DDIT (IT) 2(1), MUMBAI V. REVLON MAURITIUS LTD, MUMBAI

ITA 1290/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88505 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 24-02-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 14-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LOVE KUMAR
• Assessee Lawyers: ARPIT AGRAWAL
• Keywords: Double taxation relief
• Section: 234B; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'D' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ITA NO. 588/MUM/2013 (ASSESSMENT YEAR: 2009-10) M/S. REVLON MAURITIUS LTD. VS. DY. DIRECTOR OF INCOME TAX C/O PRICEWATERHOUSE COOPERS PVT. LTD., PWC HOUSE, PLOT 18/A GURU NANAK ROAD (STN. ROAD) BANDRA (W), MUMBAI 400050 (INTERNATIONAL TAXATION), 2(1) SCINDIA HOUSE, BALLARD ESTATE N.M. ROAD, MUMBAI 400038 PAN - AACCR7298E APPELLANT RESPONDENT ITA NO. 1290/MUM/2013 (ASSESSMENT YEAR: 2009-10) DY. DIRECTOR OF INCOME TAX VS. M/S. REVLON MAURITIUS LTD. (INTERNATIONAL TAXATION), 2(1) SCINDIA HOUSE, BALLARD ESTATE N.M. ROAD, MUMBAI 400038 C/O PRICEWATERHOUSE COOPERS PVT. LTD., PWC HOUSE, PLOT 18/A GURU NANAK ROAD (STN. ROAD) BANDRA (W), MUMBAI 400050 PAN - AACCR7298E APPELLANT RESPONDENT ASSESSEE BY: SHRI DHANESH BAFNA & SHRI ARPIT AGRAWAL REVENUE BY: SHRI LOVE KUMAR DATE OF HEARING: 24.02.2015 DATE OF PRONOUNCEMENT: 27.02.2015 O R D E R PER D. MANMOHAN, V.P. THESE CROSS APPEALS ARE DIRECTED AGAINST THE ORDER DATED 11.11.2012 PASSED BY CIT(A)-11, MUMBAI AND THEY PERTAIN TO AY 2009-10. 2. FACTS NECESSARY FOR DISPOSAL OF THE APPEAL ARE STAT ED IN BRIEF. ASSESSEE IS A FOREIGN COMPANY INCORPORATED IN MAURITIUS AND IS A TAX RESIDENT OF MAURITIUS. FOR THE YEAR UNDER CONSIDERATION IT DECL ARED TOTAL INCOME OF ` 8.40 CRORES. IN THE ORIGINAL RETURN OF INCOME ASSESSEE C LAIMED THAT TAX IS PAYABLE ON ROYALTY INCOME AT 15%. THIS RATE IS SPECIFIED IN ARTICLE 12 OF INDIA- MAURITIUS DTAA, AS PER WHICH THE MAXIMUM TAX RATE I S PRESCRIBED ON THE ITA NO. 588 & 1290/MUM/2013 M/S. REVLON MAURITIUS LTD. 2 GROSS AMOUNT OF ROYALTIES ARISING IN INDIA AND PAYA BLE TO A TAX RESIDENT OF MAURITIUS. THOUGH IT WAS CLAIMED THAT THE RATE WOUL D BE 15% BUT THERE IS NO SPECIFIC COLUMN IN THE E-RETURN FILED, CONSEQUENT T O WHICH THE AO PROCEEDED TO RAISE A DEMAND OF ` 3.41 CRORES INCLUDING SURCHARGE, ETC. WHICH WAS ON ACCOUNT OF THE FOLLOWING ADJUSTMENT; I.E. LEVY OF T AX AT 40% INSTEAD OF 15% ON THE ROYALTY INCOME EARNED BY THE ASSESSEE. 3. AGGRIEVED, ASSESSEE FILED AN APPEAL BEFORE THE CIT( A) AND SIMULTANEOUSLY A PETITION UNDER SECTION 154 OF THE ACT BEFORE THE AO. SINCE PETITION UNDER SECTION 154 WAS PENDING, APPEAL FILE D BEFORE THE CIT(A) APPEARS TO HAVE BEEN NOT TAKEN UP FOR HEARING FOR S OME TIME. IN THE MEANTIME THE AO PASSED AN ORDER UNDER SECTION 154 O F THE ACT WHEREIN HE HAD ACCEPTED THE PLEA OF THE ASSESSEE AND, VIDE ORD ER DATED 25.10.2012, THE TAX PAYABLE THEREON WAS REWORKED OUT. HOWEVER, THE APPEAL BEFORE THE CIT(A) WAS POSTED FOR HEARING ON 29.10.2012 AND ON ACCOUNT OF NON-APPEARANCE ON THE PART OF THE ASSESSEE THE LEARNED CIT(A) SOUGHT TO DISMISS THE APPEAL BY FOLLOWING THE