S.R. BROTHERS, MUMBAI V. ADDL.C.I.T. 19(3), MUMBAI

ITA 7772/MUM/2012

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 2147 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 10-11-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 28-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Permanent establishment
• Section: 14A

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, E MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO.7772/MUM/2012 ASSESSMENT YEAR: 2009-10 M/S S.R. BROTHERS, 204-205, BALRAMA, BANDRA KURLA COMPLEX, BANDRA (EAST), MUMBAI-400051 / VS. DY. CIT-19(3), ROOM NO.305, 3 RD FLOOR, PIRAMAL CHAMBERS, PAREL, MUMBAI-400012 ( ! /ASSESSEE) ( ' / REVENUE) PAN. NO. AAAFS9880L ITA NO.799 /MUM/2013 ASSESSMENT YEAR: 2009-10 DY. CIT-19(3), ROOM NO.305, 3 RD FLOOR, PIRAMAL CHAMBERS, PAREL, MUMBAI-400012 / VS. M/S S.R. BROTHERS, 204-205, BALRAMA, BANDRA KURLA COMPLEX, BANDRA (EAST), MUMBAI-400051 ( ' / REVENUE) ( ! /ASSESSEE) PAN. NO.AAAFS9880L M/S S.R. BROTHERS, ITA NO.7772/MUM/2012, ITA NOS.799 & 6148/MUM/2013 2 ITA NO. 6148/MUM/2013 ASSESSMENT YEAR: 2010-11 DY. CIT-19(3), ROOM NO.305, 3 RD FLOOR, PIRAMAL CHAMBERS, PAREL, MUMBAI-400012 / VS. M/S S.R. BROTHERS, 204-205, BALRAMA, BANDRA KURLA COMPLEX, BANDRA (EAST), MUMBAI-400051 ( ' / REVENUE) ( ! /ASSESSEE) PAN. NO.AAAFS9880L # ' $ ! % / DATE OF HEARING : 21/12/2015 $ ! % / DATE OF ORDER: 21/12/2015 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE ASSESSEE AS WELL AS THE REVENUE ARE IN CROSS AP PEAL FOR ASSESSMENT YEAR 2009-10 AGAINST THE IMPUGNED OR DER DATED 08/11/2012, WHEREAS, THE REVENUE IS IN APPEAL FOR A.Y. 2010-11 AGAINST THE IMPUGNED ORDER DATED 28/08/2013 OF THE LD. FIRST APPELLATE AUTHORITY. 2. FIRST, WE SHALL TAKE UP APPEAL OF THE ASSESSEE ( ITA NO.7772/MUM/2012), WHEREIN, FIRST GROUND RAISED PER TAINS TO CONFIRMING THE DISALLOWANCE OF RS.2,52,179/-, MADE U/S 14A(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT). THE CRUX OF ARGUMENT ADVANCED BY THE LD. COUNSEL, SHRI VISHWAS ! ! / ASSESSEE BY SHRI VISHWAS MEHENDALE ' ! / REVENUE BY SHRI J. SARAVANAN-DR M/S S.R. BROTHERS, ITA NO.7772/MUM/2012, ITA NOS.799 & 6148/MUM/2013 3 MEHENDALE, ON BEHALF OF THE ASSESSEE, IS IDENTICAL TO THE GROUND RAISED BY EXPLAINING THAT NO BORROWED FUNDS WERE INVESTED BY INVITING OUR ATTENTION TO PARA 9 OF THE ASSESSMENT ORDER BY PLEADING THAT A REASONABLE DISALLOWANCE MA Y BE MADE. ON THE OTHER HAND, THE LD. DR, SHRI J.SARAVAN AN, DEFENDED THE DISALLOWANCE MADE BY THE LD. ASSESSING OFFICER AND CONFIRMED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS). 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT THE ASSESSEE EARNED INCOME OF RS.10,34,269 /- FROM MUTUAL FUND DIVIDEND AND CLAIMED THE SAME AS EXEMPT U/S 10(35) OF THE ACT. AS PER THE ASSESSEE, NO EXPENDIT URE WAS INCURRED FOR EARNING THE DIVIDEND INCOME. HOWEVER, THE LD. ASSESSING OFFICER, BY FOLLOWING THE DECISION FROM H ONBLE JURISDICTIONAL HIGH COURT IN GODREJ & BOYCE MFG. CO MPANY LTD. VS DCIT 234 CTR 1 (BOM.) AND IN VIEW OF SECTIO N 14A READ WITH RULE 8D OF THE RULES MADE DISALLOWANCE OF RS.2 ,52,179/- WHICH WAS AFFIRMED BY THE LD. COMMISSIONER OF