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2015 (6) TMI 981 - ITAT CHENNAI

2015 (6) TMI 981 - ITAT CHENNAI - TMI - Deduction u/s.80IA on windmill power generation - CIT(A) allowed claim - Held that:- The issue is squarely covered by the judgment of jurisdictional high court in the case of Velayudhaswamy Spinning Mills (P) Ltd (2010 (3) TMI 860 - Madras High Court ) wherein held that the business undertaking of the assessee is wind mill power generation/hosiery goods, etc., and it has claimed the benefit of deduction under Section 80IA of the Income Tax Act for the asse .....

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eted the addition - Held that:- nature of services mentioned above will come not within the definition of “fees for technical services” given under explanation 2 to Section 9(1)(vii) of the Act. By virtue of such services, the concerned recipients had not made available to the assessee any new technic or skill which assessee could use in its business. The services rendered by the said parties related to clearing, warehousing and freight charges, outside India. The logistics service rendered was .....

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ny case, under Section 195 of the Act, assessee is liable to deduct tax only where the payment made to non-residents is chargeable to tax under the provisions of the Act. In the circumstances mentioned above, assessee was justified in having a bonafide belief that the payments did not warrant application of Section 195 of the Act. In such circumstances, we are of the opinion that it could not have been saddled with the consequences mentioned under Section 40(a)(i) of the Act. Disallowances were .....

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012. 2. The first ground in this appeal is with regard to deleting the restriction of deduction u/s.80IA to the extent of C62,26,739/- on windmill power generation. 3. The facts of the issue are that the assessee company engaged in the manufacture and export of steel forgings, has plants manufacture of steel forgings and has for the generation of electricity by windmill located in Nagercoil District and the entire electricity generated was for self consumption and no part of the same was sold. T .....

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5), the profits and gains of eligible business to which the provisions of subsection(1) apply shall, for the purposes of determining the quantum of deduction under the sub-section for the assessment year or any subsequent assessment year needs to be computed as if such eligible business were the only source of income of the assessee during the previous year relevant to the initial assessment year as in the instant case, the wind energy generation from the windmill units and the entire business p .....

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of deduction u/s 801A(4) is governed by the provisions of Sec 801A(5).The deduction u/s 80IA would be eligible only on such surplus profits after setting off of the brought forward losses and unabsorbed depreciation. The AO has relied on the decision of the Special Bench of ITAT, Ahmedabad in the case of ACIT Vs. Gold Mine and Shares & Finance Pvt. Ltd. (2008) 113 ITD 209 as well as the ITAT, Hyderabad in the case of Hyderabad Chemicals Supplies Ltd. Vs. ACIT, Hyderabad in support of her con .....

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sdictional high court in the case of Velayudhaswamy Spinning Mills (P) Ltd vs. ACIT 340 ITR 477, wherein held observed that ……………….From a reading of Se. 80IA(5), it is clear that the eligible business were the only source of income, during the previous year relevant to the initial assessment year and every subsequent assessment years. When the assessment exercises the option, the only losses of the years beginning from initial assessment year alone are t .....

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in earlier year against the other income of the assessee, the Revenue cannot rework the set off amount and bring it notionally. A fiction created in sub-section does not contemplates to bring set off amount notionally. The fiction is created only for the limited purpose and the same cannot be extended beyond the purpose for which it is created……. The Commissioner of Income Tax (Appeals) allowed the claim of the assessee. Against this, the Revenue is in appeal before us. 5. We have .....

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ct of the issue are that that the assessee has incurred foreign agency commission of C4,47,37,475/- and warehousing and other charges incurred overseas of C3,00,82,166/-, during the year. It has been submitted by the ld. Authorised Representative for assessee that in the present case, the agents were operating outside the taxable territories and the commission received also were outside the taxable territories and it had no authority to enter into any contract on behalf of the local manufacturer .....

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sing and other charges broadly for the following reasons:- (i) No tax was deducted on the commission paid to the foreign agents as required under section 195 of the Act. (ii) Board s circulars No.23 dated 23.07.1969, Circular No.163 dated 29.05.1975 and circular No.786 dated 07.02.2000 allowing foreign agent commission without deduction of tax under section 195 was withdrawn by Circular No.7 dated 22.10.2009. (iii) The Assessing Officer has relied on the Hon ble Authority for Advance Ruling in t .....

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orders, but the right to receive the commission arises In India when the order is executed by the applicant in India. The fact that the agents have rendered services abroad in the form of soliciting the orders and the commission is to be remitted to them abroad are wholly irrelevant for the purpose of determining the situs of their Income. We follow the ruling of this Authority in (Rajive Malhotra MR 671 of 2005, 284 JTR 564). We therefore hold that the income arising on account of commission pa .....

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held that the assessee has an obligation to obtain NIL deduction certificate from the AO even when the assessee feels that the payment is not liable to TDS, which the assessee failed to do in this case. The Assessing Officer disallowed a sum of C7,42,19,641/- Aggrieved, the assessee preferred an appeal. 8. On appeal the Commissioner of Income Tax (Appeals) observed that the following facts of the case, which are undisputed that • The agents were non-residents • The non-resident agents .....

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R 456 wherein it was held that tax deducted at source obligations u/s 195(1) arises only if the payment is chargeable to tax in the hands of the non-resident recipient. Therefore, merely because a person has not deducted tax at source or a remittance abroad it cannot be inferred that the person making the remittance, namely the assessee in the instant case, has committed a default in discharging his tax withholding obligations because such obligations come into existence only when the recipient .....

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ommissioner of Income Tax (Appeals) observed that just because the payer has not obtained a specific declaration from the revenue authorities to the effect that the recipient is not liable to be taxed in India in respect of the income embedded in the particular payment, the AO cannot proceed on the basis that the payer has an obligation to deduct tax at source. He still has to demonstrate and establish that the payee has a tax liability in respect of the income embedded in the impugned payment 1 .....

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e either. 12. The Commissioner of Income Tax (Appeals) further observed that the Hon'ble Supreme Court in the case cited supra has held that the assessee is not liable to deduct TDS when the non-resident agents provided services outside India and as such commission payments made to them cannot be treated as income deemed to accrue or arise in India and therefore the provisions of Sec.195 has no application in such cases; and in order to invoke the provisions of Sec.195 of the Act income shou .....

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essee is in appeal before us. 13. We have heard both the sides and perused the material on record. In our opinion, this issue is squarely covered by the earlier order of the Tribunal in the assessee s own case for the assessment year 2010-2011 in ITA No.2311/Mds/2013 vide order dated 28.03.2014. In the said order, the Tribunal observed as under:- 5. We have heard both parties and gone through the case file. As already stated hereinabove, the CIT(A), whilst deleting the impugned addition u/s 40(a .....

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e the hon'ble high court. In our considered opinion, mere pendency of an appeal involving the same issue against the order of the 'tribunal' is no ground to adopt a different approach in the impugned assessment year. Thus, we agree with the findings of the CIT(A) under challenge and reject grounds raised by the Revenue. Similar view was also taken by the Mumbai Bench in the case of Vilas N. Tamhankar in ITA No.4522/Mum/2013 for the assessment year 2009-2010, vide order dated 21.11.20 .....

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