DECISION OF THE HON'BLE BOMBAY HIGH C OURT DATED 17.09.2010 IN THE CASE OF M/S. CHEMIPOL VS. UNION OF INDIA IN CENTRAL EXCISE APPEAL NO. 62 OF 2009. DETAILED DISCUSSION IN THIS REGARD INDICATES THAT IF THERE IS NO APPEARANCE ON THE PART OF THE ASSESSEE ON THE DA TE FIXED FOR HEARING IT HAS TO BE PRESUMED THAT THE ASSESSEE IS NOT INTERES TED IN PURSUING THE APPEAL AND THE APPEAL CAN BE SUMMARILY DISMISSED ON THAT COUNT. HOWEVER, IN ORDER TO COMPLY WITH THE FORMALITY OF DISMISSING THE APPEAL ON MERIT HE OBSERVED THAT THE ASSESSEE HAS NOT EVEN SHOWN THE A GREEMENT OR DOCUMENT TO SPECIFY THAT THE PAYMENT RECEIVED IS ASSESSABLE AS ROYALTY AND TO SHOW THAT THE MAXIMUM RATE OF 15% IS APPLICABLE THEREON. ASSESSEE IS AGGRIEVED BY THE ORDER PASSED BY THE CIT(A) AND THEREFORE PRE FERRED AN APPEAL BEFORE US. SINCE THE CIT(A) DELETED THE INTEREST LEVIED UN DER SECTION 234B, REVENUE IS IN APPEAL BEFORE US. 4. AT THE TIME OF HEARING THE LEARNED COUNSEL FOR THE ASSESSEE PLACED BEFORE US A COPY OF THE ORDER PASSED UNDER SECTION 154 OF THE I.T. ACT TO SUBMIT THAT THE AO NOTICED THAT THERE IS A MISTAKE APPARENT ON RECORD AND ACCEPTED THE PLEA OF THE ASSESSEE THAT ON ROYALTY I NCOME THE MAXIMUM RATE OF TAX APPLICABLE WOULD BE 15%. SINCE THE AO EXAMIN ED THE RECORD AND ACCEPTED THE SAME, ASSESSEE HAS NO GRIEVANCE; HENCE THE ORDER PASSED BY ITA NO. 588 & 1290/MUM/2013 M/S. REVLON MAURITIUS LTD. 3 THE CIT(A) DOES NOT STAND. EVEN OTHERWISE THE CIT(A ) WAS NOT JUSTIFIED IN PROCEEDING TO DISPOSE OF THE APPEAL EXPARTE BY RAIS ING SEVERAL PRESUMPTIONS AND IN PARTICULAR BY APPLYING THE DECISION OF THE H ON'BLE BOMBAY HIGH COURT IN THE CASE CHEMIPOL OVERLOOKING THE FACT THAT THE HON'BLE BOMBAY HIGH COURT IN A LATER DECISION, IN THE CASE OF BHARAT PE TROLEUM 359 ITR 371, OBSERVED THAT THE APPELLATE AUTHORITY HAS NO POWER TO DISMISS AN APPEAL FOR NON-APPEARANCE, SINCE MATTER HAS TO BE DECIDED ON M ERITS. 5. WE HAVE HEARD THE LEARNED D.R. ALSO IN THIS REGARD AND CAREFULLY PERUSED THE RECORD. IT IS NOT IN DISPUTE THAT THE I NCOME EARNED BY THE ASSESSEE IS IN THE FORM OF ROYALTY AND THE AO HAS N OT DISPUTED THE FACT THAT THE INDIA-MAURITIUS TREATY IS APPLICABLE TO ROYALTY INCOME AND ACCEPTED THE RATE OF 15% IN THE ORDER PASSED UNDER SECTION 154 O F THE ACT. CONSEQUENT TO THE ORDER PASSED UNDER SECTION 154 NO GRIEVANCE CAN SAID TO BE PENDING BEFORE THE CIT(A). WE, THEREFORE, VACATE THE ORDER PASSED BY THE CIT(A) AND HELD THAT IN THE LIGHT OF THE FACTUAL FINDINGS OF T HE AO THE TAX RATE APPLICABLE TO THE ROYALTY INCOME RECEIVED BY THE ASSESSEE IS 1 5%, IN WHICH EVENT THE APPEAL FILED BY THE REVENUE ALSO BECOMES INFRUCTUOU S BECAUSE THERE IS NO INTEREST CHARGEABLE UNDER SECTION 234B OF THE ACT. THE APPEALS ARE DISPOSED OFF ACCORDINGLY. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH FEBRUARY, 2015. SD/- SD/- (D. KARUNAKARA RAO) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI, DATED: 27 TH FEBRUARY, 2015 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 11, MUMBAI 4. DIRECTOR OF INCOME TAX (IT)-1, MUMBAI 5. THE DR, D BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.