Deputy Commissioner of Income-tax, V. Tetra Pak India Private Ltd., Pune

ITA 1345/PUN/2015

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 7072 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 10 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-09-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 23-05-2019
• Assessment Year: 2011-2012
• Appeal Filed On: 12-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Double taxation relief; Bonafide belief; Reasonable cause; TDS
• Section: 273B; 201; 13; 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE BEFORE SHRI P.M. JAGTAP, VICE PRESIDENT AND SHRI S.S. VISWANETHRA RAVI, J UDICIAL MEMBER . / ITA NO . 1345 /PUN/201 5 / ASSESSMENT YEAR : 20 1 1 - 12 DY. DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION), CIRCLE 2, PUNE ....... / APPELLANT / V/S. TETRA PAK INDIA PRIVATE LIMITED, PLOT B/53, MIDC, CHAKAN, PHASE - 2, VILLAGE - VASULI, TALUKA - KHED, PUNE 410501 PAN : AAACT3467B / RESPONDENT ASSESSEE BY : SHRI NIKHIL PATHAK REVENUE BY : SHRI DEEPAK GARG / DATE OF HEARING : 2 6 - 08 - 2020 / DATE OF PRONOUNCEMENT : 08 - 0 9 - 2020 / ORDER PER S.S. VISWANETHRA RAVI, JM : THIS APPEAL BY THE REVENUE AGAINST THE ORDER DATED 28 - 07 - 2015 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 13 , PUNE [CIT(A)] FOR ASSESSMENT YEAR 201 1 - 12 WHEREIN HE DELETED THE PENALTY IMPOSED BY THE AO U/S. 271C OF THE ACT. 2 ITA NO . 1345/PUN/2015, A.Y. 2011 - 12 2. THE REVENUE RAISED THREE GROUNDS CHALLENGING THE ACTION OF CIT(A) IN DELETING THE PENALTY BY APPLYING THE PROVISIONS U/S. 273B OF THE ACT. 3. HEARD BOTH PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS U/S. 271C OF THE ACT FOR NON - DEDUCTION OF TDS ON PAYMENTS TO FOREIGN COMPANIES FOR DESIGN, EXPE NSES, SOFTWARE LICENSES/IT SUPPORT, CONSULTANCY SERVICES, TRAINING, REPAIR AND MAINTENANCE. ACCORDING TO ASSESSING OFFICER SUCH INCOME IS CHARGEABLE TO TAX IN INDIA AS ROYALTY/FTS AS PER SECTION 9(1)(VI) AND 9(1)(VII) OF THE ACT UNDER THE DTAA WITH THE RE SPECTIVE COUNTRIES. WE NOTE THAT THE ASSESSEE CONTENDED BEFORE THE ASSESSING OFFICER IN THE PENALTY PROCEEDINGS THAT THE PAYMENTS IN RESPECT OF SOFTWARE ARE NOT TAXABLE AS ROYALTY IN THE HANDS OF NON - RESIDENT S AND NO TAXES ARE REQUIRED TO BE DEDUCTED AT S OURCE. HAVING NOT ACCEPTING THE SUBMISSIONS OF ASSESSEE, THE ASSESSING OFFICER IMPOSED PENALTY OF RS.2,11,18,905/ - U/S. 271 C OF THE ACT. 4. BEFORE THE CIT(A) IT WAS CONTENDED THAT THE ASSESSEE UNDER BONAFIDE BELIEF THAT NO TAX DEDUCTABLE AT SOURCE ON T HE AFORESAID REMITTANCES TO THE FOREIGN ENTITIES AS PER THE PROVISIONS OF RELEVANT DTAA AND BY RELYING ON EXPERT OPINION OF CHARTERED ACCOUNTANT IN THE FORM 15CB THE ASSESSEE DID NOT DEDUCT TDS. FURTHER, IT WAS CONTENDED THAT THE ASSESSING OFFICER MENTION ED THAT THERE WAS DEFAULT ON THE PART OF ASSESSEE TO WITHHOLD TAX BY RELYING UPON THE EXPLANATIONS 4 TO 6 OF SECTION 9(1)(VI) WHICH WERE AMENDED RETROSPECTIVE BY FINANCE ACT, 2012 W.E.F. 01 - 06 - 1976. THE CIT(A) HELD THAT THE ISSUE IS DEBATABLE AS THERE WER E DECISIONS IN FAVOUR OF ASSESSEE AS WELL AS IN FAVOUR OF REVENUE WHEREIN HE OBSERVED THAT THE PAYMENTS ARE NOT TAXABLE AND OTHERS WERE OF THE VIEW THAT THE PAYMENT IS TAXABLE. THE 3 ITA NO . 