NSL Textiles Limited, Guntur V. The Assistant Commissioner of Income Tax, Circle-2(1), , Guntur

MA 18/VIZ/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3188 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 9 month(s) 9 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 06-03-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 27-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B RAMA KRISHNA
• Keywords: Earning of tax free income
• Section: 14A; 195

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO , HONBLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , HONBLE ACCOUNTANT MEMBER M.A.NO. 18/VIZ/2019 (ARISING OUT OF I . T . A . NO. 541/VIZ/2018) (ASST. YEAR : 20 1 2 - 1 3 ) M/S. NSL TEXTILES LIMITED, 3 RD FLOOR, EMGEE HOUSE , 4 TH LANE, RING ROAD, CHANDRAMOULI NAGAR, GUNTUR. VS. AC IT, CIRCLE - 2(1) , GUNTUR . PAN NO. AABCJ 1299 A (APP L ICANT ) (RESPONDENT) ASSESSEE BY : SHRI G.V.N. HARI , ADVOCATE DEPARTMENT BY : SHRI B. RAMA KRISHNA , SR. DR DATE OF HEARING : 06 / 0 3 /2020 . DATE OF PRONOUNCEMENT : 06 / 0 3 /20 20 . O R D E R PER V. DURGA RAO , JUDICIAL MEMBER BY FILING THIS MISC. APPLICATION ASSESSEE SEEKS RECALL OF THE ORDER PASSED BY THIS TRIBUNAL IN ITA NO.541/VIZ/2018 VIDE ORDER DATED 30/04/2019 ON THE GROUND THAT GROUND NOS. 5 & 6 ARE NOT ADJUDICATE D . 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THE ORDER OF THE LD. CIT(A) - 1, GUNTUR IS ERRONEOUS TO LAW, FACTS AND CIRCUMSTANCES OF THE CASE. 2. LD.CIT(A) OUT TO HAVE APPRECIATED THE FACT THAT GIVEN THE 2 M A NO. 1 8 /VIZ/2019 ( M/S. NSL TEXTILES LTD. ) NATURE OF TRADE OF THE ASSESSEE, IT IS ESSENTIAL FOR, FOREIGN AGENT TO BE EQUIPPED WITH MAKE AVAILABLE TECHNICAL KNOWLEDGE, EXPERIENCE, SKILL FOR PROCURING THE ORDERS OF SALES OF THE PRODUCTS OF ASSESSEE IN THE FOREIGN COUNTRY. 3 LD.CIT(A) OUGHT TO HAVE APPRECIATED THAT THE SERVICES RENDERED BY THE FOR EIGN AGENT ARE IN THE NATURE OF TECHNICAL SERVICES AND THE PAYMENTS MADE BY THE ASSESSEE TO THE FOREIGN AGENTS IS THE NATURE OF 'FEES FOR TECHNICAL SERVICES'. 4 LD.CIT(A) OUGHT TO HAV E APPRECIATED THAT THE CONJOINT READING OF THE PROVISIONS OF SEC. 9(1)(V II)(B), SEC 195 AND SEC 40(A)(I) OF THE ACT, CLEARLY STIPULATES THAT NON - DEDUCTION OF TAX AT SOURCE ON THE PAYMENTS MADE IN THE NATURE OF 'FEE FOR TECHNICAL SERVICE' ARE TO BE DISALLOWED AND LD.CIT(A) SHOULD HAVE CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER AS THE ASSESSEE FAILED TO PROVE THAT THE AMOUNT PAID TO FOREIGN AGENTS WAS NOT IN THE NATURE OF 'FEE FOR TECHNICAL SERVICES'. 5. LD.CIT(A) ERRED IN NOT RELYING ON THE RATIO OF THE HON'BLE SUPREME COURT IN THE CASE OF RAJENDRA PRASAD MOODY [115 ITR 519 (SC) WHERE IT WAS HELD THAT EARNING OF INCOME IS NOT ESSENTIAL FOR INCURRING EXPENDITURE. 6. THE LD. CIT(A) HAS INCORRECTLY RELIED ON DELHI HIGH COURT DECISION IN THE CASE OF CHEMINVEST LTD. [61 TAXMANN.COM 118 (DELHI) GIVEN THAT THE ISSUE HAS NOT REACHED FINALITY, AS THE HON'BLE SUPREME COURT IN CIVIL APPEAL NO. 7019 OF 2011 INT HE CASE OF GODREJ & BOYCE MANUFACTURING CO. LTD., VS. DCIT, MUMBAI & OTHERS IS YET TO PRONOUNCE ITS ORDER IN THE QUESTION OF 'WHETH ER PROVISION OF SECTION 14A OF THE ACT ARE APPLICABLE EVEN WHEN NO EXEMPT INCOME IS EARNED?' 7. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF HEARING. 3 . WE HAVE HEARD BOTH THE SIDES AND FIND FROM THE ORDER PASSED IN ITA NO.541/VIZ/2018, DATED 30/04/2019 THAT GROUND NOS. 5 & 6 ARE NOT ADJUDICATED, THEREFORE THERE IS A MISTAKE APPARENT ON RECORD, HENCE, IT HAS TO BE RECALLED . ACCORDINGLY, RECALLED THE ORDER PASSED IN ITA NO.541/VIZ/2018, DATED 30/04/2019 ONLY TO ADJUDICATE THE GROUND NOS. 5 & 6. REGISTRY IS DIRECTED TO POST THE APPEAL FOR HEARING ON 16/03/2020. AS THE 3 M A NO. 1 8 /VIZ/2019 ( M/S. NSL TEXTILES LTD. ) DATE OF HEARING IS ANNOUNCED IN OPEN COURT, NO NEED TO SEND THE NOTICES TO THE PARTIES SEPARATELY . 4 . IN THE RESULT, MISC. APPLICATION FILED BY THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN OPEN COURT ON TH IS 06 TH DAY OF MARCH , 2020 . S D / - S D / - (D.S. SUNDER SINGH) (V. DURGA RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 06 TH MARCH , 20 20 . VR/ - COPY TO: 1. THE ASSESSEE - M/S. NSL TEXTILES LIMITED, 3 RD FLOOR, EMGEE HOUSE, 4 TH LANE, RING ROAD, CHANDRAMOULI NAGAR, GUNTUR. 2. THE REVENUE ACIT, CIRCLE - 2(1), GUNTUR. 3. THE PR. CIT , GUNTUR. 4. THE CIT(A) - 1, GUNTUR. 5. THE D.R . , VISAKHAPATNAM. 6. GUARD FILE. BY ORDER (VUKKEM RAMBABU) SR. PRIVATE SECRETARY, ITAT, VISAKHAPATNAM.