The Principal Commissioner Of Income Taxcentral) Karnatak v. Shantilal Khushaldas And Brotherspvt. Ltd

Santosh IN THE HIGH COURT OF BOMBAY AT GOA TAX APPEAL NO.57 OF 2018 The Principal Commissioner of Income TaxCentral) Karnatak Versus Shantilal Khushaldas and BrothersPvt. Ltd. …. Appellant. …. Respondent. Ms. Amira Abdul Razaq, Standing Counsel for the Appellant. Mr. P. Pardiwala, Senior Advocate with Mr. A. D. Bhobe, Ms. C.Mashelkar and Ms. K. Govekar, Advocates for the Respondent. Coram : S.C. Gupte & Nutan D. Sardessai, JJ. th July, 2019. Date : 9 P.C. :- Heard learned Counsel for the Appellant-Revenue and theRespondent-Assessee. 2.This Tax Appeal, filed by the Revenue, concerns addition ofexpenditure as commission on export of goods, paid on behalf of theAssessee to its overseas agents for facilitating its export business. 3.The Assessee is engaged in the business of mining andextraction of iron ore and processing, trading and exporting the same.For assessment year 2012-13, it filed a return of income, declaring a 2 txa57-18.dtd.09-07-19 total income of ₹28,79,06,746/-. The return was processed underSection 143(1) of the Income Tax Act. The case later was selected forscrutiny and a notice under Section 143(2) was issued to theAssessee. In the assessment, the Assessing Officer passed an order,purportedly on the basis of a DRI report made against exporters ofiron ore, including the Assessee herein that there was under-invoicingof exports, adding the amount of ₹ 54,46,81,088/- paid by way ofcommission by the foreign counter-parties to whom exports weremade by the Assessee to the overseas agents appointed by the Assesseefor facilitating its export business and recovery of export proceeds.When the matter was carried by the Assessee before theCommissioner of Income Tax (Appeals), the latter held that the non-resident foreign commission agents had provided services to theAssessee outside India and no part of their income was assessable inIndia as the agents had no operations in India and, therefore, theprovisions of Section 9(1)(i) could not be invoked. The CIT(Appeals), accordingly, deleted the addition of income made onaccount of dis-allowance of the commission paid to the non-residentforeign agents. 4.In the Department's appeal before the ITAT, it upheldthe order of CIT (Appeals) observing, inter alia, that the payment ofcommission had a combined effect of liability as nil in the incomeof the Assessee and the transaction was between foreign agents and 3 txa57-18.dtd.09-07-19 the importers abroad which was not liable to be assessed in India. 5.The Department's appeal is on the footing that nodeduction/expenditure, which was not claimed in the return ofincome, could be claimed before the Assessing Officer without filingany revised return. A similar plea, in a similar case involving thesame issue, was before this Court in Tax Appeal No. 4 of 2019 (ThePrincipal Commissioner of Income Tax, Panaji v/s. M/s. RajaramBandekar (Sirigao) Mines Pvt. Ltd.). This Court, after consideringthe case law cited by the Revenue and, in particular, the case ofGoetze (India) Ltd. Vs. Commissioner of Income Tax, 284 ITR323 (SC), held that there was no question of the Assessee claimingany deduction by filing of a revised return. This Court held thatwhat the Assessee received from its foreign buyers was the net FOBvalue; the Assessee was not claiming any expenditure on account ofcommission paid and, there was, thus, no question of any revisedreturn. In that case, the Court observed that there was no tax effectwhatsoever by reason of the expenditure made by foreign buyers byway of commission paid outside India and that, in the premises, nosubstantial question of law arose for consideration of the Court. 6.The decision in M/s. Rajaram Bandekar (Sirigao)Mines Pvt. Ltd. (supra) covers the facts of the present case. For thereasons stated in that case, no substantial question of law arises in the 4 txa57-18.dtd.09-07-19 present Tax Appeal for consideration of this Court. The Appeal, inthe premises, is dismissed. 6.The decision in M/s. Rajaram Bandekar (Sirigao)Mines Pvt. Ltd. (supra) covers the facts of the present case. For thereasons stated in that case, no substantial question of law arises in the 4 txa57-18.dtd.09-07-19 present Tax Appeal for consideration of this Court. The Appeal, inthe premises, is dismissed. Nutan D. Sardessai, J. S.C. Gupte, J.