PER KULDIP SINGH, JUDICIAL MEMBER : Appellant, Deputy Commissioner of Income-tax, Central Circle 7, New Delhi (hereinafter referred to as the Revenue), by filing the present appeal sought to set aside the impugned order dated 12.03.2014 passed by the Commissioner of Income-tax (Appeals)-XXV, New Delhi, for the Assessment Year 1998-99 on the grounds inter alia that :-
1. The order of Ld. CIT (A) is not correct in law and facts. ITA No.3630/Del./2014
2. On the facts and circumstances of the case the Ld. CIT (A) has erred in deleting the addition of Rs.4,30,21,774/- on account of profit earned from foreign operations received from permanent establishment in Russia.
3. The appellant craves leave to add, amend any/all the grounds of appeal before or during the course of hearing of the appeal.
3. Briefly stated the facts necessary for adjudication of the controversy at hand are : during the scrutiny proceedings, Assessing Officer noticed from the annual report that the assessee company has earned profit from foreign operation to the tune of Rs.4,30,21,774/- during the year under assessment. AO by further noticing that the assessee company has never been permitted by the Reserve Bank of India (RBI) for any manufacturing activities in the foreign country except for trading activities in Russia and Germany. AO proceeded to observe that since no manufacturing activities have been permitted / carried out in Russia and Germany, the assessee company has not incurred any expenses on account of manufacturing in those countries and thereby disallowed the manufacturing expenses material consumed by the assessee debited to the profit & loss account and made addition thereof to the income of the assessee.
4. Assessee carried the matter before the ld. CIT (A) by way of an appeal who has allowed the appeal. Feeling aggrieved, the ITA No.3630/Del./2014 Revenue has come up before the Tribunal by way of challenging the impugned order passed by ld. CIT (A).
5. We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case.
6. Ld. DR for the Revenue challenging the impugned order passed by the ld. CIT (A) relied upon the order passed by AO.
7. However, on the other hand, ld. AR for the assessee challenging the assessment order supported the impugned order passed by the ld. CIT (A) on the ground that the issue in controversy has already been decided in favour of the assessee in assessees own case in AY 1997-98 which has been affirmed by the Tribunal vide order dated 05.12.2013 in ITA No.3323/Del/2013. The ld. AR for the assessee further contended that this issue has already been set at rest by the Honble Delhi High Court in case of M/s. Mideast India Ltd. for AY 1998-99 in ITA 1349/2009 order dated 15.12.2009.
8. From the grounds of appeal, arguments addressed by ld. Authorized Representatives of the parties to the appeal and facts & circumstances of the case, the sole question arises for determination in this case is :- ITA No.3630/Del./2014 as to whether the profit earned by the assessee to the tune of Rs.4,30,21,774/- from foreign operation is taxable in India, the assessee company is having a foreign permanent establishment and has not incurred any expenses on the manufacturing activities in Russia and Germany?
9. Undisputedly, the issue in controversy raised in present appeal by the Revenue has already been set at rest by the Honble Delhi High Court in case of M/s. Mideast India Ltd. for AY 1998- 99, which has further been followed by the coordinate Bench of the Tribunal in ITA No.3323/Del/2013 order dated 05.12.2013 in assessees own case for AY 1997-98. For facility of reference, findings returned by the coordinate Bench of the Tribunal by relying upon the order passed by Honble Delhi High Court in case of M/s. Mideast India Ltd. (supra) are reproduced as under :-
6. Having considered the matter, we find that the Hon'ble Delhi High Court in the case of Mideast India Ltd. for Assessment Year 1998-99 has held as follows:- "ITA NO.1349/2009 In the detailed order passed by the Income Tax Appellate Tribunal, all aspects of the matter are duly considered, holding that the appellant, which is permanent establishment in USSR (since the case relates to the year 1991) and the income earned by the assessee company in USSR would not be taxable in India by virtue of Article 7 of Indo-USSR Double Taxation Avoidance Act (DTAA). It is also recorded that the assessee paid the tax in USSR for the relevant assessment year. Further finding of fact, which is noticed is that the Tribunal had decided the similar issue in assessee's own case for the assessment years 1991- ITA No.3630/Del./2014 92, 1992-93 & 1993-94. Though the Department had filed Reference Petitions against that decision of the Tribunal, learned counsel for the assessee informs us that those References were returned unanswered by this Court. We also find that the Tribunal has relied upon the judgment of the Supreme Court in the case of PAVL Kulandagan Chettiar vs. ITO, [267 ITR 654 J. Therefore, no substantial question of law arises in this appeal, which is accordingly dismissed. Sd/- A.K. SIKRI, J. Sd/- SIDDHARTH MRIDUL, J."
10. So, following the decision rendered by the coordinate Bench of the Tribunal in assessees own case for AY 1997-98, no dispute left to be adjudicated and as such, income earned by the assessee company in USSR is not taxable in India under section 7 of Indo- USSR Double Taxation Avoidance Act (DTAA). So, in these circumstances, we find no illegality or perversity in the impugned order passed by the ld. CIT (A), hence present appeal filed by the Revenue is hereby dismissed. Order pronounced in open court on this 23RD day of August, 2017. SD/- SD/- (G.D. AGRAWAL) (KULDIP SINGH) PRESIDENT JUDICIAL MEMBER Dated the 23rd day of August, 2017 ITA No.3630/Del./2014 Copy forwarded to: 1.Appellant 2.Respondent 3.CIT 4.CIT(A)-1, New Delhi. 5.CIT(ITAT), New Delhi. AR, ITAT NEW DELHI.
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