ATOS INFORMATION TECHNOLOGY HK LTD, MUMBAI V. DCIT (IT) 1(1)(2), MUMBAI

ITA 1464/MUM/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3690 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: L
• Next Hearing Date: 07-12-2015
• Assessment Year: 2011-2012
• Appeal Filed On: 11-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JABIR S CHOUHAN
• Keywords: Double taxation relief; Principle of natural justice; Retrospective amendment
• Section: 143(3); 234B

Judgement Text

L IN THE INCOME TAX APPELLATE TRIBUNAL L BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO. 1464 /MUM/2015 ( / ASSESSMENT YEAR : 2011-12) ATOS INFORMATION TECHNOLOGY HK LIMITED, C/O ATOS INDIA PVT. LTD.,PLANT NO. 5, GODREJ & BOYCE MFG. CO. LTD., PIROJSHANAGAR, LBS MARG, VIKHROLI (W), MUMBAI 400 097. / V. DEPUTY COMMISSIONER OF INCOME TAX-(INTERNATIONAL TAXATION) 1(1)(2), SCINDIA HOUSE, MUMBAI. ./ PAN : AAKCS8720L ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY SHRI KANCHUN KAUSHAL & SHRI DHANESH BAFNA REVENUE BY : SHRI JABIR S. CHOUHAN (CIT- DR) / DATE OF HEARING : 08-12-2015 / DATE OF PRONOUNCEMENT : / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER THIS APPEAL, FILED BY THE ASSESSEE COMPANY, BEING ITA NO. 1464/MUM/2015, IS AGAINST THE ASSESSMENT ORDER DATE D 28.01.2015 PASSED BY LEARNED ASSESSING OFFICER (HEREINAFTER CALLED T HE AO ) U/S 143(3) OF THE INCOME TAX ACT,1961 (HEREINAFTER CALLED THE ACT) READ WITH SECTION 144C(13) OF THE ACT , PASSED IN PURSUANCE OF DIRECTIONS DATE D 22.12.2014 U/S 144C(5) OF THE ACT PASSED BY THE DISPUTES RESOLUTION PANEL- IV, MUMBAI (HEREINAFTER CALLED THE DRP), FOR THE ASSESSMENT YEAR 2011-12. ITA 1464/MUM/2015 2 2. THE GROUND RAISED BY THE ASSESSEE COMPANY IN THE MEMO OF APPEAL FILED WITH THE TRIBUNAL READS AS UNDER:- 1.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED DEPUTY COMMISSIONER OF INCOME-TAX (INTERNATI ONAL TAXATION) 1 (1 )(2), MUMBAI ('THE LEARNED AO') AND THE DISPUTE RESOLUTION PANEL ('THE DRP') ERRED IN HOLDING THE SUM OF RS.40,46,45, 646 AS 'ROYALTY' AND 'FEES FOR TECHNICAL SERVICES' UNDER SECTION 9(1)(VI ) AND 9(1)(VII) OF THE INCOME-TAX ACT, 1961 ('THE ACT'). IN DOING SO, THE LE ARNED AO AND THE DRP DISREGARDED THE CONTRACT FOR PROVISION OF COMPUTIN G SERVICES ENTERED INTO BETWEEN THE APPELLANT AND STANDARD CHARTER ED BANK, INDIA (SCB INDIA') FOR THE SERVICES RENDERED BY THE APPELLANT TO SCB INDIA. THE APPELLANT HUMBLY PRAYS THAT THE AFORESAID RECEIPTS SHOULD NOT BE TAXED IN INDIA AND THE LEARNED AO BE DIRECTED ACCORD INGLY. 