DCIT, V. Kirloskar Computer Services,

ITA 1243/BANG/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9464 (ITAT-BANGALORE)
• Duration Of Justice: 3 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 11-08-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 12-08-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR P K SRIHARI
• Assessee Lawyers: R E BALASUBRAMANYAM
• Keywords: Opportunity of being heard
• Section: 260A

Judgement Text

IN THE INCOME TAX APPELLATE TRI BUNAL BANGALORE BENCH A, BANGALORE BEFORE SHRI A. K. GARODIA, ACCOUNTANT MEMBER AND SMT ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO.1243(BANG) 2013 (ASSESSMENT YEAR : 2008-09) THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-11(5), NRUPTHUNGA ROAD, BANGALORE APPELLANT VS THE PRINCIPAL OFFICER, KIRLOSKAR COMPUTER SERVICES LTD., OFFICE OF THE LIQUIDATOR, HIGH COURT OF KARNATAKA, CORPORATE BHAVAN, NO.26-27, 12 TH FLOOR, RAHEJA TOWERS, MG ROD, BANGALORE-560 001 PAN NO.AABCK7280L RESPONDENT REVENUE BY : DR.P.K.SRIHARI, ADDL. CIT ASSESSEE BY : SHRI R.E.BALASUBRAMANYAM, CA DATE OF HEARING : 21-07-2016 DATE OF PRONOUNCEMENT : 1 2-08-2016 O R D E R PER SHRI A.K.GARODIA, AM THIS IS REVENUES APPEAL DIRECTED AGAINST THE ORDE R OF THE LD. CIT(A)-I, BANGALORE DATED 31-05-2013 FOR THE ASSESSMENT YEAR 2008-09. 2. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER; 0 1. THE ORDER OF THELD.CIT(A) IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE IS OPPOSED T O LAW AND FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE CIT(A) N THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE ERRED IN DELETING THE DISALLOWANCE WIT HOUT APPRECIATING THAT THE COMPANY BY PROVIDING THE BANDWIDTH IS PROVIDING THE RIGHT TO USE ITS SCIENTI FIC EQUIPMENT OR IS PROVIDING SERVICE IN CONNECTION WIT H IT AND HENCE THESE PAYMENTS ARE LIABLE FOR TDS. 3. THE CIT(A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, ERRED IN DELETING THE DISALLOWANCE MADE U /S 40(A)(I) OF THE PAYMENT OF RS.99,85,043/- BEING BANDWIDTH CHARGES PAID TO SINGAPORE TELECOMMUNICATION LTD., BY RELYING ON THE DECISION OF ITA NO.1243(B)2013 2 THE ITAT IN THE CASE OF INFOSYS TECHNOLOGIES LTD., WITHOUT APPRECIATING THE FACTS THAT THE DECISION OF THE ITAT HAS NOT REACHED A FINALITY AND AN APPEAL U/S 260A IS PREFERRED AGAINST THE ORDER OF THE ITAT IN THE CASE OF INFOSYS TECHNOLOGIES LTD., FOR THE AY : 20 04-05 IN ITA NO.1140(BANG)/2009. 4. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, IT IS HUMBLY PRAYED T HAT THE ORDER OF THE CIT(A) BE REVERSED AND THAT OF THE AO BE RESTORED. 5. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, AMEND OR DELETE ANY OF THE GROUNDS THAT MAY BE URGE D AT THE TIME OF HEARING OF THE APPEAL. 3. IT WAS SUBMITTED BY THE LD. DR OF THE REVENUE TH AT IN THE ASSESSMENT ORDER, THE DECISION OF THE AO IS ON THIS BASIS THAT THE IMPUGNED PAYMENT OF RS.99,85,043/- IS IN THE NATURE OF ROYAL TY BUT IN THE IMPUGNED ORDER, THE LD. CIT(A) HAS STATED IN PARA-5.4 OF HIS ORDER THAT THE DISALLOWANCE WAS MADE BY THE AO BY STATING THAT THE AMOUNT CAN B E CONSIDERED AS FEES FOR TECHNICAL SERVICES. HE SUBMITTED THAT THE ENT IRE BASIS OF THE ORDER OF THE LD. CIT(A) IS WRONG AND THEREFORE, HIS ORDER CANNOT BE SUSTAINED AND THE SAME SHOULD BE REVERSED AND THAT OF THE AO BE RESTO RED. 4. THE LD. AR OF THE ASSESSEE SUPPORTED THE ORDER OF THE LD. CIT(A. HE ALSO SUBMITTED THAT EVEN IF IT IS HELD THAT THE LD . CIT(A) HAS NOT CONSIDERED OBJECTION OF THE A.O. THAT THE IMPUGNED PAYMENT IS IN THE NATURE OF ROYALTY, THE MATTER MAY BE RESTORED BACK TO THE FILE OF THE LD. CIT(A) FOR A FRESH DECISION. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FI ND FORCE IN THIS ITA NO.1243(B)2013 3 SUBMISSIONS OF THE LD. DR OF THE REVENUE THAT THE O RDER OF THE LD. CIT(A) IS NOT SUSTAINABLE BECAUSE THE BASIS OF THE ASSESSMENT ORDER IS THIS THAT THE IMPUGNED PAYMENT IS IN THE NATURE OF ROYALTY WHEREA S IN PARA-5.4 OF THE LD. CIT(A)S ORDER, HE HAS PROCEEDED ON THIS BASIS THAT THE AO HAS CONSIDERED THE IMPUGNED PAYMENT AS FEES FOR TECHNICAL SERVICES . UNDER THESE FACTS, WE HOLD THAT THE ORDER OF THE LD.CIT(A) IS NOT SUSTAIN ABLE BUT AT THE SAME TIME, WE FEEL IT PROPER THAT UNDER THESE FACTS, THE MATTE R SHOULD GO BACK TO THE FILE OF THE LD. CIT(A) FOR A FRESH DECISION AND ACCORDIN GLY, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE MATTER BACK TO HI S FILE FOR A FRESH DECISION BY CONSIDERING THE OBJECTION OF THE A.O. THAT THE IMPU GNED PAYMENT IS IN THE NATURE OF ROYALTY. NEEDLESS TO SAY THAT THE LD. CIT(A) SHOULD PROVIDE ADEQUATE OPPORTUNITY OF BEING HEARD TO BOTH SIDES A ND HE SHOULD PASS A SPEAKING AND REASONED ORDER. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. SD/- (ASHA VIJAYARAGHAVAN) SD/- (A.K. GARODIA) JUDICAL MEMBER AC C OUNTANT MEMBER BANGALORE: D A T E D : 12.08.2016 AM* COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A)-II BANGALORE 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE ITA NO.1243(B)2013 4 BY ORDER, AR, ITAT, BANGALORE 1. DATE OF DICTATION .. 2. DATE ON WHIC H THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P. S. .. 4 DATE ON WHICH THE ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT .. 5. DATE ON WHICH THE ORDER COMES BACK TO THE SR. P.S. .. 6. DATE OF UPLOADING THE ORDER ON WEBSITE .. 7. IF NOT UPLOADED, FURNISH THE REASON FOR DOING SO . 8. DATE ON WHICH THE FILE GOES TO TH E BENCH CLERK .. 9. DATE ON WHICH ORDER DOES FOR XEROX & ENDORSEMENT . 10. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK. 11 THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER. 12 THE DATE ON WHICH THE FILE GOES TO THE DISPATCH SEC TION FOR DISPATCH OF THE TRIBUNAL ORDER 13 DATE OF DISPATCH OF ORDER