DCIT (IT) 2(2)(1), MUMBAI V. INGRAM MICRO INDIA LTD, MUMBAI

ITA 1385/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9108 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Assessment Year: 2008-2009
• Appeal Filed On: 09-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K MOHANDA S
• Assessee Lawyers: P B CHHAPGAR
• Keywords: Double taxation relief; Non-deduction of tax

Judgement Text

INCOME-TAX APPELLATE TRIBUNAL - I BENCH MUMBAI , ,, , . . . . . . . . , ,, , BEFORE S/SHRI RAJENDRA, ACCOUNTANT MEMBER AND C.N. PRASAD, JUDICIAL MEMBER / ITA NO.1385 & 1386/MUM/2015: /ASSESSMENT YEAR-2008-09 DCIT(IT)-2(2)(1), MUMBAI. VS. M/S. INGRAM MICRO INDIA LIMITED, GODREJ I.T. PARK, B-BLOCK, 5 TH FLOOR, PIROJSHAHNAGAR, LBS ROAD, VIKHROLI (WEST), MUMBAI 79 PAN : AABCT 1296 R (APPELLANT) (RESPONDENT) / CO.NO.169 & 170/MUM/2015: /ASSESSMENT YEAR-2008-09 M/S. INGRAM MICRO INDIA LIMITED, VIKHROLI (WEST), MUMBAI 79 VS. DCIT(IT)-2(2)(1), MUMBAI. (APPELLANT) (RESPON DENT) REVENUE BY: SHRI K. MOHANDAS - DR ASS ESSEE BY: SHRI P.B. CHHAPGAR CA / DATE OF HEARING: 25/10/2016 / DATE OF PRONOUNCEMENT: 06/01/2017 , ,, ,1961 1961 1961 1961 254 254 254 254( (( (1 11 1) )) ) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) , / PER RAJENDRA A.M. - CHALLENGING THE ORDERS DATED 30/10/2014 OF THE CIT( A)-10, MUMBAI, THE ASSESSING OFFICER (AO)AND THE ASSESSEE HAVE FILED THE ABOVE APPEALS/C ROSS OBJECTIONS (CO.S). BRIEF FACTS : ASSESSEE COMPANY IS WHOLESALER OF COMPUTER HARDWARE , SOFTWARE AND OTHER ELECTRONIC ITEMS. A SURVEY U/S.133A OF THE ACT WAS CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSEE ON 23/ 07/2011.DURING THE SURVEY, THE ASSESSEE WAS ASKED T O FILE EXPLAINATION ABOUT NON-DEDUCTION OF TAX FOR MANAGEMENT SERVICES, REBATE AND REIMBURS EMENT ETC. WHILE MAKING PAYMENT TO ITS GROUP ENTITIES.AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE, THE ASSESSING OFFICER HELD THAT THE ASSESSEE ENTERED INTO AGREEMENT WITH FOREI GN ENTITY ON 01/01/2005 FOR PROVIDING CERTAIN SERVICES TO ITS INDIAN COUNTERPARTS,THAT TH E ASSESSEE WAS NOT CORRECT IN HOLDING THAT SERVICES WERE NOT TECHNICAL IN NATURE AND WERE ALSO NOT MADE AVAILABLE, THAT SERVICES WERE IN THE NATURE OF TECHNICAL CONSULTANCY,MANAGERIAL, ADV ISORY IN THE AREA OF FINANCE, BUSINESS ANALYSIS, CONTROLLING AND PROCESSING IT INFRASTRUCT URE ETC.,THAT THE SAID SERVICES FELL IN THE AMBIT OF SECTION 9(1)(VII) OF THE ACT READ WITH ART ICLE 12(4) OF THE DTAA BETWEEN INDIA AND USA.HE HELD THAT ASSESSEE HAS MADE PAYMENT OF RS. 2 5.34 CRORES WITHOUT DEDUCTING TAX AT ITA.S /1385 & 1386 /MUM/2015&CO.S.169 & 170/MUM/2016 2 SOURCE,THAT THE TRANSACTION OF THE NATURE WAS FEES FOR TECHNICAL SERVICES, THAT THE TAX AMOUNT TO BE CALCULATED AS PER ARTICLE 12(4) WAS 2.53 CRORES. ACCORIDNGLY, HE DIRECTED THE AMOUNT OF PENALTY UNDER SECTION 201 AND INTEREST UNDER SECTIO N 201(1A) OF THE ACT. 3. AGGREIVED BY THE ORDER OF THE ASSESSING OFFICER, TH E ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA).BEFORE HIM,IT WAS A RGUED THAT ORDER PASSED BY THE ASSESSING OFFICER ON 28/03/2014 UNDER SECTION 201/201(1A) OF THE ACT FOR THE A.Y. 2008-09 WAS BARRED BY TIME LIMIT AS PER THE PROVISO INSTRUCTION 201(3) OF THE ACT, THAT THE ORDER PASSED BY THE AO WAS BAD IN LAW AND HAD TO BE QUASHED,THAT PAYMENT M ADE BY THE ASSESSEE