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Income Tax Appellate Tribunal, AHMEDABAD “D” BENCH
Before: Shri Mahavir Prasad & Shri Amarjit Singh
Revenue by: Shri Purshottam Kumar, Sr. D.R. Assessee by: Shri Amrin Pathan, A.R. Date of hearing : 14-09-2021 Date of pronouncement : 21-09-2021 आदेश/ORDER PER : AMARJIT SINGH, ACCOUNTANT MEMBER:-
This assessee’s revenue for A.Y. 2014-15, arises from order of the CIT(A)-1, Vadodara dated 11-02-2019, in proceedings under section 143(3) of the Income Tax Act, 1961; in short “the Act”.
The solitary ground of appeal filed by the revenue is directed against the order of ld. CIT(A) in deleting the addition made on account of not making TDS on the payment of commission aggregating to Rs. 3,21,07,681/-.
Page No 2 Dy. CIT vs. Inox India Pvt. Ltd.
The fact in brief is that return of income declaring total income of Rs. 33,60,60,370/- was filed on 27th Nov, 2014. The case was subject to scrutiny assessment and notice u/s. 143(2) of the act was issued on 31st August, 2015. During the course of assessment, the Assessing Officer noticed that assessee had incurred commission expenses of Rs. 3,68,45,208/- to non-residents for rendering sale services outside India. On query, the assessee explained that no TDS is required to be deducted at source u/s. 195(1) of the act as the commission was paid to the foreign parties on the services rendered outside India and they were not having any permanent establishment in India. However, the Assessing Officer has not accepted the submission of the assessee and disallowed the claim of commission expenses u/s. 40(a)(ia) of the act on account of not making TDS on such commission payment.
The assessee has filed appeal before the ld. CIT(A). The ld. CIT(A) has deleted the addition holding that ITAT Ahmedabad in the case of the assessee itself pertaining to assessment year 2010-11 vide has adjudicated the identical issue on similar facts in favour of the assessee.
During the course of appellate proceedings before us, at the outset the ld. counsel has contended that ITAT Ahmedabad on identical issue and similar fact has adjudicated the issue for assessment year 2010-11 and for assessment year 2015-16 in favour of the assessee. The ld. Departmental Representative is fair enough not to controvert this undisputed fact that issue Page No 3 Dy. CIT vs. Inox India Pvt. Ltd. is squarely covered in favour of the assessee by the decision of the ITAT in its own case as referred above.
6. With the assistance of ld. representatives, we have gone though the decision of Co-ordinate Bench of the ITAT vide for assessment year 2015-16 vide ITA 756/Ahd/2019 wherein the impugned issue was decided in favour of the assessee. The relevant part of the decision of ITAT vide ITA no. 756/Ahd/2019 dated 11th Jan, 2021 is reproduced as under:- “9. We have carefully considered the rival submissions and the assessment order as well as the first appellate order. The materials referred and relied upon were carefully considered. The solitary issue involved in the instant case is, whether in the facts of the case, the remittance made by the assessee abroad towards commission expenses is chargeable to tax in India or not and consequently, whether the commission payment is susceptible to provisions of s.195 of the Act or not. An incidental issue that arises for consideration is whether the services rendered by the non- residents are in the nature of 'fee for technical services' as widely defined in Explanation (2) to s.9(l)(vii) of the Act. It is the case of the assessee that the remittance have been made towards commission payments almost to the same parties as in the earlier years for which favourable view has been taken by the Tribunal on facts. It is the case of the assessee that the commission agents have rendered the services abroad and the situs of accrual or receipt of their commission income is outside India. It is further claimed that services rendered by agents have been utilized by the assessee outside India in procuring the export orders. 10. We straightway find that the issue is squarely covered in favour of the assessee by the decision of co-ordinate bench for AY 2010-11 as rightly acknowledged by the CIT(A). The commission payments are seen to be made to the similar set of parties as in AY 2010-11. The allegation on behalf of the Revenue that expenses incurred are covered in the wider definition of 'fees for technical services' as defined in Explanation (2) to Section 9(l)(vii) of the Act is devoid of any rationale. Except for bald allegation of the services being akin to managerial or consultancy services, the AO has not brought any material on record to discard the stand of assessee. The co- ordinate Bench of Tribunal has duly analyzed this aspect in length in ITA No.1391/Ahd/2015 for AY 2010-11 in the case of assessee itself and has delivered a speaking order in favour of the assessee on all aspects of subject matter on facts. The services in respect of commission expenses are stated to be rendered outside India as well as utilized outside India and therefore the income arising by way of commission against rendition of agency services cannot be deemed to accrue or arise in India in the hands of the recipients of such commission payments. In the circumstances, where the income arising to non-resident commission agents is not found to be chargeable in India under S.4 r.w.s. 5(2) of the Act, the obligation under S.195 of the Act for deduction of tax at source cannot be fastened upon the remitter assessee. In the absence of statutory obligation arising under Section 195 of the Act for deduction of tax in the absence of chargeability of remittances, the corresponding disallowance under s.40(a)(i) is without any merit and thus uncalled for. We thus see no error in the action of the CIT(A) who has rightly applied the decision of the Tribunal in the facts of the case. We thus decline to interfere.”
Page No 4 Dy. CIT vs. Inox India Pvt. Ltd. Following the decision of the Co-ordinate Bench of the ITAT on identical issue and facts as cited above, we do not find any infirmity in the decision of ld. CIT(A). Therefore, this ground of appeal of the revenue is dismissed.
In the result, the appeal of the revenue is dismissed.
Order pronounced in the open court on 21-09-2021 Sd/- Sd/- (MAHAVIR PRASAD) (AMARJIT SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad : Dated 21/09/2021 आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से,
उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद