M/s. Oceans Connect India Pvt. Ltd., Pune V. Deputy Director of Income-tax,

ITA 1333/PUN/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7312 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 11 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 04-10-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 12-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR VIVEK AGGARWAL
• Keywords: Non-deduction of tax
• Section: 201(1)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE . , , BEFORE SHRI D.KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.1333/PUN/2015 / ASSESSMENT YEAR : 2007-08 M/S. OCEANS CONNECT INDIA PVT. LTD., OFFICE NO.9, HOUSE NO.106, CTS NO.530, NEAR BHAJI MARKET, PUNE 411 036 PAN : AAGCS0318E . /APPELLANT VS. DY. DIRECTOR OF INCOME TAX, (INTERNATIONAL TAXATION)-II, PUNE . / RESPONDENT / APPELLANTS BY : NONE / RESPONDENT BY : DR. VIVEK AGGARWAL / DATE OF HEARING : 04.10.2017 / DATE OF PRONOUNCEMENT: 11.10.2017 / ORDER PER D. KARUNAKARA RAO, AM : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF CIT(A)-13, PUNE FOR THE A.Y. 2007-08. 2. GROUNDS RAISED BY THE ASSESSEE READ AS UNDER : 1. EXPARTE ORDER : THE LEARNED CIT (A) ERRED IN PASSING THE ORDER EX-P ARTE W ITHOUT GIVING S U FF I CIENT OPPORTUNITY TO THE A P PELLANT CO M PANY . T H E APPELLANT H A D VISITED THE OFFICE OF THE CIT (A) ON THE SUBSEQUENT DATE BUT ON ACCOUNT OF NON AVAILABILITY OF THE CIT (A) WOULD NOT APPRIS E HIM OF THE SAME . 2. HOLDING THE APPELLANT COMPANY IN DEFAULT U/S 201(1) OF THE ACT ON ACCOUNT OF FAILURE TO DEDUCT TAX U/S 195 OF THE I . T . ACT, 1961 ON THE PAYMENTS MADE TO M/S VERIZON COMMUNICATION SINGAPORE PTE LTD. (A) THE L EARNED CIT (A) ERRED IN INVOKING PROVISIONS OF SEC. 201(1) OF THE ACT AND TREAT I NG THE APPELLANT AS AN 'ASSESSEE IN DEFAULT' , ON THE GROUND THAT THE APPELLANT WAS ENTITLED TO DEDUCT TA X AT SOUR C E OF RS.5,47,110/- U/S 195 OF THE ACT WHILE MAKING FOREIGN REMITTANCE DURI NG ITA NO.1333/PUN/2015 M/S. OCEANS CONNECT INDIA PVT. LTD., 2 T H E Y EAR AMOUNTING TO M/ S VERIZON COMMUNICATION SINGAPORE PTE L TD. FOR PROVID I NG INTERNATIONAL PRIVATE LEASED CIRCUIT [ IP L C] AS THE SAID RE M ITTANCE AMOUNTE D TO ROYALTY TAXABLE IN I NDIA . (B) THE LEARNED CIT(A) HAS FAILED TO APPRECIATE THE REAL NATURE OF TH E FOREIGN REMITTANCE MADE BY THE APPELLANT DURING THE REL E VANT PREVIOUS YEAR TO VERIZON COMMUNICATIONS SINGAPORE PTE LTD. FO R PROVIDING INTERNATIONAL PRIVATE LEASED CIRCUIT [IPLC] TO THE A P PELLANT. TH E SAID REMITTA N CE WAS O UT SIDE THE SCO P E AN D PURVIEW OF THE P ROVISIONS