1.2 WITHOUT PREJUDICE TO ABOVE GROUND NO. 1.1, THE LEAR NED AO AND THE DRP ERRED IN DENYING THE BENEFIT OF THE RATE PRESCR IBED UNDER SECTION 115A OF THE ACT. IN DOING SO, THE LEARNED AO AND THE DRP HELD THAT SCB INDIA BEING A NON RESIDENT COMPANY DOES NOT FA LL WITHIN THE AMBIT OF THE TERM 'INDIAN CONCERN' AS PER THE PROVISI ONS OF SECTION 115A OF THE ACT AND ACCORDINGLY, THE PROVISIONS OF SECTION 115A OF THE ACT DO NOT APPLY TO THE PAYMENTS MADE BY SCB INDIA. THE APPELLANT HUMBLY PRAYS THAT THE LEARNED AO BE DIRE CTED TO APPLY THE RATE AS PRESCRIBED UNDER SECTION 115A OF THE ACT. 1.3 WITHOUT PREJUDICE TO GROUND NOS. 1.1 TO 1.2, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, WHILE CALCUL ATING THE TAX LIABILITY OF THE APPELLANT, THE LEARNED AO HAS ERRED IN TAXING INCOME ON GROSS RECEIPTS INSTEAD OF NET RECEIPTS RECEIVED BY T HE APPELLANT (I.E. AFTER DEDUCTING THE EXPENSES ATTRIBUTABLE TO GROSS RECEIPTS) . THE APPELLANT HUMBLY PRAYS THAT THE LEARNED AO BE DI RECTED TO COMPUTE THE CHARGEABLE INCOME OF THE APPELLANT BY ADOP TING NET RECEIPTS INSTEAD OF GROSS RECEIPTS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LEARNED AO ERRED IN GRANTING A SHORT CREDIT OF TDS AM OUNTING TO RS.4,33,02,870. THE APPELLANT HUMBLY PRAYS THAT THE LEARNED AO BE DIRE CTED TO GRANT A CREDIT FOR THE AFORESAID TDS AS PER THE SECTION 199 OF THE ACT READ WITH RULE 37BA OF THE INCOME-TAX RULES, 1962. ITA 1464/MUM/2015 3 3 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED AO ERRED IN LEVYING INTEREST UNDER SECTION 23 4B OF THE ACT AMOUNTING TO RS. 5,83,38,488 WITHOUT APPRECIATING THA T THE ENTIRE INCOME OF THE APPELLANT IS SUBJECT TO DEDUCTION OF TAX AT SOURCE AND HENCE, THE QUESTION OF ADVANCE TAX DOES NOT ARISE. THE APPELLANT HUMBLY PRAYS THAT THE LEARNED AO BE DIR ECTED TO DELETE THE INTEREST LEVIED UNDER SECTION 2348 OF THE ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A COMPANY INCORPORATED IN HONG KONG PROVIDING SERVICE/FACILIT IES FOR THE PROCESSING OF DATA THROUGH COMPUTER SOFTWARE. THE ASSESSEE COMPAN Y IS A NON-RESIDENT IN INDIA. IT HAS DECLARED NIL INCOME IN THE RETURN O F INCOME FILED WITH THE REVENUE AND CLAIMED REFUND AMOUNTING TO RS. 8,73,61 ,947/- BEING THE ENTIRE AMOUNT OF TDS. 4. IT IS SUBMITTED BY THE ASSESSEE COMPANY THAT THE ASSESSEE COMPANY HAD ENTERED INTO A CONTRACT FOR PROVIDING DATA PROCESSI NG SUPPORT SERVICE TO STANDARD CHARTERED BANK, INDIA, WHO ARE IN THE BUSI NESS OF BANKING IN INDIA. IT IS SUBMITTED BY THE ASSESSEE COMPANY THAT THE AS SESSEE COMPANY ENTERED INTO A CONTRACT/AGREEMENT KNOWN AS COCTEAU AGREEME NT DATED 12.02.2004 WHEREBY DATA RELATING TO BRANCH TRANSACTION WAS FED BY STANDARD CHARTERED BANK (SCB IN SHORT) FROM THEIR WORKSTATION AND TR ANSMITTED TO THE ASSESSEE COMPANY DATABASE CENTRE IN HONG KONG. IT IS SUBMITT ED BY THE ASSESSEE COMPANY THAT THE APPLICATION SOFTWARE OF SCB WAS NE ITHER DESIGNED NOR ACQUIRED BY THE ASSESSEE COMPANY. THE HARDWARE NET WORK AND SOFTWARE USED BY THE SCB AT THEIR WORKSTATIONS WERE OWNED BY SCB ITSELF. IT IS FURTHER SUBMITTED THAT THE ASSESSEE COMPANY DID NOT HAVE AN Y ROLE IN PREPARATION AND TRANSMISSION OF DATA FROM SCB WORKSTATIONS IN I NDIA TO THE ASSESSEE COMPANY IN HONG KONG. ONCE THE DATA WAS RECEIVED B Y THE ASSESSEE COMPANY FROM SCB WAS LOOKED INTO, OUTPUT DATA WAS T RANSMITTED