INCO ME-TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE, AGAINST TH E APPELLATE ORDER PASSED UNDER S. 250/201 (1 )/20 1 (1 A) OF THE INCOME-TAX ACT, 1961 BY THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)- 13, AHMEDABAD, PERTAINING TO THE F.Y. 2014-15 RELEVANT TO A.Y. 2015-16 IN RESPONSE TO THE APPEAL FILED AGAINST THE ORDER UN DER . 201(1)/201(1A) OF THE ACT, PASSED BY THE LEARNED INCO ME-TAX OFFICER (IT & TP), BHOPAL. 1. THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LEARNED CIT(A) GROSSLY ERRED IN PASSING THE IMPUGNED ORDER WIT HOUT CONSIDERING THE WRITTEN SUBMISSION FILED BY THE APPEL LANT THEREBY WITHOUT GIVING REASONABLE AND SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE APPELLANT. 2. THAT, WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED CI T(A) GROSSLY ERRED, BOTH ON FACTS AND IN LAW, IN CONFIRMING THE A CTION OF THE AO IN HOLDING THE APPELLANT IN DEFAULT UNDER S.20 1 (1) IN RESPECT OF THE WITHHOLDING TAX AND AS ALSO, UNDER S.201(1A) IN RESPE CT OF INTEREST THEREON, RESPECTIVELY AT RS.3,79,089/- AND RS.68,42 3/-, AGGREGATING TO RS.4,47,512/-. 3. THAT, WITHOUT PREJUDICE TO THE ABOVE, THE AUTHORITI ES BELOW GROSSLY ERRED, BOTH ON FACTS AND IN LAW, IN NOT APPRECIATING THE MATERIAL FACT THAT THE PAYMENTS MADE BY THE APPELLANT TO TWO FORE IGN COMPANIES NAMELY MIS. BELGISCH VERPAKKINGSINSTITUUT, BELGIUM (IN SHORT, 'BVK') AND M/S. LABORDATA INTERNATIONAL MATERIALS TESTING I NSTITUTE GERMANY (IN SHORT, 'LIMTI'), BEING ON ACCOUNT OF TE STING CHARGES, WERE NOT IN THE NATURE OF PAYMENT OF CONSIDERATION TOWARD S RENDERING OF ANY MANAGERIAL, TECHNICAL OR CONSULTANCY SERVICES, AS CONTEMPLATED IN EXPLANATION 2 TO CLAUSE (VII) OF SUB-SECTION (1) OF SECTION 9 OF THE INCOME-TAX ACT, 1961 AND THEREFORE, THE SAME COULD NO T BE DEEMED AS AN INCOME ACCRUE OR ARISE TO SUCH FOREIGN COMPAN IES IN INDIA WARRANTING INCIDENCE OF WITHHOLDING OF TAX AT SOURCE UNDER S.195 OF THE ACT AND CONSEQUENTLY, THE APPELLANT COULD NOT HA VE BEEN DEEMED BULK PACK EXPORTS, LTD. /ITANO.707 & 708 /2018 3 AS AN ASSESSEE IN DEFAULT IN TERMS OF PROVISIONS OF SECTION 20 I (L) OF THE ACT. 4. THAT, WITHOUT PREJUDICE TO THE ABOVE, THE AUTHORITI ES BELOW GROSSLY ERRED, BOTH ON FACTS AND IN LAW, IN NOT APPRECIATING THE MATERIAL FACT THAT BOTH THE FOREIGN COMPANIES, TO WHOM THE APPELL ANT HAD MADE PAYMENTS OF TESTING CHARGES, WERE NOT HAVING ANY RE SIDENCE OR PLACE OF BUSINESS OR BUSINESS CONNECTION OR PERMANENT EST ABLISHMENT IN INDIA AND FURTHER, NONE OF THE COMPANIES RENDERED ANY SERVICES TO THE APPELLANT IN INDIA AND AS ALSO, NOT RECEIVED ANY PAYMENT IN INDIA AND CONSEQUENTLY, INCOME OF SUCH FOREIGN COMPANIES WAS NOT CHARGEABLE TO INCOME TAX SO