OF CHAPTER XVII A & B OF THE I.T. ACT 1961 AND THE INCOME NEVER ACCRUED I N INDIA TO VERIZON COMMUNICATIONS SINGAPORE PTE LTD . (C) WITHOUT PREJUDICE TO THE ABOVE, THE APPELLANT SUBMITS THAT SIN CE VERIZON COMMUNICATIONS SINGA P ORE PTE LTD . IS HOLDING PAN IN INDIA AND IS ASSESSED TO INCOME TAX INDIA, THE RESPONDENT REVENUE MAY PLEASE BE DIRECTED TO VERIFY FROM THE CASE RECO RDS OF THE SAID COMPANY WHETHER IT HAS PAID TAX IN INDIA ON THE IMP UGNED FOREIGN REMITTANCES MADE TO IT BY THE APPELLANT COMPANY AND IF THE TAXES ON SUCH REMITTANCES HAVE BEEN PAID IN INDIA BY THE SAI D PAYEE, THEN THE IMPUGNED ORDERS BECOME INFRUCTUOUS AND THE SAME MAY PLEASE VACATED . 3. WITHOUT PREJUDICE TO THE ABOVE , THE APPELLANT SUBMITS THAT THE LEARNED CIT[A] HAS FAILED TO APPRECIATE THAT TH E FOREIGN REMITTANCE OF RS. 521,231/- (OUT OF TOTAL REMITTANCE OF RS . 49,23,992/-] MADE TO M/S VERIZON COMMUNICATIONS SINGAPORE PTE LTD . AS CO-LOCATION RENT IS OUTSIDE THE SCOPE AND PURVIEW OF THE PROVIS I ONS OF CHAPTER II A & B OF THE I . ,T . ACT 1961 AND THE INCOME NEVER ACCRUED IN INDIA TO V ERIZON COMMUNICATIONS SINGAPORE PTE. LTD . 4. CHARGING INTEREST OF RS. 4,29,734/- U/S 201(1A) OF THE ACT :- THE LEARNED CIT (A) HAS ERRED IN CHARGING INTEREST U/S 201(1A) ON ACCOUNT OF FAILURE TO DEDUCT TAX U/S.195 OF THE I . T . ACT, 196 1 ON THE PAYMENTS MADE TO M/ S VERIZON COMMUNICATION SINGAPOR E PTE LTD. 3. BEFORE US, LD. DR FOR THE REVENUE BROUGHT OUR AT TENTION TO THE FACT THAT THE ASSESSEE APPLIED FOR ADJOURNMENT IN THE PAST AND TH E SAME WAS ALLOWED ADJOURNING THE CASE TO TODAY. THE NOTINGS AVAILABLE ON RECORD S ARE RELIED. 4. ON PERUSAL OF THE SAME, WE FIND IN THE PAST ASSE SSEE FILED LETTER DATED NIL AND REQUESTED FOR ADJOURNMENT ALONG WITH REQUEST FO R CLUBBING THE APPEALS WITH ITA NOS. 1282, 1283 AND 1284/PUN/2013 FOR A.YRS. 20 09-10 TO 2011-12. HOWEVER, THE ADJOURNMENT WAS GRANTED POSTING THE CASE TO 04- 10-2007. HOWEVER, ASSESSEE DID NOT ATTEND TO THE PROCEEDINGS TODAY BEFORE THE TRIBUNAL. THEREFORE, WE PROCEED TO ADJUDICATE THE ISSUES IN THE SUCCEEDING PARAGRAPHS. FURTHER, LD. DR FOR THE REVENUE, AT THE OUTSET, MENTIONED THAT AN IDENT ICAL ISSUE CAME UP FOR ITA NO.1333/PUN/2015 M/S. OCEANS CONNECT INDIA PVT. LTD., 3 ADJUDICATION BY THE TRIBUNAL IN THE PREVIOUS ASSESS MENT YEARS (SUPRA) AND AN ORDER WAS PASSED IN THIS REGARD VIDE THE TRIBUNAL ORDER D ATED 18-08-2017. THE ISSUES RAISED IN THIS APPEAL ARE IDENTICAL AND THEY RELATE TO THE APPLICABILITY OF THE PROVISIONS OF SECTION 201 AND 201(A) R.W.S. 195 OF THE ACT IN RESPECT OF THE PAYMENTS