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TMI Blog2022 (10) TMI 487X X X X Extracts X X X X X X X X Extracts X X X X ..... ng condonation of delay was filed stating that appellate order was served on the assessee on 20.4.2012 and the appeal before ITAT was required to be filed on or before 19.6.2012, but was filed on 20.7.2012 i.e. after a delay of one month and one day, for the reason that concerned person of the assessee, handling tax matter was placed in Mumbai and in Vadodara where the order of the assessee had been served on the assessee there was only one person handling administrative work. Also the directors were of more than 75 years of age, and therefore, there was no proper staff available to forward the order of the ld.CIT(A) to Mumbai so as to facilitate the filing of the appeal before the Tribunal in 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d under section 147 of the Act. Its challenge being on the ground that reopening of the case was a mere change of opinion; that the issue of disallowance under section 40(a)(ia) of the Act was examined by the AO in the assessment framed under section 143(3) of the Act and reopened for the same reason which tantamounted to change of opinion, therefore the same is not allowable as per the law. 9. We have gone through the order of the ld.CIT(A) in this regard on which the ld.DR also relied on heavily at para 4.2 to 4.4 of the order as under: 4.2 I have considered the facts of the case, observation of the AO as well as the submission of the AR. So far as the Reliance upon the 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 reo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome or that he had formed any opinion in respect thereof. If looking back it appears to the Assessing Officer (albeit within four years of the end of the relevant assessment year) that a particular item even though reflected on tlic rccuid was not subjecLea to assessment and was left out while working out the taxable income and the tax payable thereon, i.e., while making the final assessment order, that would enable him to initiate the proceedings irrespective of the question of non-disclosure of material facts by the assessee. In fact, if there is material placed on record which would show existence of income chargeable to tax and which ordinarily ought to have 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered and there is proper applicability of mind for ascertainment of the amount of taxable income and of the tax payable thereon, then in the absence of any error or mistake being discovered or found, the Assessing Officer later on cannot merely for the sake of giving a different opinion, change the earlier opinion. However, in cases where an error or mistake is detected, it can never be said that there is only a mere change of opinion. The mistake or error which is detected and which constituted a valid decision or cause to form a belief in the first assessment as a result of which the income has escaped assessment, would constitute a reason to believe 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'b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he present case, therefore, has been rightly held to be not sustainable in law by the ld.CIT(A). The order of theld.CIT(A), upholding the validity of the assessment framed under section 147 of the Act is upheld. Ground no.1 is dismissed. 11. Ground no.2 reads as under: "2. The learned CIT(A) erred in fact and in law in confirming the action of AO by making disallowance of Rs.3,13,859/- on the ground that the Appellant failed to deduct TDS and therefore deduction of the said sum cannot be allowed while computing the total income." 12. In this regard, the ld.counsel for the assessee pointed out that the assessee is aggrieved by the disallowance 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting therefrom that the Ld.CIT(A) went through the procedure adopted by IFANCA for certification of halal and found that it involved transfer of technical knowledge so that the Plant becomes Halal compliant. He pointed out that the ld.CIT(A) went through website of "IFANCA" which reiterated his finding that "IFANCA" was "making available" technical expertise to the assessee. The finding of the ld.CIT(A) in this regard are reproduced hereunder: "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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Certificate issued by this organisation states that the Islamic Food and Nutrition Council of America, IFANCA, hereby certifies that the under mentioned products have been produced under IFANCA supervision and are free of any Haram and Mushboob ingredients, byproducts or contamination. These products are certified to be Halal (lawful) and fit for Muslim consumption. The procedure for Halal Product Certification / Supervision 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 Ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, so there is no concern of competitors learning, anything about the product(s) involved in the certification process. Further, IFANCA halal certification provides an independent third party quality assurance step valued by conscientious consumers. IFANCA has developed a documented procedure for producing halal products. The procedure is consistent with 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 certif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tification involved making available to the assessee specific methods to be adopted in the manufacturing process so as to ensure the products manufactured being halal, and therefore, it involved making available technical knowledge to the assessee so as to be treated as "included services" as per Article 14(2) of the DTAA with USA for the purpose 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vailable to the assessee, is incorrect on facts. The payment made by the assessee to IFANCA therefore for halal certification and supervision charges, amounting to Rs.3,13,859/- did not qualify as "Included Services" in terms of Article 12(4) of the DTAA with USA and the said payment, we hold, did not qualify for withholding tax in terms 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 griev ..... X X X X Extracts X X X X X X X X Extracts X X X X
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