A.C.I.T.-20(3), MUMBAI vs. S H M SHIPCARE, MUMBAI

IN THE INCOME-TAX APPELLATE TRIBUNAL “F” BENCH MUMBAI BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER (Assessment Year 2012-13) ACIT- 20(3), M/s S H M Shipcare, Room No. 615, 6th Floor, Shop No.1, 16A, Press Building, Piramal Chambers, Parel, Vs. Gr. Floor, Magzine St. Mumbai-400012. Darukhana, Mazgaon, Mumbai-400010. PAN: AARFS8910L Appellant Respondent Appellant by : Shri T.A. Khan (DR) Respondent by : Shri Dhiren Shroff (AR) Date of Hearing : 14.05.2018 Date of Pronouncement : 14.05.2018 ORDER PER PAWAN SINGH, JUDICIAL MEMBER;

1. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A)-32, Mumbai erred in deleting the addition of Rs. 23,22,932/- (Training fee Expenses), Rs. 47,85,636/- & Rs. 341,831/- (Survey fee paid) and Rs. 70,95,763/- (Royalty) made on account of non deduction of TDS on payment for training fees, survey fees and royalty ignoring the decision of Hon'ble ITAT, Mumbai in case of Satellite Television Asia Region Ltd Vs. DCIT(2006) 99 ITO 914 (MUM) which holds that section 195 of the IT Act lays emphasis on chargeability rather than source of payment" 2. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A)-32, Mumbai erred in finding the facts of this case are similar to that of the assessment year 2008-09 as the amendment in Finance Act, 2010 has taken place well before the year under consideration and question of retrospective effect does not arise"

ITA No.5001/M/16- M/s S H M Shipcare

raised by revenue are covered in favour of assessee in assessee’s own case for Assessment Year 2008-09 & 2010-11. The ld. AR of the assessee also filed copy of the order of Tribunal in assessee’s own case for Assessment Year 2008-09 & 2010-11 in & 14/M/2015 for Assessment Year 2008-09 & 2010-11 respectively. On going through the order, the ld. DR for the Revenue fairly conceded that the grounds of appeal raised by Revenue are squarely covered in favour of assessee.

3. We have considered the rival submission of the parties and have gone through the orders of authorities below. We have seen the order of Tribunal in ITA No. 1047/M/2013 & 14/M/2015 for Assessment Year 2008-09 & 2010-11. We have noted that identical ground of appeal was raised by Revenue in ITA No. 1047/Mum/2013 for Assessment Year 2008-09 and the issue was decided against Revenue vide order dated 10.02.2016. We have further noted that by following the order of Tribunal in Assessment Year 2008-09, the Tribunal in appeal for Assessment Year 2010-11 in ITA No. 14/Mum/15 passed the following order:

2. The only issue in this appeal of Revenue is against the order of CIT(A) deleting the disallowance of expenses on payment of training fees royalty amounting to Rs.26,17,330/- and Rs. 11,77,864/- respectively for non-deduction of TDS by invoking the provision of Section 40(a)(ia) of the Act. For this Revenue has raised following ground No. 1: - 2 ITA No.5001/M/16- M/s S H M Shipcare

1. On the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition on Rs. 26,17,330/- (out of total of Rs. 30.04,839/-) and Rs. 1177,864/- made u/s 40 (a) (ia) on account (?f non deduction of TDS on payment for training fees and royalty ignoring the decision of Hon’ble ITAT. Mumbai in the case of Satellite Television Asia Region Ltd. Vs. DCJT (2006) 99 ITD 914 (Mum) which holds that section 195 of the IT Act lays emphasis on chargeability rather than source of payment.

3. At the outset learned Counsel for the assessee filed copy of Tribunal order in assessee's own case in for the A.Y. 2008-09 vide order dated 10-02-2016 wherein exactly identical issue is dealt with as regards to the payment of training fees, service fees and royalty payments for the subject matter as in the present case and Tribunal has deleted the disallowance by observing as under: -

“5. We have heard the DR and perused the material before us. We find that the assessee is engaged in sales and services of safety equipments installed on board marine vessels, that it would get business from the equipment manufacturers, that after completing the servicing of safety equipments it would issues a certificate to the vessels operating in International waters, that it would purchase blank certificates from equipment manufacturers, that it also undertook servicing of life boats and its lunching appliances, that to carry out the servicing of such equipments service personnel would be sent outside India for training, that the training fee included accommodation and conveyance, that both these payments were reimbursement of actual expenditure, that no TDS is required to be deducted for such payments. We find that the FAA has given a categorical finding of fact that none of the payments in question are covered by the provisions of section 9, that the non-residents had no PE in India, that the assessee was not liable to deduct tax at source for these payments. We are of the opinion that his order does not suffer from any legal infirmity. Here, we would also like to mention that the issue of taxability of these three payments had arisen because of the retrospective amendment to section. The assessee had managed its affairs as per the provisions of existing law and at the time of filing of return, it had not to 3 ITA No.5001/M/16- M/s S H M Shipcare deduct the tax. The settled principle of jurisprudence stipulates that impossible acts cannot be expected to be performed by an assessee. In the case of IDBI Capital Market Services Ltd. (ITA No. 1404/ Mum/2013- dtd.08.05.2015) the Tribunal has, in almost similar circumstances, held that if at the ITA/1047/M/13,A 08-09-SHM Shipcare time of filing of its return the assessee is not required to deducted tax as per the existing provisions and later on because of the retrospective amendment or judgment of a court liability to deduct Tax at Source arises, the assessee cannot be held responsible for not deducting of tax at the time of filing of return. Considering the above discussion, we confirm the order of the FAA and decide the effective ground of appeal against the A0."

4. On query from the bench Learned senior DR conceded the position. We find that this issue is clearly covered in favour of assessee and against the Revenue by the Tribunal decision in assessee's own case cited (supra). Respectfully following the same we confirmed the order of CIT(A) deleting the disallowance. This issue is decided in favour of the assessee and order of CIT(A) is confirmed.”

Order pronounced in the open court on 14.05.2018.

Sd/- Sd/- B.R. BASKARAN PAWAN SINGH ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Date: 14.05.2018 SK Copy of the Order forwarded to : 1. Assessee 2. Respondent 3. The concerned CIT(A) 4.The concerned CIT M/s S H M Shipcare