ACIT, CHENNAI vs. TEXTILE FOR HOMES, CHENNAI
In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.
What did the Tribunal hold?
The Tribunal held that the CIT(A) was correct in allowing the claim, as the agents operated outside India. The pendency of a revenue appeal before the High Court against a similar order does not justify not following the Tribunal's binding precedent.
What were the facts?
The assessee paid export commission without deducting tax at source. The Assessing Officer disallowed this expenditure under Section 40(a)(ia). The CIT(A) allowed the claim, relying on a previous tribunal decision.
What were the issues?
Whether export commission paid to agents operating outside India is disallowable under Section 40(a)(ia) for non-deduction of TDS. Whether a pending appeal before the High Court can be a reason to disregard a binding ITAT order.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI A. MOHAN ALANKAMONY
आदेश /O R D E R
PER N.R.S. GANESAN, JUDICIAL MEMBER:
This appeal by the revenue is directed against the order of the CIT(A) -15, Chennai dated 04.02.2016 and pertains to Assessment Year 2011-12.
When the appeal was taken up for hearing, no one appeared for the assessee even though the notice of hearing was served on the assessee. Therefore, we have heard the learned Representative for the Department and proceeded to dispose off the appeal on merit. Shri Supriyo Pal, the learned representative for the department submitted that the assessee paid export commission under Section 40(a)(ia) to the extent of Rs.31,43,645/- without deducting the tax. Therefore, the Assessing Officer disallowed the claim of the assessee under Section 40(a)(ia) of the Act. On appeal by the assessee, the CIT(A) allowed the claim of the assessee by placing reliance on the decision of this Tribunal in the case of ACIT vs. M.M.Forgings Ltd. In dated 19.06.2015. According to the learned Department Representative, the revenue has already filed an appeal against the decision of the Tribunal in the case of M.M.Forgings cited supra and the same is pending before the High Court. Therefore, to keep the matter alive, the revenue has filed the appeal.
We have considered the submissions of the learned representative of the department and also perused the material available on record. From the material available on record, the assessee paid export commission for the agents who operates outside India and render service outside India. The CIT(A) further found that the foreign agents procured the orders from foreign buyers and follow up for the payments due from them. The CIT(A) further found that procuring orders cannot be said to be either rendering technical service or consultancy service. Therefore, by placing reliance on the decision of this bench of the Tribunal in the case of M.M.Forgings Ltd. cited supra, the CIT(A) allowed the claim of the assessee. Now, the contention of the department representative before this Tribunal is that the revenue has already filed an appeal against the order of the Tribunal in the case of M.M.Forgings Ltd. cited supra. Therefore, just to keep the matter alive, the appeal is filed before this Tribunal.
This Tribunal is of the considered opinion that the order passed by this Tribunal is binding all officers of the department in the state of Tamil Nadu and Pondicherry. Mere pendency of the appeal against the order of this Tribunal before the High Court cannot be a reason for not following the order of the Tribunal. It is not the case of the revenue that the operation of the order of the Tribunal in M.M.Forgings was stayed by the High Court. Therefore, this Tribunal is of the considered opinion that the CIT(A) has rightly placed his reliance on the orders of the Tribunal in M.M.Forgings Ltd. and allowed the claim of the assessee. This Tribunal do not find any reason to interfere with the order of the CIT(A). Accordingly, the same is confirmed.
In view of the above, the appeal of revenue stands dismissed.
Order pronounced in the open court on 11th August, 2016 at Chennai.
More judgments on Section 40(a)(ia)
- Rekha Agarwal, Jaipur vs ITO WD 4(1), JaipurITA 844/JPR/2025[2021-22]Status: Disposed21 Oct 2026AY 2021-22
- Cdg Petchem Limited, Hyderabad vs ITO, Ward - 1(1), HyderabadITA 1900/HYD/2025[2018-2019]Status: Disposed16 Oct 2026AY 2018-2019
- M/S. Shree Laminators Ltd., Kolkata vs DCIT, Circle 4(4), KolkataITA 1534/KOL/2026[2011-2012]Status: Disposed15 Oct 2026AY 2011-2012
- J.D. Marketing, Kolkata vs ITO, Ward 37(1), KolkataITA 1493/KOL/2026[2015-2016]Status: Disposed15 Oct 2026AY 2015-2016
- J.D. Marketing, Kolkata vs ITO, Ward 37(1), KolkataITA 1492/KOL/2026[2013-2014]Status: Disposed15 Oct 2026AY 2013-2014
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