M/s Animal Planet (Asia) LLC, Delhi V. ADIT, New Delhi

CO 442/DEL/2012

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 0350 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 4 month(s) 23 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 25-03-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 24-02-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 02-11-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: A MISRA
• Keywords: Business income; Rule of consistency; Permanent establishment
• Section: 234B

Judgement Text

ITA NO.4840/DEL/2012 ASSTT.YEAR: 2004-05 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `A NEW DELHI BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER I.T.A.NO.4840/DEL/2012 ASSESSMENT YEAR : 2004-05 I.T.A.NO.4841/DEL/2012 ASSESSMENT YEAR : 2006-07 ASSTT. DIRECTOR OF INCOME TAX, VS ANIMAL PLANET, CIRCLE 1(1), ONE DISCOVERY PLACE, NEW DELHI. SILVER SPRING MD, USA C/O RSM & CO., 77-B, 3 RD FLOOR, IFFCO ROAD, SECTOR-18, GURGAON C.O. NO.441/DEL/2012 (IN I.T.A.NO.4840/DEL/2012) ASSESSMENT YEAR : 2004-05 C.O. NO.442/DEL/2012 (IN I.T.A.NO.4841/DEL/2012) ASSESSMENT YEAR : 2006-07 ANIMAL PLANET (ASIA) LLC VS ADIT, CIRCLE 1(1), C/O KAPIL GOEL ADV. INTL. TAXATION, NE W DELHI. F-26/124, SECTOR 7, ROHINI, DELHI-110085 (PAN: AADCA3886G) (APPELLANT) (RESPONDENT) APPELLANT BY: SMT. A. MISRA, CIT DR RESPONDENT BY :SHRI KAPIL GOEL, ADV. DATE OF HEARING: 24.2.2015 DATE OF PRONOUNCEMENT: ITA NO.4840/DEL/2012 ASSTT.YEAR: 2004-05 2 O R D E R PER CHANDRA MOHAN GARG, JUDICIAL MEMBER THE ABOVE CAPTIONED APPEALS OF THE REVENUE AND CROS S OBJECTIONS OF THE ASSESSEE HAVE BEEN FILED AGAINST THE ORDER OF THE C IT(A)-XI, NEW DELHI BOTH DATED 19.6.2012 IN APPEAL NO. 57 AND 58/10-11 FOR AY 2004-05 AND 2006-07 RESPECTIVELY. THE ASSESSEE HAS RAISED THE SIMILARL Y WORDED GROUNDS IN BOTH THE APPEALS WHICH READ AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN HOLDING THAT ONLY 10% OF SUBSCRIPTION REVENUES ARE TAXABLE AS BUSINESS INCOM E AGAINST THE ENTIRE SUCH REVENUES TAXED BY THE AO AS ROYALTY , WITHOUT CONSIDERING THAT EVERY ASSESSMENT YEAR IS AN INDEPE NDENT YEAR AND FURTHER, MAP RESOLUTION APPLIES ONLY TO THE PAR TICULAR ENTITY AND FOR THE PARTICULAR ASSESSMENT YEAR, WHIC H IS COVERED BY SUCH RESOLUTION. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN HOLDING THAT INTEREST U /S 234B IS NOT CHARGEABLE IN THE ASSESSEE'S CASE, BY RELYING U PON THE DECISION OF HON'BLE HIGH COURT OF DELHI IN THE CASE OF JACOB CIVIL INCORPORATED, WITHOUT APPRECIATING THAT THE L EVY OF INTEREST 234B IS MANDATORY AS HELD IN THE CASE OF C IT VS ANJUM M.H. GHASWALA & OTHERS 252 ITR 1 (SC). 2. BRIEFLY STATED THE FACTS GIVING RISE TO THESE AP PEALS ARE THAT THE ASSESSEE HAD FILED ITS RETURN OF INCOME FOR AY 2004-05 ON 31 .4.2004 DECLARING AT NIL INCOME AND ASSESSMENT WAS FINALIZED AT AN INCOME OF RS. 6,00,31,583/-. THE ASSESSEE FILED ITS RETURN OF INCOME FOR AY 2006-07 ON 12.12.2006 DECLARING AN ITA NO.4840/DEL/2012 ASSTT.YEAR: 2004-05 3 INCOME OF RS.74,07,404 AND THIS CASE WAS SUBSEQUENT LY SELECTED FOR SCRUTINY. IT IS ALSO PERTINENT TO NOTE THAT THE ASSESSEE IS A NO N-RESIDENT COMPANY INCORPORATED UNDER THE LAWS OF DELAWARE, USA AND DURING THE FINA NCIAL YEARS UNDER CONSIDERATION, THE ASSESSEE WAS ENGAGED IN THE BUSI NESS OF BROADCASTING ANIMAL PLANET CHANNEL OVER THE ENTIRE ASIA REGION INCLUDIN G INDIA. DISCOVERY COMMUNICATIONS INDIA (DCIN) IS A COMPANY INCORPORAT ED IN INDIA, UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956 WITH WHOM THE ASSESSEE COMPANY HAD ENTERED INTO AN ADVERTISING SALES REPRESENTATION AG REEMENT APPOINTING THE DCIN AS ITS EXCLUSIVE ADVERTISING SALES REPRESENTAT IVE IN INDIA FOR THE PURPOSE OF MARKETING THE CHANNEL. THE CONSIDERATION FOR THE S ERVICES RENDERED UNDER THE AFORESAID AGREEMENT, THE ASSESSEE PAID DCIN COMMISS ION @15% OF THE AD SALES REVENUE. BY WAY OF A DISTRIBUTION LICENSE AGREEMEN T DATED 4.1.1999, THE ASSESSEE GRANTED DISTRIBUTION RIGHTS FOR THE CHANNE L TO DCIN AND DCIN WAS ALSO GRANTED RIGHT TO THE SUBSCRIPTION REVENUE INCOME AR ISING THEREFROM AGAINST THE SAID DISTRIBUTION RIGHTS. THE ASSESSEE COMPANY, BE ING A TAX RESIDENT OF USA IN TERMS OF ARTICLE 4 OF THE INDO US DOUBLE TAXATION A VOIDANCE TREATY, FILED ITS RETURN OF INCOME. IT IS ALSO PERTINENT TO NOTE THA T THE ASSESSEE, IN THE PAST, HAD NOT FILED ITS RETURN OF INCOME TILL AY 2001-02 BY A PPLYING THE RATIO OF THE CIRCULAR NO. 742 ISSUED BY THE CBDT WHICH REQUIRED A FOREIGN TELECASTING COMPANY (FTC) NOT HAVING PERMANENT ESTABLISHMENT (P E) IN INDIA (WITHIN THE MEANING OF THE RELEVANT TREATY) TO COMPUTE ITS INCO ME BASED ON THE METHOD PRESCRIBED THEREIN. ACCORDINGLY, SINCE THE ASSESSE E BEING AN FTC NEITHER HAD A ITA NO.4840/DEL/2012 ASSTT.YEAR: 2004-05 4 PE NOR IT MAINTAINED COUNTRY-WISE ACCOUNTS OF ITS O PERATIONS IN INDIA. THEREFORE, THE AFORESAID CIRCULAR NO. 742 WAS APPLI CABLE TO THE ASSESSEE AS PER CONTENTIONS OF THE APPELLANT. 