C/Taxap/285/2020 Order v. C/Taxap/285/2020 Order

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 285 of 2020 ========================================================== THE PRINCIPAL COMMISSIONER OF INCOME TAX-2 VersusM AND B ENGINEERING LIMITED ========================================================== Appearance:MRS MAUNA M BHATT(174) for the Appellant(s) No. 1 for the Opponent(s) No. 1 ========================================================== CORAM: HONOURABLE THE CHIEF JUSTICE MR. VIKRAM NATHandHONOURABLE MR. JUSTICE J.B.PARDIWALA Date : 06/10/2020 ORAL ORDER (PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA) 1.This Tax Appeal under Section 260A of the Income Tax Act, 1961 (for short “the Act, 1961”) is at the instanceof the Revenue and is directed against the order passedby the Income Tax Appellate Tribunal, Ahmedabad Bench“C”, Ahmedabad in ITA No. 370/Ahd/2018 for A.Y. 2013-14. 2.questions for consideration of this Court. The Revenue has proposed the following two “(A) Whether the Appellate Tribunal has erred in lawand on facts in deleting the disallowance ofcommission to foreign agents amounting to Rs. 463,62,693/- paid without properly appreciating thefacts that the assessee was unable to lead evidenceto prove the factum of actual rendering of services bysuch recipients? (B)Whether the Appellate Tribunal had erred in lawand on facts in upholding the order of the CIT (A)deleting the addition made on account ofdisallowance u/s. 40(a)(i) of the Act for non deductionof tax on commission payable to foreign agents ofRs.4,63,62,693/-?” 3.We have heard Ms. Mauna Bhatt, the learned SeniorStanding Counsel for the Revenue. 4.Ms. Bhatt fairly pointed out that in the case of thevery same assessee with respect to the earlierAssessment Year, the Tax Appeal No. 265 of 2019preferred by the Revenue came to be dismissed by thisCourt vide order dated 09.07.2019. Ms. Bhatt pointed outthat the very same questions were proposed in the TaxAppeal No. 265 of 2019 as proposed in the present appeal.The Tax Appeal No. 265 of 2019 came to be dismissed inthe following terms:- “1. This tax appeal under Section 260A of the IncomeTax Act, 1961[for short the Act, 1961] is at the instanceof the revenue and is directed against the order passedby the Income Tax Appellate Tribunal,Ahmedabad Bench'D'.AhmedabadinITANo.355/AHD/2018,dated30/11/2018 for the A.Y 201415.2.The revenue hasproposed the following questions of law:“Whether the Appellate Tribunal had erred in lawand on facts in upholding the order of the CIT(A)deleting the addition made on account ofdisallowance of Rs.2,93,56,350/ under section 40(a)(ia)of the Act for non deduction of tax oncommission payable to foreign agents.” 3.This tax appeal has something to do with the Section-40(a)(ia) of the Act. The issue is with regard to thedeletion of the addition made on account of thedisallowance of Rs.2,93,56,350/ under section40(a)(ia)ofthe Act for non deduction of the tax of the source ofcommission payable to the foreign agent. The questionsof law as proposed by the revenue has no longerintegreta in view of the decision of this Court in the casePR CIT Vs. MGM Exports rendered in Tax Appeal No.309of2018, dated 11/04/2018.4.The ratio of the decision ofthis Court, which has been applied by the tribunal is thata person paying interest or any other sum to a non-resident is not liable to deduct tax if such sum is notchargeable to tax under the Act. Ultimately, the tribunal 3.This tax appeal has something to do with the Section-40(a)(ia) of the Act. The issue is with regard to thedeletion of the addition made on account of thedisallowance of Rs.2,93,56,350/ under section40(a)(ia)ofthe Act for non deduction of the tax of the source ofcommission payable to the foreign agent. The questionsof law as proposed by the revenue has no longerintegreta in view of the decision of this Court in the casePR CIT Vs. MGM Exports rendered in Tax Appeal No.309of2018, dated 11/04/2018.4.The ratio of the decision ofthis Court, which has been applied by the tribunal is thata person paying interest or any other sum to a non-resident is not liable to deduct tax if such sum is notchargeable to tax under the Act. Ultimately, the tribunal held as under:“The principles laid down in the abovecited judgments are squarely applicable to the instantfacts of the case. Thus, it can be safely concluded thatthe Commission income in the hands of foreign agent isnot chargeable to tax in India in the given facts &circumstances. Once an income is not chargeable to taxin India then the question of deducting TDS under theprovision of section 195 of the Act does not arise.Accordingly, we do not find any reason to interfere in theorder of ld. CITA. Hence the ground of appeal raised bythe revenue is hereby dismissed.”5.Having regard to thefindings recorded by the tribunal relying on the decisionof this Court referred to above, we are of the view that noerror much less an error of law could be said to havebeen committed by the tribunal in passing the impugnedorder warranting any interference in the present appeal.There is no substantial questions of law in the presentappeal. The appeal, therefore, fails and is herebydismissed.” 5.In view of the aforesaid, this appeal also fails and ishereby dismissed. (VIKRAM NATH, CJ) (J. B. PARDIWALA, J)