BACK TO SCB USING THE SAME SOFTWARE, AS USED AND PROVIDED B Y SCB, AFTER RETAINING THE BACK OFFICE DATA. IT WAS SUBMITTED BY THE ASSE SSEE COMPANY THAT IT HAD ITA 1464/MUM/2015 4 NO RIGHT TO ACCESS THE DATA OF SCB INDIA. IT WAS SU BMITTED BY THE ASSESSEE COMPANY THAT SIMILAR SERVICES WERE MADE AVAILABLE B Y THE ASSESSEE COMPANY TO OTHER CLIENTS AS WELL. IT WAS SUBMITTED BY THE A SSESSEE COMPANY THAT NEITHER SCB HAD ANY RIGHT TO EXPLOIT THE DATA INDEP ENDENTLY NOR THERE WAS ANY USER RIGHTS, PROCURED BY THE ASSESSEE COMPANY T O ACCESS THE DATA BASE FOR OR IN FAVOUR OR BEHALF OF SCB. IT WAS FURTHER S UBMITTED THAT IN TERMS OF COCTEAU AGREEMENT, THE RESERVE BANK OF INDIA VIDE I TS LETTER DATED 5 TH OCTOBER, 2004 GRANTED APPROVAL FOR SPECIFIC SERVICE S TO BE RENDERED BY THE ASSESSEE COMPANY TO SCB-INDIA AND STORING DATA IN I NDIA AND SCB-INDIA TRANSMITTED THE DATA TO HONG KONG. THE ASSESSEE COM PANY SUBMITTED THAT THE PAYMENT MADE BY SCB-INDIA TO THE ASSESSEE COMPANY F OR USE OF SERVICES PROVIDED BY THE ASSESSEE COMPANY CANNOT BE TERMED A S ROYALTY AS PROVIDED U/S 9(1)(VI) OF THE ACT NOR THE SAME CAN BE CALLED AS FEE FOR TECHNICAL SERVICES AS PROVIDED U/S 9(1)(VII) OF THE ACT. THE ASSESS EE COMPANY SUBMITTED THAT THE TRIBUNAL IN EARLIER YEAR I.E. THE ASSESSMENT YE AR 2009-10 IN ITA NO. 7321/MUM/2012 VIDE ORDERS DATED 19-11-2014 HAD SET ASIDE THE MATTER TO THE FILE OF THE A.O. FOR DE-NOVO DETERMINATION/ADJU DICATION OF THE MATTER AND MORE SO EXPLANATION 5 WERE ADDED TO SECTION 9(1)(VI ) OF THE ACT WITH RETROSPECTIVE EFFECT AND TO CONSIDER THE EFFECT OF SAME AFTER CONSIDERING THE AFORE-STATED RETROSPECTIVE AMENDMENT IN THE ACT. I T WAS ALSO SUBMITTED THAT THERE IS NO DOUBLE TAXATION AVOIDANCE AGREEMENT(DTA A) ENTERED INTO BY INDIA WITH HONGKONG AND HENCE THE DETERMINATION OF INCOME BEING ACCRUED IN INDIA AND ASSESSABLE IN THE HANDS OF THE ASSESSEE COMPANY HAS TO BE CONSIDERED WITH RESPECT TO SECTION 9(1)(VI) AND 9(1)(VII) OF T HE ACT READ WITH OTHER PROVISIONS OF THE ACT AS APPLICABLE. IT WAS SUBMIT TED THAT THE ASSESSEE COMPANY IS USING THE INFORMATION/INFRASTRUCTURE OWN ED BY IT TO PROVIDE FACILITY/SERVICES TO SCB-INDIA AND THE SAME SERVICE S ARE ALSO PROVIDED TO OTHER CLIENTS APART FROM SCB-INDIA AND THE ASSESSEE COMPA NY IS MERELY DOING DATA PROCESSING WORK THROUGH COMPUTER SOFTWARE ON BEHALF OF THE SCB-INDIA. IT WAS SUBMITTED THAT THE ASSESSEE COMPANY HAD AGREEME NT WITH STANDARD ITA 1464/MUM/2015 5 CHARTERED BANK FOR 68 COUNTRIES FOR DATA PROCESSING OF THE STANDARD CHARTERED BANK. IT WAS SUBMITTED BY THE ASSESSEE C OMPANY THAT THE PAYMENT MADE BY THE SCB-INDIA CANNOT BE DEEMED TO B E ROYALTY OR FEE FOR TECHNICAL SERVICES AS PER PROVISIONS OF THE ACT. I T WAS SUBMITTED THAT THE PROCESSING OF DATA IS DONE IN HONG KONG AND NOT IN INDIA. OUR ATTENTION WAS DRAWN TO THE INVOICES RAISED AND THE PAYMENT BEING MADE CORRESPONDINGLY TOWARDS THE SAME. IT WAS CONTENDED THAT NO TECHNIC