3. SUBSEQUENTLY, CIRCULAR NO. 742 WAS WITHDRAWN W.E .F. 31.3.2001 AND CIRCULAR NO. 6/2001 DATED 5.3.2001 WAS MADE EFFECTI VE FOR TAXATION OF FTC IN INDIA WHEREIN FTC IS A RESIDENT OF A COUNTRY WITH W HOM INDIA HAS A TREATY, ITS BUSINESS INCOME, INCLUDING RECEIPTS FROM ADVERTISEM ENTS CAN BE TAXED ONLY IF IT HAS A PE IN INDIA. FOR AY 2004-05, THE AO ISSUED N OTICE U/S 143(2) TO THE ASSESSEE FOR DETAILED EXAMINATION AND IN RESPONSE T O THAT REQUISITE INFORMATION AND NECESSARY APPLICATIONS WERE SUBMITTED FROM TIME TO TIME. FINALLY, THE AO COMPLETED ASSESSMENT FOR AY 2004-05 AT THE TOTAL IN COME OF RS.6,00,31,583. IN THE SIMILAR LINE, THE AO FINALISED THE ASSESSMENT F OR AY 2006-07 ON 19.12.2008 DETERMINING THE TOTAL INCOME OF ASSESSEE COMPANY AT RS.7,05,80,097. THE AO IN BOTH THE YEARS MADE ADDITIONS TO THE RETURNED IN COME INTER ALIA ON THE FOLLOWING GROUNDS:- * DCIN FORMS A DEPENDENT AGENT PE OF THE APPLIC ANT IN INDIA (UNDER TREATY). THE APPELLANT IS NOT ENTITLED TO THE TREATY BENEFIT S. A SUM OF RS. 1,78,924/- (BEING 101'0 OF THE GROSS A DVERTISEMENT REVENUES) WAS TREATED AS TAXABLE INCOME IN THE HAND S OF THE APPELLANT. A SUM OF RS. 5,98,39,242/- (BEING SUBSCRIPTION REVE NUE INCOME OF DCIN) WAS TREATED AS ROYALTY INCOME OF THE APPE LLANT UNDER THE PROVISIONS OF CLAUSE (V) OF EXPLANATION 2 TO SE C. 9(1)(VI) OF THE ACT AND UNDER ARTICLE 12(3)(A) OF THE TREATY. ITA NO.4840/DEL/2012 ASSTT.YEAR: 2004-05 5 IN ADDITION THE AO ALSO LEVIED INTEREST U/S 234B OF THE ACT AMOUNTING TO RS. 39,50,424/-. 4. BEING AGGRIEVED BY THE ABOVE ASSESSMENT ORDERS, THE ASESSEE PREFERRED APPEALS BEFORE THE CIT(A) WHICH WERE PARTLY ALLOWED ON BOTH THE GROUNDS AS REPRODUCED HEREINABOVE. GROUND NO.1 5. APROPOS GROUND NO. 1, LD. DR SUBMITTED THAT THE CIT(A) HAS ERRED IN HOLDING THAT ONLY 10% OF SUBSCRIPTION REVENUES ARE TAXABLE AS BUSINESS INCOME AGAINST THE ENTIRE SUCH REVENUES TAXED BY THE AO AS ROYALTY, WITHOUT CONSIDERING THAT EVERY ASSESSMENT YEAR IS AN INDEPE NDENT YEAR AND FURTHER, MAP RESOLUTION APPLIES ONLY TO THE PARTICULAR ENTITY AN D FOR THE PARTICULAR ASSESSMENT YEAR, WHICH IS COVERED BY SUCH RESOLUTION. 6. LD. DR DRAWING OUR ATTENTION TOWARDS PARA 7 AT P AGE 11 OF THE ASSESSMENT ORDER SUBMITTED THAT THE AO ADJUDICATED THE ISSUE O F TAXABILITY OF SUBSCRIPTION INCOME AFTER CONSIDERING THE AGREEMENT BETWEEN ASSE SSEE AND DCIN. THE DR FURTHER SUBMITTED THAT THE AO WAS RIGHT IN HOLDING THAT THE CONSIDERATION PAID BY THE ASSESSEE COMPANY TO DCIN IS COVERED BY THE PROV ISIONS OF CLAUSE (V) OF EXPLANATION 2 TO SECTION 9(1)(VI) OF THE ACT AND R IGHTLY TAXED THE SAME AT 20% OF GROSS BASIS AS PER PROVISIONS OF THE ACT. LD. A R ALSO CONTENDED THAT THE CONSIDERATION PAID BY THE ASSESSEE COMPANY IS ALSO COVERED BY THE ROYALTY AS ITA NO.4840/DEL/2012 ASSTT.YEAR: 2004-05 6 GIVEN IN ARTICLE 12(3) OF THE TAX TREATY BETWEEN IN DIA AND USA. THEREFORE, ACTION OF THE AO WAS QUITE JUSTIFIED AND WAS BASED ON COGENT REASONS. 7. LD. DR FURTHER CONTENDED THAT THE CIT(A) WHILE D EALING WITH GROUND NO. 3 AND 4 OF THE ASSESSEE WRONGLY COMPUTED THAT THE A SSESSEE IS AN PE IN INDIA AND BOTH THE ADVERTISEMENT AND SUBSCRIPTION CONSTITUTE BUSINESS INCOME OF THE ASSESSEE IN INDIA AND THAT 10% OF THE BUSINESS INCO ME BE TREATED AS TAXABLE INCOME IN THE HANDS OF THE ASSESSEE IN INDIA. LD. DR POINTED OUT THAT THE CIT(A) MISUNDERSTOOD AND MISINTERPRETED THE PROVISI ONS OF THE ACT WHILE GRANTING RELIEF FOR THE ASSESSEE, THEREFORE, THE IM PUGNED ORDER OF THE CIT(A) MAY BE SET ASIDE BY RESTORING THAT OF THE AO. 8. REPLYING TO THE ABOVE, LD. COUNSEL FOR ASSESSEE FIRSTLY HAS DRAWN OUR ATTENTION TOWARDS PARA NO. 2.2.1 AND 2.2.2 OF THE S TATEMENT OF FACTS SUBMITTED BEFORE THE CIT(A) DURING THE FIRST APPELLATE PROCEE DINGS AND SUBMITTED THAT AS PER LICENCE AGREEMENT BETWEEN ASSESSEE AND DCIN AFT ER COLLECTING SUBSCRIPTION REVENUE FROM THE CABLE OPERATOR AS A RIGHT TO RETAI N THE SAME AND IN TURN, THE DCIN WOULD INCUR NECESSARY COSTS FOR THE PROMOTION OF THE CHANNEL AND SPECIALLY WHEN THE ENTIRE SUBSCRIPTION REVENUES WER E DULY OFFERED TO TAX BY THE DCIN IN ITS RETURN OF INCOME FILED TILL DATE, THEN THE CONCLUSION OF THE CIT(A) WAS RIGHT IN TREATING BOTH THE ENTITLEMENT AND SUBS CRIPTION REVENUE AS BUSINESS INCOME OF THE ASSESSEE IN INDIA. LD. COUNSEL OF TH E ASSESSEE HAS ALSO PLACED RELIANCE ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF RADHA ITA NO.4840/DEL/2012 ASSTT.YEAR: 2004-05 7 SWAMI SATSANG 193 ITR 321 (SC) AND ANOTHER DECISION REPORTED AS 358 ITR 295 (SC) WHEREIN IT HAS BEEN HELD THAT THE REVENUE AUTHORITIES ARE DUTY BOUND TO FOLLOW THE RULE OF CONSISTENCY, UNLESS AND UNTIL TH ERE IS SUBSTANTIAL CHANGE IN THE FACTS AND CIRCUMSTANCES OR LAW POSITION IN THE SUBS EQUENT YEARS IN TAKING A DIFFERENT OR DEVIATED STAND. LD. COUNSEL OF THE AS SESSEE FURTHER PLACED COPIES OF THE ASSESSMENT ORDER FOR AY 2008-09 DATED 5.10.2011 ASSESSMENT ORDER FOR AY 2009-10 DATED 27.11.2011 AND ASSESSMENT ORDER FOR A Y 2010-11 DATED 26.2.2014 AND SUBMITTED THAT THE ADVERTISEMENT AND DISTRIBUTION