AS TO ATTRACT THE PROVI SIONS OF WITHHOLDING TAX. 5. THAT, WITHOUT PREJUDICE TO THE ABOVE AND WITHOUT ADM ITTING THAT THE APPELLANT WAS IN ANY MANNER LIABLE FOR TDS UNDER S.1 95 OF THE ACT, THE AUTHORITIES BELOW GROSSLY ERRED, BOTH ON FACTS AND IN LAW, IN NOT CONSIDERING AND APPRECIATING THE MATERIAL FACT THAT B OTH THE FOREIGN COMPANIES TO WHOM THE APPELLANT HAD MADE PAYMENTS WE RE ENTITLED TO THE BENEFITS CONFERRED UNDER SUB-SECTION (2) OF SE CTION 90 OF THE ACT AS WITH BOTH THE COUNTRIES, OF WHICH THESE TWO FORE IGN COMPANIES WERE RESIDENT OF, I.E. BELGIUM AND GERMANY, CENTRAL GOVERNMENT OF INDIA HAD ENTERED INTO AGREEMENTS IN ACCORDANCE WITH THE PROVISIONS OF SUB-SECTION (1) OF SECTION 90 OF THE ACT. 6. THAT, WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED CI T(A) AS WELL AS LD. AO GROSSLY ERRED IN NOT CONFERRING THE BENEFIT UN DER SUB-SECTION (2) OF SECTION 90 OF THE ACT MERELY FOR THE WANT OF TAX RESIDENCY CERTIFICATES DESPITE BEING THE FACT THAT THE LEARNED AO HIMSELF HAD ADMITTED THE RESIDENCY STATUS OF SUCH COMPANIES THAT OF BELGIUM AND GERMANY. 7. THAT, WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED C IT (A) AS WELL AS LD. AO GROSSLY ERRED, BOTH ON FACTS AND IN LAW, IN NOT CONSIDERING THE MATERIAL FACT THAT THE PROVISIONS OF SECTION 206AA OF THE ACT CANNOT OVERRIDE DOUBLE TAXATION AVOIDANCE AGREEMENTS ENTERE D INTO IN ACCORDANCE WITH THE PROVISIONS OF S.90(1) OF THE AC T. 8. THAT, WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED C IT (A) AS WELL AS LD. AO GROSSLY ERRED, BOTH ON FACTS AND IN LAW, BY APP LYING TAX RATE AT THE RATE OF 20.6% WITHOUT CONSIDERING THE MATERIA L FACT THAT THE PROVISIONS OF S.206AA OF THE ACT WHICH HAVE BEEN AM ENDED BY WAY OF INSERTION OF A NEW SUB-SECTION (7) TO SUCH SECTI ON, WERE NOT APPLICABLE TO A FOREIGN COMPANY. 9. THAT, WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED CI T(A) AS WELL AS LD. AO GROSSLY ERRED, BOTH ON FACTS AND IN LAW, IN NOT CONSIDERING THE MATERIAL FACT THAT AS PER SUB-ITEM NO. (D) OF ITEM NO. (II) OF SUB-CLAUSE BULK PACK EXPORTS, LTD. /ITANO.707 & 708 /2018 4 (B) OF CLAUSE (1) TO PART II OF THE FIRST SCHEDULE TO THE FINANCE ACT, 2015, THE PRESCRIBED RATE OF TAX FOR DEDUCTION AT SOUR CE UNDER S.195 OF THE ACT IN RESPECT OF PAYMENT MADE TO A NON-RESI DENT (OTHER THAN A NON-RESIDENT INDIAN), ON INCOME BY WAY OF FEES FOR T ECHNICAL SERVICES, WAS OFTEN PERCENT ONLY AS IT RELATES TO A MATTER IN CLUDED IN THE INDUSTRIAL POLICY. 10. THAT, THE APPELLANT FURTHER CRAVES LEAVE TO ADD, ALT ER AND/OR AMEND ANY OF THE FOREGOING GROUNDS OF APPEAL AS AND WHEN CONSIDERED NECESSARY. 3. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL IN ITANO.708/IND/2018 FOR A.Y. 2016-17: GROUNDS OF INCOME-TAX APPEAL BEFORE THE HON'BLE INCO ME-TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE, AGAINST TH E APPELLATE ORDER PASSED UNDER S. 250/201 (1 )/20 1 (1 A) OF THE INCOME-TAX ACT, 1961 BY THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)- 13, AHMEDABAD, PERTAINING TO THE F.Y. 2015-16 RELEVANT TO A.Y. 2016-17 IN RESPONSE TO THE APPEAL FILED AGAINST THE ORDER UN DER . 201(1)/201(1A) OF THE ACT, PASSED BY THE LEARNED INCO ME-TAX OFFICER (IT & TP), BHOPAL. 1. THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LEARNED CIT(A) GROSSLY ERRED IN PASSING THE IMPUGNED ORDER WITHOUT CONSIDERING THE WRITTEN SUBMISSION FILED BY THE APPEL LANT THEREBY WITHOUT GIVING REASONABLE AND SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE APPELLANT. 2. THAT, WITHOUT PREJUDICE TO THE ABOVE, THE LEARNE D CIT(A) GROSSLY ERRED, BOTH ON FACTS AND IN LAW, IN CONFIRMING THE A CTION OF THE AO IN HOLDING THE APPELLANT IN DEFAULT UNDER S.20 1 (1) IN RESPECT OF THE WITHHOLDING TAX AND AS ALSO, UNDER S.201(1A) IN RESPE CT OF INTEREST THEREON, RESPECTIVELY AT RS.1,13,282/- AND RS.46,21 4/-, AGGREGATING TO RS.1,59,496/-. 3. THAT, WITHOUT PREJUDICE TO THE ABOVE, THE AUTHOR ITIES BELOW GROSSLY ERRED, BOTH ON FACTS AND IN LAW, IN NOT APPRECIATING THE MATERIAL FACT THAT THE PAYMENTS MADE BY THE APPELLANT TO TWO FORE IGN COMPANIES NAMELY M/S. BELGISCH VERPAKKINGSINSTITUUT, BELGIUM (IN SHORT, 'BVK') AND M/S. LABORDATA INTERNATIONAL MATERIALS TESTING I NSTITUTE GERMANY (IN SHORT, 'LIMTI'), BEING ON ACCOUNT OF TE STING CHARGES, WERE BULK PACK EXPORTS, LTD. /ITANO.707 & 708 /2018 5 NOT IN THE NATURE OF PAYMENT OF CONSIDERATION TOWARD S RENDERING OF ANY MANAGERIAL, TECHNICAL OR CONSULTANCY SERVICES, AS CONTEMPLATED IN EXPLANATION 2 TO CLAUSE (VII) OF SUB-SECTION (1) OF SECTION 9 OF THE INCOME-TAX ACT, 1961 AND THEREFORE, THE SAME COULD NO T BE DEEMED AS AN INCOME ACCRUE OR ARISE TO SUCH FOREIGN COMPAN IES IN INDIA WARRANTING INCIDENCE OF WITHHOLDING OF TAX AT SOURCE UNDER S.195 OF THE ACT AND CONSEQUENTLY, THE APPELLANT COULD NOT HA VE BEEN DEEMED AS AN ASSESSEE IN DEFAULT IN TERMS OF PROVISIONS OF SECTION 20 I (L) OF THE ACT. 4.THAT, WITHOUT PREJUDICE TO THE ABOVE, THE AUTHORI TIES BELOW GROSSLY ERRED, BOTH ON FACTS AND IN LAW, IN NOT APPRECIATING THE MATERIAL FACT THAT BOTH THE FOREIGN COMPANIES, TO WHOM THE APPELL ANT HAD MADE PAYMENTS OF TESTING CHARGES, WERE NOT HAVING ANY RE SIDENCE OR PLACE OF BUSINESS OR BUSINESS CONNECTION OR PERMANENT EST ABLISHMENT IN INDIA AND FURTHER, NONE OF THE COMPANIES RENDERED ANY SERVICES TO THE APPELLANT IN INDIA AND AS ALSO, NOT RECEIVED ANY PAYMENT IN INDIA AND CONSEQUENTLY, INCOME OF SUCH FOREIGN