Aspire Systems (India) P Ltd., Chennai vs Assessee

IN THE INCOME TAX APPELLATE TRIBUNAL "B" BENCH, CHENNAI ी ए. मोहन अलंकामणी, लेखा सद य एवं ी वी. दग ु ा$ राव, या%यक सद य केसम&

BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER

आयकर अपील सं./ITA No.1407/Mds/2013 & C.O. No.137/Mds/2013 (in I.T.A. No. 1407/Mds/2013) %नधा$रण वष$ /Assessment Year : 2009-10

The Deputy Commissioner of M/s Aspire Systems (India) P. Ltd., Income Tax, v. No.7, Trust Link Road, Company Circle - I(1), Mandaveli, Chennai - 600 034. Chennai - 600 028.

PAN : AACCA 4543 M (अपीलाथ+/Appellant) (,-यथ+/Respondent & Cross Objector)

Revenue by : Shri S. Das Gupta, JCIT Assessee by : Mrs. Jharna B. Harilal, FCA

सन ु वाई क. तार ख/Date of Hearing : 23.02.2015 घोषणा क. तार ख/Date of Pronouncement: 25.02.2015

आदे श /O R D E R

PER V. DURGA RAO, JUDICIAL MEMBER:

The appeal filed by the Revenue and the cross-objection

filed by the assessee are directed against the order dated 11-02-

2013 passed by the Commissioner of Income Tax (Appeals)-VI,

Chennai, and they relate to assessment year 2009-10. 2 I.T.A. No. 1407/Mds/2013 C.O. No. 137/Mds/2013

2. Facts are in brief that the assessee is in the business of

providing outsourced product development services. The assessee

had filed a return of income by admitting a total income of

`7,54,35,305/-. It claimed deduction under Section 10A of Income-

tax Act, 1961 (in short 'the Act') of `7,33,78,813/-. After due

process, the A.O. has completed the assessment under Section

143(3) of the Act. In the assessment order, the A.O. has observed

that it is observed from the financials that the assessee has not

deducted TDS on agency commission of `1,00,62,191/- and

consultancy charges of `4,14,42,184/-. When questioned, it was

revealed that these payments made to non-residents were deemed

to arise in India under Section 9(1)(vii) of the Act and therefore,

chargeable to tax in India. On the above observation, the A.O. by

invoking Section 40(a)(i), deleted an amount of ` 5,15,04,375/-.

3. On appeal, the Ld. CIT(Appeals) without discussing any facts

simply deleted the addition made by the A.O.

4. Revenue carried the matter in appeal before the Tribunal.

The Ld. D.R. strongly supported the order of the A.O. When the

Bench pointed out regarding payments of agency commission and

the consultancy charges, the Ld.counsel for the assessee submitted 3 I.T.A. No. 1407/Mds/2013 C.O. No. 137/Mds/2013

that the issue may be remitted back to the file of the A.O. for

verification.

5. We have heard both sides and perused the records and

gone through the orders of the authorities below. We find that

neither the A.O. nor the Ld. CIT(Appeals) discussed the factual

aspects of the issue. Therefore we set aside the order passed by

the Ld. CIT(Appeals) and remit the matter back to the file of the

A.O. to decide the issue after considering all the facts with regard to

agency commission and consultancy charges and after giving

reasonable opportunity of being heard to the assessee.

6. In sofar as the second ground raised by the Revenue with

regard to disallowance made under Section 14A of the Act is

concerned, again the authorities below have not discussed the facts

relating to the actual expenditure incurred by the assessee.

Therefore we set aside the order passed by the Ld. CIT(Appeals)

and direct the A.O. to decide this issue also afresh after examining

the facts of the case.

7. In the result, the appeal filed by the Revenue is allowed for

statistical purposes.

4 I.T.A. No. 1407/Mds/2013 C.O. No. 137/Mds/2013

8. Since the appeal is remitted back to A.O. to decide the issue

afresh, the cross-objection filed by the assessee is allowed for

statistical purposes.

9. To summarize the result, the appeal filed by the Revenue

and the cross-objection filed by the assessee are allowed for

statistical purposes.

Order pronounced on Wednesday, the 25th of February,

2015 at Chennai.

Sd/- sd/- (ए. मोहन अलंकामणी) (वी. दग ु ा$ राव) (A. Mohan Alankamony) (V. Durga Rao) लेखा सद य/Accountant Member या%यक सद य/Judicial Member

चे नई/Chennai, th =दनांक/Dated, the 25 February, 2015.

Kri.

आदे श क. ,%त?ल@प अAे@षत/Copy to: 1. अपीलाथ+/Appellant 2. ,-यथ+/Respondent

3. आयकर आयुBत (अपील)/CIT(A)-VI, Chennai

4. आयकर आयुBत/CIT-I, Chennai

5. @वभागीय ,%त%न ध/DR

6. गाड$ फाईल/GF.