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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI KUL BHARAT & SHRI MANISH BORAD
Bulk Pack Exports Ltd. ITO(IT & TP), 507, B-block, 5th Floor, Bhopal बनाम/ Corporate House, R.N.T. Vs. Marg, Indore (Appellant) (Revenue ) P.A. No.AABCB5569R Appellant by S/Shri Anil Kamal Garg & Arpit Gaur, ARs Revenue by Smt. Vineeta Dube, Sr. DR Date of Hearing: 05.10.2020 Date of Pronouncement: 20.10.2020 आदेश / O R D E R PER KUL BHARAT, J.M: These two appeals by the assessee pertaining to Assessment years 2015-16 & 2016-017 are directed against the different order of ld. Commissioner of Income
Bulk Pack Exports, Ltd. /ITANo.707 & 708/2018 Tax (Appeals)(in short ‘Ld. CIT(A)’-13 Ahmedabad, dated 29.06.2018.
The assessee has raised following grounds of appeal in ITANo.707/Ind/2018 for A.Y. 2015-16:
Grounds of Income-Tax appeal before the Hon'ble Income-Tax Appellate Tribunal, Indore Bench, Indore, against the Appellate Order passed under s. 250/201 (1 )/20 1 (1 A) of the Income-Tax Act, 1961 by the learned Commissioner of Income-Tax (Appeals)- 13, Ahmedabad, pertaining to the F.Y. 2014-15 relevant to A.Y. 2015-16 in response to the appeal filed against the Order under . 201(1)/201(1A) of the Act, passed by the learned Income-Tax Officer (IT & TP), Bhopal. 1.That, on the facts and in the circumstances of the case, the learned CIT(A) grossly erred in passing the impugned Order without considering the written submission filed by the appellant thereby without giving reasonable and sufficient opportunity of being heard to the appellant. 2.That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the action of the AO in holding the appellant in default under s.20 1 (1) in respect of the withholding tax and as also, under s.201(1A) in respect of interest thereon, respectively at Rs.3,79,089/- and Rs.68,423/-, aggregating to Rs.4,47,512/-. 3.That, without prejudice to the above, the Authorities below grossly erred, both on facts and in law, in not appreciating the material fact that the payments made by the appellant to two foreign companies namely Mis. Belgisch Verpakkingsinstituut, Belgium (in short, 'BVK') and M/s. Labordata International Materials Testing Institute Germany (in short, 'LIMTI'), being on account of testing charges, were not in the nature of payment of consideration towards rendering of any managerial, technical or consultancy services, as contemplated in Explanation 2 to clause (vii) of sub-section (1) of section 9 of the Income-Tax Act, 1961 and therefore, the same could not be deemed as an income accrue or arise to such foreign companies in India warranting incidence of withholding of tax at source under s.195 of the Act and consequently, the appellant could not have been deemed 2
Bulk Pack Exports, Ltd. /ITANo.707 & 708/2018 as an assessee in default in terms of provisions of section 20 I (l) of the Act. 4.That, without prejudice to the above, the Authorities below grossly erred, both on facts and in law, in not appreciating the material fact that both the foreign companies, to whom the appellant had made payments of testing charges, were not having any residence or place of business or business connection or permanent establishment in India and further, none of the companies rendered any services to the appellant in India and as also, not received any payment in India and consequently, income of such foreign companies was not chargeable to income tax so as to attract the provisions of withholding tax. 5.That, without prejudice to the above and without admitting that the appellant was in any manner liable for TDS under s.195 of the Act, the Authorities below grossly erred, both on facts and in law, in not considering and appreciating the material fact that both the foreign companies to whom the appellant had made payments were entitled to the benefits conferred under sub-section (2) of section 90 of the Act as with both the countries, of which these two foreign companies were resident of, i.e. Belgium and Germany, Central Government of India had entered into Agreements in accordance with the provisions of sub-section (1) of section 90 of the Act. 6.That, without prejudice to the above, the learned CIT(A) as well as ld. AO grossly erred in not conferring the benefit under sub-section (2) of section 90 of the Act merely for the want of Tax Residency Certificates despite being the fact that the learned AO himself had admitted the residency status of such companies that of Belgium and Germany. 