COMPANIES WAS NOT CHARGEABLE TO INCOME TAX SO AS TO ATTRACT THE PROVI SIONS OF WITHHOLDING TAX. 5. THAT, WITHOUT PREJUDICE TO THE ABOVE AND WITHOUT ADMITTING THAT THE APPELLANT WAS IN ANY MANNER LIABLE FOR TDS UNDER S.195 OF THE ACT, THE AUTHORITIES BELOW GROSSLY ERRED, BOTH ON FA CTS AND IN LAW, IN NOT CONSIDERING AND APPRECIATING THE MATERIAL FACT T HAT BOTH THE FOREIGN COMPANIES TO WHOM THE APPELLANT HAD MADE PAY MENTS WERE ENTITLED TO THE BENEFITS CONFERRED UNDER SUB-SECTION (2) OF SECTION 90 OF THE ACT AS WITH BOTH THE COUNTRIES, OF WHICH THE SE TWO FOREIGN COMPANIES WERE RESIDENT OF, I.E. BELGIUM AND GERMANY, CENTRAL GOVERNMENT OF INDIA HAD ENTERED INTO AGREEMENTS IN A CCORDANCE WITH THE PROVISIONS OF SUB-SECTION (1) OF SECTION 9 0 OF THE ACT. 6.THAT, WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED CIT(A) AS WELL AS LD. AO GROSSLY ERRED IN NOT CONFERRING THE BENEFIT UN DER SUB-SECTION (2) OF SECTION 90 OF THE ACT MERELY FOR THE WANT OF TAX RESIDENCY CERTIFICATES DESPITE BEING THE FACT THAT THE LEARNED AO HIMSELF HAD ADMITTED THE RESIDENCY STATUS OF SUCH COMPANIES THAT OF BELGIUM AND GERMANY. 7.THAT, WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED CIT (A) AS WELL AS LD. AO GROSSLY ERRED, BOTH ON FACTS AND IN LAW, IN NOT CONSIDERING THE MATERIAL FACT THAT THE PROVISIONS OF SECTION 206AA OF THE ACT CANNOT OVERRIDE DOUBLE TAXATION AVOIDANCE AGREEMENTS ENTERE D INTO IN ACCORDANCE WITH THE PROVISIONS OF S.90(1) OF THE AC T. 8.THAT, WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED CIT (A) AS WELL AS LD. AO GROSSLY ERRED, BOTH ON FACTS AND IN LAW, BY APP LYING TAX RATE BULK PACK EXPORTS, LTD. /ITANO.707 & 708 /2018 6 AT THE RATE OF 20.6% WITHOUT CONSIDERING THE MATERIA L FACT THAT THE PROVISIONS OF S.206AA OF THE ACT WHICH HAVE BEEN AM ENDED BY WAY OF INSERTION OF A NEW SUB-SECTION (7) TO SUCH SECTI ON, WERE NOT APPLICABLE TO A FOREIGN COMPANY. 9. THAT, WITHOUT PREJUDICE TO THE ABOVE, THE LEARNE D CIT(A) AS WELL AS LD. AO GROSSLY ERRED, BOTH ON FACTS AND IN LAW, IN NOT CONSIDERING THE MATERIAL FACT THAT AS PER SUB-ITEM NO. (D) OF ITEM NO. (II) OF SUB-CLAUSE (B) OF CLAUSE (1) TO PART II OF THE FIRST SCHEDULE TO THE FINANCE ACT, 2015, THE PRESCRIBED RATE OF TAX FOR DEDUCTION AT SOUR CE UNDER S.195 OF THE ACT IN RESPECT OF PAYMENT MADE TO A NON-RESI DENT (OTHER THAN A NON-RESIDENT INDIAN), ON INCOME BY WAY OF FEES FOR T ECHNICAL SERVICES, WAS OFTEN PERCENT ONLY AS IT RELATES TO A MATTER IN CLUDED IN THE INDUSTRIAL POLICY. 10. THAT, THE APPELLANT FURTHER CRAVES LEAVE TO ADD, ALTER AND/OR AMEND ANY OF THE FOREGOING GROUNDS OF APPEAL AS AND WH EN CONSIDERED NECESSARY. 