The Principal Commissioner of Income-tax-2 v. M and B Engineering Limited
[Citation -2020-LL-1006-29]

Citation 2020-LL-1006-29
Appellant Name The Principal Commissioner of Income-tax-2
Respondent Name M and B Engineering Limited
Court HIGH COURT OF GUJARAT AT AHMEDABAD
Relevant Act Income-tax
Date of Order 06/10/2020
Assessment Year 2013-14
Judgment View Judgment
Keyword Tags disallowance of commission • commission income • deduction of tax • foreign agent • tds
Bot Summary: 40(a)(i) of the Act for non deduction of tax on commission payable to foreign agents of Rs.4,63,62,693/- 3. Ms. Bhatt pointed out that the very same questions were proposed in the Tax Appeal No. 265 of 2019 as proposed in the present appeal. 2.The revenue has proposed the following questions of law: Whether the Appellate Tribunal had erred in law and on facts in upholding the order of the CIT(A) deleting the addition made on account of disallowance of Rs.2,93,56,350/ under section 40(a)of the Act for non deduction of tax on commission payable to foreign agents. 3.This tax appeal has something to do with the Section- 40(a)(ia) of the Act. The issue is with regard to the deletion of the addition made on account of the disallowance of Rs.2,93,56,350/ under section40(a)(ia)of the Act for non deduction of the tax of the source of commission payable to the foreign agent. 4.The ratio of the decision of this Court, which has been applied by the tribunal is that a person paying interest or any other sum to a non- resident is not liable to deduct tax if such sum is not chargeable to tax under the Act. Once an income is not chargeable to tax in India then the question of deducting TDS under the provision of section 195 of the Act does not arise.


C/TAXAP/285/2020 ORDER IN HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 285 of 2020 PRINCIPAL COMMISSIONER OF INCOME TAX-2 Versus M AND B ENGINEERING LIMITED Appearance: MRS MAUNA M BHATT(174) for Appellant(s) No. 1 for Opponent(s) No. 1 CORAM:HONOURABLE CHIEF JUSTICE MR. VIKRAM NATH and HONOURABLE MR. JUSTICE J.B.PARDIWALA Date : 06/10/2020 ORAL ORDER (PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA) 1. This Tax Appeal under Section 260A of Income Tax Act, 1961 (for short Act, 1961 ) is at instance of Revenue and is directed against order passed by Income Tax Appellate Tribunal, Ahmedabad Bench C , Ahmedabad in ITA No. 370/Ahd/2018 for A.Y. 2013- 14. 2. Revenue has proposed following two questions for consideration of this Court. (A) Whether Appellate Tribunal has erred in law and on facts in deleting disallowance of commission to foreign agents amounting to Rs. Page 1 of 4 Downloaded on : Thu Oct 08 10:33:38 IST 2020 C/TAXAP/285/2020 ORDER 463,62,693/- paid without properly appreciating facts that assessee was unable to lead evidence to prove factum of actual rendering of services by such recipients? (B) Whether Appellate Tribunal had erred in law and on facts in upholding order of CIT (A) deleting addition made on account of disallowance u/s. 40(a)(i) of Act for non deduction of tax on commission payable to foreign agents of Rs.4,63,62,693/-? 3. We have heard Ms. Mauna Bhatt, learned Senior Standing Counsel for Revenue. 4. Ms. Bhatt fairly pointed out that in case of very same assessee with respect to earlier Assessment Year, Tax Appeal No. 265 of 2019 preferred by Revenue came to be dismissed by this Court vide order dated 09.07.2019. Ms. Bhatt pointed out that very same questions were proposed in Tax Appeal No. 265 of 2019 as proposed in present appeal. Tax Appeal No. 265 of 2019 came to be dismissed in following terms:- Page 2 of 4 Downloaded on : Thu Oct 08 10:33:38 IST 2020 C/TAXAP/285/2020 ORDER 1. This tax appeal under Section 260A of Income Tax Act, 1961[for short Act, 1961] is at instance of revenue and is directed against order passed by Income Tax Appellate Tribunal,Ahmedabad Bench 'D'. Ahmedabad in ITA No.355/AHD/2018, dated30/11/2018 for A.Y 201415.2.The revenue has proposed following questions of law: Whether Appellate Tribunal had erred in law and on facts in upholding order of CIT(A) deleting addition made on account of disallowance of Rs.2,93,56,350/ under section 40(a) (ia)of Act for non deduction of tax on commission payable to foreign agents. 3.This tax appeal has something to do with Section- 40(a)(ia) of Act. issue is with regard to deletion of addition made on account of disallowance of Rs.2,93,56,350/ under section40(a)(ia)of Act for non deduction of tax of source of commission payable to foreign agent. questions of law as proposed by revenue has no longer integreta in view of decision of this Court in case PR CIT Vs. MGM Exports rendered in Tax Appeal No.309 of2018, dated 11/04/2018.4.The ratio of decision of this Court, which has been applied by tribunal is that person paying interest or any other sum to non- resident is not liable to deduct tax if such sum is not chargeable to tax under Act. Ultimately, tribunal Page 3 of 4 Downloaded on : Thu Oct 08 10:33:38 IST 2020 C/TAXAP/285/2020 ORDER held as under: principles laid down in above cited judgments are squarely applicable to instant facts of case. Thus, it can be safely concluded that Commission income in hands of foreign agent is not chargeable to tax in India in given facts & circumstances. Once income is not chargeable to tax in India then question of deducting TDS under provision of section 195 of Act does not arise. Accordingly, we do not find any reason to interfere in order of ld. CITA. Hence ground of appeal raised by revenue is hereby dismissed. 5.Having regard to findings recorded by tribunal relying on decision of this Court referred to above, we are of view that no error much less error of law could be said to have been committed by tribunal in passing impugned order warranting any interference in present appeal. There is no substantial questions of law in present appeal. appeal, therefore, fails and is hereby dismissed. 5. In view of aforesaid, this appeal also fails and is hereby dismissed. (VIKRAM NATH, CJ) (J. B. PARDIWALA, J) A. B. VAGHELA Page 4 of 4 Downloaded on : Thu Oct 08 10:33:38 IST 2020 Principal Commissioner of Income-tax-2 v. M and B Engineering Limited
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