C/Taxap/408/2019 Order v. Mgm Exports Rendered In Tax Appeal

IN THE HIGH COURT OF GUJARAT AT AHMEDABADR/TAX APPEAL NO. 408 of 2019 ========================================================== THE PRINCIPAL COMMISSIONER OF INCOME TAX 2 VersusGUJARAT APOLLO INDUSTRIES LTD ==========================================================Appearance:MRS MAUNA M BHATT(174) for the Appellant(s) No. 1 for the Opponent(s) No. 1 ========================================================== CORAM: HONOURABLE MR.JUSTICE J.B.PARDIWALAand HONOURABLE MR.JUSTICE A.C. RAO Date : 05/08/2019 ORAL ORDER (PER : HONOURABLE MR.JUSTICE J.B.PARDIWALA) 1This Tax Appeal under Section 260-A of the Income Tax Act, 1961 [for short, “the Act, 1961”] is at the instance of the Revenue and is directed against the order passed by the Income Tax Appellate Tribunal, 'D' Branch, Ahmedabad, dated 19[th] September 2018 in the I.T.A. No.154/Ahd/2015 for the assessment year 2011-12. 2The Revenue has proposed the following substantial question of law for the consideration of this Court: “Whether the Appellate Tribunal has erred in law on facts in upholding the decision of the CIT(A) and thereby deleting the addition of Rs.1,07,23,167/- u/s.40(a)(i) of the Act, when the assessee did not obtain certificate from withholding of tax u/s. 195(2) of the act?” 3This Tax Appeal has something to do with Section 40(a)(ia) of the Act. The issue is with regard to the deletion of the addition made on account of the disallowance of Rs.1,89,56,798/- under Section 40(a)(ia) of the Act for non-deduction of the tax of the source of commission payable to the foreign agent. The questions of law as proposed by the revenue has no longer integreta in view of the decision of this Court in the case PR CIT vs. MGM Exports rendered in Tax Appeal No.309 of 2018 dated 11[th] April 2018. 4The ratio of the decision of this Court, which has been applied by the Tribunal is that a person paying interest or any other sum to a non-resident is not liable to deduct tax if such sum is not chargeable to tax under the Act. Ultimately, the Tribunal held as under: “The principles laid down in the above cited judgments are squarely applicable to the instant facts of the case. Thus, it can be safely concluded that the Commission income in the hands of foreign agent is not chargeable to tax in India in the given facts & circumstances. Once an income is not chargeable to tax in India then the question of deducting TDS under the provision of section 195 of the Act does not arise. Accordingly, we do not find any reason to interfere in the order of ld. CITA. Hence the ground of appeal raised by the revenue is hereby dismissed.” 5Having regard to the findings recorded by the tribunal relying on the decision of this Court referred to above, we are of the view that no error much less an error of law could be said to have been committed by the Tribunal in passing the impugned order warranting any interference in the present appeal. There is no substantial question of law in the present appeal. This Tax Appeal, therefore, fails and is hereby dismissed. (J. B. PARDIWALA, J) (A. C. RAO, J)