The DCIT, Circle-1(1)(2), Baroda V. Inox India Private Ltd., Vadodara

ITA 755/AHD/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 5530 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2014-2015
• Appeal Filed On: 29-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PURSHOTTAM KUMAR
• Keywords: Services rendered outside India; Deemed to accrue or arise in india; Permanent establishment; TDS
• Section: 143(3); 5(2); 40(a)(ia); 195; 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH (CONDUCTED THROUGH VIRTUAL COURT) BEFORE: SHRI MAHAVIR PRASAD, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEM BER THE DY. CIT, CIRCLE-1(1)(2), VADODARA (APPELLANT) VS INOX INDIA PVT. LTD., 9 TH FLOOR K.P. PLATINA, RACE COURSE, BARODA-390007 PAN: AAACI4416P (RESPONDENT) REVENUE BY: SHRI PURSHOTTAM KUMAR, SR. D.R. ASSESSEE BY: SHRI AMRIN PATHAN, A.R . DATE OF HEARING : 14-09-2021 DATE OF PRONOUNCEMENT : 21-09-2021 /ORDER PER : AMARJIT SINGH, ACCOUNTANT MEMBER:- THIS ASSESSEES REVENUE FOR A.Y. 2014-15, ARISES FR OM ORDER OF THE CIT(A)-1, VADODARA DATED 11-02-2019, IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. 2. THE SOLITARY GROUND OF APPEAL FILED BY THE REVEN UE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A) IN DELETING THE ADDITION M ADE ON ACCOUNT OF NOT MAKING TDS ON THE PAYMENT OF COMMISSION AGGREGATING TO RS. 3,21,07,681/-. ITA NO. 755/AHD/2019 ASSESSMENT YEAR 2014-15 I.T.A NO. 755/AHD/2019 A.Y. 2014-15 PAGE NO DY. CIT VS. INOX INDIA PVT. LTD. 2 3. THE FACT IN BRIEF IS THAT RETURN OF INCOME DECLA RING TOTAL INCOME OF RS. 33,60,60,370/- WAS FILED ON 27 TH NOV, 2014. THE CASE WAS SUBJECT TO SCRUTINY ASSESSMENT AND NOTICE U/S. 143(2) OF THE A CT WAS ISSUED ON 31 ST AUGUST, 2015. DURING THE COURSE OF ASSESSMENT, THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAD INCURRED COMMISSION EXPEN SES OF RS. 3,68,45,208/- TO NON-RESIDENTS FOR RENDERING SALE SERVICES OUTSID E INDIA. ON QUERY, THE ASSESSEE EXPLAINED THAT NO TDS IS REQUIRED TO BE DE DUCTED AT SOURCE U/S. 195(1) OF THE ACT AS THE COMMISSION WAS PAID TO TH E FOREIGN PARTIES ON THE SERVICES RENDERED OUTSIDE INDIA AND THEY WERE NOT H AVING ANY PERMANENT ESTABLISHMENT IN INDIA. HOWEVER, THE ASSESSING OFF ICER HAS NOT ACCEPTED THE SUBMISSION OF THE ASSESSEE AND DISALLOWED THE CLAIM OF COMMISSION EXPENSES U/S. 40(A)(IA) OF THE ACT ON ACCOUNT OF NO T MAKING TDS ON SUCH COMMISSION PAYMENT. 4. THE ASSESSEE HAS FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS DELETED THE ADDITION HOLDING THAT ITAT AHMEDABAD IN THE CASE OF THE ASSESSEE ITSELF PERTAINING TO ASSESSMENT YEAR 2010- 11 VIDE ITA NO. 1391/AHD/2015 HAS ADJUDICATED THE IDENTICAL ISSUE O N SIMILAR FACTS IN FAVOUR OF THE ASSESSEE. 5. DURING THE COURSE OF APPELLATE PROCEEDINGS BE FORE US, AT THE OUTSET THE LD. COUNSEL HAS CONTENDED THAT ITAT AHMEDABAD ON ID ENTICAL ISSUE AND SIMILAR FACT HAS ADJUDICATED THE ISSUE FOR ASSESSME NT YEAR 2010-11 AND FOR ASSESSMENT YEAR 2015-16 IN FAVOUR OF THE ASSESSEE. THE LD. DEPARTMENTAL REPRESENTATIVE IS FAIR ENOUGH NOT TO CONTROVERT THI S UNDISPUTED FACT THAT ISSUE I.T.A NO. 755/AHD/2019 A.Y. 2014-15 PAGE NO DY. CIT VS. INOX INDIA PVT. LTD. 3 IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY TH E DECISION OF THE ITAT IN ITS OWN CASE AS REFERRED ABOVE. 