ACIT Vs Goodrick Group Ltd. (ITAT Kolkata)
Assessee paid commission on export orders to two non-resident agents. TDS under section 195 was not deducted by assessee. Revenue’s case was that assessee failed to place on record any non-deduction of TDS certificate under section 195(1).
Held by ITAT
The section 195(1) casts an obligation to deduct tax only when any sum is chargeable to tax under the provisions of the Act and this position in law was confirmed by the Hon’ble Supreme Court in GE India Technology Centre Pvt. Ltd’s case reported in 327 ITR 456. The fact that the services of the export agent were rendered outside India, they are not maintaining any permanent establishment in India, they are not engaged in any activities in India and the payments were received outside India has not been disputed by the AO. I am, therefore, of the view that section 40(a)(i) is not applicable in this case for commission paid. I, therefore, direct the AO to delete the disallowance of Rs.23,87,696/-
FULL TEXT OF THE ITAT JUDGMENT
These three Revenue’s appeals for assessment years 2009-10, 2010-11 & 2011-12 arise from the Commissioner of Income Tax (Appeals)-17, Kolkata’s separate orders; all dated 29.07.2016, passed in case No(s) 206/CIT(A)-17/Kol/15-16, 156/CIT(A)-17/Kol/15-16 & 158/CIT(A)-17/Kol/15-16; respectively, involving proceedings u/s. 143(3) of the Income Tax Act, 1961; in short ‘the Act’.
2. It emerges at the outset that Revenue’s identical first grievance in all these three cases challenges correctness of CIT(A)’s action reversing disallowance of assessee’s least rent(s) of ₹36.48 lakh, ₹40,02,936/- & ₹55,20,999/-; respectively paid to M/s Koomber Properties & Leasing Co. Pvt. Ltd. Learned Departmental Representative vehemently contends that Assessing Officer had rightly disallowed these three payments in respect of all assessment years which have been wrongly deleted in lower appellate proceedings. We find that the instant issue is already covered as per the tribunal’s different orders right from assessment year(s) 1988-89 to 1992-93 onwards regarding the very payee. The Assessing Officer’s sole reason for invoking the impugned disallowance is that Revenue’s appeals against the said tribunal’s decision(s) are pending before hon’ble jurisdictional high court. He further made it clear that the impugned disallowance is meant to protect Revenue’s interest only. The CIT(A)’s findings in para-3 page 4 make it clear that assessee has already succeeded on the very issue in case of M/s Koomber Properties & Leasing Co. Pvt. Ltd. He has therefore adopted judicial consistency in the impugned assessment year as well. We therefore find no merit in Revenue’s instant common substantive ground for lack of distinction on facts or law in these three assessment year(s). The Revenue’s first substantive grievance is therefore rejected in all three cases.
3. The Revenue’s second substantive grievance for assessment years 2009-10 and 2010-11 seeks to restore the Assessing Officer’s identical action disallowing assessee’s commission payments to non-resident export agents amounting to ₹23,87,696/- in former and ₹22,09,101/- in latter assessment year; respectively. The assessee’s payees in both these assessment years) are M/s Robertson Bois Dickson Anderson Ltd. (UK) (RBDA) and Ludwig HO Schroeder & Rudolph Hamann, Germany. It had admittedly made the impugned commission payments in lieu of their services rendered outside India in the nature of procuring export orders. The Assessing Officer invoked section 40(a)(i) of the Act on account of non deduction of TDS thereupon. He quoted Transmission Corporation of India of AP Limited 239 ITR 587 (SC) for disallowing the assessee’s instant two exports commission claims. The CIT(A)’s reverses the above assessment findings in former assessment year as follows:-
“The ARs of the assessee have submitted that the appellant had a contractual liability to pay commission to non-resident export agents appointed by it for sale of tea abroad on the basis of orders procured by them abroad. It was also submitted that according to agreements with the non-resident export agents their area of operation was outside the territories of India and their services were rendered outside India and the non-resident export agents cannot engage in any other activity in India, neither they have any permanent establishment nor any branch or liaison office in India. The appellant paid commission of Rs.23,87,696/- and details thereof was also furnished vide its letter dated 15.12.2011 to the Assessing Officer, as under:-
