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2019 (11) TMI 336

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..... ored by a story-writer with different purposes and objects and certainly not to displace the merchandize to boost the sales of a manufacturer or a trader of the product or services. Therefore, the impugned payments made by the assessee to Matrix India on behalf of Ms Katrina Kaif do not attract the provisions of section 194J TDS not deductible from payments made to custom house agents on account of reimbursement of clearing and forwarding - CIT (Appeals) giving relief to the assessee by holding that TDS is not deductible on supply of Cameras manufactured by Hical Magnetic Private Limited by treating the same as contract for sale - HELD THAT:- As decided in own case [ 2013 (5) TMI 154 - ITAT MUMBAI] the procurement of the raw material is also arranged by the assessee as per the tripartite agreement Thus, it is nothing but a job work contract under these two agreements. Further the assessee is paying the entire cost in advance being working capital and compensation with the margin on cost of raw material and labor at the rate of ₹ 8.04 per Camera to Hical which is nothing hut the job work charges. The price arrangement as agreed between the parties clearly shows that it is a jo .....

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..... ment made to Matrix India on behalf of Ms. R.K. Kaif required withholding under section 194J. 4. Upon hearing both the counsel and perusing the records, it transpires that this issue stands covered in favour of the assessee by the decision of this Tribunal in assessee s own case for Assessment Year 2009-10, ITA No. 9080/M/2010 vide order dated 20/2/2013. The Tribunal by an elaborate order has concluded that the TDS officer was incorrect in holding that tax was required to be deducted at 11.33%. The Tribunal concluded that the impugned payments made by the assessee to Matrix India on behalf of Ms. Katarina Kaif do not attract the provisions of section 19 4J. Accordingly the ground raised was allowed. We may refer to the concluding portion in the said order as under:- 18. In the light of the above legal scope we need to examine, if the services, the modeling, rendered by Ms. Katrina Kaif in this case constitutes professional service and the fee paid to her for modeling with the purpose of marketing of the camera products of the assessee constitutes FPS, notwithstanding the (act that she is otherwise an actor engaged in the production of a cinematographic film. The answer for this enq .....

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..... splay of merchandise, the 'acting' is defined as to act in play or film www.freedictionaty.com) i.e. to portray a role authored by a story-writer with different purposes and objects and certainly not to displace the merchandize to boost the sales of a manufacturer or a trader of the product or services. Therefore, the impugned payments made by the assessee to Matrix India on behalf of Ms Katrina Kaif do not attract the provisions of section 194J of the Act. Accordingly, the grounds raised are allowed. Respectfully following the aforesaid decision, we decide this issue in favour of the assessee. 5. One common issue raised in Revenue s appeal is that learned CIT(A) erred in giving relief to the assessee by holding that TDS is not deductible from payments made to custom house agents on account of reimbursement of clearing and forwarding. 6. Brief facts of the case are that during the previous years relevant to assessment years under consideration, the appellant had made payments to Custom House Agents (CHAs). The appellant is making two types of payments to CHAs i.e. i) clearing charges and ii) reimbursement of the expenditure incurred by CHAs on behalf of the appellant on acc .....

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..... rties This aspect has not been explained by the appellant as to why in respect of the later two parties i.e. DHL Express (I) Pvt. Ltd and International Clearing & Shipping, two different sections and two different rates have been applied for tax deduction at source in AY 2007-08 and AY 2008^09. Therefore no further relief can be granted to the appellant at this stage: However, the AO shall be free to look into this aspect and re-compute the demand of tax and interest, if any in view of the decision of my Ld. Predecessor in AY 2009-10. Against this order revenue is in appeal before us. 8. Assessee for AY 07-08 has raised a cross appeal on this issue that Ld CIT (A) should have deleted the entire disallowance. 9. We have heard both the counsel and perused the records. We find that ITAT assessee s own case in ITA No. 568 for assessment year 2009 - 10 vide order dated 21/1/15 has dealt with the issue as under:- 24. We have considered the rival submissions as well as relevant material on record. There is no dispute that the assessee paid this amount to the agent for making the payment to third parties for various services availed by the assessee. It is also not disputed that if the .....

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..... nt but is a payment to the third party through the agent. Accordingly in view of the above discussion and facts and circumstances of the case, we set aside the order of CIT(A) and restore the order of Assessing Officer on this issue. 10. In this regard it is the submission of the learned counsel of the assessee that the said order is erroneous. Without prejudice it has been contended that assessee cannot be considered to be in default with regard to those clearing house agents who are assessee s on record, and have filed return of income under section 139 and who have taken into account the sum paid by Kodak and have also paid the tax on the income declared by it. It has been submitted that the proviso below section 201 (1) inserted as an amendment by the finance act 2012 with effect from 1st July 2 012 is retrospective in nature. Reliance in this regard is placed on ACIT v/s Bharti Airtel, 42 ITR trib 469, Mahindra Navistar Automatics Ltd v/s DCIT, 159 ITD 123, Gujarat Pipavav port Ltd versus DCIT 149 ITD 23. It has been submitted that this issue was not before ITAT in assessment year 2009-10. Hence it is claimed that to this extent ITATs earlier order cannot be said to have cover .....

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..... e camera by Hical Magnetic Pvt. Ltd. is arranged by the assessee under the tripartite agreement. Further the assessee is providing the working capital fund to the Hical Magnetic Pvt. Ltd, for the purpose of all cost including labor and raw material which is supplied under the tripartite agreement. Therefore, the nomenclature of the agreement becomes irrelevant when the intention of the parties presents a different picture as per the various terms and conditions of the agreement. The CJT(A] has assumed a wrong fact by recording the tripartite agreement as- an agreement for tools and moulds but it was actually an agreement for job work of Camera parts by supplier for use of assembling the camera by Hical Magnetic Pvt. Ltd. Therefore, it was not an agreement for tools and moulds but is an agreement for supply of Camera parts by various suppliers to Hical Magnetic JM. Ltd. The Camera parts are manufactured as per the tools and moulds provided by the assesses thus the raw material is supplied to the Hical Magnetic Pvt Ltd. by the assessee through the suppliers under the tripartite agreement. The assessee has provided the working capital to Hical Magnetic Pvt. Ltd. for purchase of raw ma .....

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..... ble jurisdictional High Court. The jurisdictional High Court has not reversed the said decision of the ITAT. When it was pointed out by the Bench that if the learned counsel of the assessee is urging us to take a contrary view than that expressed by the ITAT in assessee s own case the matter would need to be referred to a Special Bench, the learned counsel of the assessee submitted that he would not be requesting for a Special Bench reference. Accordingly, respectfully following the decision of ITAT in assessee s own case, we set aside the order of learned commission of income tax appeals and restore the order of assessing officer. 14. Another issue raised in Revenue s appeal is that learned Commissioner of Income Tax (Appeals) has erred in giving relief to the assessee by holding that TDS is not deductible on supply of batteries manufactured by power cell batteries India Ltd. by treating the same as contract for sale. 15. It transpires that this issue stands covered in favour of the assessee by the aforesaid Tribunal order for Assessment Year 2009-10, wherein the Tribunal has decided the issue in favour of the assessee by dealing with the same at paragraphs 7 and 8 of the said ord .....

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