Neuland Laboratories Limited, Hyderabad, Secunderabad V. DCIT, Circle-16(1), Hyderabad, Hyderabad

ITA 823/HYD/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9840 (ITAT-HYDERABAD)
• Duration Of Justice: 4 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-07-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 10-06-2021
• Assessment Year: 2012-2013
• Appeal Filed On: 11-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B BALAKRISHNA
• Keywords: TDS
• Section: 48; 13; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD. BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER AND SHRI L . P . SAHU, ACCOUNTANT MEMBER (THROUGH VIRTUAL HEARING) ITA NO. 823 /HYD/20 17 (ASSESSMENT YEAR : 20 12 - 13 ) SHRI NEULAND LABORATORIES LIMITED, HYDERABAD. PAN AAACN 9531E ..APPELLANT. VS. DY. COMMISSIONER OF INCOME TAX, CIRCLE 16(1), HYDERABAD. ..RESPONDENT. APPELLANT BY : SHRI CH.VENKATESH FOR SHRI M.V. ANIL KUMAR. RESPONDENT BY : SHRI B. BALAKRISHNA (D.R.) DATE OF HEARING : 10.06 . 2021. DATE OF PRONOUNCEMENT : 12 .0 7 .2021. O R D E R PER SHRI S.S. GODARA, J.M. : THIS ASSESSEES APPEAL FOR ASST. YEAR 20 12 - 13 ARISES FROM THE PR. COMMISSIONER OF INCOME TAX, HYDERABAD S ORDER DT. 27.03.2017 IN PROCEEDINGS UNDER S ECTION 263 OF INCOME TAX ACT, 1961 (THE ACT). HEARD BOTH THE PARTIES . C ASE FILE PERUSED. 2. WE NOTI CE AT THE OUTSET WITH THE ABLE ASSISTANCE OF TWO PARTIES THAT THE PCIT HAS TREATED THE REGULAR 2 ITA NO. 823/HYD/2017 ASSESSMENT IN ISSUE DT.31.10.2014 FRAMED AS AN ERRONEOUS ONE CAUSING PREJUDICE TO INTEREST OF REVENUE ON THE FOLLOWING TWIN COUNTS : 3 ITA NO. 823/HYD/2017 3. LEARNED P CIT THEREAFTER REJECTED THE ASSESSEE'S EXPLANATION SUPPORTING THE IMPUGNED ASSESSMENT FOLLOWED BY HIS DIRECTIONS TO THE ASSESSING OFFICER TO FRAME O N AFRESH AFTER DULY EXAMINING THE SAID TWIN ISSUES AS PER LAW. 4. THE REVENUE VEHEMENTLY CONTENDED IN SUPPORT OF THE PCIT DIRECTION S THAT THE ASSESSING OFFICER HAD FAILED TO CARRY OUT THE NECESSARY ENQUIRY (IES) WHICH RENDERED HIS REGULAR ASSESS MENT AS ERRONEOUS ONE CAUSING PREJUDICE TO INTEREST OF REVENUE. 5. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO RIVAL CONTENTIONS AGAINST AND IN SUPPORT OF THE IMPUGNED SECTION 263 REVISION DIRECTION S . WE FIND NO MERIT TO SUSTAIN THE LEARNED PCIT S ORDER UNDER CHALLENGE. THIS ASSESSEE IS ADMITTEDLY ENGAGED IN MANUFACTURING AND TRADING OF BULK DRUGS AND INTERMEDIATERIES FOR OVERSEES MARKET S . THERE IS NO MATERIAL BEFORE US WHICH COULD INDICATE THAT THE ASSESSEE'S OVERSEAS AGENTS HAD RENDERED ANY OF THEIR SERVICES IN INDIA SO AS TO BE EXIGIBLE TO BOTH INCOME TAX AS WELL AS CHAPTER XVII PROVISIONS. WE THUS ARE OF THE VIEW THAT THE MERE FACT THAT THE ASSESSING OFFICER HAVING NOT 4 ITA NO. 823/HYD/2017 EXAMINED THE IMPUGNED COMMISSION PAYMENT VIS - - VIS THE CORRESPONDING COM MISSION AGENT S HAVING RENDERED SERVICES OUTSIDE INDIA, IS NOT FATAL HIS VIEW FOR THE ASSESSEE'S CLAIM N OR DOES IT RENDER THE IMPUGNED ASSESSMENT AS AN ERRONEOUS CAUSING PREJUDICE TO THE INTEREST OF REVENUE; SIMULTANEOUSLY , AS PER HON'BLE APEX COURT S LANDM ARK DECISION IN MALABAR INDUSTRIAL CO. VS. CIT 243 ITR 83 (SC) ; C ASE LAW CIT VS. FAIZAN SHOES P. LTD. (2014) 48 TAXMANN.COM 48 (MAD) AND DCIT VS. WELSPUN CORPORATION LTD. 77 TAXMANN.COM 165 (AHD ) HOLD THAT SUCH OVERSEAS COMMISSION PAYMENTS IN ABSENCE OF ANY SERVICES HAVING BEING RENDERED IN INDIA, DO NOT ATTRACT TDS MECHANISM UNDER CHAPTER XVII OF THE ACT SINCE NOT TAXABLE IN RECIPIENTS HANDS . COUPLED WITH THIS, SO FAR AS THE REVENUES ST A ND THAT THE ASSESSING OFFICER HAD FAILED TO VERIFY THE ASSESSEE'S COMMISSION PAYMENT, WE MAKE IT CLEAR THAT THE IMPUGNED ASSESSMENT HAS BEEN FRAMED ON 31.10.2014 I.E. MUCH BEFORE EXPLN. 2 TO SECTION 263 OF THE ACT INSERTED VIDE FINANCE ACT, 2015 W.E.F. 1.6.2015. WE FURTHER WISH TO CLARIFY THAT THE PR. CIT HA S ALSO NOT INVOKED 5 ITA NO. 823/HYD/2017 THE SAID STATUTORY EXPLANATION WHICH COULD INDICATE THAT THE ASSESSING OFFICER S ENQUIRIES MADE DURING THE COURSE OF ASSESSMENT HAD BEEN INADEQUATE. ALL THESE RELEVANT FACTS MAKE US TO CONCLUDE THAT THE PCIT HEREIN HAS ERRED IN LAW AND ON FACTS IN RE VISING THE IMPUGNED ASSESSMENT QUA THE FOREIGN COMMISSION PAYMENT. THE SAME STAND REVERSED THERE FORE. 6. WE NEXT ADVERT TO THE PCIT S LATTER ISSUE OF INCREASE / DECREASE IN ASSESSEE'S CORRESPONDING INCOME AND EXPENDITURE IN THE I MPUGNED ASSESSMENT YEAR 2012 - 13 INVOLVING F.Y.2011 - 12 THAN THAT IN PRECEDING ASSESSMENT YEAR. WE FAIL TO UNDERSTAND ON A PERUSAL OF THE LEARNED PR. CIT DETAILED DISCUSSION AS TO HOW AND IN WHAT MANNER THE ASSESSING OFFICER HAD COMMITTED AN Y ERROR IN HAVI NG NOT REJECTED ITS BOOKS OF ACCOUNTS. LEARNED PCIT ; IN OTHER WORDS, HAS MERELY TAKEN INTO CONSIDERATION THE ASSESSEE'S GROSS RECEIPTS, SALE VOLUME, EBIDTA MARGIN AND VARIOUS OTHER EXPENSES WITHOUT EVEN INDICATING AS TO WHETHER THE SAME HAD INVOLVED ANY ABNORMAL TR END PER SE OR NOT. IT RATHER EMERGES THAT THE ASSESSING OFFICERS ASSESSMENT HAD 6 ITA NO. 823/HYD/2017 DULY SOUGHT FOR THE ASSESSEE'S EXPLANATION DURING THE COURSE OF ASSESSMENT BEFORE DECIDING NOT TO DISALLOW ANY ITEM QUA THIS LATTER ISSUE. WE THEREFORE CONCLU DE THAT MERE FACT THAT THE ASSESSING OFFICER NOT HAVING TRAVELLED BEYOND THE ASSESSEE'S EXPLANATION TO A GREATER EXTENT WOULD NOT IPSO FACTO RENDER THE IMPUGNED ASSESSMENT AS EXIGIBLE TO 263 REVISION JURISDICTION IN OUR CONSIDERED OPINION. WE THEREFORE CONCLUDE THAT LEARNED PCIT HAS ERRED IN LAW AS WELL AS ON FACTS IN TERMING THE IMPUGNED ASSESSMENT AS AN ERRONEOUS ONE CAUSING PREJUDICE TO THE INTEREST OF R EVENUE QUA THE INSTANT LATTER ISSUE AS WELL. WE ACCEPT THE ASSESSEE'S PLEADINGS CHALLENGING CORRE CTNESS OF THE LEARNED PCITS ORDER IN FOREGOING TERMS. THE ASSESSMENT ORDER DT.31.10.2014 IS RESTORED AS A NECESSARY COROLLARY. 7. THIS ASSESSEE'S APPEAL IS ALLOWED IN ABOVE TERMS . ORDER PRONOUNCED IN THE OPEN COURT ON 12TH JU LY , 2021. SD/ - SD/ - (L .P. SAHU) (S.S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DT. 12 .0 7 .2021. * REDDY GP 7 ITA NO. 823/HYD/2017 COPY TO : 1. M/S. NEULAND LABORATORIES LIMITED, 8 - 2 - 120/113, ROAD NO.2, BANJARA HILLS, HYDERABAD - 500 034 2. DCIT, CIRCLE 16(1), HYDERABAD. 3. PR. C I T - 4 , HYDERABAD. 4. 5. DR, ITAT, HYDERABAD. 6. GUARD FILE. BY ORDER SR. PVT. SECRETARY, ITAT, HYDERABAD.