AL SERVICES WERE RENDERED WHEREAS ONLY PROCESSING OF DATA WAS DONE AND THAT T OO AT HONGKONG AND NO PART OF SERVICES ARE RENDERED IN INDIA. THE A.O. H AS CHOSEN THE SELECTIVE CLAUSES OF THE CONTRACT AND HELD THAT THE PAYMENT R ECEIVED BY THE ASSESSEE COMPANY FROM SCB-INDIA IS PAYMENT FOR ROYALTY AND F EE FOR TECHNICAL SERVICES AS DEFINED U/S 9(1)(VI) AND 9(1)(VII) OF THE ACT RE SPECTIVELY. IT WAS FURTHER SUBMITTED THAT THERE IS NO BUSINESS CONNECTION OF T HE ASSESSEE COMPANY IN INDIA. THE LD. COUNSEL FOR THE ASSESSEE COMPANY ALS O DISTINGUISHED THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE O F (2011)340 ITR 333(BOM. HC) AND SUBMITTED THAT IN THE SAID CASE BS E/NSE HAD IN THIS CASE HAD GIVEN ACCESS TO THE USER WHEREBY THE TRANSACTIO NS /TRADING BETWEEN THE BUYER AND SELLER OF THE SECURITIES IS CONCLUDED WHI CH IS REGULATED, CONTROLLED AND MANAGED BY THE STOCK EXCHANGE TILL THE TRANSACT IONS ARE FINALLY SETTLED WHILE IN THE CASE OF THE ASSESSEE COMPANY THE ACCES S TO INFRASTRUCTURE/SOFTWARE OWNED BY THE ASSESSEE COMPA NY IS NOT GIVEN TO THE SCB. THE LD. COUNSEL ALSO RELIED ON THE FOLLOWING DECISIONS:- 1. (2007) 106 TTJ 620(DEL. TRIB.) IN THE CASE OF SH ERATON INTERNATIONAL INC. V. DDIT 2. (2001)170 CTR 238(MAD. HC) IN THE CASE OF SKYCEL L COMMUNICATIONS LIMITED V. DCIT ITA 1464/MUM/2015 6 AND CONTENDED THAT IT IS ONLY PROCESSING OF DATA OF SCB-INDIA AS PER THE BANKING REGULATORY REQUIREMENT AND ANALYSIS REPORTS WHICH ARE GENERATED AS PER THE REQUIREMENT OF STANDARD CHARTERED BANK. 5.ON THE OTHER HAND, THE LD. D.R. SUBMITTED THAT TH E MUMBAI-TRIBUNAL IN THE ASSESSMENT YEAR 2009-10 HAS SET ASIDE THE MATTER TO THE FILE OF A.O. FOR DE- NOVO DETERMINATION OF ALL THE ISSUES RAISED BY THE ASSESSEE COMPANY AND MORE SO WHEN THERE ARE RETROSPECTIVE AMENDMENTS IN SECTION 9 OF THE ACT. THE MATTER BEING SIMILAR, THIS MATTER SHOULD ALSO NEEDS TO BE SET ASIDE IN VIEW OF RETROSPECTIVE AMENDMENTS IN SECTION 9 OF THE ACT, THE A.O. WILL RE-DECIDE THE ISSUE AFTER CONSIDERING THE RETROSPECTIVE AMENDMENT S BROUGHT IN SECTION 9 OF THE ACT. IT WAS ALSO SUBMITTED THAT THE MUMBAI-TRIB UNAL FOR THE ASSESSMENT YEAR 2005-06 AND 2008-09 HAS ALSO SET ASIDE AND RES TORED THE MATTER TO THE FILE OF THE AO VIDE ORDERS DATED 07-03-2014 IN ITA NO. 6562/MUM/2009 , 6888/MUM/2011, 219/MUM/2010 AND 6889/MUM/2011 FOR T HE ASSESSMENT YEAR 2006-07 AND 2008-09 ALSO. THE LD. DR SUBMITTED THAT NO DOUBLE TAXATION AVOIDANCE AGREEMENT (DTAA) HAS BEEN ENTERE D INTO BY AND BETWEEN INDIA AND HONG KONG AND HENCE TAXABILITY OF THE SER VICE CHARGES PAID BY THE SCB-INDIA TO THE ASSESSEE COMPANY HAS TO BE DETERMI NED IN ACCORDANCE WITH THE ACT. THE LD. DR SUBMITTED THAT THE ASSESSEE COM PANY IS NOT MERELY PROCESSING THE DATA OF SCB . THE ASSESSEE COMPANY HAD ENTERED INTO A CONTRACT FOR PROVIDING DATA PROCESSING SUPPORT SERV ICE TO STANDARD CHARTERED BANK IN INDIA. THE STAFF AND KEY PERSONNEL OF THE ASSESSEE