Appeal details
Counselvise Citation
[2013] 122 COUNSELVISE.COM (IT) 8494 (ITAT-COCHIN)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 6 month(s) 28 day(s)
Appellant
Respondent
Appeal Type
Cross Objection
Pronouncement Date
05-04-2013
Appeal Filed By
Assessee
Order Result
Dismissed
Bench Allotted
DB
Assessment Year
2005-2006
Appeal Filed On
07-09-2011
Judgement Text
1 ITA NO. 430 TO 435/COCH/2011 CO NOS. 23 TO 28/COCH/2011 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKA RAN(AM) I.T.A NO. 430 TO 435/COCH/2011 (ASSESSMENT YEARS 2003-04 TO 2008-09) ITO (INT.TAXATION)-II VS M/S M FAR HOTELS LTD KOCHI NH-47, BY-PASS KUNDANNUR JUNCTION KOCHI-34 PAN : CHNMO1094C (APPELLANT) (RESPONDENT) C.O. NOS 23 TO 28/COCH/2011 (ARISING OUT OF I.T.A NO. 430 TO 435/COCH/2011) (ASSESSMENT YEARS 2003-04 TO 2008-09) M/S M FAR HOTELS LTD VS ITO (INT.TAXATION)-II KUNDANNUR JUNCTION, KOCHI-34 KOCHI (CROSS OBJECTOR) (RESPONDENT) REVENUE BY : SHRI M ANIL KUMAR, C.I.T RESPONDENT BY : SHRI C KRISHNAMOORTHY DATE OF HEARING : 02-04-2013 DATE OF PRONOUNCEMENT : 05-04-2013 2 ITA NO. 430 TO 435/COCH/2011 CO NOS. 23 TO 28/COCH/2011 O R D E R PER N.R.S. GANESAN (JM) ALL THE APPEALS OF THE REVENUE ARE DIRECTED AGAINS T THE INDEPENDENT ORDERS OF CIT(A)-III, KOCHI DATED 30-11-2010 FOR TH E ASSESSMENT YEARS 2003- 04 TO 2008-09. THE TAXPAYER HAS ALSO FILED CROSS O BJECTIONS AGAINST THE VERY SAME ORDERS OF C.I.T.(A). THEREFORE, WE HEARD ALL THE APPEALS OF THE REVENUE AND THE CROSS OBJECTIONS OF THE TAXPAYER TO GETHER AND DISPOSE OF THE SAME BY THIS COMMON ORDER. 2. THE ONLY ISSUE ARISES FOR CONSIDERATION IS TREAT ING THE TAXPAYER AS ASSESSEE IN DEFAULT U/S 201(1) AND LEVY OF INTERE ST U/S 201(1A) OF THE ACT. 3. SHRI ANIL KUMAR, THE LD.DR SUBMITTED THAT THE TA XPAYER HAD TO DEDUCT TAX U/S 195 OF THE ACT @10.5% INCLUSIVE OF SURCHARG E. HOWEVER, SURCHARGE PORTION WAS NOT TAKEN INTO CONSIDERATION WHILE DEDU CTING THE TAX. ACCORDING TO THE LD.DR UNDER THE INCOME-TAX ACT, TH E TAXPAYER IS EXPECTED TO DEDUCTED TAX @10.5% AFTER TAKING INTO CONSIDERAT ION SURCHARGE. 3 ITA NO. 430 TO 435/COCH/2011 CO NOS. 23 TO 28/COCH/2011 THEREFORE, THE CIT(A) IS NOT CORRECT IN DELETING TH E ADDITION BY FOLLOWING THE DTAA. 4. ON THE CONTRARY, SHRI KRISHNAMURTHY, THE LD.REPR ESENTATIVE FOR THE TAXPAYER SUBMITTED THAT THE TAXPAYER HAS PAID MANAG EMENT FEE, INTEREST, ETC. TO A RESIDENT OF FRANCE. ACCORDING TO THE LD. REPRESENTATIVE, THERE WAS AN AGREEMENT BETWEEN GOVERNMENT OF INDIA AND GOVERN MENT OF FRANCE FOR AVOIDING DOUBLE TAXATION. ACCORDING TO THE LD.REPR ESENTATIVE, WHENEVER, THERE IS A DOUBLE TAXATION AGREEMENT BETWEEN TWO SO VEREIGN COUNTRIES, THE PROVISIONS OF DTAA WOULD PREVAIL OVER THE INDIAN IN COME-TAX ACT. ACCORDING TO THE LD.REPRESENTATIVE, DOUBLE TAXATION AVOIDANCE AGREEMENT BETWEEN INDIA AND FRANCE DOES NOT SAY ANYTHING ABOU T INCLUSION OF SURCHARGE FOR THE PURPOSE OF DEDUCTION OF TAX. THE REFORE, DOUBLE TAXATION AVOIDANCE AGREEMENT IS MORE BENEFICIAL TO THE TAXPA YER THAN THE INDIAN INCOME-TAX ACT. IN VIEW OF SECTION 90(2) OF THE AC T, THE LD.REPRESENTATIVE SUBMITTED THAT BY FOLLOWING THE PROVISIONS OF THE D TAA, THE TAXPAYER HAS DEDUCTED TAX ONLY THE TAX PORTION WITHOUT INCLUDING THE SURCHARGE. THE CIT(A), ACCORDING TO THE LD.REPRESENTATIVE, DELETED THE ADDITION TO THE TAX 4 ITA NO. 430 TO 435/COCH/2011 CO NOS. 23 TO 28/COCH/2011 LIABILITY TO THE EXTENT OF ADDITION MADE FOR SURCHA RGE AND EDUCATION CESS AS PER THE RATE APPLICABLE UNDER THE DTAA. THEREFORE, THE REVENUE MAY NOT HAVE ANY GRIEVANCE AT ALL. