Case Number: ITA 397/DEL/2019
Appellant: ACIT, Circle-10(2), New Delhi
Respondent: Graziano Transmission India Pvt. Ltd., New Delhi
Assessment Year: 2014-15
Case Filed On: 2019-01-18
Order Type: Final Tribunal Order
Date of Order: 2022-04-11
Pronounced On: 2022-04-11
Result: Appeal Dismissed
The appeal was filed by the Revenue against the order of the CIT(A)-4, New Delhi, dated 10.10.2018, for the assessment year 2014-15. The primary issue in this case was the disallowance of Rs. 3,07,65,783/- on account of non-deduction of TDS on payments made to M/s Oerlikon Graziano SPA, Italy (hereafter referred to as ‘SPA’).
The Revenue filed this appeal challenging the decision of the CIT(A) to delete the disallowance of Rs. 3,07,65,783/- made by the Assessing Officer (AO) under section 40(a)(i) of the Income Tax Act, 1961 (‘the Act’). The disallowance was on account of non-deduction of TDS on payments made to SPA, which the AO treated as fees for technical services (FTS) under section 9(1)(vii) of the Act.
During the hearing held on 03.03.2022, the Revenue was represented by Shri Mrinal Kumar Das, Sr. DR, and the respondent by Shri Rishabh Malhotra, AR. The Revenue contended that the CIT(A) erred in deleting the disallowance, arguing that the services rendered by SPA included managerial, technical, and consultancy services, which fall under FTS as per section 9(1)(vii) of the Act.
The ITAT, comprising Dr. B.R.R. Kumar, Accountant Member, and Ms. Astha Chandra, Judicial Member, reviewed the submissions and facts of the case. The Tribunal noted that the issue was whether the payments made to SPA were for technical services or merely for commission.
It was observed that SPA, a tax resident of Italy, was engaged under an agreement to provide marketing and sales services outside India. The AO had disallowed the payments based on the premise that these constituted FTS. However, the CIT(A) held that the services were purely for procuring export orders, not technical services, and therefore not liable for TDS.
Given these points, the Tribunal upheld the CIT(A)’s decision to delete the disallowance of Rs. 3,07,65,783/-.
The appeal filed by the Revenue was dismissed. The ITAT confirmed that the payments made to SPA were for commission related to export orders, not for technical services, and thus not subject to TDS under section 195 of the Act.
Order Pronounced: 11.04.2022
This case underscores the importance of correctly classifying the nature of payments to foreign entities to determine TDS obligations. It also highlights the consistency of the ITAT in upholding principles based on established facts and previous rulings.
For further details, refer to the complete judgment text available in the records of the ITAT, Delhi Bench.
ITA 397/DEL/2019: ACIT vs Graziano Transmission India Pvt. Ltd. – Appeal on TDS Disallowance
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