4. THE FACTS IN BRIEF ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND EXPORTING OF BAGS. THE ASSESSEE WAS RESPONSIBLE FOR DEDUCTING TAX AT SOURCE UNDER CHAPTER XVII OF THE INCOME TAX ACT, 1961(HEREINAFTER REFERRED AS THE ACT.) THE ASSESSEE HAD FILED FORM 15CA REGARDING REMITTANCE OF VARIOUS PAYMEN TS TO NON-RESIDENTS. A LETTER WAS ISSUED ON 12.10.2015 FOR VERIFICATION OF PAYMENTS MADE TO NON-RESIDENTS WITHOU T DEDUCTION OF TDS U/S 195 OF THE ACT. THE AO ASKED TH E ASSESSEE TO SUBMIT FORM NO.10F AS WELL AS TAX RESIDENC Y BULK PACK EXPORTS, LTD. /ITANO.707 & 708 /2018 7 CERTIFICATE (TRC) ISSUED BY THE CONCERNED TAX AUTHORI TIES OF THE RESPECTIVE COUNTRIES. THE AO NOTED THAT THE ASSE SSEE COMPANY FAILED TO SUBMIT THE SAME, THEREFORE, PASSED AN ORDER DIRECTING THE ASSESSEE TO WITHHOLD TAXES AT A HI GHER RATE OF 20%. THE LD. CIT(A) CONFIRM THE SAME, PASSING EX- PARTE IMPUGNED ORDER. 5. NOW THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL. 6. AT THE OUTSET OF THE HEARING, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE IMPUGNED ORDER WAS PASSED WITHOUT CONSIDERING THE WRITTEN SUBMISSION FILED BY THE ASSE SSEE, THEREBY WITHOUT GIVING REASONABLE AND SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 7. ON THE OTHER, LD. DR OPPOSED THE SUBMISSION AND R ELIED UPON THE ORDERS OF THE REVENUE AUTHORITIES AND SUBMI TTED THAT NO WRITTEN SUBMISSION WAS FILED BY THE ASSESSEE O N TIME. IN REPLY, LD. COUNSEL FOR THE ASSESSEE SUBMITT ED THAT THE WRITTEN SUBMISSION WAS FILED BY THE ASSESSEE THR OUGH BULK PACK EXPORTS, LTD. /ITANO.707 & 708 /2018 8 POST BUT THE SAME WAS DELAYED AND RECEIVED IN THE OFFI CER OF LD. CIT(A) AFTER PASSING THE ORDER WHICH LED EX-PARTE IMPUGNED ORDER PASSED WITHOUT CONSIDERING THE WRITTE N SUBMISSION FILED BY THE ASSESSEE. 8. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT LD. CIT(A) PAS SED EX-PARTE IMPUGNED ORDER WITHOUT CONSIDERING THE WRIT TEN SUBMISSION FILED BY THE ASSESSEE. THUS, NO PROPER AND REASONABLE OPPORTUNITY OF BEING HEARD WAS PROVIDED TO T HE ASSESSEE. THEREFORE, IN THE INTEREST OF JUSTICE AND F AIR PLAY THE ASSESSEES MATTER REQUIRES RECONSIDERATION AT THE LE VEL OF LD. CIT(A). LD. CIT(A) WOULD PASS THE ORDER AFRESH AFTER AFFORDING SUFFICIENT AND REASONABLE OPPORTUNITY OF BEIN G HEAD TO THE ASSESSEE. THE ASSESSEE IS AT LIBERTY TO FIL E FURTHER SUBMISSION/RELEVANT PAPERS IN SUPPORT OF THE CLAIM. BULK PACK EXPORTS, LTD. /ITANO.707 & 708 /2018 9 9. IN RESULT, BOTH THE APPEALS FILED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 20.10.202 0. SD/- (MANISH BORAD) SD/- (KUL BHARAT) A CCOU NTANT MEMBER JUDICIAL MEMBER INDORE; DATED : 20/10/2020 PATEL/PS COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUAR D FILE. BY ORDER ASSISTANT REGISTRAR, INDORE