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JVS Export Versus The Deputy Commissioner of Income Tax

2015 (12) TMI 833 - MADRAS HIGH COURT

Tds on commission paid to the agent who is a non-resident - Held that:- The commission amounts which were earned by the non-resident assessees for services rendered outside India cannot, therefore, be treated as an income which have either accrued or arisen in India. Therefore, the question of deducting TDS does not arise. - Decided in favour of assessee

Reopening of assessment - whether non-speaking and composite order have been passed - Held that:- Pursuant to the notice issued by t .....

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on 147 of the Act is exercised beyond a period of four years, therefore, the same is hit by limitation. Viewed from any angle, the respondent has not made out any ground to reopen the assessment order and the orders impugned in these Writ Petitions are liable to be set aside - Decided in favour of assessee - W. P. (MD)No. 7825 of 2015, W. P. (MD)No. 7828 of 2015, M. P. (MD). Nos. 1 of 2015 - Dated:- 28-9-2015 - R. Subbiah, J. For the Petitioner : M/s. R. Srinivasan For the Respondent : Mrs. S. S .....

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e dated 28.03.2014 under Section 148 of the Income Tax Act, 1961 has been issued and a composite order dated 05.03.2015 has been passed simultaneously rejecting the objections of the petitioner firm and for completing the re-assessment and quash the notice dated 28.03.2014 and order dated 05.03.2015. 3. All the four Writ Petitions have been filed for each assessment year. In the Writ Petition in W.P.(MD).No.7825 of 2015, the petitioner has averred that the petitioner firm filed its return of inc .....

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also, in the case of W.P.(MD).No.7828 of 2015, the petitioner filed its return of income for the assessment year 2010-2011, admitting a total income of ₹ 4,82,02,050/-. 3.1. It is further averred in the affidavit that all the returns were processed under Section 143(1) of the Income-Tax Act, 1961 for the respective assessment years. All the cases were selected for detailed scrutiny and an assessment was made under Section 143(3) of the Act, on different occasions, determining the total in .....

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eipt of the said notice on the ground that the Assessing officer has reason to believe that the income of the petitioner firm chargeable to tax had escaped assessment within the meaning of Section 147 of the Income Tax Act,1961. The petitioner firm duly complied with the notice dated 28.04.2014 stating that the return already filed may be taken as one filed in response to the said notice and by another letter dated 23.01.2015 requested the Assessing Officer to disclose the reasons recorded for i .....

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n in GKN Driveshaft (India) Ltd Vs. ITO (259 IT 19(SC). 3.3. Thereupon, the Assessing Officer has passed a composite order dated 05.03.2015 rejecting the objections and also passed the re- assessment order resulted in filing the Writ Petition in W.P.(MD).No.7825 of 2015. In the similar set of facts, the other three Writ Petitions have been also been preferred, of course, for different assessment years. 4. To back his averment, the learned counsel for the petitioner has made the following submiss .....

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eipt of the reasons, the noticee is entitled to file objections to issuance of notice and the assessing officer is bound to dispose of the same by passing a speaking order. But, in the instant case, a non-speaking and composite order have been passed. (iii)If there is any tangible material, the Assessing Officer can come to the conclusion that there is escapement of income. However, earlier order cannot be reviewed. But, here, there is no tangible material available. In the absence of same, the .....

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e by the learned counsel for the petitioner as well as the learned counsel appearing for the respondent. 7. With regard to the first ground, the learned counsel for the petitioner by relying upon a judgment reported in a Division Bench of this Court in Commissioner of Income Tax Vs. Faizan Shoes Pvt.Ltd, T.C.(A).No.789 of 2013, submitted that if the commission amount was paid to the agent who is a non-resident for the service rendered outside India, Section 195 cannot be invoked. Since the Commi .....

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emitted by the purchasers from abroad does not amount to an operation carried out by the assessees in India as contemplated by cl.(a) of the Explanation to s.9(1)(i) of the Act. The commission amounts which were earned by the non-resident assessees for services rendered outside India cannot, therefore, be deemed to be incomes which have either accrued or arisen in India. The High Court was, therefore, right in answering the question against the department. 11. The facts of the present case are a .....

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ian on payment of commission. 12. In the light of the above said decision and the finding rendered by us on the earlier issue that the services rendered by the non-resident agent can at best be called as a service for completion of the export commitment and would not fall within the definition of fees for technical services , we are of the firm view that Section 9 of the Act is not applicable to the case on hand and consequently, Section 195 of the Act does not come into play. In view of the abo .....

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concurrent findings rendered by the Commissioner of Income Tax (Appeals) and the Tribunal 8. From the dictum laid down in the above judgment, it could be seen that the commission amounts which were earned by the non-resident assessees for services rendered outside India cannot, therefore, be treated as an income which have either accrued or arisen in India. Therefore, the question of deducting TDS does not arise. 9. The second fold submission of the learned counsel for the petitioner is that in .....

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clarify that when a notice under Section 148 of the Income Tax Act is issued, the proper course of action for the noticee is to file a return and if he so desires, to seek reasons for issuing notices. The Assessing Officer is bound to furnish reasons within a reasons within a reasonable time. On receipt of reasons, the noticee is entitled to file objections to issuance of notice and the Assessing Officer is bound to dispose of the same by passing a speaking order. In the instant case, as the rea .....

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ing the objection of the petitioner, the respondent has passed a composite and non- speaking order. Since it is a non-speaking and composite order, the same is liable to be set aside. 11. As regards to the third ground that the respondent has no power to reopen the assessment order without any tangible material, the learned counsel for the petitioner submitted that in the case of Commissioner of Income Tax Vs. Schwing Stetter India P. Ltd, reported (2015) 93 CCH 112 ChenHC, it could be seen that .....

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