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2015 (9) TMI 122 - ITAT CHENNAI

2015 (9) TMI 122 - ITAT CHENNAI - TMI - Disallowance u/s 40(a)(i) - non deduction of TDS on payment of commission to non-residents - revision u/s 263 - Held that:- This Tribunal is of the considered opinion that it is incumbent on the part of the Assessing Officer to disclose the reasons in the assessment order for allowing or disallowing a claim of the assessee. This Tribunal is of the considered opinion that the CIT has rightly exercised his jurisdiction u/s 263 of the Act. However, the CIT ha .....

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same in accordance with law. It is made clear that the Assessing Officer shall examine the issue independently without being influenced by the observation made by the CIT(A) in the impugned order or by this Tribunal in this order and decide the same in accordance with law after giving a reasonable opportunity to the assessee. - Decided partly in favour of assessee. - I.T.A.No.530/Mds/2014 - Dated:- 21-8-2015 - SHRI N.R.S. GANESAN AND SHRI A. MOHAN ALANKAMONY, JJ. For The Appellant : Shri G Baska .....

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pies of foreign commission payments and details of TDS deducted etc. The assessee also by his letter dated 10.11.2011 filed all the details called for by the Assessing Officer. The Assessing Officer, after considering all the details filed by the assessee, allowed the payment of commission to non-residents. However, the Administrative Commissioner in the guise of exercising his revisional jurisdiction u/s 263 of the Act, found that the payment of commission was made to non-residents, therefore, .....

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sallow the claim u/s 40(a)(i) of the Act. Referring to the order of this Tribunal in assessee s own case in I.T.A. No.2334/Mds/2014 dated 2.1.2015, the ld. Counsel submitted for assessment year 2011-12, this Tribunal, after following the judgment of the Hon'ble Madras High Court in CIT vs Faizan Shoes Pvt. Ltd [2014] 367 ITR 155, allowed the claim of the assessee. Therefore, the CIT ought not to have directed the Assessing Officer to disallow the claim of the assessee u/s 40(a)(i) of the Act .....

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nt of commission. The Assessing Officer, after examining the details filed by the assessee allowed the claim of the assessee. Apparently, the Assessing Officer has not discussed anything in the assessment order. We have also gone through the order of this Tribunal in assessee s own case for assessment year 2011-12 . This Tribunal, by following the judgment of the Hon'ble Madras High Court in Faizan Shoes Pvt. Ltd. (supra) dismissed the Revenue s appeal. This Tribunal found that the assessee .....

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lower authority. Moreover, there is no discussion in the assessment order with regard to payment of foreign commission. The only contention of the ld. Counsel is that the Assessing Officer called for the details and allowed the claim. This Tribunal is of the considered opinion that the Assessing Officer being a quasi-judicial authority, the application of mind shall be reflected in the impugned assessment order itself. In this case, even though the Assessing Officer called for the details, there .....

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s, the Assessing Officer is bound to record the reasons for the conclusion reached in the assessment order. Unless and until the reasons are recorded in the assessment order, the appellate/judicial authorities may not be in a position to appreciate the order of the Assessing Officer. 7. We find that the Hon'ble P&H High Court had an occasion to examine this issue in CIT vs Sunil Kumar Goel [2005] 274 ITR 53. The P&H High Court, after considering the judgment of the Constitutional Ben .....

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o above indicate that with regard to the requirement to record reasons the approach of this court is more in line with that of the American Courts. An important consideration which has weighed with the court for holding that an administrative authority exercising quasi-judicial functions must record the reasons for its decision, is that such a decision is subject to the appellate jurisdiction of this court under article 136 of the Constitution as well as the supervisory jurisdiction of the High .....

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n making. In this regard a distinction has been drawn between ordinary courts of law and tribunals and authorities exercising judicial functions on the ground that a judge is trained to look at things objectively uninfluenced by considerations of policy or expediency whereas an executive officer generally looks at things from the stand point of policy and expediency. Reasons, when recorded by an administrative authority in an order passed by it while exercising quasijudicial functions, would no .....

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of decision-making. The said purpose would apply equally to all decisions and its application cannot be confined to decisions which are subject to appeal, revision or judicial review. In our opinion, therefore, the requirement that reasons be recorded should govern the decisions of an administrative authority exercising quasi-judicial functions irrespective of the fact whether the decision is subject to appeal, revision or judicial review. It may, however, be added that it is not required that t .....

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ve separate reasons if the appellate or revisional authority agrees with the reasons contained in the order under challenge." In Testeels Ltd. v. N. M. Desai [1970] 37 FJR 7; AIR 1970 Guj 1, a Full Bench of the Gujarat High Court has made an extremely lucid enunciation of law on the subject and we can do no better than to extract some of the observations made in that decision. The same are (headnote of AIR 1970 (Guj): "The necessity of giving reasons flows as a necessary corollary from .....

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ard to ensure observance of the duty to act judicially. It introduces clarity, checks the introduction of extraneous or irrelevant considerations and excludes or, at any rate, minimises arbitrariness in the decision-making process. Another reason which compels making of such an order is based on the power of judicial review which is possessed by the High Court under article 226 and the Supreme Court under article 32 of the Constitution. These courts have the power under the said provisions to qu .....

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stultified and no redress being available to the citizen, there would be insidious encouragement to arbitrariness and caprice. If this requirement is insisted upon, then, they will be subject to judicial scrutiny and correction." If the order passed by the Tribunal is scrutinised in the light of the aforementioned proposition of law, we do not find any difficulty in setting aside the same on the ground of violation of the rules of natural justice. The flowery language used by the Tribunal t .....

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