INCOM E TAX (APPEALS). SO FAR AS, THE DISALLOWANCE IS CONCERNE D, THE LD. COUNSEL FOR THE ASSESSEE HAS ALSO NO GRIEVANCE BUT THE CONTENTION RAISED BEFORE US IS THAT IT SHOULD BE RE ASONABLE. THE ASSESSEE IS ALSO DIRECTED TO ESTABLISH THE NEXU S AND ALSO WHETHER OWN FUNDS WERE INVESTED IN MUTUAL FUND OR B ORROWED FUNDS WERE ALSO INVESTED. WE ALSO FIND THAT THE F UND BORROWED AND OWNED BY THE ASSESSEE, WERE MIXED UP. SO FAR AS, THE REASONABLENESS OF DISALLOWANCE IS CONCERNED , WE DIRECT M/S S.R. BROTHERS, ITA NO.7772/MUM/2012, ITA NOS.799 & 6148/MUM/2013 4 THE LD. ASSESSING OFFICER TO EXAMINE THE CLAIM OF T HE ASSESSEE AND MAKE REASONABLE DISALLOWANCE, AS PER LAW AND FU RTHER IN THE LIGHT OF THE DECISIONS IN THE CASE OF CIT VS HD FC BANK AND CIT VS RELIANCE UTILITIES AND POWER LTD. 313 ITR 34 0 (BOM.). THIS GROUND OF THE ASSESSEE IS ALLOWED FOR STATISTI CAL PURPOSES. 3. NOW, WE SHALL TAKE UP THE APPEAL IN (ITA NO.799/MUM/2013), WHEREIN, THE ONLY GROUND PERTAINS TO DIRECTING THE ASSESSING OFFICER TO DELETE THE ADDIT ION OF RS.87,12,544/- MADE U/S 40(A)(I) OF THE ACT BY PLAC ING RELIANCE UPON THE DECISION OF THE TRIBUNAL IN DDIT VS SIEMEN S AKTIENGESELLSCHAFT DATED 07/12/2009 (ITA NO.6133/MU M/ 2002). THE LD. DR ADVANCED ARGUMENTS, WHICH IS IDEN TICAL TO THE GROUND RAISED. ON THE OTHER HAND, THE LD. COUNS EL FOR THE ASSESSEE, DEFENDED THE CONCLUSION ARRIVED AT IN THE IMPUGNED ORDER. 3.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT FROM THE PROFIT & LOSS ACCOUNT OF THE ASSE SSEE, IT WAS OBSERVED BY THE LD. ASSESSING OFFICER THAT THE ASSE SSEE CLAIMED RS.87,12,544/-AS FOREIGN COMMISSION ON WHICH TDS HA S NOT BEEN DEDUCTED. ON ASKING BY THE ASSESSING OFFICER, THE ASSESSEE VIDE LETTER DATED 12/01/2011, EXPLAINED HI S POSITION BY PLACING RELIANCE UPON BOARD CIRCULAR NO.786 DATE D 07/02/2000. HOWEVER, THE LD. ASSESSING OFFICER WAS OF THE VIEW, THAT THE CIRCULAR IS RETROSPECTIVE IN OPERATI ON. THE CONTENTION OF THE ASSESSEE WAS CONSIDERED BY THE LD . M/S S.R. BROTHERS, ITA NO.7772/MUM/2012, ITA NOS.799 & 6148/MUM/2013 5 COMMISSIONER OF INCOME TAX (APPEALS), WHEREIN, FOLL OWING THE AFORESAID DECISION OF THE TRIBUNAL DATED 07/12/2009 (ITA NO.6133/MUM/2002) HOLDING THAT WITHDRAWAL OF EARLIE R CIRCULAR WITH EFFECT FROM 22/10/2009 HAS NO BEARING IN A.Y. 1998-99. WE ARE OF THE VIEW THAT UNLESS AND UNTIL M ADE SPECIFICALLY EFFECTIVE RETROSPECTIVELY, THE CIRCULA R IS PROSPECTIVE IN NATURE, THUS, WE FIND NO INFIRMITY IN THE CONCLU SION OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS), CONSEQUEN TLY, THE APPEAL OF THE REVENUE IS DISMISSED. 4. NOW, WE SHALL TAKE UP THE APPEAL OF THE REVENUE FOR A.Y. 2010-11 (ITA NO.6148/MUM/2013), WHEREIN, IDENTICAL GROUND OF DELETING THE ADDITION OF RS.51,11,288/- ON ACCOU NT OF DISALLOWANCE MADE U/S 40(A)(I) OF THE ACT FOR NON-D EDUCTION OF TAX AT SOURCE HAS BEEN RAISED. 4.1. THE CRUX OF ARGUMENT ADVANCED ON BEHALF OF THE REVENUE, IS IDENTICAL TO THE GROUND RAISED. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE, DEFENDED THE CONC LUSION ARRIVED AT IN THE IMPUGNED ORDER. 