COMPANY ARE COMPULSORILY APPOINTED WITH THE CONSENT/APPROVAL OF THE STANDARD CHARTERED BANK AND THE ASSESSEE COMPANY HAS NO AUTHORITY TO A PPOINT KEY PERSONNEL WITHOUT THE APPROVAL OF THE SCB. THE SCB HAS ALSO A CCESS AND CONTROL OVER THE INFRASTRUCTURE AND SOFTWARE OF THE ASSESSEE COM PANY . THERE IS A DIRECT CONTROL OVER THE INFRASTRUCTURE AND SOFTWARE OF THE ASSESSEE COMPANY BY SCB THE LD. D.R. RELIED UPON THE FOLLOWING DECISIONS:- ITA 1464/MUM/2015 7 1. (1996)222 ITR 354(KER. HC) IN THE CASE OF COCHIN RE FINERIES LIMITED V. CIT 2. (2009)309 ITR 244(UTTARAKHAND HC) IN THE CASE OF CI T V. ONGC LIMITED 3. (2007)289 ITR 355(AAR) IN RE. CARGO COMMUNITY NETW ORK PRIVATE LIMITED & 4. (2011) 340 ITR 333(BOM. HC) IN KOTAK SECURITIES LIM ITED THE LD. DR SUBMITTED THAT THE PROVISIONS OF THE ACT IS APPLICABLE AS THERE IS NO DTAA AGREEMENT WITH HONG KONG. THE EXPLANATION 5 IS ADDED TO SECTION 9(1)((VI) OF THE ACT WITH RETROSPECTIVE EFFECT AND HENCE THE A.O. HAS RIGHTLY HELD THAT THE INCOME EARNED BY THE ASSESSEE COMPANY IS R OYALTY AND TECHNICAL SERVICES AND IS CHARGEABLE TO TAX IN INDIA U/S 9(1) (VI) AND 91(1)(VII) OF THE ACT. THE LD. DR SUBMITTED THAT THE DECISIONS RELIED UPON BY THE ASSESSEE COMPANY ARE NOT APPLICABLE TO THE PRESENT CASE AS IN THOSE CASES, THERE IS DTAA WITH THE RESPECTIVE COUNTRIES AND THEY ARE RENDERED PRIO R TO THE RETROSPECTIVE AMENDMENT IN SECTION 9 OF THE ACT BY FINANCE ACT, 2 012. THE LD. DR SUBMITTED THAT THE ASSESSEE COMPANY IS NOT MERELY P ROCESSING THE DATA OF SCB-INDIA WHEREAS IT IS A CASE OF PAYMENT OF ROYALT Y AND TECHNICAL SERVICES. 6. THE LD. COUNSEL FOR THE ASSESSEE COMPANY, IN THE REJOINDER, SUBMITTED THAT THE CASE OF SHERATON INTERNATIONAL INC.(SUPRA) IS DIRECTLY APPLICABLE TO THE PRESENT CASE AND THE PITH AND SUBSTANCE OF THE AGRE EMENT IS DATA PROCESSING AND THE SAME IS A COMMERCIAL ARRANGEMENT ENTERED IN TO BY THE ASSESSEE COMPANY WITH SCB-INDIA. WITH RESPECT TO GROUND NO. 1.2, THE LD. COUNSEL SUBMITTED THAT THE SCB IS AN INDIAN CONCERN AS DEFI NED U/S 115A OF THE ACT AND IN SUPPORT, HE RELIED UPON THE DECISION IN THE CASE OF JOINT OFFICIAL LIQUIDATOR OF BANK OF CREDIT & COMMERCE (OVERSEAS) LTD. VS. JCIT, REPORTED IN (2006)6 SOT 391(MUM.-TRIB.) AND SUBMITTED THAT THER E IS A TYPOGRAPHICAL ERROR IN THE ORDER OF THE A.O. AND THE RATE AS PRES CRIBED BY SECTION 115A OF ITA 1464/MUM/2015 8 THE ACT IS 10% AND NOT 20%. WITH RESPECT TO THE OT HER GROUNDS, THE ASSESSEE COMPANY SUBMITTED THAT IF THE SAID PAYMENT ARE HELD TO BE INCOME TAXABLE IN INDIA AND BENEFIT OF SECTION 115A OF THE ACT IS DEN IED TO THE ASSESSEE, THEN THE EXPENSES INCURRED BY THE ASSESSEE COMPANY SHOUL D BE ALLOWED IF IT IS HELD TO BE ROYALTY/ FEE FOR TECHNICAL SERVICES. IN SUPPO RT, THE LD. COUNSEL RELIED UPON THE FOLLOWING DECISIONS:- 1. (2003) 85 ITD 478(DEL.-TRIB.) IN THE CASE OF ASIA S ATELLITE TELECOMMUNICATIONS CO. LTD. V. DCIT (ITAT, DELHI BE NCH) & 2. 