Prakash Impex, CHENNAI v. ACIT, CHENNAI

ITA 8/CHNY/2012 | 2008-2009
Pronouncement Date: 30-03-2012 | Result: Allowed

Appeal Details

RSA Number 821714 RSA 2012
Assessee PAN AAAFP5388G
Bench Chennai
Appeal Number ITA 8/CHNY/2012
Duration Of Justice 2 month(s) 27 day(s)
Appellant Prakash Impex, CHENNAI
Respondent ACIT, CHENNAI
Appeal Type Income Tax Appeal
Pronouncement Date 30-03-2012
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 30-03-2012
Assessment Year 2008-2009
Appeal Filed On 03-01-2012
Judgment Text
IN THE INCOME-TAX APPELLATE TRIBUNAL CHENNAI A BENCH CHENNAI. BEFORE DR. O.K. NARAYANAN VICE-PRESIDENT & SHRI CHALLA NAGENDRA PRASAD JUDICIAL MEMBER I.T.A. NO. 08/MDS/2012 ASSESSMENT YEAR: 2008-09 M/S. PRAKASH IMPEX NO. 58E (N/P) SIDCO INDUSTRIAL ESTATE AMBATTUR CHENNAI 600 098. [PAN:AAAFP5388G] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE XI CHENNAI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI T. BANUSEKAR C.A. REVENUE BY : SHRI SHAJI P. JACOB ADDL.CIT DATE OF HEARING : 1 5 . 0 3 .201 2 DATE OF PRONOUNCEMENT : 30.03.2012 ORDER PER CHALLA NAGENDRA PRASAD JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) IV CHENNAI DATED 17.11.2011 IN ITA NO. 110/10-11/A -IV FOR THE ASSESSMENT YEAR 2008-09. SHRI T. BANUSEKAR C.A. REPRESENTED O N BEHALF OF THE ASSESSEE AND SHRI SHAJI P. JACOB ADDL. CIT REPRESE NTED ON BEHALF OF THE REVENUE. 2. THE ONLY ISSUE IN THIS APPEAL OF THE ASSESSEE I S AGAINST THE DISALLOWANCE OF COMMISSION OF ` .1 45 83 443/- PAID TO NON-RESIDENT AGENTS OUTSIDE INDIA FOR THE SERVICES RENDERED BY THEM OUT SIDE INDIA. I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.08/M/12 08/M/12 08/M/12 08/M/12 2 3. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANU FACTURING AND EXPORTING OF LEATHER GARMENTS. THE ASSESSING OFFICE R WHILE COMPLETING THE ASSESSMENT DISALLOWED THE COMMISSION PAID TO NON-RE SIDENT AGENTS ON THE GROUND THAT NO TDS WAS MADE UNDER SECTION 195 OF TH E ACT AND THEREFORE THE PROVISIONS OF SECTION 40(A)(I) ARE APPLIED. 4. THE CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER STATING THAT THE TRANSACTION IS BETWEEN A RESIDENT AND NON-RESID ENTS. THE COMMISSION WAS PAID BY A RESIDENT FOR SERVICES RENDERED TO NON -RESIDENTEVEN THOUGH THE SERVICES WERE RENDERED OUTSIDE THE COUNTRY. 