ITO 2(1)(2), MUMBAI vs. CITY CAT OVERSEAS CHEMICALS LTD, MUMBAI

The captioned appeal is filed by the Revenue and the Cross Objection is filed by the assessee for the assessment year 2011-12. Both these appeals are filed against the order of the CIT (A)-4, Mumbai dated 21.9.2015 for the assessment year 2011-2012. Since, the issues raised in these appeals are inter-connected, therefore, for the sake of convenience, they are clubbed, heard combinedly and disposed off in this consolidated order. Appeal wise adjudication is given in the following paras of this order. 2. Firstly we shall take up the Revenue’s appeal ITA No.5791/M/2015. In this appeal, Revenue raised the following grounds which read as under:- “1. On the facts and in the circumstances of the case and in law, the ld CIT (A) has erred in directing the AO to delete the disallowance of Rs. 76,39,431/- made u/s 40(a)(ia) of the Act without appreciating the fact that the assessee has claimed the said expenditure in the books of account and therefore, as per the provisions of section 195 of the Act, the assessee is liable to make TDS on the said payments failing which provisions of section 40(a)(ia) of the Act was applicable to it.

On hearing both the parties and on perusal of the orders of the Revenue Authorities as well as the cited decisions of the Tribunal we find, the said paras 3.4 and 3.5 of the CIT (A)’s order are relevant to the issue under consideration. Considering the significance of the said paras and for the sake of completeness of this order, the said paras 3.4 and 3.5 are extracted as under:- “3.4. Further, on appeal by the Department, Hon’ble ITAT has confirmed the above finding of the CIT (A) in the background of decision in the case of ACIT vs. Vilas N. Tamhankar in dated 21.11.2014 and vide appellant’s own case bearing ITA No.5854/Mum/2013, dated 7.8.2015. 3.5. Respectfully following the decision of my Learned predecessor (supra) and Hon’ble ITAT confirming the finding of the CIT (A) and dismissing the appeal of the Department. AO is hereby directed to delete the disallowance of commission expense of Rs.76,39,431/-.”

Further, we have also perused the relevant paras from the said order of the Tribunal in the assessee’s own case for the AY 2010-11 (supra), wherein the Tribunal followed the coordinate Bench decision in the case of Vilas N Tamhankar (supra), and find, the following lines on page 10 of the said Tribunal’s order are relevant which read as under:- “........By following the above decision of the coordinate Bench (in the case of Vilas N Tamhankar (supra) and in view of the above facts and circumstances of the case, we do not find any error or illegality in the order of the CIT (A). The same is upheld. The Revenue’s appeal is dismissed.”

The above decision of the Tribunal was given in the context of identical payment of the assessee towards commission paid to non-residents outside India. Since, the facts of the present case are similar to that of the assessment year 2010- 2011, therefore, the ratio laid down by the Tribunal in the said assessee’s own case (supra) are applicable to the instant case too. Considering the same, the appeal of the Revenue is dismissed.

In the result, appeal of the Revenue is dismissed. 9. Now, we shall take up the Cross Objection (CO) raised by the assessee. In this CO, assessee raised the issue relating to the compensation paid of prior period export sales are dismissed as agreed by the Ld Counsel for the assessee in the Court. Thus, CO raised by the assessee is dismissed. 10. In the result, appeal of the Revenue and the CO raised by the assessee are dismissed.