REVENUES HAVE BEEN CONSISTENTLY TAXED BY THE DEPARTMENT @10%, THE REFORE, FOR THE ASSESSMENT YEARS UNDER CONSIDERATION IN THESE APPEALS, REVENUE IS NOT ALLOWED TO CHARGE THE SAME AT 20% OR ANY OTHER HIGHER RATE. 9. ON CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS, W E NOTE THAT THE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE CIT(A ) FOR AY 2004-05 WITH FOLLOWING OBSERVATIONS AND CONCLUSION:- GROUND NO.III & IV: THESE GROUNDS ARE IN RESPECT OF TAXABILITY OF ADVERTISEMENT REVENUES & SUBSCRIPTION REVENUES. DISCOVERY ASIA LLC (DALLC') (EARLIER KNOWN AS DISC OVERY ASIA INC.), ONE OF THE APPELLANT'S GROUP COMPANY HA D EARLIER INVOKED THE PROVISIONS OF ARTICLE 27 OF TREATY RELA TING TO MUTUAL AGREEMENT PROCEDURE (MAP') FOR AY 2000-01 A ND AY 2001-02. A MAP RESOLUTION DATED JANUARY 02, 2006 WA S THEREAFTER ISSUED FOR AYS 2000-01 AND AY 2001-02. U NDER THE AFORESAID MAP RESOLUTION, THE COMPETENT AUTHORITIES OF BOTH INDIA AND US HAD AGREED THAT 10 PERCENT OF DISTRIBU TION AND ADVERTISEMENT REVENUES EARNED BY DALLC OR DAI FROM INDIA SHOULD BE TAXABLE IN INDIA, BEING PROFITS ATTRIBUTA BLE TO THE DEPENDENT AGENT PE IN FORM OF DCIN IN INDIA. ITA NO.4840/DEL/2012 ASSTT.YEAR: 2004-05 8 THE ASSESSMENT PROCEEDINGS IN THE APPELLANTS CASE FOR AY 2003-04 HAD BEEN COMPLETED ON THE BASIS OF THE M AP RESOLUTION OF THE GROUP COMPANY I.E. DAI WHEREIN AF TER HOLDING DCIN TO BE PE OF THE APPELLANT IN INDIA, TH E ADVERTISEMENT AND SUBSCRIPTION REVENUES WERE TAXED AS BUSINESS INCOME AND THEREAFTER, 10% OF THE SUCH REV ENUES WERE TREATED AS TAXABLE INCOME OF THE APPELLANT IN INDIA. THEREAFTER THE ORDER FOR AY 2007-08 WAS AS PER THE ORDER OF THE DRP DATED 30/09/2010 WHEREBY IT WAS HELD THAT:- 'BEFORE DRP THE ASSESSEE HAS FILED A LETTER DATED A UGUST 20,2010, WHEREIN IT IS EXPLAINED THAT IN THE CASE O F A GROUP ENTITY, DISCOVERY ASIA INC, USA ('OAI'). THE COMPET ENT AUTHORITIES OF INDIA AND US AGREED THAT OAI HAS A D EPENDENT AGENT PE IN INDIA IN THE FORM OF DCIN. IT WAS RESOL VED THAT THE INCOME OF DAI FROM ADVERTISEMENT REVENUES AND SUBSCRIPTION REVENUES BE TAXED UNDER ARTICLE 7 OF T HE TREATY I.E AS BUSINESS INCOME. THE TWO COMPETENT AUTHORITI ES THEN AGREED TO COMPUTATION OF DAI'S INCOME @ 10% OF GROS S ADVERTISEMENT AND SUBSCRIPTION REVENUES. COPY OF TH E MAP RESOLUTION DATED JANUARY 2,2006 HAS BEEN FILED. THE ASSESSEE THEN SUBMITTED THAT WITHOUT PREJUDICE TO IT'S VARIOUS CONTENTIONS OUTLINED IN THE DRP APPLIC ATION OF FEBRUARY 19,2010, TO BUY PEACE AND