7.That, without prejudice to the above, the learned CIT (A) as well as ld. AO grossly erred, both on facts and in law, in not considering the material fact that the provisions of section 206AA of the Act cannot override Double Taxation Avoidance Agreements entered into in accordance with the provisions of s.90(1) of the Act. 8.That, without prejudice to the above, the learned CIT (A) as well as ld. AO grossly erred, both on facts and in law, by applying tax rate at the rate of 20.6% without considering the material fact that the provisions of s.206AA of the Act which have been amended by way of insertion of a new sub-section (7) to such section, were not applicable to a foreign company. 9.That, without prejudice to the above, the learned CIT(A) as well as ld. AO grossly erred, both on facts and in law, in not considering the material fact that as per sub-item no. (D) of item no. (ii) of sub-clause 3
Bulk Pack Exports, Ltd. /ITANo.707 & 708/2018
(b) of clause (1) to Part II of the First Schedule to the Finance Act, 2015, the prescribed rate of tax for deduction at source under s.195 of the Act in respect of payment made to a non-resident (other than a non-resident Indian), on income by way of fees for technical services, was often percent only as it relates to a matter included in the Industrial Policy. 10.That, the appellant further craves leave to add, alter and/or amend any of the foregoing grounds of appeal as and when considered necessary.
The assessee has raised following grounds of appeal in ITANo.708/Ind/2018 for A.Y. 2016-17:
Grounds of Income-Tax appeal before the Hon'ble Income-Tax Appellate Tribunal, Indore Bench, Indore, against the Appellate Order passed under s. 250/201 (1 )/20 1 (1 A) of the Income-Tax Act, 1961 by the learned Commissioner of Income-Tax (Appeals)- 13, Ahmedabad, pertaining to the F.Y. 2015-16 relevant to A.Y. 2016-17 in response to the appeal filed against the Order under . 201(1)/201(1A) of the Act, passed by the learned Income-Tax Officer (IT & TP), Bhopal.
That, on the facts and in the circumstances of the case, the learned CIT(A) grossly erred in passing the impugned Order without considering the written submission filed by the appellant thereby without giving reasonable and sufficient opportunity of being heard to the appellant.
2. That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the action of the AO in holding the appellant in default under s.20 1 (1) in respect of the withholding tax and as also, under s.201(1A) in respect of interest thereon, respectively at Rs.1,13,282/- and Rs.46,214/-, aggregating to Rs.1,59,496/-.
3. That, without prejudice to the above, the Authorities below grossly erred, both on facts and in law, in not appreciating the material fact that the payments made by the appellant to two foreign companies namely M/s. Belgisch Verpakkingsinstituut, Belgium (in short, 'BVK') and M/s. Labordata International Materials Testing Institute Germany (in short, 'LIMTI'), being on account of testing charges, were Bulk Pack Exports, Ltd. /ITANo.707 & 708/2018 not in the nature of payment of consideration towards rendering of any managerial, technical or consultancy services, as contemplated in Explanation 2 to clause (vii) of sub-section (1) of section 9 of the Income-Tax Act, 1961 and therefore, the same could not be deemed as an income accrue or arise to such foreign companies in India warranting incidence of withholding of tax at source under s.195 of the Act and consequently, the appellant could not have been deemed as an assessee in default in terms of provisions of section 20 I (l) of the Act. 4.That, without prejudice to the above, the Authorities below grossly erred, both on facts and in law, in not appreciating the material fact that both the foreign companies, to whom the appellant had made payments of testing charges, were not having any residence or place of business or business connection or permanent establishment in India and further, none of the companies rendered any services to the appellant in India and as also, not received any payment in India and consequently, income of such foreign companies was not chargeable to income tax so as to attract the provisions of withholding tax.