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. ADMITTED LY, THE MANAGEMENT FEE, INTEREST, ETC. ARE PAID TO A RESIDENT OF FRANC E. IT IS ALSO NOT IN DISPUTE THAT THERE WAS AN AGREEMENT BETWEEN THE GOVERNMENT OF INDIA AND GOVERNMENT OF FRANCE FOR AVOIDANCE OF DOUBLE TAXATI ON. IT IS ALSO NOT IN DISPUTE THAT THE DOUBLE TAXATION AVOIDANCE AGREEMEN T BETWEEN THE GOVERNMENT OF INDIA AND FRANCE DOES NOT SAY ANYTHIN G ABOUT INCLUSION OF SURCHARGE AND EDUCATION CESS FOR THE PURPOSE OF DED UCTION OF TAX AT SOURCE. THEREFORE, THERE IS AN APPARENT CONFLICT BETWEEN TH E INCOME-TAX ACT AND DTAA BETWEEN THE TWO SOVEREIGN COUNTRIES WITH REGAR D TO DEDUCTION OF TAX AT SOURCE ON SURCHARGE AND EDUCATION CESS. IN THES E CIRCUMSTANCES, THE QUESTION ARISES FOR CONSIDERATION IS WHETHER THE PR OVISIONS OF INDIAN INCOME-TAX ACT WOULD PREVAIL OVER THE DOUBLE TAXATI ON AVOIDANCE AGREEMENT BETWEEN THE TWO SOVEREIGN COUNTRIES. 5 ITA NO. 430 TO 435/COCH/2011 CO NOS. 23 TO 28/COCH/2011 6. WE HAVE CAREFULLY GONE THROUGH THE PROVISIONS OF SECTION 90(2) OF THE ACT WHICH READS AS FOLLOWS: (2) WHERE THE CENTRAL GOVERNMENT HAS ENTERED INTO AN AGREEMENT WITH THE GOVERNMENT OF ANY COUNTRY OUTSID E INDIA OR SPECIFIED TERRITORY OUTSIDE INDIA, AS THE CASE M AY BE, UNDER SUB-SECTION (1) FOR GRANTING RELIEF OF TAX, OR AS T HE CASE MAY BE, AVOIDANCE OF DOUBLE TAXATION, THEN, IN RELATION TO THE ASSESSEE TO WHOM SUCH AGREEMENT APPLIES, THE PROVISIONS OF T HIS ACT SHALL APPLY TO THE EXTENT THAT ARE MORE BENEFICIAL TO THAT ASSESSEE. IN VIEW OF THE ABOVE, IT IS OBVIOUS THAT IN RESPECT OF A TAXPAYER TO WHOM THE DOUBLE TAXATION AVOIDANCE AGREEMENT APPLIES, THE PR OVISIONS OF THE INDIAN INCOME-TAX ACT SHALL APPLY TO THE EXTENT THEY ARE M ORE BENEFICIAL TO THAT TAXPAYER. IN OTHER WORDS, IF THE PROVISIONS OF DTA A ARE MORE BENEFICIAL TO THE TAXPAYER, THEN THE PROVISIONS OF DTAA WOULD PRE VAIL OVER THE INDIAN INCOME-TAX ACT. SINCE THE DTAA IS SILENT ABOUT THE SURCHARGE AND EDUCATION CESS FOR THE PURPOSE OF DEDUCTION OF TAX AT SOURCE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE TAXPAYER MAY TAKE ADVAN TAGE OF THAT PROVISION IN THE DTAA FOR DEDUCTION OF TAX. THE CIT(A) HAS O NLY DELETED THE TAX 6 ITA NO. 430 TO 435/COCH/2011 CO NOS. 23 TO 28/COCH/2011 COMPONENT TO THE EXTENT OF SURCHARGE AND EDUCATION CESS AT THE RATE APPLICABLE UNDER THE DTAA. THEREFORE, THIS TRIBUNA L DO NOT FIND ANY INFIRMITY IN THE ORDERS OF LOWER AUTHORITY. ACCORD INGLY THE SAME ARE CONFIRMED. 7. THE CROSS OBJECTIONS ARE FILED ONLY TO SUPPORT T HE ORDERS OF CIT(A). NO INDEPENDENT ISSUE IS RAISED IN THE CROSS OBJECTI ONS. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE CROS S OBJECTIONS OF THE TAXPAYER ARE NOT MAINTAINABLE. 8. IN VIEW OF THE ABOVE, BOTH THE APPEALS OF THE RE VENUE AND THE CROSS OBJECTIONS OF THE TAXPAYER ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 05 TH APRIL, 2013. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 05 TH APRIL, 2013 PK/- 7 ITA NO. 430 TO 435/COCH/2011 CO NOS. 23 TO 28/COCH/2011 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE COMMISSIONER OF INCOME-TAX 4. THE COMMISSIONER OF INCOME-TAX(A) 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH
