ASHOK LEYLAND LIMITED, CHENNAI V. DCIT COMPANY CIRCLE 1 (1), CHENNAI

ITA 835/CHNY/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 1014 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 08-03-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R CLEMENT RAMESH KUMAR
• Assessee Lawyers: R VIJAYARAGHAVAN
• Section: 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . . . , . !' , $ % BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NOS.835, 836 & 837/CHNY/2018 ' (' / ASSESSMENT YEARS : 2008-09 & 2009-10 M/S ASHOK LEYLAND LTD., (SINCE ASHOK LEYLAND PROJECT SERVICES LIMITED MERGED WITH ASHLEY SERVICES LIMITED WHICH SUBSEQUENTLY MERGED WITH ASHOK LEYLAND LIMITED) 1, SARDAR PATEL MARG, GUINDY, CHENNAI - 600 032. PAN : AAACA 4651 L V. THE DEPUTY COMMISSIONER OF INCOME TAX, THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE 1(1), NUNGAMBAKKAM, CHENNAI - 600 034. (*+/ APPELLANT) (,-*+/ RESPONDENT) *+ . / / APPELLANT BY : SH. R. VIJAYARAGHAVAN, ADVOCATE ,-*+ . / / RESPONDENT BY : SHRI R. CLEMENT RAMESH KUMAR, J CIT 0 . 1$ / DATE OF HEARING : 14.08.2018 2!( . 1$ / DATE OF PRONOUNCEMENT : 19.09.2018 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THESE APPEALS FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE RESPECTIVE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS)-3, CHENNAI, DATED 30.11.2017 FOR THE ASSESSMENT YEARS 2008-09 AND 2009- 2 I.T.A. NO.835 TO 837/CHNY/18 10. SINCE COMMON ISSUES ARISE FOR CONSIDERATION, W E HEARD ALL THESE APPEALS TOGETHER AND DISPOSING OF THE SAME BY THIS COMMON ORDER. 2. THE FIRST COMMON ISSUE ARISES FOR CONSIDERATION IS DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDER SECTION 14A OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). 3. WE HEARD SH. R. VIJAYARAGHAVAN, THE LD.COUNSEL F OR THE ASSESSEE AND SHRI R. CLEMENT RAMESH KUMAR, THE LD. DEPARTMENTAL REPRESENTATIVE. THE CIT(APPEALS) RESTRICTED THE DI SALLOWANCE TO THE EXTENT OF INCOME EARNED BY WAY OF DIVIDEND. THEREF ORE, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY AND ACCORDINGLY THE SAME IS CONFIRMED. 4. THE NEXT COMMON ISSUE ARISES FOR CONSIDERATION I S DISALLOWANCE MADE UNDER SECTION 40(A)(I) OF THE ACT FOR NON-DEDU CTION OF TAX. 5. SH. R. VIJAYARAGHAVAN, THE LD.COUNSEL FOR THE AS SESSEE, SUBMITTED THAT THE ASSESSEE MADE PAYMENT TO M/S 3I INFOTECH, DUBAI FOR CARRYING OUT SOME SOFTWARE RELATED WORK IN DUBAI. THE ENTIRE SERVICES WERE RENDERED IN DUBAI. M/S 3I INFOTECH HAS NO PER MANENT ESTABLISHMENT OR BUSINESS CONNECTION IN INDIA. THEREFORE, ACCORD ING TO THE LD. COUNSEL, THE PAYMENT MADE TO M/S 3I INFOTECH IS NOT TAXABLE IN INDIA AND HENCE, THE ASSESSEE IS NOT LIABLE FOR DEDUCTION OF TAX. S IMILARLY, ACCORDING TO THE 3 I.T.A. NO.835 TO 837/CHNY/18 LD. COUNSEL, THE PAYMENT TO M/S FTZ CORPORATE SERVI CES, AUSTRIA WAS ALSO MADE IN RELATION TO ON-SHORE WORK IN IRAN. TH EREFORE, ACCORDING TO THE LD. COUNSEL, THERE CANNOT BE ANY DISALLOWANCE. 6. ON THE CONTRARY, SHRI R. CLEMENT RAMESH KUMAR, T HE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSE SSEE MADE PAYMENTS IN FOREIGN CURRENCY FOR TECHNICAL SERVICES , THEREFORE, WHAT WAS PAID BY THE ASSESSEE IS FOR TECHNICAL SERVICES. HE NCE, ACCORDING TO THE LD. D.R., THE ASSESSEE IS LIABLE TO DEDUCT TAX. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THE NON-RESIDENTS M/S 3I INFOTECH, DUBAI AND M/S FT Z CORPORATE SERVICES, AUSTRIA RENDERED SERVICES OUTSIDE THE COU NTRY. IT IS NOT IN DISPUTE THAT BOTH THE COMPANIES HAVE NO PERMANENT E STABLISHMENT IN INDIA AND THEY HAVE NO BUSINESS CONNECTION IN INDIA . IN VIEW OF THE ABOVE, THE INCOME EARNED BY M/S 3I INFOTECH, DUBAI AND M/S FTZ CORPORATE SERVICES, AUSTRIA ARE NOT TAXABLE IN INDI A, HENCE, THE ASSESSEE IS NOT LIABLE TO DEDUCT TAX. THEREFORE, WE ARE UNA BLE TO UPHOLD THE ORDERS OF THE AUTHORITIES BELOW. ACCORDINGLY, ORDERS OF B OTH THE AUTHORITIES BELOW ARE SET ASIDE AND THE DISALLOWANCE MADE BY THE ASSE SSING OFFICER IS DELETED. 4 I.T.A. NO.835 TO 837/CHNY/18 8. IN THE RESULT, ALL THE THREE APPEALS FILED BY TH E ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 19 TH SEPTEMBER, 2018 AT CHENNAI. SD/- SD/- (. !' ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) $ / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 4 /DATED, THE 19 TH SEPTEMBER, 2018. KRI. . ,156 76(1 /COPY TO: 1. *+ /APPELLANT 2. ,-*+ /RESPONDENT 3. 0 81 () /CIT(A)-3, CHENNAI 4. PRINCIPAL CIT-1, CHENNAI. 5. 69 ,1 /DR 6. :' ; /GF.