FSL Projects Limited V. The Deputy Commissioner of Income Tax, Circle 14 (3) (TDS), Hyderabad

ITTA/53/2008

AI Insights

The case involves M/s FSL Projects Limited, formerly known as Frontline Soft Limited, which appealed against the orders of the Income Tax Appellate Tribunal, Hyderabad, and the Commissioner of Income Tax (Appeals), Hyderabad. The core issue was the denial of exemption under Section 195(3) of the Income Tax Act, 1961, for TDS on remittances made to a US-based company, M/s. IGTL Solutions. The appellant argued that they had obtained a certificate from the Joint Director of Income Tax-IV (International Taxation) exempting them from TDS, which was allegedly ignored by the lower authorities.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 683349 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 21-09-2023
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: A RAMAKRISHNA REDDY
• Assessee Lawyers: S RAVI
• Keywords: Assessment Year 2003-2004; Exemption; Income Tax; Remittances; TDS
• Section: 260-A; 195(3)

Judgement Text

"[ 3386 ] IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD THURSDAY, THE TWENTY FIRST DAY OF SEPTEMBER TWO THOUSAND AND TWENTYTHREE PRESENT THE HON'BLE SRI JUSTICE P.SAM KOSHY AND THE HON'BLE SRI JUSTICE LAXMI NARAYANA ALISHETW INCOME TAX TRIBUNAL APPEAL No: 53 of2008 lncome Tax Tribunal Appeal Under Section 260-4 of the lncome Tax Act, 1961 arising out of the order of the lncome-tax Appellate Tribunal, Hyderabad Bench' B 1 Hyderabad, in ITA No.1O81/Hyd/O3, for assessment Yeat 2O03-2OO4 dated 03-08- 2007 preferred against the Order of Commissioner of lncome Tax (Appeals) V, Hyderabad in ITA Nos.0397 & 0398/DC 14(3)lClT (A)N|2OO2-03, dated 27-06-2003 against the Order of the Deputy Commissioner of lncome Tax 1 (3) (TDS), Hyderabad, Appeal No.HYDFOo191F/DCIT 14(3XTDSy02-03 dated:10-02-2003, preferred against the Order of Commissioner of lncome Tax (Appeals)-V, Hyderabad PAN/GIR No. AAACF 4743Q. Between: M/s FSL Projects Limited, fformerly Frontline Soft Limitedl, A public Limited company, Having its registered office at 602, Lake Shore Towers, Rajbhavan Road, Soma.jiguda, Hyderabad. Represented by its Director [vlr. Mir Hussain Ali S/o Sri Mir Yousuf Ali Khan, Aged 44 years. .,.APPELLANT AND The Deputy Commissioner of lncome Tax, Circle 14 (3) (TDS), Hyderabad. ...RESPONDENT ITTAMP. NO: 63 OF 2008 Petition under Section 151 CPC praying that in the c.ircumstances stated in the affidavit filed in support of the petition, the High Court may be pleased stay the collection tax of Rs. 7,23,783.501: disputed in the appeal for the assessment year 2O03-2004. I .: I Counsel forthe Appellant: SRI S. RAVI Counsel for the Respondent: SRI A- RAMAKRISHNA REDDY The Court delivered the following: JUDGMENT 7 q PSK,J & I-. ,1J IT-|A tYo 53 oJ )008 HONOURABLE SRI JUSTICE P.SAM KOSI{Y AND HON'BLE SRI JUSTICE LAXMI NARAYANA ALISHETTY INCOME TAX TRIBUNAL APPEAL NO.53 OF'2OO8 JUDGMENT: (per Hon'bLe Srt Justice P.Sam Koshg) The present appeal has been hled under Section 260-A of Income Tax Act, 1961 (for short, the \"Act\") assailing the order passed by Income Tax Appellate Tribunal, Bench-B, Hyderabad (for short \"Tribunal\") in ITA No.1087/Hyd/03, dated O3.08.2007 for the Assessment Year 2OO3-O4. Vide impugned order, the order preferred by the appellant stood rejected and in the process, the order passed by the Commissioner of Income Tax (Appeals), Hyderabad, for the assessment year 2OO3-04 was alfirmed. 2. The whole issue raised by the appellant in the present appeal is so far as the denial of exemption under Section 195(3) of the Act, in spite of there being an order passed by the Joint Director in this regard so far as the deduction of TDS in respect of remittances made by the appellant to US based company i.e., M/s.IGTL Solutions (U.S.A.). 2 r PSK J & 1,, A,J I lf) ) 'o 53 of 2008 l 3. At the outset, learned counsel for appellant drew the attention of this Court to the documents, which were furllished before the Appellate Tribunal i.e., the order dated la.Oi,.2OO3 passed by the Joint Director of Income Tax-IV (lnternational Taxation), Ayakar Bhavan, Mumbai, whereby the Joint Director had permitted the authorities in India to receive sums r,r'ithout deduction of income tax as is required under Section 195(1) of the Act. 4. karned counsel for the appellant contended that in spite of specifrc certificate have not been issued under Section 195(3) of the Act by the Joint Director of the Department, the authorities concerned have made the remittalces after deduction of tax at source in contravention to the afcrresaid Circular dated 18.O2.2003. This granting of exemption under Section 195(3) of the Act in spite of its appraisal lo the authorities below, ignoring the same, the Commissioner of Income Tax (Appeals), so also the Tribunal have decided the matter against the assessee. 