WAS NOT FEE FOR TECHNICAL SERVICES,THAT THE AO HAD ERRED IN REJECTI NG THE SUBMISSION MADE BY IT THAT THE SERVICES RENDERED WERE NOT TECHNICAL IN NATURE AND ALSO DID NOT MAKE AVAILABLE TECHNICAL KNOWLEDGE, EXPERIENCE, SKILL, NO HOW OR PROCESS.AFT ER CONSIDERING THE SUBMISSION OF THE ASSESSEE AND THE ORDER OF THE AO PASSED U/S. 201/ 2 01(1A) OF THE ACT,THE FAA HELD THAT THE ORDER PASSED BY THE AO WAS BARRED BY LIMITATION. H E REFERRED TO THE PROVISO 201(3) OF THE ACT AND HELD ORDER WAS NOT PASSED WITHIN TIME FRAME D PRESCRIBED BY THE ACT. ALLOWING THE APPEAL OF THE ASSESSEE, HE ANNULLED THE ORDER OF TH E AO. 4. DURING THE COURSE OF HEARING BEFORE US, THE DEPARTM ENTAL REPRESENTATIVE (DR) REFERRED TO THE FINANCIAL BILL 2009, WHEREIN AMENDMENTS WERE PR OPOSED. HE STATED THAT NO TIME LIMIT HAD BEEN PRESCRIBED FOR ORDER UNDER SUB-SECTION (1) OF 201 WHERE THE DEDUCTIVE WAS NON-RESIDENT. CLAUSE (C) OF THE ACT.THE AUTHORISED REPRESENTATIVE (AR)STATED THAT THERE WAS NO AMENDMENT INSTRUCTION DEALING WITH THE TIME LIMIT, THAT IT WA S ONLY A PROPOSAL. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT THE DR HAD REFERRED TO THE FINANCE BILL. IN OUR OPINION , THESE WERE THE PROPOSALS THAT WERE TO BE RECTIFIED BY THE PARLIAMENT TO BECOME PART OF THE A CT.THE ACT DOES NOT INCLUDE THE PROPOSALS. THEREFORE, IN OUR OPINION,THE ORDER OF FAA DOES NOT SUFFER FROM ANY LEGAL INFIRMITY. THE TIME LIMIT PRESCRIBED BY THE ACT WAS OVER ON 31/03/ 2011 FOR THE YEAR UNDER CONSIDERATION AS PER THE PROVISO 201(3) OF THE ACT.UPHOLDING HIS ORD ER,WE DECIDE EFFECTIVE GROUND OF APPEAL AGAINST THE AO. ITA/1386/MUM/2015 THE FACTS OF THE CASE ARE IDENTICAL TO THE FACTS OF THE EARLIER APPEAL,EXCEPT FOR THE AMOUNT INVOLVED.THE SECOND ORDER WAS PASSED FOR THE PAYMEN T MADE BY THE ASSESSEE TO THE TUNE OF ITA.S /1385 & 1386 /MUM/2015&CO.S.169 & 170/MUM/2016 3 RS. 19.93 CRORES FOR THE YEAR UNDER CONSIDERATION.F OLLOWING OUR EARLIER ORDER, WE DISMISS THE APPEAL FILED BY THE AO. CO/169/MUM/2016 DURING THE COURSE OF HEARING BEFORE US, THE AR ARGU ED THAT THE FAA HAD NOT DECIDED THE GROUND THAT THE PAYMENT IN QUESTION WAS NOT CHARGEA BLE TO TAX UNDER THE ACT, THAT THE ISSUE OF MAKING AVAILABLE OF SERVICES WERE RAISED BEFORE HIM , BUT HE DID NOT ADJUDICATE THE SAME. DEPARTMENTAL REPRESENTATIVE LEFT THE ISSUE TO THE D ISCRETION OF THE BENCH. WE FIND THAT THE FAA HAD QUASHED THE ORDER OF THE A O,THAT HE DID NOT ADJUDICATE THE ISSUES RAISED BY THE ASSESSEE. IN OUR OPINION,THE INTEREST OF JUSTICE THE MATTER SHOULD BE RESTORED BACK TO THE FILE OF THE FAA FOR FRESH ADJUDICATION. HE I S DIRECTED TO AFFORD REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE.EFFECTIVE GROUND OF APPE AL, RAISED BY THE ASSESSEE IS ALLOWED, IN ITS FAVOUR IN PART. CO/170/MUM/2016: FOLLOWING OUR EARLIER ORDER,CO FILED BY THE ASSESSE E IS ALLOWED IN PART, AS THE FACTS OF BOTH THE MATTERS ARE IDENTICAL. AS A RESULT,APPEALS FILED BY THE AO ARE DISMISSED A ND CO.S OF THE ASSESSEE STAND PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH JANUARY, 2017. 06 , 2017 SD/- SD/- ( . . . . . . . . / C.N. PRASAD ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 06 .01.2017. VR/- / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR K BENCH, ITAT, MUMBAI / , , . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.