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ACIT Circle-9 (1) , New Delhi Versus M/s SRL Ranbaxy Ltd (Now Known As Super Religare Laboratories Ltd) And Others

2015 (5) TMI 715 - ITAT DELHI

Addition made by the AO u/s. 40(a)(i) - CIT(A) restricted disallowance - Held that:- The working submitted by the assessee show that the amount of discount given to the Collection Centre is ₹ 11,78,24,030/- as against the disallowance of ₹ 16,80,66,667/- made by the AO. We find that Ld. CIT(A) has rightly observed regarding the disallowance of ₹ 11,78,24,030/- the assessee has accepted this amount as discount given to the Collection Centre and there is no dispute regarding this .....

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firmity in the order of the Ld. CIT(A). - Decided against revenue.

Disallowance u/s. 40(a)(i) read with section 195 - non-deduction of tax - CIT(A) deleted the disallowance - Held that:- for any amount on which tax has to be deducted u/s 195, one of the basic conditions is that the, said amount should be taxable in India. Ld. CIT(A) further observed that the parties who have rendered service to the assessee company outside India and are working as collection centres do not fall within .....

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. 1548/Del/2011, ITA No. 2276/Del/2012 - Dated:- 7-5-2015 - H. S. Sidhu, JM And J. S. Reddy, AM,JJ. For the Appellants : Shri Ramesh Chandra, CIT(DR) & Shri BRR Kumar, Sr. DR For theRespondents Rep by: Shri Ajay Vohra, Sr. Adv. & Ms Bhavita Kumar, Adv. ORDER Per H S Sidhu,JM. These appeals filed by the Revenue emanate out of the separate Orders passed by the Ld. CIT(A)-XII, New Delhi pertaining to assessment years 2006-07 & 2008-09. Since the issues involved in these appeals are iden .....

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94H/194C of the I.T. Act, 1961. 2. On the facts and circumstances of the case the Ld. CIT(A) erred in law as well as on merits in deleting the disallowance of ₹ 33,67,000/- made by AO u/s. 40(a)(i) read with section 195 of the Income Tax Act. 3. The appellant craves to amend modify, alter, add or forego any ground of appeal at any time before or during the hearing of this appeal." 3. The grounds raised in ITA No. 2276/Del/2012 (AY 2008-09) read as under:- "1. The Ld. CIT(A) erred .....

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e filed return declaring an income of Rupees NIL (after adjusting brought forward loss of ₹ 8,18,11,190) was filed electronically on 30.11.2006 which was processed u/s. 143(1) on 5.3.2008. The case was selected for scrutiny by issuance of notice u/s. 143(2). In response thereto, assessee counsel appeared before the AO from time to time and filed the details / evidences and written submissions. Audited accounts in the form of balance sheet, profit and loss account with the relevant annexure .....

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n dispute. 5. At the time of hearing, Ld. DR relied upon the order of the AO and reiterated the contentions raised by the Revenue in its ground of appeal. 6. On the contrary, Ld. Counsel of the assessee relied upon the order passed by the Ld. CIT(A) and requested that the same may be upheld. 7. We have heard both the counsel and perused the records available on record with us, especially the orders passed by the Revenue Authorities. As regards Ground No. 1 relating to restricting the disallowanc .....

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observed regarding the disallowance of ₹ 11,78,24,030/- the assessee has accepted this amount as discount given to the Collection Centre and there is no dispute regarding this amount of discount given by the assessee. The hospitals which act as Collection Centre have the same agreement, therefore, the discount given to them also falls within the purview of section 40(a)(ia) and has to be disallowed. Keeping in view of the Ld. CIT(A) has rightly held that total disallowance of ₹ 16,8 .....

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ction of tax. We find that before the Ld. CIT(A) assessee has stated that without prejudice to the other arguments of the assessee, even if the discount offered is treated as a payment to the non-resident, it is a settled position of law that the commission paid to agents operating outside India cannot be taxed in India. He further submitted that the ruling of the Hon'ble Supreme Court of India in the case of CIT vs. Toshoku Limited (125 ITR 525) supports the position of the assessee in this .....

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the account of agents, in the books of taxpayer could not tantamount to receipt (actual or constructive) in India, as the amounts so credited were not at their disposal in India; - The business operations were not carried out by the commission agents in India; and - The commission was earned by the agents for rendering services outside India, therefore the same could not be deemed to have arisen in India. Circular 23 dated July 23, 1969 (Refer page no 220 of the case law index) clearly clarified .....

