ADF Foods Limited Vs ACIT (ITAT Ahmedabad)
Assessee company is engaged in the business of processing and packaging of various food items and selling them world-wide. It recorded total turnover of more than Rs.110 Crores, out of which more than 90% of its turnover accounted for by way of exports outside India and remaining turnover accounted for in domestic market. Hence, to improve its international market it had appointed various persons as ‘Country Managers’ in different countries. They were non residents and they provided all business & marketing related services abroad. Learned AR argued that before the learned CIT(A) assessee filed detailed chart of the supporting case laws of Hon’ble Supreme Court, High Courts as well as ITAT but same were not considered by the learned CIT(A) for the reason best known to him. Apart from that payments supported by other documents to the effect that to whom payments were made were not the resident of India were also filed before the learned CIT(A).
On plain reading of the order of CIT(A), we find nowhere that CIT(A) has considered the case laws and details submitted by the assessee. To our mind, same is amounting to miscarriage of justice. Learned CIT(A) ought to have considered the submission and case laws filed by the assessee in its support, thereafter, ought to have passed a detailed and reasoned order. Thus, in the interest of justice, we set aside this matter back to the file of the CIT(A) to pass afresh order after considering the submissions and case laws filed by the assessee.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
All four appeals (three by assessee & one by Revenue) have been preferred against the orders of the Commissioner of Income Tax (Appeals)-2, Vadodara (‘CIT(A)’ in short) vide Appeal Nos. CAB/(A)-2/93/15-16 dated 14.02.2017 in A.Y. 2012-13 & CIT(A) /Vadodara-2/10358/15-16 dated 18.05.2018 in A.Y. 2013-14 arising in the assessment order dated 24.03.2015, 29.02.2016 & 09.03.2020 passed by the Assessing Officer (AO) under s. 143(3) of the Income Tax Act, 1961 (the Act) concerning AYs. 2012-13, 2013-14 & 2014-15.
2. Since, in all appeals facts & circumstances & issues are common, therefore, for the sake of brevity, we would like to dispose of these matters by way of a common order. ITA No. 1169/Ahd/2017 for A.Y. 2012-13 is taken as lead case for disposal of the above appeals.
3. The ground of appeal raised by assessee reads as under:
“1. The learned Commissioner of Income Tax (Appeals) – 2, Vadodara [“the CIT(A)”] erred in fact and in law in confirming the action of the learned Assistant Commissioner of Income Tax, Kheda Circle, Nadiad (“the AO”) in not allowing expenditure of Rs. 70,805/- despite the fact that it was incurred for the purpose of business.
2. The learned CIT(A) erred in fact and in law in confirming the action of the AO in disallowing interest of Rs.3,13,000 charged u/s. 220(2) of the Act on delayed payment of tax though the same is not in the nature of penalty.
3. The learned CIT(A) erred in fact and in law in confirming the action of the AO in disallowing an amount of Rs.1,37,87,905/- invoking section 40(a)(i) for non-deductiori of TDS u/s. 195 r.w. Explanation 2 of the Act without appreciating the fact that the amount was not chargeable to tax in India.
4. The learned CIT(A) erred in fact and in law in confirming the action of the AO in treating the following payments as Fees for Technical Services (“FTS”) considering the services rendered as managerial and consultancy in nature.
