Income Tax Appellate Tribunal - Mumbai
Reliane General Insurance Co. Ltd., ... vs D.C.I.T. Circle 3(3), Mumbai on 6 December, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCHES "D", MUMBAI
BEFORE SHRI R.C. SHARMA (AM) AND SHRI RAM LAL NEGI (JM)
ITA No. 2209/MUM/2012
Assessment Year: 2009-10
M/s Reliance General Insurance Co. The Dy. Commissioner of
Ltd., Income Tax,
570, Rectifier House, 1st Floor, Circle 3(3),
Naigaum Cross, Vs. Mumbai
Next to Royal Ind. Estate, Wadala (W),
Mumbai - 400031
PAN: AABCR6747B
(Appellant) (Respondent)
Assessee by : Shri Jitendra Sanghavi (AR)
Revenue by : Shri Chaitanya Anjaria (DR)
Date of Hearing: 10/09/2018
Date of Pronouncement: 06/12/2018
ORDER
PER RAM LAL NEGI, JM
This appeal has been filed by the assessee against the order dated 20.12.2011 passed by the Commissioner of Income Tax (Appeals)-7 (for short 'the CIT (A)'), Mumbai, for the assessment year 2009-10, whereby the Ld. CIT (A) has dismissed the appeal filed by the assessee against the assessment order passed u/s 143 (3) of the Income Tax Act, 1961 (for short the 'Act').
2. In the present case, the assessee filed its return of income for the assessment year under consideration declaring current year's loss of Rs.53,62,71,857/-. The AO made disallowance of Rs. 60,74,169/-u/s 40(a)(ia) of the Act, for the reason that the ITO(TDS)-2 Mumbai, in its order dated 31.03.2010 passed u/s 201(I)/201(IA) of the Act has observed that in the 2 ITA No. 2209 /MUM/2012 Assessment Year: 2009-10 financial year 2008-09 relevant to the assessment year under consideration, the assessee had made certain payments to M/s Fair Isaac International Corporation, USA towards 'license fees' and fees for training and maintenance and the ITO after considering the submissions made by the assessee, held the assessee as assessee in default for not deducting tax in respect of payments made to M/s Fair Isaac Corporation. In view of the aforesaid facts, the assessee was asked to explain as to why the expenditure claimed in respect of payment made aforesaid should not be disallowed u/s 40(a)(i) of the Act. The assessee submitted that it has filed appeal against the order passed by the ITO. However, the AO rejecting the submissions disallowed the deduction claimed by the assessee in respect of payment made by the assessee on account of license fee and training and maintenance to the tune of Rs. 60,74,169/- and made addition of the said amount to the income of the assessee.
3. Against the said order, the assessee filed appeal before the Ld. CIT (A). The Ld. CIT(A) after hearing the assessee dismissed the appeal and confirmed the disallowance of Rs. 60,74,169/- made by the AO u/s 40(a)(ia) of the Act. The assessee is in appeal against the said findings of the Ld. CIT (A).
4. The assessee has challenged the impugned order passed by the Ld. CIT (A) by raising the following effective grounds:
1. "The learned Commissioner of Income Tax (Appeals)-7, Mumbai [CIT (A)] erred in confirming the disallowance u/s 40(a)(i) of the Income Tax Act amounting to Rs. 60,74,169/- in respect of license fee, training and maintenance fees.
2. The learned CIT (A) erred in relying upon the order of CIT (A) in respect of the order u/s 201(1) passed by the TDS Officer in which the appellant was held to be an assessee in default and thereby confirming the disallowance u/s 40(a)(i) of the Act.3 ITA No. 2209 /MUM/2012
Assessment Year: 2009-10 Your appellant submits that the appeal against the order of CIT (A) in the proceedings u/s 201(1) are pending before the Appellate Tribunal and therefore the disallowance u/s 40(a)(i) is wrongly confirmed and the same ought to be deleted."
5. At the outset, the Ld. counsel for the assessee submitted that the ITAT, Mumbai has allowed the appeal of the assessee filed against the order passed by the Ld. CIT (A) confirming the order passed by the AO u/s 201 (1) and 201 (IA) of the Act and set aside the findings of the Ld. CIT (A) holding that the assessee was not required to deduct tax at source while making payments to M/s Fair Isaac International Corporation, USA for grant of license to the assessee and for making payments towards maintenance fees, under the India USA Tax Treaty. The Ld. counsel further submitted that since, the ITAT has set aside the decision of the Ld. CIT(A) and held that the assessee has wrongly been held to be the assessee in default within the meaning of the provisions of section 201 of the Act, the disallowance made u/s 40(a)(ia) does not survive. The ld. counsel has also placed on record, the copy of order dated 23.08.2018 passed by the ITAT, Mumbai in ITA No. 8184/Mum/2011.
6. On the other hand, the Ld. Departmental Representative (DR) fairly admitted that the ITAT, Mumbai has set aside the order passed by the CIT (A) confirming the order passed by AO u/s 201 (1) and 201 (IA) of the Act.
7. We have carefully perused the entire material on record including the order of the coordinate Bench in the light of the submissions made by the Ld. counsel for the assessee. The coordinate Bench, vide its order dated 23.08.2018 rendered in ITA No. 8184/Mum/2011 pertaining to the assessment year under consideration has held that since the assessee was not liable to deduct tax at source in respect of payments made to Fair Isaac 4 ITA No. 2209 /MUM/2012 Assessment Year: 2009-10 International Corporation, USA for license fees and training and maintenance fees, the assessee cannot be treated as assessee in default within the meaning of section 201 of the Act. Since, the assessee was not required to deduct the tax at source, the assessee cannot be the assessee in default. Therefore, the addition of Rs. 60,74,169/- confirmed by the Ld. CIT (A) does not sustain. Hence, we allow the appeal of the assessee and set aside the order passed by the Ld. CIT (A). Accordingly, we direct the AO to delete the addition confirmed by the Ld. CIT (A) on account of disallowance made u/s 40(a)(ia) of the Act.
In the result, appeal filed by the assessee for assessment year 2009-2010 is allowed.
Order pronounced in the open court on 6th December, 2018.
Sd/- Sd/-
(R.C. SHARMA) (RAM LAL NEGI)
ACCOUNTANT MEMBER JUDICIAL MEMBER
मुंबई Mumbai; दिन ुं क Dated: 06/12/2018
Alindra, PS
आदे श प्रतितिति अग्रेतिि/Copy of the Order forwarded to :
1. अपील र्थी / The Appellant
2. प्रत्यर्थी / The Respondent.
3. आयकर आयक्त(अपील) / The CIT(A)-
4. आयकर आयक्त / CIT
5. दिभ गीय प्रदिदनदि, आयकर अपीलीय अदिकरण, मुंबई / DR, ITAT, Mumbai
6. ग र्ड फ ईल / Guard file.
आदे शानुसार/ BY ORDER, सत्य दपि प्रदि //True Copy// उि/सहायक िंजीकार (Dy./Asstt. Registrar) आयकर अिीिीय अतिकरण, मुंबई / ITAT, Mumbai