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Income Tax Appellate Tribunal, HYDERABAD ‘ B ‘ BENCH, HYDERABAD.
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 : 12.07.2021. O R D E R Per Shri S.S. Godara, J.M. : This assessee’s appeal for Asst. Year 2012-13 arises from the Pr. Commissioner of Income Tax, Hyderabad’s order dt.27.03.2017 in proceedings under section 263 of Income Tax Act, 1961 (‘the Act’). Heard both the parties. Case file perused.
We notice at the outset with the able assistance of two parties that the PCIT has treated the regular assessment in issue dt.31.10.2014 framed as an erroneous one causing prejudice to interest of revenue on the following twin counts :
Learned PCIT thereafter rejected the assessee's explanation supporting the impugned assessment followed by his directions to the Assessing Officer to frame on afresh after duly examining the said twin issues as per law.
The Revenue vehemently contended in support of the PCIT directions that the Assessing Officer had failed to carry out the necessary enquiry(ies) which rendered his regular assessment 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 directions. 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 markets. 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 India, is not fatal his view for the assessee's claim nor does it render the impugned assessment as an erroneous causing prejudice to the interest of Revenue; simultaneously, as per hon'ble apex court’s landmark decision in Malabar Industrial Co. Vs. CIT 243 ITR 83 (SC) ; Case 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 Revenue’s stand 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 has also not invoked