The Pr Commissioner of Income Tax v Sesa Resources Ltd. 909-TXA68-16-J-F.doc Meena IN HIGH COURT OF BOMBAY AT GOA TAX APPEAL NO. 68 OF 2016 Principal Commissioner of Income Tax, Aayakar Bhavan , Patto Plaza, Panaji, Goa Appellant versus Sesa Goa Ltd Sesa Ghor, 20 EDC Complex, Patto, Panaji, Goa PAN No.AAACCS7101B Respondent APPEARANCES FOR APPELLANT Ms Susan Linhares, Advocate FOR RESPONDENT Mr RG Ramani, Advocate CORAM : G.S.Patel & Nutan D. Sardessai, JJ. DATED : 16th August 2017. ORAL JUDGMENT (per G.S. Patel J) 1. This is appeal by Principal Commissioner of Income Tax ( PCIT ) assailing order dated 10th September 2015 of Income Tax Appellate Tribunal ( ITAT ), Panaji Bench, Panaji, Goa in ITA No 92/PNJ/2015. Page 1 of 5 16th August 2017 Pr Commissioner of Income Tax v Sesa Resources Ltd. 909-TXA68-16-J-F.doc 2. We have today delivered judgment dismissing Tax Appeal No. 57 of 2016 (Principal Commissioner of Income Tax v Sesa Resources Ltd). In present case, three substantial questions of law are proposed. Our decision in Sesa Resources Ltd will cover third of these questions, numbered C . 3. assessee in this case, Sesa Goa Ltd ( SGL ) is, like Sesa Resources Ltd, also engaged in mining, ore exports, shipping, ship- building and sales of certain qualities of ash and coke. relevant assessment period is 2010 1011. SGL filed e-return on 14th October 2015 declaring total income of Rs 15,54,29,26,836/-. This was processed under Section 143(1) of Income Tax Act, 1961 ( Act ) and followed by notice under section 143(2). Assessing Officer ( AO ) by order dated 11th January 2013 (i) disallowed Rs.54,14,54,962 under Section 14(A); (ii) disallowed commission paid to non-residents in amount of Rs.5,07,06,761; (iii) disallowed demurrage over despatch to extent of Rs.34,85,71,032/-; (iv) disallowed claim for deduction under Section 10(B) of Rs.818,76,45,096/- and (v) disallowed additional depreciation of Rs 17,19,74,078/-. 4. SGL appealed. Commissioner of Income Tax (Appeals) ( CIT ) allowed that appeal in part. Revenue and SGL both went up in appeal to ITAT. By its order dated 10th September 2015, ITAT partly allowed Revenue s appeal. present appeal is presented against that portion of ITAT which disallowed Revenue s appeal. Page 2 of 5 16th August 2017 Pr Commissioner of Income Tax v Sesa Resources Ltd. 909-TXA68-16-J-F.doc 5. These three questions are proposed as substantial questions of law: A. Whether on facts and in circumstances of case, Hon ble ITAT is right in deleting addition of Rs.5,07,06,761 u/s. 40(a)(ia) towards payment of commission of foreign agents where TDS was not deducted ignoring decision of AAR in case of Rajiv Malhotra INRE (AAR) 284 ITR 564 and SKF Boilers and Driers Pvt Ltd, wherein it was held that commission paid to export agents is taxable in India in view of sec.5(2)(b) r.w.s. 9(1)(i) of IT Act? B. Whether on facts and in circumstances of case, Hon ble ITAT is right in deleting addition of Rs.34,85,71,032/- made u/s.40(a)(ia) r.w.s. 195(1) of IT Act towards payment of demurrage paid to non-resident buyer of iron ore on which TDS was not deducted by ignoring binding decision of jurisdiction of High Court of Bombay at Goa in case of CIT v Orient Goa Pvt Ltd (BOM) 325 ITR 554? C. Whether on facts and in circumstances of case, Hon ble ITAT is right in deleting addition made by AO on account of disallowance of additional depreciation amounting to Rs.17,19,74,078/- by ignoring decision of Hon ble Supreme Court in case of CIT v Gem India Manufacturing Co. (2001) 249 ITR 307 (SC) and Lucky Minmat (P) Ltd. v. CIT (2001) 116 Taxman 1 (SC) and also fact that activities crried out by assessee do not amount to manufacture or production as defined in section 2(29BA) of IT Act? 6. Our decision today in Sesa Resources Ltd fully covers item C . That question therefore does not arise. Page 3 of 5 16th August 2017 Pr Commissioner of Income Tax v Sesa Resources Ltd. 909-TXA68-16-J-F.doc 7. As regards proposed question A, this appears to us to be on finding of fact. question would not arise because finding of fact remained unchallenged. question of TDS on commission income paid to foreign agents and non-deduction of TDS is issue fully covered by decision of Supreme Court in GE India Technology Centre Private Limited v Commissioner of Income Tax & Anr.1 There is, in addition, decision of Division Bench of this Court in CIT v Gujarat Reclaim & Rubber Products Ltd,2 where, following Supreme Court decision in CIT v Toshoku Ltd,3 Court held that commission earned by non-resident (that is to say, foreign) agent who carried on business of selling Indian goods outside India cannot be said to be deemed income accrued or arising in India. 8. We also note observations in paragraph 6(c) of Gujarat Reclaim regarding manner in which such Income Tax Appeals are filed by revenue. 9. second question sought to be framed is about ITAT s deletion of addition of Rs 34,85,71,032/- under Section 40(a)(ia) r/w. Section 195(1) as demurrage paid to non-resident buyer of iron ore without deducting TDS. This is also fully covered by decision in GE India and assessee s reliance on decision of Bombay High Court in Commissioner of Income-Tax v Orient 1 (2010) 10 SCC 29. 2 ITA No. 2116 of 2013, decided on 8th December 2015, per MS Sanklecha & GS Kulkarni JJ. 3 125 ITR 525. Page 4 of 5 16th August 2017 Pr Commissioner of Income Tax v Sesa Resources Ltd. 909-TXA68-16-J-F.doc (Goa) Private Limited4 is misplaced for that judgment was expressly overruled by Full Bench of Bombay High Court in Commissioner of Income Tax v VS Dempo and Company Pvt Ltd.5 10. As we have noted, again there is no substantial question of law that arises. We are unable to agree with Ms Linhares for appellant that appeal deserves admission. We must agree with Mr Ramani that there is no issue here that is not either question of fact or fully covered by binding decision. appeal is accordingly dismissed. No costs. NUTAN D. SARDESSAI J. G. S. PATEL J. 4 325 ITR 554. 5 [2016] 381 ITR 303 (Bom) (FB). Page 5 of 5 16th August 2017 Principal Commissioner of Income-tax, Panaji, Goa v. Sesa Goa Ltd