RANE (MADRAS) LIMITED,CHENNAI vs. DCIT LTU-2, CHENNAI

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ITA 2850/CHNY/2017Status: DisposedITAT Chennai02 May 2018AY 2009-105 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted that a similar issue for an earlier assessment year was remitted back to the AO for fresh examination based on agreements. The Tribunal found the CIT(A) had overlooked this previous order and decided to follow the same course of action.

What were the facts?

The assessee paid export commission to a non-resident. The Assessing Officer disallowed this expenditure under Section 40(a)(ia) for non-deduction of TDS under Section 195. The CIT(A) confirmed this disallowance.

What were the issues?

Whether the export commission paid to a non-resident is disallowable under Section 40(a)(ia) for failure to deduct TDS under Section 195, requiring fresh examination of agreements.

Which sections of the Income-tax Act were involved?

Section 40(a)(ia),Section 195,Section 143(3),Section 250(6)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘C’ BENCH, CHENNAI

Before: SHRI A.MOHAN ALANKAMONY & SHRI DUVVURU RL REDDY

Pronounced: 02.05.2018

आदेश / O R D E R

Per A. Mohan Alankamony, AM:-

1.

This appeal by the assessee is directed against the order passed by the Commissioner of Income Tax (Appeals)-17, Chennai dated 31.08.2017 in & 8/14-15/LTU(A)

/(A)-17 for the assessment year 2009-10 passed U/s.250(6) r.w.s.

143(3) of the Act.

2.

The assessee has raised three grounds in its appeal however the crux of the issue is that the Ld.CIT(A) has erred in confirming the addition made by the Ld.AO amounting to Rs.84,19,196/- by invoking the provisions of Section 40(a)(ia) of the Act, being disallowance of expenditure incurred towards export commission paid to non-residents due to non-deduction of tax at source.

3.

The brief facts of the case are that the assessee is a limited company engaged in the business of manufacture of automobile ancillaries, filed its return of income for the assessment year 2009-10 on 29.09.2009 and subsequently filed revised return on 31.03.2011 admitting total income of Rs.2,29,14,587/-. Initially the return was processed U/s.143(1) of the Act and subsequently the case was selected for scrutiny under CASS and notice U/s.143(2) of the Act was issued on 26.08.2010. Finally the assessment order was passed U/s.143(3) of the Act on 23.12.2011 wherein the Ld.AO made several additions amongst which one of the addition was with respect to disallowance of export commission paid to non-resident Mr. James Drutchas, USA amounting to Rs.84,19,196/- invoking the provisions of Section 40(a)(ia) of the Act since tax was not deducted at source U/s.195 of the Act.

4.

At the outset the Ld.AR submitted before us that on the identical facts for the assessment year 2007-08 the Chennai Bench of the Tribunal in vide order dated 13.06.2014 had remitted the matter back to the file of Ld.AO with directions to examine the issue afresh with reference to the agreements and the case laws relied by the assessee. The Ld.AR further submitted that though the decision of the Tribunal was cited before the Ld.CIT(A), the Ld.CIT(A) overlooking the same held that “in the absence of evidence to the contrary, the disallowance U/s.40(a)(ia) of the Act for Rs.84,19,196/- made by the AO is confirmed.” It was therefore pleaded that the order of the Ld.CIT(A) may be set aside and the matter may be remitted back to the file of Ld.AO with the similar directions of the Hon’ble Tribunal in the case of the assessee for the relevant assessment year because the issue was on identical facts. The Ld.DR on the other hand could not controvert to the submission of the Ld.AR.

5.

We have heard the rival submissions and carefully perused the materials available on record and we find merit in the Ld.AR. The Ld.CIT(A) in his order dated 31.08.2017 for the assessment year 2009-10 had extracted the order of the Tribunal cited by the Ld.AR. The same is reproduced herein below for reference:-

“Extract from the order in dated 13.06.2014 for the A.Y. 2007-08:

6. From the above scope of services of the agreement, we do not find any managerial/technical services are to be provided to the assessee by the overseas agent M/s. James Druchas, USA so as to attract the provisions of section 195 of the Act. However, this agreement which was entered into on 5.6.2008 is relevant to the assessment year 2009-10 and the assessment year under appeal now before us is 2007-08. Neither the assessee nor the Revenue placed an agreement relevant for the assessment year under consideration. In such circumstances, we are not able to decide the issue. Therefore, we are of the considered view that this matter has to be re- examined by the Assessing Officer with reference to the agreement prevailing for the assessment year 2007-08 and the conditions mentioned thereon for the relevant assessment year i.e. 2007-08. Therefore, we restore this issue to the file of the Assessing Officer to examine afresh with reference to the agreement and the case laws relied on this issue. The assessee shall provide agreements which are relevant to the assessment year. The Assessing Officer shall provide adequate opportunity to the assessee.

7.

In the result, appeal of the Revenue is allowed for statistical purposes.”

From the above facts it is apparent that the Ld.CIT(A) had overstepped the order of the Tribunal on the identical issue in the case of the assessee for the assessment year 2007-08 while deciding the case of the assessee for the relevant assessment year. This act of the Ld.CIT(A) is not appreciable. Since the Tribunal in its order dated 13.06.2014, has remitted back the Ld.AO in order to examine the matter afresh in the light of the agreements and the case laws relied by the assessee, the same decision will apply for the relevant assessment year also in the case of the assessee. Therefore, we hereby remit back the matter to the file of Ld.AO with similar directions as stated in the order of the Tribunal dated 13.06.2014 in the case of the assessee in for the assessment year 2007-08.

6.

In the result the appeal of the assessee is allowed for statistical purposes.

Order pronounced on the 02nd May, 2018 at Chennai.

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