TO PUT AN END TO LITIGATION, IT IS SUBMITTED THAT THIS CAN BE RESOLV ED IN SPIRIT OF DAI MAP RESOLUTION WHEREIN ADVERTISEMENT AND SUBSCR IPTION REVENUES WERE TREATED AS BUSINESS INCOME AND 10% OF GROSS ADVERTISEMENT AND SUBSCRIPTION REVENUES WERE TREATE D AS TAXABLE INCOME IN INDIA. NOW AS WE HAVE ALREADY CONCURRED WITH THE AO'S CONCLUSION THAT DCIN CONSTITUTES THE ASSESSEE'S PE IN INDIA FOR BOTH ADVERTISEMENT AND SUBSCRIPTION REVENUE, IN LINE WITH THE ABOVE MAP ORDER, WE HOLD THAT BOTH ADVERTISEMEN T AND SUBSCRIPTION REVENUES CONSTITUTE ASSESSEE'S BUSINES S INCOME AND THAT 10% OF THE GROSS ADVERTISEMENT AND SUBSCRI PTION REVENUES BE TREATED AS TAXABLE INCOME OF THE ASSESS EE IN INDIA.' FURTHER, EVEN FOR THE YEARS UNDER APPEAL, THE APPEL LANT HAS SUBMITTED THAT WITHOUT PREJUDICE TO IT'S VARIOU S CONTENTIONS ON NON-TAXABILITY OF ADVERTISEMENT AND SUBSCRIPTION REVENUES IN INDIA, INCLUDING INTER-ALI A THAT NO ITA NO.4840/DEL/2012 ASSTT.YEAR: 2004-05 9 PE EXISTS/PAYMENT OF ARMS LENGTH REMUNERATION TO DC IN EXTINGUISHES ANY FURTHER TAX LIABILITY OF THE ASSES SEE IN INDIA, TO BUY PEACE AND TO PUT AN END TO LITIGATION, THIS COULD BE RESOLVED IN SPIRIT OF DAI MAP RESOLUTION (CONCLUDED BETWEEN THE TWO COMPETENT AUTHORITIES) AND THE ORDER OF THE DRP WHEREIN ADVERTISEMENT AND SUBSCRIPTION REVENUES WER E TREATED AS BUSINESS INCOME AND 10'10 OF ADVERTISEME NT AND SUBSCRIPTION REVENUES WERE TREATED AS TAXABLE INCOM E IN INDIA. ON THE BASIS OF THE ABOVE POSITION, ON EXAMINATION OF THE DOCUMENTS PLACED ON RECORD BY THE APPELLANT, A ND TO ENSURE CONSISTENCY OF ASSESSMENT OVER THE YEARS, BY FOLLOWING THE BASIS OF TAXABILITY OF THE ADVERTISEMENT AND SU BSCRIPTION REVENUES IN THE OTHER RELEVANT YEARS, I HOLD THAT T HE APPELLANT HAS A PE IN INDIA, BOTH ADVERTISEMENT AND SUBSCRIPT ION REVENUES CONSTITUTE BUSINESS INCOME OF THE APPELLAN T IN INDIA AND THAT 10% OF THE ADVERTISEMENT AND SUBSCRIPTION REVENUES BE TREATED AS TAXABLE INCOME OF THE APPELLANT IN IN DIA. THIS GROUND IS RULED PARTLY IN FAVOUR OF THE APPELLANT. 10. IN VIEW OF ABOVE, WE ARE INCLINED TO HOLD THAT THE CIT(A) WAS RIGHT IN GRANTING RELIEF FOR THE ASSESSEE AND IN HOLDING THA T TO ENSURE THE CONSISTENCY OF ASSESSMENT OVER THE YEARS, BY FOLLOWING THE BASIS O F TAXABILITY OF THE ADVERTISEMENT AND SUBSCRIPTION REVENUE CONSTITUTE B USINESS INCOME OF THE ASSESSEE IN INDIA AND 10% OF THE ADVERTISEMENT AND SUBSCRIPTION REVENUE ITSELF TO BE TREATED AS TAXABLE INCOME OF THE ASSESSEE IN INDIA. WE ALSO NOTE THAT