5. That, without prejudice to the above and without admitting that the appellant was in any manner liable for TDS under s.195 of the Act, the Authorities below grossly erred, both on facts and in law, in not considering and appreciating the material fact that both the foreign companies to whom the appellant had made payments were entitled to the benefits conferred under sub-section (2) of section 90 of the Act as with both the countries, of which these two foreign companies were resident of, i.e. Belgium and Germany, Central Government of India had entered into Agreements in accordance with the provisions of sub-section (1) of section 90 of the Act. 6.That, without prejudice to the above, the learned CIT(A) as well as ld. AO grossly erred in not conferring the benefit under sub-section (2) of section 90 of the Act merely for the want of Tax Residency Certificates despite being the fact that the learned AO himself had admitted the residency status of such companies that of Belgium and Germany. 7.That, without prejudice to the above, the learned CIT (A) as well as ld. AO grossly erred, both on facts and in law, in not considering the material fact that the provisions of section 206AA of the Act cannot override Double Taxation Avoidance Agreements entered into in accordance with the provisions of s.90(1) of the Act. 8.That, without prejudice to the above, the learned CIT (A) as well as ld. AO grossly erred, both on facts and in law, by applying tax rate 5
Bulk Pack Exports, Ltd. /ITANo.707 & 708/2018 at the rate of 20.6% without considering the material fact that the provisions of s.206AA of the Act which have been amended by way of insertion of a new sub-section (7) to such section, were not applicable to a foreign company.
9. That, without prejudice to the above, the learned CIT(A) as well as ld. AO grossly erred, both on facts and in law, in not considering the material fact that as per sub-item no. (D) of item no. (ii) of sub-clause (b) of clause (1) to Part II of the First Schedule to the Finance Act, 2015, the prescribed rate of tax for deduction at source under s.195 of the Act in respect of payment made to a non-resident (other than a non-resident Indian), on income by way of fees for technical services, was often percent only as it relates to a matter included in the Industrial Policy.
That, the appellant further craves leave to add, alter and/or amend any of the foregoing grounds of appeal as and when considered necessary.
The facts in brief are that the assessee company is engaged in the business of manufacturing and exporting of bags. The assessee was responsible for deducting tax at source under chapter XVII of the Income Tax Act, 1961(hereinafter referred as the Act.) The assessee had filed Form 15CA regarding remittance of various payments to non-residents. A letter was issued on 12.10.2015 for verification of payments made to non-residents without deduction of TDS u/s 195 of the Act. The AO asked the assessee to submit Form No.10F as well as tax residency 6
Bulk Pack Exports, Ltd. /ITANo.707 & 708/2018 certificate (TRC) issued by the concerned tax authorities of the respective countries. The AO noted that the assessee company failed to submit the same, therefore, passed an order directing the assessee to withhold taxes at a higher rate of 20%. The Ld. CIT(A) confirm the same, passing ex- parte impugned order.
Now the assessee is in appeal before this Tribunal.
At the outset of the hearing, Ld. counsel for the assessee submitted that the impugned order was passed without considering the written submission filed by the assessee, thereby without giving reasonable and sufficient opportunity of being heard to the assessee.
On the other, Ld. DR opposed the submission and relied upon the orders of the Revenue Authorities and submitted that no written submission was filed by the assessee on time. In reply, Ld. counsel for the assessee submitted that the written submission was filed by the assessee through
Bulk Pack Exports, Ltd. /ITANo.707 & 708/2018 post but the same was delayed and received in the officer of Ld. CIT(A) after passing the order which led ex-parte impugned order passed without considering the written submission filed by the assessee.
We have heard rival submissions and perused the material available on record. We find that Ld. CIT(A) passed ex-parte impugned order without considering the written submission filed by the assessee. Thus, no proper and reasonable opportunity of being heard was provided to the assessee. Therefore, in the interest of justice and fair play the assessee’s matter requires reconsideration at the level of Ld. CIT(A). Ld. CIT(A) would pass the order afresh after affording sufficient and reasonable opportunity of being head to the assessee. The assessee is at liberty to file further submission/relevant papers in support of the claim.
Bulk Pack Exports, Ltd. /ITANo.707 & 708/2018
In result, both the appeals filed by the assessee are allowed for statistical purposes.
Order was pronounced in the open court on 20.10.2020.