277 ITR 97 IN THE CASE OF DHV CONSULTANTS BV, IN RE 7. WE HAVE CONSIDERED THE RIVAL CONTENTION AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD INCLUDING THE CASE LAWS CITED BY BOTH THE SIDES. WE HAVE OBSERVED THAT THE MUMBAI-TRIBUNAL IN THE ASSESSEE C OMPANYS OWN CASE FOR THE ASSESSMENT YEAR 2009-10 IN ITA NO. 7321/MUM/201 2, VIDE ORDERS DATED 19-11-2014 DEALT WITH THE SIMILAR MATTER AND THE MU MBAI-TRIBUNAL HELD AS UNDER:- INSTANT APPEAL IS FILED AGAINST THE ORDER OF DRP U NDER SECTION 144C(5), DATED 07.09.2012, WHEREIN, THE FOLLOWING G ROUNDS HAVE BEEN TAKEN: THE UNDER MENTIONED GROUNDS OF APPEAL ARE WITHOUT PREJUDICE TO EACH OTHER. 1.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED ASSISTANT DIRECTOR OF INCOME-TAX (INTERNATI ONAL TAXATION) 1(1), MUMBAI (THE LEARNED AO) AND THE DISPUTE RES OLUTION PANEL (THE DRP) ERRED IN HOLDING THE SUM OF RS. 21,39,7 1,104/- AS ROYALTY AND FEES FOR TECHNICAL SERVICES UNDER S ECTION 9(1)(VI) AND 9(1)(VII) OF THE INCOME-TAX ACT, 1961 (THE ACT ). IN DOING SO, THE LEARNED AO AND THE DRP DISREGARDED THE CONTRACT FOR PROVISION OF COMPUTING SERVICES ENTERED INTO BETWEEN THE APPELLA NT AND STANDARD CHARTERED BANK, INDIA (SCB INDIA) FOR TH E SERVICES RENDERED BY THE APPELLANT TO SCB INDIA. ITA 1464/MUM/2015 9 THE APPELLANT HUMBLY PRAYS THAT THE AFORESAID RECEI PTS SHOULD NOT BE TAXED IN INDIA AND THE LEARNED AO BE DIRECTED AC CORDINGLY. 1.2 WITHOUT PREJUDICE TO ABOVE GROUND NO. 1.1, THE LEARNED AO AND THE DRP ERRED IN DENYING THE BENEFIT OF THE RATE PRESCR IBED UNDER SECTION 115A OF THE ACT. IN DOING SO, THE LEARNED A O AND THE DRP HELD THAT SCB INDIA BEING A NON RESIDENT COMPANY DO ES NOT FALL WITHIN THE AMBIT OF THE TERM INDIAN CONCERN AS PE R THE PROVISIONS OF SECTION 115A OF THE ACT AND ACCORDINGLY, THE PRO VISIONS OF SECTION 115A OF THE ACT DO NOT APPLY TO THE PAYMENTS MADE B Y SCB INDIA. THE APPELLANT HUMBLY PRAYS THAT THE LEARNED AO BE D IRECTED TO APPLY THE RATE AS PRESCRIBED UNDER SECTION 115A OF THE ACT. 1.3 WITHOUT PREJUDICE TO GROUND NOS. 1.1 TO 1.2, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, WHILE CALCULA TING THE TAX LIABILITY OF THE APPELLANT, THE LEARNED AO HAS ERRE D IN ADOPTING CHARGEABLE INCOME AS GROSS RECEIPTS INSTEAD OF NET RECEIPTS RECEIVED BUY THE APPELLANT (I.E. AFTER DEDUCTING THE EXPENSE S ATTRIBUTABLE TO GROSS RECEIPTS). THE APPELLANT HUMBLY PRAYS THAT THE LEARNED AO BE D IRECTED TO COMPUTE THE CHARGEABLE INCOME OF THE APPELLANT BY A DOPTING NET RECEIPTS INSTEAD OF GROSS RECEIPTS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED AO ERRED IN GRANTING A SHORT CREDIT OF TDS AMOUNTING TO RS. 9,54,980/-. THE APPELLANT HUMBLY PRAYS THAT THE LEARNED AO BE D IRECTED TO GRANT A CREDIT FOR THE AFORESAID TDS AS PER SECTION 199 OF THE ACT READ WITH RULE 37BA OF THE INCOME-TAX RULES, 1962. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED AO ERRED IN LEVYING INTEREST UNDER SECTION 234A OF THE ACT AMOUNTING TO RS. 42,11,918/-. THE APPELLANT HUMBLY PRAYS THAT THE LEARNED AO BE D IRECTED TO DELETE OR APPROPRIATELY REDUCE THE INTEREST LEVIED UNDER SECTION 234A OF THE ACT. ITA 1464/MUM/2015 10 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED AO ERRED IN LEVYING INTEREST UNDER SECTION 234B OF THE ACT AMOUNTING TO RS. 3,01,85,410/- WITHOUT APPRECIATING THAT THE ENTIRE INCOME OF THE APPELLANT IS SUBJECT TO DEDUCTION OF TAX AT SOURCE AND HENCE, THE QUESTION OF ADVANCE TAX DOES NOT ARISE. THE APPELLANT HUMBLY PRAYS THAT THE LEARNED AO BE D IRECTED TO DELETE THE INTEREST LEVIED UNDER SECTION 234B OF TH E ACT. THAT APPELLANT CRAVES LEAVE TO ADD, TO AMEND, TO SU BSTITUTE, TO WITHDRAW, TO MODIFY, TO ALTER AND/OR RE-INSTATE THE FOREGOING GROUNDS OF THE APPEAL AT OR BEFORE THE TIME OF HEARING. 2. THE FACTS AS EMERGING FROM THE ORDERS OF THE REV ENUE AUTHORITIES ARE THAT THE ASSESSEE IS A COMPANY INCORPORATED IN HONGKONG AND PROVIDING SERVICES AND FACILITIES FOR PROCESSING DA TA THROUGH COMPUTER SOFTWARE. THE ASSESSEE HAD ENTERED INTO A CONTRACT FOR PROVIDING DATA PROCESSING SUPPORT SERVICE TO STANDA RD CHARTERED BANK, INDIA, WHO ARE IN THE BUSINESS OF BANKING IN INDIA. THE ASSESSEE ENTERED INTO A CONTRACT/AGREEMENT DATED 07 .08.2005, WHEREBY NEW DATA RELATING TO BRANCH TRANSACTION WAS FED BY SCB FROM THEIR WORKSTATION AND TRANSMITTED TO THE ASSES SEE DATA BASE CENTRE IN HONGKONG. THE APPLICATION SOFTWARE WAS NE ITHER DESIGNED NOR ACQUIRED BY THE ASSESSEE. IN FACT, HAR DWARE, NETWORK AND SOFTWARE USED BY SCB AT THEIR WORKSTATIONS WERE OWNED BY SCB ITSELF. THE ASSESSEE DID NOT HAVE ANY ROLE IN O PERATION AND TRANSMISSION OF DATA FROM SCB WORKSTATIONS IN INDIA TO THE ASSESSEE IN HONGKONG. ONCE THE DATA WAS RECEIVED BY THE ASSESSEE FROM SCB WAS LOOKED INTO, OUTPUT DATA WAS TRANSMITTED BACK TO SCB, USING THE SAME SOFTWARE, AS USED AND P ROVIDED BY SCB, AFTER RETAINING THE BACK OFFICE DATA. 3. IN THE ENTIRETY, ON TO AND FRO OF DATA TRANSMISS ION, THE ASSESSEE ITA 1464/MUM/2015 11 HAD NO RIGHT TO ACCESS THE DATA OF SCB INDIA. IT WA S FURTHER SUBMITTED THAT NEITHER SCB HAD ANY RIGHT TO EXPLOIT THE DATA INDEPENDENTLY NOR THERE WAS ANY USER RIGHTS, PROCUR ED BY THE ASSESSEE TO ACCESS THE DATA BASE FOR OR IN FAVOUR O R BEHALF OF SCB. SIMILAR SERVICES WERE MADE AVAILABLE BY THE ASSESSE E TO OTHER CLIENTS AS WELL. 4. IN THIS FACTUAL SCENARIO THE PAYMENT MADE BY SCB INDIA, FOR THE USE OF SERVICES PROVIDED BY THE ASSESSEE COULD NOT BE TERMED AS ROYALTY. 5. THE ASSESSEE FURTHER URGED THAT THE SERVICES COU LD NOT BE CHARACTERIZED AS FTS U/S 9(1)(VIII) OF THE INCOME T AX ACT, BECAUSE, THE TO FALL IN SUCH SERVICE CHARACTERIZATION, THE A SSESSEE SHOULD HAVE EXPERTISE/SPECIAL SKILL/KNOWLEDGE TO PROVIDE T HE SERVICE. IN THE PRESENT CASE, THE ASSESSEE DID NOT HAVE ANY OF THE ABOVE QUALIFICATIONS BUT IT WAS A COMPANY, WHICH PROVIDED SERVICES TO CLIENTS, WHO REQUIRED BACK OFFICE RENDITION. 