TMI Blog2016 (3) TMI 1115X X X X Extracts X X X X X X X X Extracts X X X X ..... since commission paid to non-residents was not taxable in India, assessee was not required to deduct tax at source while making said payments. See Faizan Shoes (P) Ltd case [2014 (1) TMI 440 - ITAT CHENNAI] - Decided in favour of assessee - I.T.A. No. 1143/Mds/2014 - - - Dated:- 31-3-2016 - SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI. G. PAVAN KUMAR, JUDICIAL MEMBER For The Appellant : Shri. A.V.Sreekanth, IRS, JCIT. For The Respondent : Shri. A.S. Sriraman, Advocate PER G. PAVAN KUMAR, JUDICIAL MEMBER: The appeal filed by the Department is directed against order the Commissioner of Income-tax (Appeals)-I, Madurai in ITA No.0088/12-13, dated 03.02.2014 for the assessment year 2010-2011 passed u/s.143(3) and 250 of the Income Tax Act, 1961 (herein after referred to as the Act ). 2. The Revenue has raised two substantive grounds (i) The Commissioner of Income Tax (Appeals) erred in deleting the addition of deduction u/s. 80IB of the Act relying on the judicial decisions. (ii) The Commissioner of Income Tax (Appeals) erred in deleting the disallowance of commission paid to foreign agent without deduction of tax u/s.195 of the Act. 3. The Brief fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 2007-08 to 2009-2010 were profit of unit alone is considered for 80IB deduction without any adjustment. The ld. Commissioner of Income Tax (Appeals) considered the submissions and findings of the Assessing Officer and deleted the addition by following the order of the Tribunal in assessee s own case as observed in para 5.2 at page 5 as under:- ITAT in its order in ITA NO.782 to 787/Mds/2012 ITAT 869 to 874/Mds/2012 dated 21.02.2013 has allowed the issue in favour of the assessee with the following remarks: In later decision in the case of CIT Vs. MEPCO Industries 294 ITR 121 it was held that the deduction u/s.80IA and 801B could be worked out independently without effecting any inter se adjustment of loss and profit between various units. If an assessee had different units resulting in positive gross total in view of the decisions of Hon'ble Jurisdiction High Court in the case of CIT Vs. Macmillan India Ltd. (295 ITR 67), CIT Vs. Rathore Brothers (254 ITR 656), CIT Vs. Suresh B. Mehta (291 ITR 462) and CIT Vs. M. Gani And Co. (301 ITR 381), each of the unit had to be separately considered for working out deduction u/s.80IA or 8018 or 80HHC of the Act, one s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their decision in the case of Chamundi Textiles (Silk Mills) Ltd. v. CIT (341 ITR 488). There the question was regarding claim of deduction under Section 80HHC and whether such deduction could be allowed without considering the results of a unit, which was not having any profits. It was held by their Lordships that by virtue of the decision of Hon'ble Apex Court in the case of IPCA Laboratories Ltd. v. CIT (266 ITR 521), undisputedly only an assessee having positive profits could claim such a deduction. Their Lordship also held that for arriving at such profit, income from various units had to be calculated and if one of the units was running at a loss, gross total income had to be arrived considering such loss also. Ultimately, if the gross total income was a loss, claim for deduction was to be rejected. Sections 80HHC or 80-IA or 80-IB for that matter, are all controlled by Section 80AB of the Act. Gross total income means gross total income computed as per the provisions of the Act. This was clearly reiterated by Hon'ble Apex Court in the case of Synco Industries Ltd. (supra). Hon'ble Apex Court held that gross total income had to be arrived at after making deducti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /2012, dated 21.02.2013 in assessee s own case, uphold the order of Commissioner of Income Tax (Appeals) and dismiss the ground of the Revenue. 8. In respect of other ground, the Commissioner of Income Tax (Appeals) heard the submissions and considered the findings and also made elaborate discussions of the advance ruling and CBDT circulars and the submissions at para 6.2 of the order and statement at para 6.3 as under:- Appellant filed the details of the evidence for the commission paid in the form of the invoices raised by the Appellant, where the word commission is clearly mentioned including details of the export order to which the commission relates to. also filed during the assessment proceedings. The address of all the persons in the invoice is outside India, have no business presence in India and the payments are made in foreign exchange through banking channels and certificates are submitted to the Banks for paying the foreign exchange. The details of the commission are as under. Month Name Address USD Amount (Rs) June, 09 Meditrade Lebanaon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hemently argued the grounds that the ld. Commissioner of Income Tax (Appeals) erred in deleting the addition without considering the facts and provisions of Sec. 195 and applicability of Sec. 210(a)(i) and CBDT circular and relied on lower authorities order and prayed for set aside the order of Commissioner of Income Tax (Appeals). 10. The ld. Authorised Representative of assessee vehemently argued and relied on order of the Commissioner of Income Tax (Appeals) and prayed for dismissal of Revenue appeal. 11. We heard the rival submissions and perused the material on record and judicial decisions. We respectfully following the decision of Co-ordinate Bench in the case of Faizan Shoes (P) Ltd (2013) 34 taxmann.com 79 wherein held as under:- Assessee company was engaged in business of manufacture and export of shoe uppers and leather shoes - It paid certain commission to non-residents for procuring export orders - Since assessee did not deduct tax at source while making said payments, Assessing Officer disallowed same under section 40(a)(i) - It was noted from records that nonresidents were only procuring orders for assessee and following up payments and apart from that n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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