MADE BY THE ASSESSEE TO M/S. VERIZON COMMU NICATIONS SINGAPORE PTE LTD. (IN SHORT VERIZON) FOR RECEIVING SERVICES F ROM M/S. INTERNATIONAL PRIVATE LEASED CIRCUIT (IN SHORT IPCL). ASSESSEE DID NOT MAKE THE TDS IN RESPECT OF THESE PAYMENTS. THEREFORE, THE AO INVOKED THE PROVISIONS OF SECTION 195 AND DEEMED THE ASSESSEE AS DEFAULTER U/S.201 AND 201(A) OF THE ACT. THE LD. DR FURTHER SUBMITTED THAT SIMILAR ISSUE WAS ADJUDICATED BY THE TRIBUNAL AND THE SAME WAS DECIDED AGAINST THE ASSESSEE BASED ON THE REASONING THAT THE PAYMENTS RECEIVED BY VERIZON ARE CHARGEABLE TO TAX AND IT CONSTITUTES ROYALTY U/S.9(1)(VI) OF THE ACT AS WELL AS UNDER ARTICLE 12(3) OF THE INDO-SINGAPORE D TAA. LD. DR FILED THE COPY OF THE TRIBUNAL IN ITA NOS. 1282, 1283 AND 1284/PUN/20 13 ORDER DATED 18-08-2017. HE READ OUT THE CONTENTS OF THE PARAGRAPHS 10 TO 15 OF THE ORDER OF THE TRIBUNAL, WHICH ARE RELEVANT. 5. FURTHER, LD. DR REFERRED TO THE SAID EXPARTE ORD ER PASSED BY THE CIT(A) AND BROUGHT OUR ATTENTION TO THE CONTENTS OF PARA NO.1 .5 WHICH CONTAINS THE ELABORATE DETAILS OF THE LIST OF ADJOURNMENTS, WHICH EVENTUAL LY LED THE CIT(A) TO PASS THE EXPARTE ORDER. CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE. 6. AFTER HEARING THE LD. DR AND AFTER CONSIDERING T HE ORDER OF THE TRIBUNAL PASSED BY US, WE FIND THE ISSUE OF PAYMENTS RECEIVE D BY VERIZON CONSTITUTES THE CORE ISSUE CONTENDED BY THE ASSESSEE IN THE APPEAL. IT IS AN UNDISPUTED FACT THAT THE ORDER OF THE CIT(A) CONSTITUTES AN EXPARTE ORDE R. THEREFORE, WE ARE OF THE OPINION THAT IT IS A FIT CASE FOR REMANDING TO THE FILE OF CIT(A) WITH A DIRECTION TO GIVE ADEQUATE OPPORTUNITY TO THE ASSESSEE AND PASS APPROPRIATE ORDER AFTER CONSIDERING THE SAID ORDER OF THE TRIBUNAL DT. 18-0 8-2017 IN ASSESSEES OWN CASE FOR ITA NO.1333/PUN/2015 M/S. OCEANS CONNECT INDIA PVT. LTD., 4 THE A.YRS. 2009-10 TO 2011-12 (SUPRA). IT GOES WIT HOUT SAYING THAT THE CIT(A) SHALL PASS A SPEAKING ORDER ON THIS ISSUE IN ACCORDANCE W ITH THE PROVISIONS OF SECTION 250 (6) OF THE I.T. ACT. HE SHALL CONSIDER ALL THE GRO UNDS AND THE ALTERNATE GROUNDS RAISED BEFORE US. ACCORDINGLY, ALL THE GROUNDS RAI SED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 11 TH DAY OF OCTOBER, 2017. SD/- SD/- (VIKAS AWASTHY) (D. KARUNAKARA RAO) /JUDICIAL MEMBER / ACCOUNTANT MEMBER PUNE; DATED : 11 TH OCTOBER, 2017. / COPY OF THE ORDER FORWARDED TO : BY ORDER // TRUE COPY // //TRUE COPY// SENIOR PRIVATE SECRETARY , / ITAT, PUNE THE APPELLANT THE RESPONDENT THE CIT(A) - 13, PUNE CIT (A) - 1 3 , PUNE , , B BENCH PUNE; / GUARD FILE.