IN INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI NARENDRA SINGH SAINI, HON BLE ACCOUNTANT MEMBER AND GEORGE MATHAN, HON BLE JUDICIAL MEMBER ITA 71, 76, 77, 79/PAN/2016 : (Asst. Year : 2011-12, 12-13, & 13-14) Asstt. Commissioner of Income Tax M/s V. M. Salgaonkar & Brothers (P) Ltd. Circle 2(1) Panaji. Salgaonkar House, F.L. Gomes Road, Vasco da- Gama - Goa. PAN : AAACV5950B (Appellant) (Respondent) Assessee by : Shri Percy Pardiwala, Sr. Advocate Shri Ashwin Bhobe, Advocate Department by : Shri Ramesh S Mutagar, Ld. D.R. Date of Hearing : 15/09/2016 Date of Order : 15/09/2016 ORDER PER GEORGE MATHAN, JM: These are appeals filed by revenue against order of CIT(A), Panaji 1 in ITA No 71/PAN/2016 dated 12/05/2016 for A.Y. 2011-12, ITA 76/PAN/2016 dated 12/05/2016 for A. Y. 2012-13, ITA 77/PAN/2016 dated 12/05/2016 A.Y. 2012-13 & ITA 79/PAN/2016 dated 12/05/2016 A.Y. 2013-14. Shri Ramesh S Mutagar represented on behalf of revenue and Shri Percy Pardiwala, Sr. Advocate, Shri Ashwin Bhobe, Advocate represented on behalf of assessee. 2. As issues in all these appeals are identical they are being disposed of by this common order. In revenue s appeal, revenue has raised following grounds: - -2- ITA 71, 76, 77 & 79/PAN/2016 1. Whether on facts and circumstances of case Hon ble CIT (A) is right in holding that payments made by assessee towards sales and marketing services rendered outside India are not liable for deduction of TDS by assessee. 2. appellant prays to be allowed to add vary and amend grounds of appeal at or before date of hearing. 3. At time of hearing it has specifically submitted by Ld. Sr. Counsel on behalf of assessee that grounds raised by revenue did not arise out of order of Ld. CIT (A). It was submission that there was no issue in respect of payments by assessee towards sale and marketing services rendered outside India. It was submission that assessee runs barges and ships and is doing business of mining and export of iron ores. In course of shipping ships of assessee sometimes undergo repairs and maintenance at foreign ports. payments for repairs done in respect of ships of assessee are paid for without deducting TDS as recipient was not resident in India nor was its income liable to tax in India nor did it have any permanent establishment in India. repairs and maintenance were also not in nature of any fee for technical services as they were merely repair works. It was submission that Ld. CIT (A) has deleted addition made on ground that payee company is non resident foreign company and it has not provided any services in India and therefore it cannot be said that any part of income of said company accrued or arose in India or any part of income of said company was assessable in India. It was submission that on merits issue was squarely covered by decision of Hon ble Jurisdictional High Court of Bombay at Panaji in case of CIT Vs Gujarat Reclaim and Rubber Products Ltd in ITA No. 169/2014, dated 08/12/2015 where in it has been held as under: - 5. Re:- Question (a): (a) For subject Assessment Year, Respondent-Assessee had during two Assessment Years made payment of commission to non- resident agent in respect of sales made outside India. Assessing Officer in both Assessment Years passed order disallowing -3- ITA 71, 76, 77 & 79/PAN/2016 payments made to non-resident agent under Section 40(a) (i) of Act for failure to deduct tax at source. basis of both Assessment Order disallowing expenditure is in view of fact that Circular No. 23 of 1969 and 786 of 2000 issued by CBDT which had clarified that commission paid to non-resident agent for sale does not give it rise to income had been withdrawn by Circular No.7 dated 22fld October, 2009; (b) In appeal, so far as Assessment Year 2007-08 was concerned, CIT(A) upheld order of Assessing Officer on same ground i.e. Withdrawal of earlier Circular Nos.23/1969, 786/2000 by Circular No. 7 of 2009. So far as Assessment Year 2008-09 is concerned, CIT(A) by order dated 10th October 2009 allowed Respondent-Assessees appeal. CIT(A) while allowing Respondent-Assessee s Appeal for Assessment Year 2008-09, inter alia held that commission agent did not have any business connection in India as they had no permanent establishment in India and in fact neither any income arose or accrued to non- resident agent in India. CIT(A), inter alia relied upon decision of Tribunal In DeIT v/s Ardeshi B Cursetjee & Sons Ltd. 115 TTJ 916 which held that commission paid to non-resident agent outside India for services rendered were not chargeable to tax in India. In these circumstances, CIT(A) held that there was no occasion to deduct tax at source in respect of payment made to non-resident agent; (c) Moreover, order of CIT(A) also holds that Circular No.7 of 2009 withdrawing earlier Circulars will not have retrospective effect so as to render Circular No.23 of 1965 and 786 of 2000 inoperative for Assessment Years; (d) Being aggrieved, Respondent-Assessee as well as Revenue preferred Appeal to Tribunal from order of CIT(A). In respect of order of CIT(A) for Assessment Year 2007-08 Respondent-Assessee s filed appeal, while in respect of order of CIT(A) for Assessment Year 2008-09 Revenue has filed Appeal; (e) By common Impugned order, Tribunal after considering submissions places reliance upon decision of its Co-ordinate Bench in Armayesh Global v/s. ACIT, 50 SOT 564, Delhi High Court in CIT vs. Eon 366 ad reasons recorded by CIT(A) in his order for Assessment Year 2008-09 to conclude that of non- resident commission agent cannot be as income arising or accruing in India of Section 40(a)(i) would have no Assessment Years under consideration; -4- ITA 71, 76, 77 & 79/PAN/2016 (f) grievance of Revenue is that impugned order of reproduces order of CIT(A) for Assessment Year 2008-09 which was in favour of Respondent-Assessee and approves same. This without bestowing any consideration to order passed by CIT(A) in respect of Assessment Year 2007-08 which was in favour of Revenue. In these circumstances, it is submitted that appeals warrant admission. (g) We find that common order of Tribunal while dealing with order of CIT(A) for Assessment Year 2008-09 also considers order of CIT(A) for Assessment Year 2007- 08 while dealing with Revenue s contention as reflected in orders of Assessing Officer which are similar for both Assessment Years. In fact, reasons for order of CIT(A) for Assessment Year 2007-08 are identical to Assessing Officer s orders in both Assessment Years i.e. earlier Circular Nos. 23 of 1969 and 786 of 2000 stand withdrawn by Circular No7 of 2003. Therefore, earlier Circular which cover would not be applicable/ available for Assessment Year 2007- 08 and 2008-09. In fact, CIT(A) in his order for Assessment Year 2008- 09 while allowing appeal of Respondent-Assessee places reliance upon decision p1.. Tribunal in case of Ardeshi B. Cursetjee (supra) which in turn relies upon decision of Supreme Court in CIT Ws Toshoku Ltd 125 ITR 525 wherein on almost identical facts, Apex Court held that commission earned by non- resident agent who carried on business of selling Indian goods outside India, cannot be said have deemed to be, income which has accrued and/or arisen in India. This view of that CIT(A) for Assessment Year 2008-09 was found acceptable by Tribunal in its impugned order and applied same even for Assessment Year 2007-08. In view of fact that issue stands concluded in favour of Respondent-Assessee by decision of Supreme Court in Toshoku Ltd. (supra). Revenue has not shown any change in law in subject Assessment Years which would warrant our not following Apex Court s decision; (h) Moreover, we find CBDT Circular No.23 of 1969 has been reproduced in impugned order and relevant extract reads as under: Foreign agents of Indian exports foreign agent of Indian exporter operates in his own country and no part of his income arises in India. His commission is usually remitted directly to him and is, therefore, not received by him or on his behalf in India. Such agent is not liable to income tax in India on commission. -5- ITA 71, 76, 77 & 79/PAN/2016 This Circular of 1969 was admittedly in force during two Assessment Years It was only subsequently i.e on 22nd October 2009 that earlier Circular of 1969 and its reiteration as found in Circular No.786 of 2000 were withdrawn. However, such subsequent withdrawal of earlier circular cannot have retrospective operation as held by this Court in UTI v/s. P.K.Unny and Others 249 ITR 612. (i) In view of above, not only entire issue stands concluded in favour of Respondent-Assessee in present facts by CBDT Circular Nos. 23 of 2969 and 786 of 2000 which were in force during subject Assessment Years but also by decision of Apex Court in Toshoku Ltd. (supra) in favour of Respondent- Assessee Thus, no substantial question of law arises in question framed for our consideration Accordingly, Question (a) not entertained. 4. In reply Ld. DR vehemently supported order of AO. 5. We have considered rival submission. On perusal of orders of Ld. CIT (A), it is cleared that there is no issue of payments made by assessee towards sales and marketing services rendered outside India without deducting TDS in any of years under appeal. Consequently we are of view that grounds raised by revenue in four appeals are misconstrued and liable to be dismissed and we do so. 6. Even on merits considering issue is one of repairs of ships of assessee at foreign ports it is noticed that issue is squarely covered by principles laid down in decision of Hon ble Jurisdictional High Court of Bombay at Goa in case of Gujarat Reclaim and Rubber Products Ltd referred to Supra. This being so we are of view that even on merits appeals filed by revenue is liable to be dismissed and we do so. In result appeals filed by revenue stands dismissed. Order pronounced in Open Court on 15.09.2016. Sd/- Sd/- (N.S. Saini) (George Mathan) ACCOUNTANT MEMBER JUDICIAL MEMBER Place: PANAJI - GOA Dated : 15/09/2016 *nanu* -6- ITA 71, 76, 77 & 79/PAN/2016 Copy to : (1) Appellant (2) Respondent (3) CIT concerned (4) CIT(A) concerned (5) D.R (6) Guard file By Order Assistant Registrar ITAT, Panaji Bench, Panaji Asstt. Commissioner of Income Tax, Circle 2(1) Panaji v. M/s V. M. Salgaonkar & Brothers (P) Ltd