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Income Tax Appellate Tribunal, “B” BENCH, CHENNAI
Before: SHRI A. MOHAN ALANKAMONY & SHRI V. DURGA RAO
आदेश /O R D E R
PER V. DURGA RAO, JUDICIAL MEMBER:
The appeal filed by the Revenue and the cross-objection filed by the assessee are directed against the order dated 11-02- 2013 passed by the Commissioner of Income Tax (Appeals)-VI, Chennai, and they relate to assessment year 2009-10.
Facts are in brief that the assessee is in the business of providing outsourced product development services. The assessee had filed a return of income by admitting a total income of `7,54,35,305/-. It claimed deduction under Section 10A of Income- tax Act, 1961 (in short 'the Act') of `7,33,78,813/-. After due process, the A.O. has completed the assessment under Section 143(3) of the Act. In the assessment order, the A.O. has observed that it is observed from the financials that the assessee has not deducted TDS on agency commission of `1,00,62,191/- and consultancy charges of `4,14,42,184/-. When questioned, it was revealed that these payments made to non-residents were deemed to arise in India under Section 9(1)(vii) of the Act and therefore, chargeable to tax in India. On the above observation, the A.O. by invoking Section 40(a)(i), deleted an amount of ` 5,15,04,375/-.
On appeal, the Ld. CIT(Appeals) without discussing any facts simply deleted the addition made by the A.O.
Revenue carried the matter in appeal before the Tribunal.
The Ld. D.R. strongly supported the order of the A.O. When the Bench pointed out regarding payments of agency commission and the consultancy charges, the Ld.counsel for the assessee submitted verification.
We have heard both sides and perused the records and gone through the orders of the authorities below. We find that neither the A.O. nor the Ld. CIT(Appeals) discussed the factual aspects of the issue. Therefore we set aside the order passed by the Ld. CIT(Appeals) and remit the matter back to the file of the A.O. to decide the issue after considering all the facts with regard to agency commission and consultancy charges and after giving reasonable opportunity of being heard to the assessee.
In sofar as the second ground raised by the Revenue with regard to disallowance made under Section 14A of the Act is concerned, again the authorities below have not discussed the facts relating to the actual expenditure incurred by the assessee.
Therefore we set aside the order passed by the Ld. CIT(Appeals) and direct the A.O. to decide this issue also afresh after examining the facts of the case.
In the result, the appeal filed by the Revenue is allowed for statistical purposes.
4 C.O. No. 137/Mds/2013 8. Since the appeal is remitted back to A.O. to decide the issue afresh, the cross-objection filed by the assessee is allowed for statistical purposes.
To summarize the result, the appeal filed by the Revenue and the cross-objection filed by the assessee are allowed for statistical purposes.
Order pronounced on Wednesday, the 25th of February, 2015 at Chennai.