5. Today, when the matter is taken up for hearing, l,:arned counsel for appellant strongly contended that once wh'en the certificate was obtained from the Joint Director so far as the PSK.J & I, A.J lTT,l o 53 of 2008 certiflcate was obtained from the Joint Director so far as the waiver of deduction of TDS in respect of remittances is made to M/s.IGTL Solutions (USA) has not been considered, discussed, referred to either by the Commissioner of Income Tax (Appeals) or by the Tribunal. According to the appellant, the exemption from deduction of tax at source was permissible under Section 195 (3) of the Act, which appellant had availed and which was also granted by the respondent, but when it carne for deduction, they had made the remittances only after deduction of TDS was made. 6. Perusal of the pleadings would go to show that the appellant had been all along taking this stand both before the Commissioner of Income Tax (Appeals) and before the Tribunal that they are not liable to make deductions for the reasons that they have an exemption already obtained by way of certifrcate under Section 195(3) of the Act. In spite of the categorical stand being taken, the two appellate forums for the reasons best known have not discussed, deliberated or relied upon the said certilicate at all. 7. Today, when the matter is taken up for hearing, the entire paper-book that was hled before the Tribunal was made 4 ( x-E ' P- ,(.J & 1_. .J.J I7'1..1 'o 53 of 2008 ) available by the learned counsel for appellant and ono such document therein is the certificate so issued under Siection 195(3) of the Act, granting exemption to M/s.lGTL Solutions (USA) so far as receiving of remittances without deducr,ion of income tax at source. If the contents of the said documerrt is to be accepted and on verihcation, found to be genuine, the consequences would be that the entire remittances that have been made to M/s. IGTL Solutions (USA) would be non-taxable so far as TDS is concerned. Further, if the contents of th.e said letter stands accepted, then the action on the part 'cf the respondent in carrying out deduction at source o:n the remittances made to M/s.lGTL Solutions (USA) would be per se bad. B. In view of the aforesaid factual matrix of the case, more particularly, taking note of the fact that there is a non-refr:rence or non-deliberation of the exemption so obtained under Section 195(3) of the Act by the two forums below, we are r>f the considered opinion that it is a fit case where matter can be remitted back to the Tax Tribunal for considering the contentions raised by the appellant so far as exemption that they have got under Section 195(3) of the Act insofar zts the PSK,J & L Jl.J IT'|A . 'o. 5 3 of 2008 remittances that have been made to M/s.IGTL Solutions (USA) is concerned. considering the fact that the order of the Tribunal is one, which was passed as early as on O3.OS.2OO7, it is expected that the Tribunal shall reconsider this matter, particularly, taking into consideration the exemption so gr€rnted to the appellant on LO.O2.2OO3. Let the Tribunal now decide the matter on priority basis within the outer limit of 9O days from the date of receipt of copy of this order. 9. Accordingly, Appeal stands allowed to the aforesaid extent. There shall be no order as to costs. 10. Pending miscellaneous applications, if any, shall stand closed. 6 //TRUE COPY// 1. The lncometax Appellate Tribunal, Hyderabad Bench ' B ' Hyderabad' 2. The Commissioner of lncome Tax (Appeals) V, Hyderabad' 3. The Deputy Commissioner of lncome Tax 14(3) (TDS)' Hyderabad 4. The Commissioner of lncome Tax (Appeals)-V, Hyderabad 5. One CC to SRI S. RAVI' Advocate [OPUC] 6. One CC to SRI A. RAMAKRISHNA REDDY, Advocate {OPUCI 7. Two CD Copies Sd/- M. VIJAYA BHASKER JOINT REGISIRAR / d' SECTION OFFICER To, kam t . & .)/ HIGH COURT DATED:21 10912023 JUDGMENT !TTA.No.S3 of 2008 THE APPEAL IS ALLOWED $t: ST4a 1 € Y ( q 12 * oes oi '1, \"- I t, $ { "