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Income Tax Appellate Tribunal, DELHI
ORDER
PER ANIL CHATURVEDI, AM:
This appeal filed by the Revenue is directed against the order dated 31.07.2017 of the Commissioner of Income Tax (Appeals) – 16, New Delhi relating to Assessment Year 2010-11.
The relevant facts as culled from the material on records are as under :
Assessee is an individual who filed his return of income for A.Y. 2010-11 on 15.10.2010 declaring total income at Rs.23,34,100/-. The assessment was initially framed u/s 143(3) of the Act vide order dated 30.03.2013 and the total income was determined at Rs.24,16,550/-. Thereafter the case was reopened and thereafter assessment was framed u/s 147/143(3) of the Act vide order dated 14.03.2016 and the total income was determined at Rs.5,09,69,670/-. Aggrieved by the order of AO, assessee carried the matter before CIT(A) who vide order dated 31.07.2017 in Appeal No.10493/16-17 allowed the appeal of the assessee. Aggrieved by the order of CIT(A), Revenue is now in appeal and has raised the following the grounds of appeal:
1. “On the facts and circumstances of the case, the ld. CIT(A) has erred in deleting the disallowance of Rs.4,85,53,177/- made by the Assessing officer under section 40(a)(ia) r.w.s 195 of the Income Tax Act, 1961 on account of the commission payment of Rs.4,85,53,177/-, in the nature of fee for technical services even when these payments were made without obtaining no-deduction certificate u/s 197 of the I.T. Act?
2. Whether the commission payment made without TDS being deducted can be allowed to the agents who have business connection in India and are subject to tax deduction at source u/s 195 of the Act?
3. The appellant craves leave for reserving the right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal.”
On the date of hearing none appeared on behalf of the assessee nor any adjournment application was filed. The case file reveals that on earlier occasions also there was no appearance on behalf of the assessee. In such a situation, we proceed to dispose of the appeal ex-parte qua the assessee after hearing the Learned DR.
Though various grounds have been raised by the Revenue, but the sole controversy is about the deletion of addition made u/s 40(a)(ia) of the Act.
AO noted that assessee had paid commission of Rs.3,13,91,733/- to Mr. Atequalla and Rs.1,71,61,384/- to Mr. Amanullah, thus assessee had made aggregate payment of commission of Rs.4,85,53,117/-. He also noticed that assessee had not deducted TDS while making aforesaid payment. Assessee was asked to show-cause as to why the claim of expenses not be disallowed on account of non-deduction of TDS. Assessee inter alia submitted that commission has been paid to foreign agents, the services by agents have been rendered outside India and they do not have any Permanent Establishment in India and therefore income of agents is not taxable in India and accordingly assessee is not liable to deduct TDS. The submissions of the assessee was not found acceptable to AO. AO was of the view that provision of Section 195 of the Act were applicable and assessee was under obligation to deduct on commission. Since assessee had failed to deduct TDS, he by applying provision of Section 40(a)(ia) r.w.s 195 of the Act, disallowed the aggregate commission of Rs.4,85,53,117/- and made its addition. Aggrieved by the order of AO, assessee carried the matter before CIT(A).
CIT(A) noted that his predecessor in assessee’s own case for A.Y. 2011-12 had come to the conclusion that the payment made by the assessee was out of the purview of Section 195 of the Act and he by relying on the decision of Hon’ble Supreme Court in the case of CIT vs. Toshoku Ltd. 125 ITR 525 and other decisions, deleted the addition. CIT(A) by relying on the decision of his predecessor in assessee’s own case and the other decisions of the Tribunal cited in his order, deleted the addition. Aggrieved by the order of CIT(A), Revenue is now before us.
Before us, Learned DR supported the order of AO.
We have heard the Learned DR and perused the materials available on record. The issue in the present ground is with respect to deleting the addition made u/s 40(a)(ia) of the Act on account of non-deduction of TDS. We find that CIT(A) while deciding the issue in favour of the assessee had relied on the decision of his predecessor in assessee’s own case for A.Y. 2011- 12 and after relying on the various decisions cited in his order, has decided the issue in favour of the assessee by deleting the addition made by AO.
Before us, no fallacy in the findings of CIT(A) has been pointed out by Revenue nor has Revenue placed any material on record to demonstrate that the CIT(A) decision in assessee’s own case for earlier years which has been relied upon by CIT(A) while deciding the issue has been stayed/ set aside/ overruled by higher judicial forum. We therefore find no reason to interfere with the order of CIT(A) and thus grounds of Revenue are dismissed.
In the result, appeal of the Revenue is dismissed.
Order pronounced in the open court on 29.11.2021