5. AGAINST THE ORDER OF THE CIT(A) THE ASSESSEE C AME UP IN APPEAL BEFORE US. 6. WE HAVE HEARD BOTH THE SIDES PERUSED THE MATER IALS AVAILABLE ON RECORD. AT THE TIME OF HEARING THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF EXP ORTS IN LEATHER GARMENTS. IN THE COURSE OF BUSINESS THE ASSESSEE PAID COMMIS SION TO NON-RESIDENT AGENTS WHO HAVE RENDERED THEIR SERVICES OUTSIDE IN DIA. IT IS SUBMITTED THAT THE INCOME DOES NOT ACCRUE IN INDIA AS THE SERVICES WERE RENDERED OUTSIDE INDIA BY NON-RESIDENT AGENTS AND THEY HAVE NO ESTAB LISHMENT WHATSOEVER IN INDIA. THEREFORE THE PROVISIONS OF EITHER SECTION 195 OR SECTION 9 (1)(VI) OF THE INCOME TAX ACT ARE APPLICABLE IN THE ASSESSEES CASE. HE SUBMITTED THAT SINCE THE INCOME DOES NOT ACCRUE IN INDIA NO DEDUC TION OF TDS IS REQUIRED TO BE MADE UNDER SECTION 195 OF THE ACT AND THEREFO RE THERE IS NO I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.08/M/12 08/M/12 08/M/12 08/M/12 3 JUSTIFICATION IN DISALLOWING THE SALES COMMISSION P AID TO NON-RESIDENT AGENTS AND HENCE APPLYING THE PROVISIONS OF SECTION 40(A) (I) ARE NOT JUSTIFIED. HE FURTHER SUBMITTED THAT AN IDENTICAL ISSUE WAS DECID ED IN FAVOUR OF THE ASSESSEE BY THE HONBLE SUPREME COURT IN THE CASE O F G.E. INDIA TECHNOLOGY CENTRE (P) LTD. V. CIT [2010 327 ITR 456 ] AND ALSO BY THIS TRIBUNALS ORDER IN THE CASE OF DCIT V. M/S. VENKAT SHOES PVT. LTD. I.T.A. NO. 996/MDS/2008 DATED 06.03.2009. 7. THE LD. DR RELIED ON THE ORDER OF THE CIT(A). 8. WE HAVE GONE THROUGH THE DECISION OF HONBLE SU PREME COURT IN THE CASE OF G.E. INDIA TECHNOLOGY CENTRE (P) LTD. V. CI T (SUPRA) AND FIND THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THIS DECISION. THE HONBLE SUPREME COURT HAS HELD THAT THE MOST IMPORTANT EXPR ESSION IN SECTION 195(1) CONSISTS OF THE WORDS CHARGEABLE UNDER THE PROVISIONS OF THE ACT AND HELD THAT PAYER IS BOUND TO DEDUCT TAX AT SOURC E ONLY IF THE SUM IS ASSESSABLE TO TAX IN INDIA. IT WAS HELD THAT A PERS ON PAYING INTEREST OR ANY OTHER SUM TO A NON-RESIDENT IS NOT LIABLE TO DEDUCT TAX IF SUCH SUM IS NOT CHARGEABLE TO TAX UNDER THE PROVISIONS OF INCOME TA X ACT. 9. IN THIS CASE SINCE THE COMMISSION WAS PAID TO A NON-RESIDENT AGENTS FOR THE SERVICES RENDERED OUTSIDE INDIA SUCH PAYME NTS ARE NOT CHARGEABLE TO TAX IN INDIA AND THEREFORE THE PROVISIONS OF SE CTION 195 ARE NOT APPLICABLE IN VIEW OF THE DECISION OF THE HONBLE SUPREME COUR T (SUPRA). THEREFORE WE DIRECT THE ASSESSING OFFICER TO DELETE THE DISALLOW ANCE OF COMMISSION OF I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.08/M/12 08/M/12 08/M/12 08/M/12 4 ` .1 45 83 443/- PAID TO NON-RESIDENT AGENTS. ACCORDI NGLY WE SET ASIDE THE ORDERS OF LOWER AUTHORITIES AND ALLOW THE GROUNDS O F APPEAL OF THE ASSESSEE. 10. IN THE RESULT THE APPEAL OF THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED IN OPEN COURT ON 30.03.2012. SD/- SD/- (DR. O.K. NARAYANAN) VICE-PRESIDENT (CHALLA NAGENDRA PRASAD) JUDICIAL MEMBER CHENNAI DATED THE 30.03.2012 VM/- TO: THE ASSESSEE//A.O./CIT(A)/CIT/D.R.