Madras High Court
The Commissioner Of Income Tax vs M/S.Laserwords Us Inc on 22 October, 2024
Author: R.Suresh Kumar
Bench: R.Suresh Kumar, C.Saravanan
T.C.A.No.235 of 2024
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 22.10.2024
CORAM
THE HONOURABLE MR.JUSTICE R.SURESH KUMAR
and
THE HONOURABLE MR.JUSTICE C.SARAVANAN
T.C.A.No.235 of 2024
The Commissioner of Income Tax,
International Taxation - 1(2),
Chennai. ... Appellant
-Vs-
M/s.Laserwords US Inc.,
C/o.SPI Technologies India Pvt. Ltd.,
"Gothi Industrial Estate",
R.S.Nos.415 & 416,
Vazhudavur,
Kurumbapet Revenue Village,
Puducherry - 605 009.
PAN:AABCL 8781F ... Respondent
PRAYER : Tax Case Appeal filed under Section 260 A of the Income Tax Act,
1961, against the order of the Income Tax Appellate Tribunal 'D' Bench,
Chennai dated 10.05.2024 in I.T(TP)A.No.45/Chny/2021 for the assessment
year 2017-18.
For Appellant : Mr.R.Karthik
Senior Standing Counsel
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1/6
T.C.A.No.235 of 2024
JUDGMENT
(Judgment of the Court was delivered by R.SURESH KUMAR, J.)
This tax case appeal has been filed against the order passed by the
Income Tax Appellate Tribunal 'D' Bench, Chennai for the assessment year
2017-18 in I.T(TP)A.No.45/Chny/2021 dated 10.05.2024.
2. The following substantial questions of law had been framed by the
appellant:
"1. Whether, on the facts and in the circumstances of
the case, the Appellate Tribunal was right in law in
concluding that the fees paid as sales is not in nature in
fee for included services?
2. Whether, on the facts and in the circumstances of the
case, the Appellate Tribunal had erred in not
appreciating that there was make available of technical
inputs by the assessee and so, the amounts received as
sales commission is in nature of Fee for included
services?
3. Whether, on the facts and in the circumstances of the
case, the Appellate Tribunal had erred in not
considering the provisions of Clause 8 of the Article 12
of India - US DTAA which are applicable in the
assessee case?"
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3. It is brought to our notice that, at least two decisions one by the
Hon'ble Supreme Court of India and another by the Division Bench of this
Court have been rendered already on the same issue.
4. It is fairly submitted by the learned Senior Standing Counsel appearing
for the appellant / Revenue that, the issue is covered by a decision of the Hon'ble
Supreme Court in the case of Commissioner of Income Tax Vs. Toshoku
Ltd., reported in [1980] 125 ITR 525 (SC) as well as the Division Bench of this
Court in the case of Evolv Clothing Co.(P). Ltd., Vs. The Assistant
Commissioner of Income Tax, Company Circle-II(1), Chennai reported in
[2018] 94 taxmann.com 449 (Madras).
5. The Hon'ble Supreme Court in Toshoku Ltd., case cited supra has
held as follows:
"The second aspect of the same question is whether
the commission amounts credited in the books of the
statutory agent can be treated as incomes accrued, arisen,
or deemed to have accrued or arisen in India to the non-
resident assessees during the relevant year. This takes us
to S.9 of the Act. It is urged that the commission amounts
should be treated as incomes deemed to have accrued or
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arisen in India as they, according to the Department, had
either accrued or arisen through and from the business
connection in India that existed between the non-resident
assessees and the statutory agent. This contention
overlooks the effect of Cl. (a) of the Explanation to Cl. (i)
of sub-s. (1) of S. 9 of the Act which provides that in the
case of a business of which all the operations are not
carried out in India, the income of the business deemed
under that clause to accrue or arise in India shall be only
such part of the income as is reasonably attributable to the
operations carried out in India. If all such operations are
carried out in India, the entire income accruing therefrom
shall be deemed to have accrued in India. If, however, all
the operations are not carried out in the taxable
territories, the profits and gains of business deemed to
accrue in India through and from business connection in
India shall be only such profits and gains as are
reasonably attributable to that part of the operations
carried out in the taxable territories. If no operations of
business are carried out in the taxable territories, it
follows that the income accruing or arising abroad
through or from any business connection in India cannot
be deemed to accrue or arise in India. (See CIT v.
R.D.Aggarwal and Co. [1965] 56 ITR 20 (SC) and
Carborundum Co. v. CIT [1977] 108 ITR 335 (SC) which
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are decided on the basis of s.42 of the Indian I.T. Act,
1922, which corresponds to s. 9(1)(i) of the Act."
6. In view of the law having been settled, we are of the view that, the
substantial questions of law raised by the appellant Revenue in this appeal are
to be answered in favour of the assessee and against the Revenue by following
the said decision. Hence, this tax case appeal is decided with the aforesaid
substantial questions of law in favour of the assessee and against the Revenue
and accordingly, this Tax Case Appeal is dismissed. However, there shall be no
order as to costs.
(R.S.K., J.) (C.S.N., J.)
22.10.2024
NCC : Yes / No
Index : Yes / No
Speaking Order : Yes / No
vji
To
The Income Tax Appellate Tribunal 'D' Bench,
Chennai.
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R.SURESH KUMAR, J.
and
C.SARAVANAN, J.
vji
22.10.2024
https://www.mhc.tn.gov.in/judis
