2017 (5) TMI 469 - HC - Income Tax

Addition under Section 40(a) (i) - whether the export commission is neither royalty nor fee for technical service? - Held that - By a separate order passed in Commissioner of Income Tax- IV v. Hero Motocorp Ltd (2017 (5) TMI 435 - DELHI HIGH COURT), an identical question that arose in AY 2006-07 has been answered in the negative i.e. against the Revenue and in favour of the Assessee. - Revenue appeal dismissed.

Summary

Issues involved:
1. Appeal against ITAT orders for different assessment years.
2. Addition under Section 40(a)(i) of the Income Tax Act, 1961 for export commission.

Analysis:
1. The High Court heard appeals against ITAT orders for different assessment years: ITA No. 312 of 2015 for AY 2007-08, ITA No. 538 of 2015 for AY 2008-09, and ITA No. 118 of 2017 for AY 2009-10. The Court issued notices for specific questions related to the deletion of addition under Section 40(a)(i) of the Income Tax Act, 1961 concerning export commission. The Court's order in a separate case, Commissioner of Income Tax-IV v. Hero Motocorp Ltd, where a similar question for AY 2006-07 was decided against the Revenue, influenced the decision in the present case.

2. The main issue revolved around whether the export commission should be considered as royalty or fee for technical service under Section 40(a)(i) of the Income Tax Act, 1961. The Court, based on its previous judgment in a similar case, declined to frame any substantial question of law on this matter. The Court dismissed the appeals, stating that the question had been answered against the Revenue and in favor of the Assessee in a previous case. Therefore, the appeals were dismissed, and the addition under Section 40(a)(i) for export commission was not upheld, following the precedent set in the earlier judgment.