THE DRP IN THE ORDER DATED 30.9.2010 FOR AY 2007-08 FOR THE SUBSEQUENT ASSESSMENT YEAR HAS ALSO ADJUDICATED THE ISSUE ON T HE SAME LINE WHICH HAS BEEN FOLLOWED BY THE CIT(A) IN THE IMPUGNED ORDERS. ACCO RDINGLY, WE ARE UNABLE TO SEE ANY PERVERSITY, INFIRMITY OR ANY OTHER VALID RE ASON TO INTERFERE WITH THE ORDERS OF THE CIT(A) ON THIS ISSUE AND WE UPHOLD TH E CONCLUSION OF THE CIT(A) ITA NO.4840/DEL/2012 ASSTT.YEAR: 2004-05 10 BASED ON JUSTIFIED REASONING IN ACCORDANCE WITH THE PROVISIONS OF THE ACT. THEREFORE, GROUND NO. 1 OF THE REVENUE IN BOTH THE APPEALS BEING DEVOID OF MERITS IS DISMISSED. GROUND NO.2 OF THE REVENUE 11. APROPOS GROUND NO.2, LD. DR CONTENDED THAT THE LD. CIT(A) HAS ERRED IN HOLDING THAT INTEREST U/S 234B IS NOT CHARGEABLE IN THE ASSESSEE'S CASE, BY RELYING UPON THE DECISION OF HON'BLE HIGH COURT OF DELHI IN THE CASE OF JACOB CIVIL INCORPORATED, WITHOUT APPRECIATING THAT THE LEVY OF INTEREST 234B IS MANDATORY AS HELD IN THE CASE OF CIT VS ANJUM M.H. GHASWALA & OTHERS (SUPRA). 12. REPLYING TO THE ABOVE, LD. COUNSEL OF THE ASSES SEE PLACING RELIANCE ON THE DECISION OF ITAT C BENCH DATED 16.7.2013 IN ITA N O.6049/DEL/2010 AND OTHER APPEALS IN THE CASE OF ADIT VS G.E. ENERGY PA RTS INC. TO WHICH ONE OF US (C.M.GARG, JM) WAS A PARTY, SUBMITTED THAT THE CIT( A) FOLLOWED BINDING DECISION OF HONBLE JURISDICTIONAL HIGH COURT OF DE LHI IN THE CASE OF JACABS CIVIL INCORPORATED (SUPRA) WHEREIN THE JURISDICTIO NAL HIGH COURT OF DELHI HAS ALSO CONSIDERED THE RATIO OF DECISION OF HONBLE AP EX COURT IN THE CASE OF CIT VS ANJUM M.H. GHASWALA & OTHERS (SUPRA). IN THE C ASE OF JACABS CIVIL INCORPORATED (SUPRA) SPEAKING FOR THE JURISDICTIONA L HIGH COURT OF DELHI, THEIR LORDSHIPS ANSWERED THE QUESTION IN FAVOUR OF THE AS SESSEE BY HOLDING THAT THE TRIBUNAL HAS RIGHTLY HELD THAT THE ASSESSEE WAS NOT LIABLE TO PAY ANY INTEREST U/S ITA NO.4840/DEL/2012 ASSTT.YEAR: 2004-05 11 234B OF THE ACT FOR THE FAILURE TO PAY DIVIDEND AS PER PROVISIONS OF SECTION 208 AND 209 OF THE ACT. 13. ON CAREFUL CONSIDERATION OF ABOVE RIVAL SUBMISS IONS, WE NOTE THAT THE CIT(A) HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSES SEE WITH FOLLOWING CONCLUSION:- REGARDING U/S 234B OF THE ACT, THE APPELLANT HAS SUBMITTED THAT THE APPELLANT IS A NON-RESIDENT AND TAX WAS DEDUCTIBLE U/S 195 OF THE ACT ON THE INCOME OF THE APPELLANT AND, THEREFORE IT WAS NOT REQUIRED TO DEPOSIT ANY A DVANCE TAX AND CONSEQUENTLY INTEREST U/S 234B IS NOT LEVIABLE IN THE APPELLANT'S CASE. THE