Pramod Export Pvt. Ltd.,, New Delhi vs Department Of Income Tax

Deputy Commissioner of Vs. M/s Promed Exports Pvt.Ltd., Income Tax, 208, Ashirwad Complex, Circle- Circle-14(1), D-1, Green Park, New Delhi. New Delhi - 110 016. PAN : AAACP1612Q. (Appellant) (Respondent)

Appellant by : Shri Vikram Sahay, Sr.DR. Respondent by : Shri V.P. Gupta, Advocate.

Date of hearing : 22.04.2015 Date of pronouncement : 06.05.2015

ORDER

PER G.C. GUPTA, GUPTA, VP :

This appeal by the Revenue for the assessment year 2008-09 is directed against the order of learned CIT(A)-XVII, New Delhi dated 29th April, 2013.

2. Ground No.1 and 2 of the Revenue's appeal read as under:-

"1. The ld.CIT(A) has erred in law and on the facts in deleting the disallowance of Rs.13,39,707/- made by the AO on account of non-deduction of tax out of payments made to NRIs.

2. The ld.CIT(A) has erred in law and on the facts in not appreciating the fact that provisions of section 195 of Income Tax Act, 1961 are squarely applicable on the assessee company."

2 ITA-4250/Del/2013

3. Learned DR submitted that the learned CIT(A) has not given any reason for deciding the issue in favour of the assessee. He referred to paragraph 6.2 of the appellate order passed by the CIT(A) in which the disallowance made under Section 40(a)(i) was deleted by him on the only plea that there is no mention in the assessment order that the payments made to non-residents in USA were for services rendered in India or these payments were taxable in India. He referred to the relevant portion of the assessment order in support of the case of the Revenue in which the Assessing Officer has passed a detailed order while making the disallowance. He relied on the order of the Assessing Officer.

4. Learned counsel for the assessee submitted that the issue has been discussed in detail by the learned CIT(A). He submitted that the assessee has claimed before the Assessing Officer that these services do not fall within the definition of fees for included services under Article 12 of the DTAA with USA. He submitted that this fact has been recorded by the Assessing Officer in paragraph 6.1 of the assessment order. He also referred to the relevant portion of the appellate order passed by the learned CIT(A) wherein the issue was discussed in detail by him and the decisions of the Hon'ble Court applicable to the facts of the case have been discussed. He relied on the order of the learned CIT(A).

5. We have considered the rival submissions and have perused the order of the Assessing Officer and the CIT(A). We find that the assessee has claimed at the stage of assessment itself that these services do not fall within the definition of fees for included services under Article 12 of the DTAA with USA. The Assessing Officer has made the disallowance based on the decision of Delhi Tribunal in the case of Van OORD ACZ India (P) Ltd. Vs. CIT which was overruled by the decision of Hon'ble Delhi High Court reported in 323 ITR 130 3 ITA-4250/Del/2013

(Delhi). Learned CIT(A) has recorded the decision of Hon'ble Supreme Court in GE India Technology Centre P.Ltd. Vs. CIT and Another - [2010] 327 ITR 456 (SC) wherein it is held that provisions of Section 195(2) have no application in cases where payments to non-residents are not chargeable to tax in India. The CIT(A) concluded that only if the amount paid to non-residents is taxable in India, the obligation to deduct tax occurs and when the amount is not taxable in India, provisions of Section 195 or 40(a)(i) have no application. In these facts, learned CIT(A) concluded that no case had been made out by the Revenue that the payment of ` 13,39,707/- was made to non-residents in USA for services rendered in India or these payments were liable to be taxed in India. There being no mistake in the order of learned CIT(A) on this issue, the same is confirmed and grounds of appeal No.1 & 2 of the Revenue are dismissed.

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

Decision pronounced in the open Court on 6th May, 2015.

Sd/- Sd/- (INTURI RAMA RAO) RAO) (G.C. (G.C. GUPTA) GUPTA) ACCOUNTANT MEMBER VICE PRESIDENT

VK.

Copy forwarded to: -

1. Appellant : Deputy Commissioner of Income Income Tax, Circle-

Circle-14(1), New Delhi.

2. Respondent : M/s Promed Exports Pvt.Ltd., 208, Ashirwad Complex, D-1, Green Park, New Delhi - 110 016.

3. CIT

4. CIT(A)

5. DR, ITAT

Assistant Registrar