TMI Blog2022 (10) TMI 487X X X X Extracts X X X X X X X X Extracts X X X X ..... le 14(2) of the DTAA with USA for the purpose of holding taxes on the same - assessee contended thereafter that IFANCA was division of Islamic Food and Nutrition Council of America, and a non-profit Islamic Organization incorporated in 1982 in the State of Illinois, USA and remittance was on account of payment of Halal supervision and certificate fees in respect of export of Gelatine to USA and European countries - HELD THAT:- To make the assessee halal compliant the assessee is educated about the meaning and implication of the term, its products and process adopted for manufacturing are reviewed to see that they are halal compliant, sanitation and cleaning procedures are reviewed and so on. The end purpose, we may state at the cost of repetition, being to ensure that the product manufactured by the assessee and the process adopted for manufacturing is such that it can be certified as halal . What technicality is involved in halal compliant, has not been pointed out by the Revenue. As per the common meaning of the term halal , as noted above by us, we do not find any technicality involved in halal compliant. Therefore, we hold, that the findings of the Ld.CIT(A) that hala ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n time. It is stated in the application that the delay in filing the appeal was for reason beyond the control of the assessee which was unintentional, and therefore, it was pleaded that the same be condoned. The ld.DR on the other hand objected to the same. 5. We have heard both the parties and we are satisfied that the assessee has demonstrated reasonable cause for the delay of small period of 31 days on account of being logistically handicapped in this regard, since its taxation matter was being handled in Mumbai, and the order being received in Vadodara, there was nobody to immediately forward to Mumbai so as to ensure timely filing of the appeal. Noting the fact that despite the logistic disability, the assessee still managed to get the appeal filed by it with a small delay of 31 days, it is evident that the assessee was aware of the statutory limitation prescribed for filing appeal and proactively pursued the matter despite limitation at its end. The delay surely is not intentional, and therefore, in the interest of justice we consider it fit to condone the delay. The order was pronounced in the Open Court and hearing of the appeal is being proceeded with. 6. The fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e decision of honourable Supreme Court in the case of Kelvinator of India is concerned, this decision was interpreted recently by honourable madras High Court in the case of Sri Sakthi Textiles Ltd, [2010] 193 TAXMAN 216 (MAD.). In this decision the court has held as follows: 29. A reading of the above judgment would go to really show that an assessment already completed cannot be reopened for the purpose of redssessment merely on the basis of the change of opinion by the subsequent Assessing Officer. Such reopening is possible only on tangible materials in the event of the Officer finding reasons to believe that there is escapement of income from assessment. In my considered opinion, as I have understood from the judgments cited supra, more particularly, the recent judgment of the Hon'ble Supreme Court cited supra, there is no legal necessity that the materials referred to in section 147 of the Act should be fresh materials collected subsequent to the original assessment orders. Even from out of materials which are already available on record, if the subsequent officer finds reasons to believe that there has been escapement of assessment, surely he can issue notice under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve included in the ascertainment of taxable income made in the assessment order but was not so included, that would itself provide a cause or justification for a belief to the Assessing Officer that such income had escaped assessment and the Assessing Officer in such cases would be ex facie justified in initiating the proceedings on such basis. The cases of non-assessment of an item of income chargeable to tax would warrant formation of requisite belief to initiate the proceedings within four years of the end of the relevant assessment year, even where full disclosures were made and yet an income chargeable to tax had escaped from being included in the final assessment order in which taxable income was worked out. In such cases the Assessing Officer has in fact a duty to exercise his jurisdiction. The Assessing Officer has not to conclusively come to any finding on the facts which prompted his reason to believe, at the stage of the issuance of notice under section 148 pursuant to which the assessee is to be heard; and the order if adverse, can be questioned under the provisions of the Act. The cases of underassessment or excessive relief which are deemed cases of escapement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the income had escaped assessment and such cases where mistakes and errors are detected and which constitute a valid justification or cause to form a belief sought to be corrected cannot be said to be cases of mere change of opinion. 4.4. Similar view has also been taken by the special bench of Chennai ITAT in the case of Mahindra Holidays Resorts (India) Ltd. [2010] 39 SOT 438 (CHENNAI) (SB), decision of Hon'ble Delhi Court in the case of Dalmia (P) Ltd. v/s CIT Delhi, Taxmann. Com 106 (Delhi) and decision of Hon'ble Kerala High Court in CIT Cochin v/s National Tyres Rubber Co. of India Ltd. Taxmann. Com 3 (Ker). In the present case, the assessment has been re-opened by issuing the notice u/s. 148 within 4 years from the end of the assessment year. The reason for re-opening was that the TDS had not been deducted on some payments on which it was required to be deducted and hence the disallowance to be made u/s 40(a)(ia) was not made. This issue was not discussed in the original assessment order and hence no opinion was formed on it. Thus, the AO has recorded his reason to believe that the income has escaped assessment and then issued the notice u/s. 148. Henc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowance of Rs.3,13,859/- made on account of non-deduction of tax at source on expenses related to certification fees paid to Islamic Food and Nutrition Council of America ( IFANCA ), Chicago. The details of which are reproduced at page no.3 of the assessment order as under: 5) Amount paid to IFANCA, Chicago for shipment certification fee 263820 N.A. Ledger attached. Service rendered outside India (copy of their Certificate to this effect attached) No permanent establishment in India. 6) Amount paid to IFANCA, Chicago 50039 N.A. -do- 13. The ld.counsel for the assessee contended thereafter that IFANCA was division of Islamic Food and Nutrition Council of America, and a non-profit Islamic Organization incorporated in 1982 in the State of Illinois, USA and remittance was on account of payment of Halal supervision and certificate fees in respect of export of Gelatine to USA and European countries. The ld.counsel for the assessee pointed ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reunder: 5.2 I have given my careful consideration to the facts of the case, arguments advanced by the AR as also the observation of the AO. The appellant's basic contention is that the payments made for obtaining different certificates from above mentioned persons cannot be categorized under the head Fee for Technical Services' or where it is so covered it is to be exempted from TDS by provisions of DTAA. This is not correct. The payments have been made for obtaining certificates for medicines being manufactured by the appellant as herbal, inspection and supervision of plants of the appellant etc. Hon'ble Kerala High Court in its decision in the case of Cochin Refinery Ltd, 222 ITR 354 was concerned with similar issue. In that case the assessee had requested a foreign company situated in USA to evaluate whether coke produced from a blend of vacuum bottoms and clarified oil from Bombay High crude was suitable for making anode for aluminium industry. The test was carried out in USA. The court held that the payment made for such purposes would have to be deemed as amounting to fees for technical services as per explanation (2) to clause (vii) of subsection (1) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... states that a confidential agreement is executed by both parties. But despite being asked, the copy of this agreement was not produced before the undersigned. Procedure for Halal Gelatine Certification states that the production plant is inspected by a IFANCA Inspector according to the Plant Inspection - requirements. A copy of it is attached. The Plant Inspection requirements are as follows: The philosophy of IFANCA's Halal supervision program is to educate the company personnel about Halal requirements so that they can be properly implemented and self monitored by the company, eliminating the need for on site production inspection by the IFANCA staff. 1. Discuss Key elements of the program with the plant management Islamic Food Laws. What is Halal and what is not? - Critical Ingredients to watch for. Muslim Markets. Domestic International 2. Review product and other information. Product Review. List of finished products to be certified Suppliers of critical ingredients Specification sheets for critical ingredients Process Review. Flow chart of the process Sanitation Review. Sanitation program Audited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th HACCP and other quality assurance standards and is easily implemented. IFANCA works with the producer every step of the way to ensure all questions are answered and halal procedures are integrated into the standard operating procedures effectively and efficiently. IFANCA -provides training in halal policy and procedure to key personnel in the production process who, in turn, pass on this training to other staff, thereby assuring methodical cleanliness and consistency throughout the production process. IFANCA provides consulting on product development, marketing, and quality assurance to help roll out new products for the halal consumer. IFANCA offices are available for this consultation year-round and it is part of the services we provide to client companies. Once a product meets the requirements for halal certification, a certificate is issued. This can be done electronically, if that is preferred. The IFANCA halal certificate has worldwide acceptance. From Indonesia, Malaysia and Singapore, to Saudi Arabia, the UAE and the rest of the Middle East, through Europe and North and South America, IFANCA-certified halal products and procedures have delighted and satisfied consumers a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of holding taxes on the same. The ld.counsel for the assessee, on the other hand, opposed to this finding of the ld.CIT(A). After going through the finding of the ld.CIT(A), We are not in agreement with the ld.CIT(A) that certification and supervision services for which IFANCA was paid the impugned amount involved any technology being made available to the assessee with respect to the products being manufactured by it for halal compliant. 16. For this purpose, it is first necessary to understand, what the term halal means. halal is an Arabic term/word that means permissible in English. In regard to the food, halal is set of standards for determining whether or not a product meets Islamic dietary restrictions. There are varying standards of halal and different understanding of halal law by the Islamic scholars, and that is why, there are multiple halal certifications. But there are three main requirements to consider halal viz. (i) the person performing action must have belief in God, (ii) the person performing action should attend to the act with proper intention and (iii) action should not harm anyone else. In a sense, halal means permitted and allowed by law Giver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rms of the DTAA. The disallowance of the said expenses for non deduction of tax at source is therefore unwarranted. 19. In view of the above, the disallowance therefore of the amount of certification and supervision paid to the IFANCA amounting to Rs.3,13,859/-is directed to be deleted. Ground no.2 is allowed. 20. Ground No.4 and 5 are as under: 4. The learned CIT(A) erred in fact and in law in charging interest u/s. 234B of the Income Tax Act, 1961. 5. The learned CIT(A) erred in fact and in law in charging interest u/s. 234D of the Income Tax Act, 1961. 21. These grounds being consequential relating to the charging of interest under section 234B/D are not dealt with by us. They are accordingly disposed off. 22. Now we take ITA No.2078/Ahd/2012 23. The ground no.1 reads as under: 1) That on facts, and in law, the learned CIT(A) has grievously erred in confirming the disallowance of Rs.5,12,500/- being fees paid to ROC. 24. The ld.counsel for the assessee fairly admitted that the issue of disallowance of expenses relating to the fees paid to ROC for increase in authorized share capital was covered against it, and therefore, did not press the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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