9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (4) TMI 34 - AT - Income TaxAddition u/s 68 towards trade creditor outstanding for payment as on 31.03.2012 as per balance sheet of the Assessee company - Commissioner deleted the addition in hand - HELD THAT - We have given our thoughtful consideration to the above factual position and determination made by the Ld. Commissioner. Before us the aforesaid facts remained un-controverted and even otherwise we do not find any material and/or any plausible reason to take a contrary view against the conclusion drawn by the ld. Commissioner. Consequently, ground no. 1 stands dismissed. TDS u/s 195 - Non-deduction of TDS qua payments of marketing expenses - HELD THAT - Commissioner while considering the aforesaid claim of the Assessee and analyzing the provisions of section 9 195 of the Act, held that the DTAA between India and Ireland provides that the profits of the foreign enterprise shall be taxable only if it had carried on business in India through a permanent establishment ( PE ) situated therein. The Ld. Commissioner also observed that FII has certified that it has no permanent establishment ( PE ) in India and is a resident of Ireland for taxation purposes. Commissioner finally concluded that there was no liability of tax on payments made for advertising services to FII. Before us the aforesaid facts remained uncontroverted and even otherwise we do not find any material and/or any reason to take a contrary view against the conclusion drawn by the ld. Commissioner. Consequently, ground no. 2 also stands dismissed.
Issues:
1. Addition of trade creditors outstanding for payment 2. Non-deduction of TDS on marketing expenses Issue 1: Addition of Trade Creditors Outstanding for Payment The Assessee filed an appeal against an order by the Commissioner of Income Tax deleting additions made by the Assessing Officer totaling ?1,64,02,845/- and ?67,68,768/-. The additions were on account of trade creditors outstanding for payment and non-deduction of TDS on marketing expenses. The Assessee argued that the trade creditors' balance included provisions for liabilities and expenses, supported by confirmations, ledger accounts, and bank statements showing payments made through banking channels. The Assessee cited judicial precedents to support their case, emphasizing that payments were made by account payee cheques and were duly recorded. The Assessee contended that since the department had accepted the trading results and purchases, the additions were unwarranted. The Commissioner agreed with the Assessee, noting the lack of effort by the AO to verify the creditors and the genuineness of purchases. The Commissioner ruled in favor of the Assessee, leading to the Revenue Department appealing the decision. Issue 2: Non-Deduction of TDS on Marketing Expenses The second ground of appeal focused on the addition of ?67,68,768/- due to non-deduction of TDS on marketing expenses, which was later deleted by the Commissioner. The Assessee argued that payments made to Facebook Ireland Inc. (FII) for advertising services were not taxable in India as FII had no permanent establishment in India, citing the India-Ireland DTAA. The Assessee relied on legal precedents, including the case of Yahoo India Pvt. Ltd. vs. DCIT, to support their position. The introduction of Equalisation Levy from June 1, 2016, was also highlighted to show that prior to this, online advertising services were not subject to TDS. The Commissioner, after considering the provisions of the Income Tax Act and the DTAA, concluded that since FII had no permanent establishment in India, there was no liability to deduct tax on payments for advertising services. The Commissioner's decision was upheld, leading to the dismissal of the Revenue Department's appeal on this ground as well. In conclusion, the Appellate Tribunal upheld the Commissioner's decision to delete the additions made by the Assessing Officer, both regarding trade creditors outstanding for payment and non-deduction of TDS on marketing expenses. The Tribunal found no grounds to overturn the Commissioner's reasoned conclusions based on the facts presented and the applicable legal provisions and precedents.
|
