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Income Tax Appellate Tribunal, DELHI BENCH ‘C’, NEW DELHI
Before: Sh. Bhavnesh SainiDr. B. R. R. Kumar
Per Dr. B. R. R. Kumar, Accountant Member:
The present appeal has been filed by the revenue against the order of the ld. CIT(A)-39, New Delhi dated 26.05.2017.
Following grounds have been raised by the revenue:
1. Whether on the facts and circumstances of the case & in law, the Ld. CIT(A) erred in deleting the addition of Rs. 38,12,375/- made on account of ‘disallowance on account of payment of Royalty’ vide order u/s 143(3) of the I.T. Act 1961 passed by the DCIT, Circle 10(2), ignoring the fact that the assessee company has failed to prove any legal backing to the agreement and there is nothing mentioned in the agreement regarding the justification for these payments.
2 Groz Engineering Tools Pvt. Ltd. 2. Whether on the facts and circumstances of the case & in law, the Ld. CIT(A) erred in deleting the addition of Rs. 2,04,15,947/- made on account of ‘non-deduction of TDS on commission payment made to foreign companies u/s 40(a)(ia)’ vide order u/s 143(3) of the I.T. Act 1961 passed by the DCIT, Circle 10(2), ignoring the fact that though the payment has been made for work done outside India but the profit is actually earned in India.”
The AO has disallowed the Royalty payment made by the assessee to M/s Macnaught Pvt. Ltd. Australia in pursuance of agreement dated 01.06.2005 treating the Royalty payment as capital expenditure. The AO further relied on the orders of the ld. CIT (A) for the earlier years. The disallowance was agitated before the ld. CIT (A) who has allowed the appeal of the assessee on the grounds that the similar disallowance made by the AO was allowed in favour of the assessee by the jurisdictional ITAT New Delhi in & 638/Del/2013 for A.Y. 2005-06 dated 01.10.2014, ITA No. 4373/Del/2013 for AY 2007-08 dated 01.10.2014 and in ITA No. 4776/Del/2013 dated 14.11.2014 and for A.Y. 2011-12 and 2013-14 in ITA No. 274/2016-17 and 276/2016-17 respectively vide order dated 10.02.2017.
We also find that the Hon’ble jurisdictional High Court in the case of the assessee for assessment year 2008-09 in & 476/2005 has dismissed the appeal of the revenue filed against the order of the ITAT. Thus, the issue stands settled in favour of the assessee. Hence, the appeal of the revenue is dismissed on this ground.
3 Groz Engineering Tools Pvt. Ltd.
Apropos ground No. 2 dealing with non-deduction of TDS on commission paid to foreign companies has also been dealt by the Co-ordinate Bench of the Tribunal for the A.Y. 2011-11 as well as for A.Y. 2013-14 wherein it was held that the commission has been paid to foreign agents deciding outside India and they have not rendered any technical services and hence do not come under the provisions of Section 9(1)(vii)(b) of the Income Tax Act, 1961. In the absence of any change in the position of the facts and proposition of the law, we hold that the disallowance made by the AO u/s 40(a)(ia) is not legally tenable. We affirm the order of the ld. CIT (A) on this ground.
In the result, the appeal of the revenue is dismissed. Order Pronounced in the Open Court on 17/02/2021.