APPELLANT HAS RELIED UPON VAR IOUS AUTHORITIES AS UNDER:- I) DIT V JACABS CIVIL INCORPORATED, MITSUBISHI CORPORATION AND ORS 330 ITR 578 (DELHI). II) DIT V ERICSSON AB (ITA NO.504/2007)(DELHI HIGH COURT); III) DIT V NBGC NETWORK ASIA (222 CTR 86 )(MUM.); IV) CIT V SEDCO FOREX INTERNATIONAL DRILLING CO. LT D 264 ITR 320 (UTTRANCHAL); V) CIT V MADRAS FERTILIZERS LIMITED (149 ITR 703)(MAD) VI) RHEINBRAUN ENGINEERING & WASSER GMBH (1915/BOM/96). VII) ASIA SATELLITE LTD (85 ITD 478)(DEL). IN VIEW OF VARIOUS HIGH COURTS DECISIONS INCLUDING JURISDICTIONAL HIGH COURT ON THE ISSUE, I HOLD THAT INTEREST U/S 234B IS NOT LEVIABLE IN CASE OF APPELLANT BEING NON - RESIDENT WHEN ITS ENTIRE INCOME IS SUBJECT TO TDS U/S 195. T HIS GROUND IS THEREFORE RULED IN FAVOUR OF THE APPELLANT. ITA NO.4840/DEL/2012 ASSTT.YEAR: 2004-05 12 14. IN VIEW OF ABOVE, RESPECTFULLY FOLLOWING THE DE CISION OF JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF DIT V JACABS CIV IL INCORPORATED AND THE DECISION OF ITAT C BENCH DELHI IN THE CASE OF ADI T VS G.E. ENERGY PARTS INC., WE ARE INCLINED TO HOLD THAT THE CIT(A) WAS R IGHT IN HOLDING THAT THE INTEREST U/S 234B OF THE ACT IS NOT LEVIABLE IN THE CASE OF THE ASSESSEE BEING NON- RESIDENT WHEN ITS ENTIRE INCOME IS SUBJECT TO TDS U /S 195 OF THE ACT. HENCE, WE ARE UNABLE TO SEE ANY VALID REASON TO INTERFERE WIT H THE CONCLUSION OF THE CIT(A) ON THIS ISSUE AND WE UPHOLD THE SAME. ACCORDINGLY, GROUND NO. 2 IN BOTH THE APPEALS OF THE REVENUE BEING DEVOID OF MERITS IS AL SO DISMISSED. C.O. NO. 441 AND 442/DEL/2012 FOR AY 2004-05 AND 20 06-07 15. BY THE EARLIER PART OF THIS ORDER, WE HAVE DISM ISSED THE APPEALS OF THE REVENUE UPHOLDING THE ORDER OF THE CIT(A) ON BOTH T HE GROUNDS. LD. COUNSEL OF THE ASSESSEE FAIRLY ACCEPTED THAT THE ASSESSEE HAS FILED CROSS OBJECTIONS TO SUPPORT THE ORDER OF THE CIT(A) WHICH GRANTED RELIE F FOR THE ASSESSEE AND IF REVENUE DOES NOT SUCCEED IN THIS APPEAL, THEN THE A SSESSEE IS NOT INTERESTED TO PRESS ITS CROSS OBJECTIONS AND WE DISMISS THE SAME AS NOT PRESSED. 16. IN THE RESULT, THE APPEALS OF THE REVENUE AS WE LL AS CROSS OBJECTIONS OF THE ASSESSEE FOR BOTH THE ASSESSMENT YEARS ARE DISMISSE D. ITA NO.4840/DEL/2012 ASSTT.YEAR: 2004-05 13 ORDER PRONOUNCED IN THE OPEN COURT ON 25.03.2015. SD/- SD/- (N.K. SAINI) (CHANDRAMOHAN GARG ) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 25TH MARCH 2015 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. C.I.T.(A) 4. C.I.T. 5. DR BY ORDER ASSTT.REGISTRAR