NIRMAL INTERNATIONAL,PANIPAT vs. ACIT, PANIPAT

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ITA 7813/DEL/2019Status: DisposedITAT Delhi28 June 2023AY 2012-132 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that no Tax Deducted at Source (TDS) was deductible on the payment made to the fair organizers for exhibiting products at an international textile fair. Therefore, the disallowance made by the revenue was not justified.

What were the facts?

The assessee, engaged in manufacturing and export of carpets and other made-ups, made payments to a non-resident for exhibition expenses. The Assessing Officer disallowed a portion of these expenses under Section 40(a)(ia) for non-deduction of TDS.

What were the issues?

Whether TDS was deductible on payments made to a non-resident for participation in an international exhibition, and consequently, if disallowance under Section 40(a)(ia) was warranted.

Which sections of the Income-tax Act were involved?

Section 40(a)(ia)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘E’, NEW DELHI

Before: Dr. B. R. R. KumarSh. Yogesh Kumar US

Hearing: 06.06.2023Pronounced: 28.06.2023

ORDER

Per Dr. B. R. R. Kumar, Accountant Member:

1.

The present appeal has been filed by the assessee against the order of ld. CIT(A), Karnal dated 09.07.2019. 2. Following grounds have been raised by the assessee: “1. That the order of ld. CIT(A) to the extent of various additions and disallowances is illegal, perverse and unjustified being without proper application of mind and appreciation of the facts and circumstances, statutory provisions, trade practices and the explanations and evidences filed and on record.

2. That under the facts and circumstances of the case, the ld. CIT(A) is not justified in making disallowance u/s 40(a)9i0 of the Income Tax Act, 1961 on account of payment made to non-resident for travelling, professional/managerial services amounting to Rs.17,70,975/-, so part relief i.e. of the amount of Rs.14,84,001/- has been allowed to the assessee while no relief has been provided on the balance amount of Rs.2,86,925/- to exhibit its products in “Domotex” which is an internationally acclaimed textile fair organized in Germany.”

Nirmal International 3. The assessee is an individual and engaged in the business of manufacturing and export of carpet, bath mats, durries and other made-up as sole proprietor of M/s Nirmal International. The assessee filed return of income on 26.09.2012 declaring income of Rs.68,26,300/-.

4.

The AO made disallowance u/s 40(a)(ia) of the Income Tax Act, 1961 on account of payment made to non-resident for travelling, professional/managerial services amounting to Rs.17,70,975/- and the revenue has allowed an amount of Rs.14,84,001/-. The revenue disallowed an amount of Rs.2,86,925/- paid to exhibit his products in “Domotex” which is an internationally acclaimed textile fair organized in Germany. This amount has been paid to the fair organizers namely Domotex Deutshe Messe Hanover, Germany for putting up a business stall in the exhibition centre. We hold that no TDS is deductible on such payment and hence no disallowance is called for.

5.

In the result, the appeal of the assessee is allowed. Order Pronounced in the Open Court on 28/06/2023.

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