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Income Tax Appellate Tribunal, “C” BENCH, MUMBAI
Before: SHRI M. BALAGANESH, AM & SHRI AMARJIT SINGH, JM
O R D E R
PER AMARJIT SINGH, JM:
The revenue has filed the present appeal against the order dated 28.02.2018 passed by the Commissioner of Income Tax (Appeals) -21, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the A.Y.2014- 15.
The revenue has raised the following grounds: -
" I. On the facts and circumstances of the case and in law, the CIT(A) was justified in deleting the disallowance u/s 40(a)(i) made by AO holding that the amount paid by assessee to M/s Google Ireland Ltd. is ITA No. 3693/M/2018 A.Y.2014-15 not chargeable to tax in India, in the absence of any PE of M/s Google Ireland in India.
2. On the facts and circumstances of the case and in light of Hon'ble Supreme Court's decision in the case of CIT vs Kanpur Coal Syndicate [1965 AIR 325, 1964 SCR (6)(85)] and as per clause (iva) to Explanation 2 below Sec 9(1)(vi) of the Income Tax Act, 1961, the CIT(A) was justified in deleting the addition of Rs. 91,92,344/- which should have been treated as royalty and he ought to have upheld the decision of the AO.
3. The appellant prays that the order of CIT(A) on the above ground be set aside and that of assessing Officer be restored.
The appellant craves leave to amend or alter any grounds or add a new ground which may be necessary."
The brief facts of the case are that the assessee filed its return of income on 18.09.2014 declaring total loss to the tune at Rs.36,70,426/-. The return was processed u/s 143(1) of the I.T. Act, 1961. Thereafter, the case was selected for scrutiny, therefore, notices u/s 143(2) and 142(1) of the Act were issued and served upon the assessee. The assessee company was engaged in the business of Search engine, marketing through internet consisting of generating clicks, links, visits through internet with clients. On verification, the assessee was asked to furnish the detail of TDS deducted along with necessary documentary evidence to substantiate the payment made to the Government Treasury. It was also noticed that the TDS was not deducted on advertisement cost in sum of Rs.91,92,344/- which was required u/s 195 of the Act. Notice was given and after the reply of the assessee, the said amount was disallowed and added to the income of the assessee. The total income of the assessee was assessed to the tune of Rs.55,21,920/-. Feeling aggrieved, the assessee filed an appeal before the CIT(A) who allowed the claim of the assessee, therefore, the revenue has filed the present appeal before us.
ITA No. 3693/M/2018 A.Y.2014-15 ISSUE NOS. 1 & 2:-
4. Under these issues the revenue has challenged the deletion of disallowance of Rs.91,92,344/- u/s 40A(a)(ia) of the Act. The Ld. Representative of the revenue has argued that the assessee failed to deduct the TDS upon the payment of advertisement cost in sum of Rs.91,92,344/- u/s 195 of the Act, therefore, the AO has rightly disallowed the claim of the assessee but the CIT(A) has wrongly deleted the said addition, therefore, the finding of the CIT(A) is not justifiable, hence is liable to be set aside. However, on the other hand, the Ld. Representative of the assessee has placed reliance upon the order of the CIT(A) in question. Before going further, we deemed it necessary to advert the finding of the CIT(A) on record: -
“I have considered the facts of the case and submissions made by the appellant. The assessee is in the business of placing the Clients particulars in the vantage points in the search engines like Google, Yahoo etc. The appellant buys the vantage points in the search engines and sells the same to clients by placing their name and also by generating the data of hits thereon and bills the clients accordingly. The payments to the popular search engines like Google is made by swiping the credit cards and thereby remitting the monies to Google who has headquarters in Ireland. Google does not have any Permanent Establishment in India. The nature of payment is towards business income and not Fees for Technical Service, it is further seen that this issue was decided in favour of the Appellant in its own case in AY 2006- 07, dated 18.07.2012. This decision was followed in the Appellant's own case in the subsequent assessment years also in the decision of the Hon’ble ITAT. Further, Ld. CIT(A)had also allowed the appellant’s appeal on this issue for the earlier Assessment years. Further the issue is covered in favour of the appellant by the ITAT and CIT(A) in its own case, for the earlier assessment years, respectfully following the same the AO is directed to delete the additions of Rs.91,92,344/-. The grounds of appeal no.1 is allowed.”
ITA No. 3693/M/2018 A.Y.2014-15
On appraisal of the above mentioned order, we find that the issue has been decided on the basis of the decision of Hon’ble ITAT in the assessee’s own case for the A.Y.2006-07 in dated 18.07.2012. The facts are not distinguishable at this stage. No law contrary to the law relied upon the Ld. Representative of the CIT(A) has been produced before us. Further, we also noticed that the issue has also been dealt with by Hon’ble ITAT in the assessee’s own case for the A.Y.2012-13 in ITA. No.4937/M/2016 dated 14.02.2018. The relevant finding has been given in para no. 4 which is hereby reproduced as under:-
4. Under these issues the revenue has challenged the deletion of the disallowance u/s 40(a)(ia) of the I.T. Act, 1961 of an amount of Rs.1,01,02,632/-. The contention of the assessee is that the payment to M/s. Google Ireland Ltd. for uploading and display of banner advertisement was not in the nature of rendering of royalty but the same was for rendering the business profit of M/s. Google Ireland Ltd. and in the absence of any PE of M/s. Google Ireland Ltd. in India, the same is not chargeable to tax in India. The revenue is of the view that the said payment was in the nature of royalty, therefore, the TDS was liable to be deducted in accordance with law. On appraisal of the order of the CIT(A), it came into noticed that the issue has already been decided in favour of the assessee by the ITAT in the assessee’s own case for the A.Y. 2006-07 in dated 18.07.2012. The said decision was followed in the appellants own case in the subsequent assessment year also. The Hon’ble ITAT has also decided these issues in favour of the Assessee in the assessee’s own case for the A.Y. 2008-09 in ITA. No.2895/M/2012 dated 23.01.2013. The CIT(A) has also decided these issue in favour of the assessee on the basis of the decision of ITAT. Since these issues has already been decided in favour of the assessee by the ITAT and the CIT(A) has also followed the same, therefore, in the said circumstances, we nowhere found any illegality and irregularity in the order passed by the CIT(A) in question. Therefore, we confirmed the finding of the CIT(A) on these issues and decided these issues in favour of the assessee against the revenue.
Since the issue has duly been covered by the decision of Hon’ble ITAT in the assessee’s own case (supra), therefore, we are of the view that the CIT(A) has decided the matter of controversy judiciously and correctly
ITA No. 3693/M/2018 A.Y.2014-15 which is not liable to be interfere with at this appellate stage. Accordingly, all these issues are decided in favour of the assessee against the revenue.