6. WITH THE ASSISTANCE OF LD. REPRESENTATIVES, WE H AVE GONE THOUGH THE DECISION OF CO-ORDINATE BENCH OF THE ITAT VIDE ITA NO. 1391/AHD/2015 FOR ASSESSMENT YEAR 2015-16 VIDE ITA 756/AHD/2019 W HEREIN THE IMPUGNED ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE. THE R ELEVANT PART OF THE DECISION OF ITAT VIDE ITA NO. 756/AHD/2019 DATED 11 TH JAN, 2021 IS REPRODUCED AS UNDER:- 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS AND THE ASSESSMENT ORDER AS WELL AS THE FIRST APPELLATE ORDER. THE MATERIALS REFERRED AND R ELIED UPON WERE CAREFULLY CONSIDERED. THE SOLITARY ISSUE INVOLVED IN THE INSTANT CASE IS, WHE THER IN THE FACTS OF THE CASE, THE REMITTANCE MADE BY THE ASSESSEE ABROAD TOWARDS COMMISSION EXPENSES IS CHARGEABLE TO TAX IN INDIA OR NOT AND CONSEQUENTLY, WHETHER THE COMMISSION PAYMENT IS SUS CEPTIBLE TO PROVISIONS OF S.195 OF THE ACT OR NOT. AN INCIDENTAL ISSUE THAT ARISES FOR CONSIDERAT ION IS WHETHER THE SERVICES RENDERED BY THE NON- RESIDENTS ARE IN THE NATURE OF 'FEE FOR TECHNICAL S ERVICES' AS WIDELY DEFINED IN EXPLANATION (2) TO S.9(L)(VII) OF THE ACT. IT IS THE CASE OF THE ASSES SEE THAT THE REMITTANCE HAVE BEEN MADE TOWARDS COMMISSION PAYMENTS ALMOST TO THE SAME PARTIES AS I N THE EARLIER YEARS FOR WHICH FAVOURABLE VIEW HAS BEEN TAKEN BY THE TRIBUNAL ON FACTS. IT IS THE CASE OF THE ASSESSEE THAT THE COMMISSION AGENTS HAVE RENDERED THE SERVICES ABROAD AND THE SITUS OF ACCRUAL OR RECEIPT OF THEIR COMMISSION INCOME IS OUTSIDE INDIA. IT IS FURTHER CLAIMED THAT SERVIC ES RENDERED BY AGENTS HAVE BEEN UTILIZED BY THE ASSESSEE OUTSIDE INDIA IN PROCURING THE EXPORT ORDE RS. 10. WE STRAIGHTWAY FIND THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF CO-ORDINATE BENCH FOR AY 2010-11 AS RIGHTLY ACKN OWLEDGED BY THE CIT(A). THE COMMISSION PAYMENTS ARE SEEN TO BE MADE TO THE SIMILAR SET OF PARTIES AS IN AY 2010-11. THE ALLEGATION ON BEHALF OF THE REVENUE THAT EXPENSES INCURRED ARE CO VERED IN THE WIDER DEFINITION OF 'FEES FOR TECHNICAL SERVICES' AS DEFINED IN EXPLANATION (2) T O SECTION 9(L)(VII) OF THE ACT IS DEVOID OF ANY RATIONALE. EXCEPT FOR BALD ALLEGATION OF THE SERVIC ES BEING AKIN TO MANAGERIAL OR CONSULTANCY SERVICES, THE AO HAS NOT BROUGHT ANY MATERIAL ON RE CORD TO DISCARD THE STAND OF ASSESSEE. THE CO- ORDINATE BENCH OF TRIBUNAL HAS DULY ANALYZED THIS A SPECT IN LENGTH IN ITA NO.1391/AHD/2015 FOR AY 2010-11 IN THE CASE OF ASSESSEE ITSELF AND HAS D ELIVERED A SPEAKING ORDER IN FAVOUR OF THE ASSESSEE ON ALL ASPECTS OF SUBJECT MATTER ON FACTS. THE SERVICES IN RESPECT OF COMMISSION EXPENSES ARE STATED TO BE RENDERED OUTSIDE INDIA AS WELL AS UTILIZED OUTSIDE INDIA AND THEREFORE THE INCOME ARISING BY WAY OF COMMISSION AGAINST RENDITION OF A GENCY SERVICES CANNOT BE DEEMED TO ACCRUE OR ARISE IN INDIA IN THE HANDS OF THE RECIPIENTS OF SU CH COMMISSION PAYMENTS. IN THE CIRCUMSTANCES, WHERE THE INCOME ARISING TO NON-RESIDENT COMMISSION AGENTS IS NOT FOUND TO BE CHARGEABLE IN INDIA UNDER S.4 R.W.S. 5(2) OF THE ACT, THE OBLIGAT ION UNDER S.195 OF THE ACT FOR DEDUCTION OF TAX AT SOURCE CANNOT BE FASTENED UPON THE REMITTER ASSESSE E. IN THE ABSENCE OF STATUTORY OBLIGATION ARISING UNDER SECTION 195 OF THE ACT FOR DEDUCTION OF TAX IN THE ABSENCE OF CHARGEABILITY OF REMITTANCES, THE CORRESPONDING DISALLOWANCE UNDER S .40(A)(I) IS WITHOUT ANY MERIT AND THUS UNCALLED FOR. WE THUS SEE NO ERROR IN THE ACTION OF THE CIT(A) WHO HAS RIGHTLY APPLIED THE DECISION OF THE TRIBUNAL IN THE FACTS OF THE CASE. WE THUS D ECLINE TO INTERFERE. I.T.A NO. 755/AHD/2019 A.Y. 2014-15 PAGE NO DY. CIT VS. INOX INDIA PVT. LTD. 4 FOLLOWING THE DECISION OF THE CO-ORDINATE BENCH OF THE ITAT ON IDENTICAL ISSUE AND FACTS AS CITED ABOVE, WE DO NOT FIND ANY INFIRMITY IN THE DECISION OF LD. CIT(A). THEREFORE, THIS GROUND OF APPEAL OF TH E REVENUE IS DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21-09-2021 SD/- SD/- (MAHAVIR PRASAD) (AMARJIT SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 21/09/2021 / COPY OF ORDER FORWARDED TO:- 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,