1345/PUN/2015, A.Y. 2011 - 12 CIT(A) CONSIDERING THE REASONABLE CAUSE AS CONTEMPLATED U/S. 27 3 B OF THE ACT DELETED THE PENALTY AS IMPOSED BY THE ASSESSING OFFICER U/S. 271C OF THE ACT. 5. BEFORE US, THE LD. DR, SHRI DEEPAK GARG SUBMITS THAT THE CIT(A) DID NOT DISCUSS THE ITEMWISE AT LEAST ON DISALLOWANCE CONFIRMED BY HIM. THE ORDER OF CIT(A) IN QUANTUM APPEAL WAS NOT AVAILABLE TO THE AO AT THE TIME OF PASSING PENALTY ORDER. HE REFERRED TO PAGE 154 OF THE PAPER BOOK AND ARGUED THE ITAT CONFIRMED DISALLOWANCE TO AN EXTENT OF RS.14,44,106/ - AND PRAYED TO CONFIRM THE PENALTY TO THAT EXTENT AND SUPP ORTED THE ORDER OF AO. 6. THE LD. AR, SHRI NIKHIL PATHAK, SUBMITS THAT THERE WAS NO DISCUSSION WHATSOEVER MADE BY THE AO IN THE PENALTY ORDER REGARDING THE SOFTWARE AND TRAINING REMITTANCES. THE SAID TRANSACTIONS WERE PREVALENT FOR FOUR ASSESSMENT YEAR S THAT ARE 2007 - 08, 2009 - 10, 2010 - 11 AND 2011 - 12. HE SUBMITS THAT NO PENALTY PROCEEDINGS WERE INITIATED FOR A.YS. 2009 - 10 AND 2010 - 11 BUT THE AO INITIATED ONLY FOR A.Y. 2007 - 08 AND 2011 - 12 AND REFERRED TO PAGE 37 OF THE PAPER BOOK. FURTHER, HE SUBMITS TH AT THE ASSESSEE WAS UNDER BONAFIDE BELIEF HAS THE PAYMENTS WERE MADE OUT OF INDIA AND THE ISSUE THEN WAS HIGHLY DEBATABLE. WE NOTE THAT AS RIGHTLY POINTED OUT BY THE LD. AR THAT THERE WAS NO DISCUSSION REGARDING THESE SOFTWARE AND TRAINING REMITTANCES IN THE PENALTY ORDER BY THE AO. FURTHER, WE FIND THAT THIS TRIBUNAL IN ASSESSEES OWN CASE FOR A.YS. 2009 - 10 TO 2011 - 12 IN ITA NOS. 1857 TO 1859/PUN/2014 VIDE ORDER DATED 09 - 09 - 2019 IN PARA 14 IT WAS HELD THE CLAUSE OF MAKE AVAILABLE OF TECHNOLOGY REQUIRES TO BE SATISFIED IN PROVIDING TRAINING . IN THE ABSENCE OF ANY TECHNOLOGY BEING TRANSFERRED AND PROVIDING GENERAL TRAINING OR ATTENDING SEMINAR AND 4 ITA NO . 1345/PUN/2015, A.Y. 2011 - 12 SUCH RECEIPTS ARE NOT TAXABLE IN THE HANDS OF ENTITIES . THEREFORE, IN OUR OPINION , AT THE TIME OF I NITIATING PENALTY PROCEEDINGS THE ISSUE WAS HIGHLY DEBATABLE AND WE FIND FORCE IN THE SUBMISSIONS OF LD. AR THAT THE ASSESSEE WAS IN THE BONAFIDE BELIEF THAT THE PAYMENTS ARE NOT TAXABLE. THEREFORE, THE REASONABLE C L AUSE CONTEMPLATED U/S. 273B AS APPLIED BY THE CIT(A) IS JUSTIFIED. THUS, GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 7. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 08 TH SEPTEMBER, 2020 . SD/ - SD/ - ( P.M. JAGTAP ) ( S.S. VISWANETHRA RAVI ) VICE PRESIDENT JUDICIAL MEMBER / PUNE; / DATED : 08 TH SEPTEMBER, 2020. RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(A) - 13, PUNE 4. THE CIT (IT/TP), PUNE 5. , , , / DR, ITAT, B BENCH, PUNE. 6. / GUARD FILE. // // TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE