In Commissioner Of Income Tax v. V.s.dempo & Co. (P.)Ltd.[1

Priya Soparkar 1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.962 OF 2016 Ratika P.Khurana… Appellant V/s. The Income Tax Officer Ward-24(3)-3… Respondent --- Mr.Vipul Joshi i/by Mr.Sameer Dalal for the Appellant.Mr.Suresh Kumar for the Respondent. --- CORAM : AKIL KURESHI AND M.S.SANKLECHA, JJ. DATE : JANUARY 22, 2019. P.C.:- 1.Mr.Joshi, learned counsel appearing for the appellant seeksliberty to carry out amendment in the title of the appeal memo isindicating the correct ward number of the Respondent No.1.Liberty as sought for granted. Amendment to be carried outforthwith. Reverification is dispensed with. 2.This Appeal under Section 260-A of the Income Tax Act,1961 (the Act), challenges the order dated 12[th] February, 2015 passed by the Income Tax Appellate Tribunal (the Tribunal). ThisAppeal relates to Assessment Year 2008-09. 3.The Revenue urges the following questions of law for ourconsideration: “1.Whether on the facts and circumstances of thecase and in law, the order of the Tribunal wasjustified in disallowing freight charges of,Rs.6,58,588/- paid to agents of foreign shippingcompanies, under section 40(a)(ia) of the Act? 2.Whether on the facts and circumstances ofthe case and in law, the order of the Tribunal wasjustified in holding that provisions of section 172of the Act, do not override the provisions of section194 of the Act and therefore, Appellant was liableto deduct tax at source while making payment offreight charges paid to agents of foreign shippingcompanies?” 3.Whether on the facts and circumstances ofthe case and in law, the Tribunal was justified infollowing the decision in the case of, CIT Vs.Orient Goa P. Ltd.-(2010) 325 ITR 554(Bom)?” 4.The appeal is admitted on the above substantial questions oflaw. The appeal itself is taken up for final disposal as it is anagreed position between the parties that the issue standsconcluded in favour of the appellant-assessee and against therespondent-revenue by the decision of the full bench of this Court in Commissioner of Income Tax Vs. V.S.Dempo & Co. (P.)Ltd.[1] 5. We find that the impugned order dated 12[th] February 2015of the Tribunal holds that payments made to agents of foreignshipping companies to whom Section 172 of the Act applies aresubject to tax deduction at source under Section 195 of the Act.In support reliance was placed upon the decision of this Court incase of Commissioner of Income Tax, Panaji, Goa Vs. Orient(Goa) P. Ltd.[2] wherein it was held that before the provisions ofSection 172 of the act can be made applicable, the person makingthe payment has to be non-resident. A subsequent division benchof this Court in CIT vs. V.S.Dempo & Co. (P.) Ltd (supra) wasnot able to agree with the view of this Court in Orient (Goa) P.Ltd. Therefore made a reference to the full bench of this Court.Though the full bench of this Court in V.S.Dempo & Co. (P)Ltd. (supra) held that if the receiptant of the income is coveredby Section 172 of the Act, then no occasion to deduct tax atsource can be foisted upon the Indian company making the 1381 ITR 303 (Bombay) 2325 ITR 554 (Bombay) payment. 6.Mr.Suresh Kumar, learned counsel for the respondent-revenue very fairly states that in view of the full bench decisionin V.S.Dempo & Co. (P) Ltd. (supra) and the subsequentdecision of this Court on an identical issue in Elve CorporationVs. Assistant Commissioner of Income Tax 12(3), Mumbaiand anr. (ITXA No.271 of 2016 and ITXA No. 295 of 2016)rendered on 22[nd] October, 2018, the issue stands concluded infavour of the appellant-assessee and against the respondent-Revenue. 7.Therefore, all the three substantial questions of law areanswered in the negative i.e. in favour of the appellant-assesseeand against the respondent-revenue. 1381 ITR 303 (Bombay) 2325 ITR 554 (Bombay) payment. 6.Mr.Suresh Kumar, learned counsel for the respondent-revenue very fairly states that in view of the full bench decisionin V.S.Dempo & Co. (P) Ltd. (supra) and the subsequentdecision of this Court on an identical issue in Elve CorporationVs. Assistant Commissioner of Income Tax 12(3), Mumbaiand anr. (ITXA No.271 of 2016 and ITXA No. 295 of 2016)rendered on 22[nd] October, 2018, the issue stands concluded infavour of the appellant-assessee and against the respondent-Revenue. 7.Therefore, all the three substantial questions of law areanswered in the negative i.e. in favour of the appellant-assesseeand against the respondent-revenue. 8.In the result, the appeal is allowed. (M.S.SANKLECHA,J.) (AKIL KURESHI,J.)