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his own country and no part of his income arises in India. His commission is usually remitted directly to him and is therefore not received by him or on his behalf in India. Such an agent is not liable to incometax in India on the commission." The same point was clarified by a subsequent Circular no 786 dated February 07, 2000 which clearly stated that no tax is deductible under section 195 of the Act on the expenditure on export commission. It is a settled law that the circulars issued by .....

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ply for the relevant AY 2006-07. The Bombay High Court has in the case of Shakti Raj Films Distributors (213 ITR 20) held that modification or withdrawal of circulars during the pendency of the assessment proceedings cannot prejudicially affect the right of the assessee to have his assessment made in accordance with the circular as it stood prior to its amendment or withdrawal. This proposition is supported by a Full Bench decision of the Kerala High Court in the case of B M Edward, India Sea Fo .....

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ficate from the Assessing Officer and because of its failure to do so he added an amount of ₹ 33,67,000/- for violation of section 195 read with section 40(a)(i). Ld. CIT(A) has considered the submission given by the assessee as well as objections of the Assessing Officer and observed that for any amount on which tax has to be deducted u/s 195, one of the basic conditions is that the, said amount should be taxable in India. Ld. CIT(A) further observed that the parties who have rendered ser .....

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ing Officer U/S 40(a)(i) was rightly deleted by the Ld. CIT(A). Hence, we do not find any infirmity in the order of the Ld. CIT(A), therefore, we affirm the same and the Ground No. 2 raised by the Revenue stands rejected. ITA NO. 2276/DEL/2012 (AY 2008-09) 9. Briefly stated the facts are that the assessee filed return declaring an income of ₹ 8,26,20,030/- electronically on 28.9.2008 and the same was processed u/s. 143(1) on 19.3.2009. The case was selected for scrutiny under CASS and noti .....

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making various additions. Aggrieved by the assessment order, the assessee filed the Appeal before the Ld. CIT(A) who vide impugned order dated 20.3.2012 has deleted the additions in dispute. 9.1 At the time of hearing, Ld. DR relied upon the order of the AO and reiterated the contentions raised by the Revenue in its ground of appeal. He also filed the Written Synopsis in reply to the assessee's arguments made during the hearing. For the sake of convenience we are reproducing the same as unde .....

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n made by the AO u/s. 40(a)(ia) amounting to ₹ 17,28,04,843/-. 2. The Ld. CIT(A) erred in law and on facts of the case in deleting the addition made by the AO u/s. 40(a)(i) amounting to ₹ 1,23,54,189/- 3.1 In so far as the disallowance / addition as made by the AD u/ s 40(a)(ia) amounting to ₹ 17,28,04,843/ - is concerned it would be noticed that he first made disallowance by holding the payments as commission covered by section 194H as per which TDS was required to be done. Be .....

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e found the payments to be covered even by section 194C as a result of which TDS was required to be done. 3.3 In view of the failure of the CIT(A) in adjudicating the applicability of section 194C it is clear that the issue cannot as such be said to be covered fully by the Tribunal's order relied by the CIT(A) especially when the Tribunal also in it order has refrained from adjudicating this particular of the case which was carried by the assessee before it. 4. The fact situation & adjud .....

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the case qua the applicability of section 194C of the Act which if considered would have resulted in endorsement of AO's order at least partly. 6. In view of the above, it is prayed (a) either to release the matter for being heard in reference to sec. 194C de-novo especially when the Revenue was not even heard in the appeal at all; (b) or to restore the matter back to the CIT(A) with the directions to adjudicate the alternative application of section 194C of the Act." 10. On the contra .....

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as made a disallowance u/s. 40(a)(ia) of the Act of ₹ 1,72,804,803/- being discount to CCs, as payment of commission within the meaning of section 194H and held that the assessee should have deducted tax at source on such amount. Ld. CIT(A) further observed that the assessee's case is covered by the ITAT's order vide ITA No. 434/Del/2011 for the AY 2006-07 dated 16th December, 2011 in its own case, wherein the ITAT has held that "There is no Principal - Agent relationship betw .....

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4,030/- made u/s. 40(a)(ia) of the Act for the alleged failure of TDS by the assessee u/s. 194H of the Act. Ground No. 3 stated that the Ld. CIT(A) erred in not adjudicating the challenge of the assessee to the AO's findings that the discount offered by the assessee to the Collection Centres was in the nature of payment for work, on which tax was deductible u/s. 194C of the Act. Since the claim of the assessee has allowed as above, there remains no requirement to go into this aspect of the m .....

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