4.2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND P ERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS, IN BRI EF, ARE THAT FROM PERUSAL OF THE PROFIT & LOSS ACCOUNT OF THE AS SESSEE, IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE ASSES SEE HAS CLAIMED PAYMENT OF COMMISSION ON EXPORT OF RS.51,11 ,288/- ON WHICH NO TAX WAS DEDUCTED AT SOURCE. THE ASSESSE E WAS ASKED TO FURNISH THE DETAILS WITH RESPECT TO SERVIC ES RENDERED M/S S.R. BROTHERS, ITA NO.7772/MUM/2012, ITA NOS.799 & 6148/MUM/2013 6 BY THE RECIPIENT AND THE RATES ON WHICH SUCH COMMIS SION WAS PAID. THE ASSESSEE FILED THE DETAILS, HOWEVER, THE LD. ASSESSING OFFICER WAS NOT SATISFIED WITH THE REPLY OF THE ASS ESSEE DATED 17/12/2012, WHICH HAS BEEN REPRODUCED AT PAGE 4 ONW ARDS OF THE ASSESSMENT ORDER, WHEREIN, THE CRUX OF THE S UBMISSION IS THAT THE COMMISSION PAID BY THE ASSESSEE ON ITS EXPORT IS NOT LIABLE TO TAX IN INDIA, THUS, THERE IS OBLIGATI ON TO DEDUCT TAX AT SOURCE IN INDIA. THE ASSESSING OFFICER MADE THE DISALLOWANCE BY HOLDING THAT THE ASSESSEE WAS TO DE DUCT TDS AND THUS, HE MADE DISALLOWANCE U/S 40(A)(I) OF THE ACT. ON APPEAL, BEFORE THE LD. COMMISSIONER OF INCOME TAX ( APPEALS), THE FACTUAL MATRIX WAS CONSIDERED AND IT WAS HELD T HAT THE FACTS OF THE CASE OF THE ASSESSEE ARE DIFFERENT AND HE DELETED THE DISALLOWANCE. THE REVENUE IS AGGRIEVED AND IS I N APPEAL BEFORE THIS TRIBUNAL. 4.3. IF THE OBSERVATION MADE IN THE ASSESSMENT ORD ER, LEADING TO ADDITION MADE TO THE TOTAL INCOME, CONCL USION DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY THE LD. RESPECTIVE COUNSEL, IF K EPT IN JUXTAPOSITION AND ANALYZED, THE TOTALITY OF FACTS, CLEARLY INDICATES THAT THE AGENTS DID NOT RENDER ANY MANAGE RIAL, CONSULTANCY OR TECHNICAL SERVICES AND THE ONLY CARR IED OUT LIAISON AND PROCURED EXPORT ORDERS AND THE ASSESSEE WAS USING THE SERVICES OF OVERSEAS COMMISSION AGENT. THERE IS NO PERMANENT ESTABLISHMENT OF SUCH NON-RESIDENT IN IND IA, THUS, THE AMOUNT IN QUESTION DID NOT ACCRUE IN INDIA, THE REFORE, THERE WAS NO NEED TO DEDUCT TDS. NO OTHER CONTRARY FACTS M/S S.R. BROTHERS, ITA NO.7772/MUM/2012, ITA NOS.799 & 6148/MUM/2013 7 WERE BROUGHT TO OUR NOTICE SUBSTANTIATING THE VERSI ON OF THE LD. ASSESSING OFFICER. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS DULY CONSIDERED VARIOUS DECISIONS ON IDENTICAL FACTS. IN FACT, SERVICES WERE RENDERED ABROAD, THE REFORE, WE FIND NO INFIRMITY IN THE CONCLUSION OF THE LD. COMM ISSIONER OF INCOME TAX (APPEALS). FINALLY, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES, WHEREAS, THE APPEALS OF THE R EVENUE ARE DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN TH E PRESENCE OF THE LD. REPRESENTATIVE FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 21/12/2015. SD/- SD/- ( ASHWANI TANEJA ) (JOGINDER SINGH) '!# / ACCOUNTANT MEMBER $!# /JUDICIAL MEMBER # MUMBAI; ' DATED : 21/12/2015 F{X~{T? P.S/. . . %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. )*+, / THE APPELLANT (RESPECTIVE ASSESSEE) 2. -.+, / THE RESPONDENT. 3. / / # 0! ( )* ) / THE CIT, MUMBAI. 4. / / # 0! / CIT(A)- , MUMBAI, 5. 2'3 -! , / )*% ) 4 , # / DR, ITAT, MUMBAI 6. 5 6 / GUARD FILE. ! / BY ORDER, .2*! -! //TRUE COPY// /! (DY./ASSTT. REGISTRAR) , # / ITAT, MUMBAI