Kamil Leathers, Chennai vs Department Of Income Tax

The Assistant Commissioner M/s Kamil Leathers, of Income Tax, v. 23, Karpura Street, Business Circle - XI, Periamet, Chennai - 600 003. Chennai - 600 006. PAN : AADFK 4054 B (अपीलाथ,/Appellant) (-.यथ,/Respondent)

अपीलाथ, क/ ओर से/Appellant by : Shri N. Madhavan, JCIT -.यथ, क/ ओर से/Respondent by : Shri B.Raghav Prasad, CA

सन ु वाई क/ तार ख/Date of Hearing : 25.05.2015 घोषणा क/ तार ख/Date of Pronouncement : 19.06.2015

आदे श /O R D E R

PER N.R.S. GANESAN, JUDICIAL MEMBER:

This appeal of the Revenue is directed against the order of

the order of the Commissioner of Income Tax (Appeals) - IV,

Chennai, dated 25.04.2014 and pertains to assessment year 2011-

12. 2 I.T.A. No.2260/Mds/14

2. Shri N. Madhavan, the Ld. Departmental Representative,

submitted that the only issue arises for consideration is with regard

to addition of `26,37,197/- made on account of non-deduction of tax

at source towards the payment made by the assessee under

Section 40(a)(ia) of the Income-tax Act, 1961 (in short "the Act").

The Ld. D.R. further pointed out that the Assessing Officer found

that the non-resident collected all information about the fashion

trend and communicated the same to the assessee so as to enable

the assessee to develop its product according to the latest trend

prevailing outside the county. The assessee has also made

arrangements for collection of orders outside the country and paid

commission. Since the assessee received information with regard

to latest fashion trend, which was at last for development of its

production, according to the Ld. D.R., what was paid by the

assessee was not a mere commission it would amount to fees for

technical service. Therefore, the CIT(Appeals) is not correct in

allowing the claim of the assessee.

3. On the contrary, Shri B. Raghav Prasad, the Ld.

representative for the assessee, submitted that mere furnishing of

information about latest trend in the fashion does not amount to

providing any technical service. According to the Ld. 3 I.T.A. No.2260/Mds/14

representative, what was paid by the assessee is a commission for

the orders procured by the non-resident outside India. Therefore,

the CIT(Appeals) has rightly allowed the claim of the assessee. The

Ld. representative placed his reliance on the decision of this Bench

of the Tribunal in ACIT v. T. Abdul Wahid Tanneries Pvt. Ltd. in

I.T.A. No.2123/Mds/2013 dated 2.06.2014 and submitted that on

identical set of facts, this Tribunal found that the assessee is not

liable to deduct tax. The Ld. representative has also filed a copy of

the agreement entered between the assessee and the non-resident

for the services said to be provided to the assessee.

4. We have considered the rival submissions on either side and

perused the relevant material on record. The only objection of the

Revenue is that latest trend in the fashion was communicated to the

assessee so as to enable the assessee to produce/manufacture its

products in tune with latest trend which prevailed in that part of the

country. This Tribunal is of the considered opinion that mere

communication of latest trend/fashion prevailed in a particular

country cannot amount to providing technical service. Technical

service is something which goes in the manufacturing process by

applying the techniques provided by the non-resident. In this case,

no techniques were provided by the non-resident and what was 4 I.T.A. No.2260/Mds/14

communication is, admittedly, fashion/trend prevailing outside India.

Therefore, this Tribunal is of the considered opinion that this does

not amount to providing any technical service. Therefore, this

Tribunal do not find any infirmity in the order of the CIT(Appeals)

and accordingly the same is confirmed.

5. In the result, the appeal of the Revenue is dismissed.

Order pronounced on 19th June, 2015 at Chennai.

sd/- sd/- (A.Mohan Alankamony) (N.R.S. Ganesan) (ए. मोहन अलंकामणी) (एन.आर.एस. गणेशन) लेखा सद य/Accountant Member या यक सद य/Judicial Member

चे नई/Chennai, th 5दनांक/Dated, the 19 June, 2015.

Kri.

आदे श क/ - त6ल7प अ8े7षत/Copy to: 1. अपीलाथ,/Appellant 2. -.यथ,/Respondent 3. आयकर आय9 ु त (अपील)/CIT(A)-IV, Chennai 4. आयकर आय9 ु त/CIT-IX, Chennai 5. 7वभागीय - त न ध/DR 6. गाड( फाईल/GF.