6. THE REVENUE AUTHORITIES AFTER EXAMINING THE WORK MANUAL AND MODUS APPLIED BY THE ASSESSEE, CONCLUDED, THE AO, HOWEVER, HELD THAT THE CONTRACT SUBMITTED BY THE ASSESSEE IN RELATION TO THESE SERVICES WAS ONLY IN THE NATURE O F A CONFIRMATORY LETTER, AND THE SERVICES PERFORMED ACTUALLY FLOWED FORM A C OCTEAU CONTRACT DT. 12.2.2004, WHICH IS A COMPREHENSIVE DOCUMENT OF 113 5 PAGES AND IS SIGNED AND ENTERED INTO BETWEEN ATOS ORIGIN, UK AND STANDARD CHARTERED BANK, UK. THIS FACT IS CLEARLY STATED IN THE CONFIRMATORY LETTER FURNISHED BY THE ASSESSEE. THE AO EXAMINED THE COCT EAU CONTRACT AND FOUND THAT UNDER THE CONTRACT, THE ATOS GROUP COMPA NIES, CALLED THE SUPPLIER COMPANIES, HAVE TO PROVIDE CERTAIN TECHNOL OGY, INFRASTRUCTURE ITA 1464/MUM/2015 12 FACILITIES, ENVIRONMENT AND SERVICES TO THE STANDAR D CHARTERED BANK GROUP IN ACCORDANCE WITH CERTAIN AGREED STANDARDS. THE OBJECTIVE SPELT OUT IN THE CONTRACT IS TO CONTINUOUSLY IMPROVE THE PERFORMANCE AND BUSINESS OPERATIONS OF THE BANK ENTITIES. THE OBJEC TIVES INCLUDE PROVIDING THE SCB GROUP WITH A GLOBAL REACHING, FLE XIBLE AND TECHNOLOGICALLY INNOVATIVE APPROACH IN DELIVERING D ATA CENTRE AND RELATED COMPUTING SERVICES, TO ACCESS BROADER AND D EEPER RANGE OF TECHNOLOGICAL SKILLS AND TO LEVERAGE THE CAPABILITI ES AND TECHNOLOGY OF THE ASSESSEE GROUP FOR RAPID BUSINESS GROWTH. THE E XTENT OF TECHNICAL SUPPORT IS EVIDENT FROM THE SUPPORT AND SERVICES PR OVIDED FOR VARIOUS CRITICAL FUNCTIONS LIKE 24 HOURS ATMS, VERIFICATION OF CLEARING CHEQUES, VISA AUTHORIZATION ETC. THE COCTEAU CONTRACT ALSO P ROVIDED THAT ATOS SHALL BE REQUIRED TO DO PROCUREMENT AND ASSET MANAG EMENT FOR SCB AND TO PROVIDE A PROCEDURAL MANUAL FOR SCB PERSONNE L IN ORDER TO ENSURE THAT ALL TECHNOLOGICAL DEVELOPMENTS AND CHAN GES ARE DOCUMENTED AND PROPERLY MAINTAINED. THE ENTIRE DOCU MENTATION RELATING TO THE PERFORMANCE OF THE SERVICES WAS TO BE MAINTAINED IN AN ONLINE LIBRARY WHICH IS DIRECTLY ACCESSIBLE BY THE SCB GROUP ENTITIES. THE COCTEAU CONTRACT ALSO PROVIDES FOR CREATION OF THE ASSESSEES DATA CENTRE AT HONGKONG, AS PER THE REQUIREMENTS AND STANDARDS LAID DOWN BY SCB. NEW INFRASTRUCTURE AND OPERATING SYSTEMS WERE REQUIRED TO BE SET UP AT THESE CENTERS AND IT IS SPECIFICALLY PROVIDED THAT OPERATIONAL AND REMOTE TECHNICAL SUPPORT SHALL BE DELIVERED VIA A C OMBINATION OF SERVICES FROM ATOS HONGKONG AND OTHER ATOS ENTITIES. 3.3 IN VIEW OF THE ABOVE FACTS, THE AO HELD THAT TH E ASSESSEE HAS PROVIDED SCB INDIA WITH THE USE OF ITS EQUIPMENTS A ND PROCESSES AND HAS ALSO RENDERED SERVICES IN CONNECTION WITH THE S AME. THE PROCEDURE MANUAL COMPLIED BY ATOS FOR THE BENEFIT OF SCB INDI A WAS HELD TO BE INFORMATION FOR WHICH THE RIGHT TO USE HAD BEEN PRO VIDED TO SCB. THE AO HELD THAT IN THESE CIRCUMSTANCES, THE CHARGES PAID BY THE ASSESSEE AMOUNTED TO ROYALTY AS DEFINED IN SECTION 9(1)(VI). IT WAS FURTHER HELD THE ASSESSEE WAS ALSO PROVIDED ADVANCED TECHNICAL S ERVICES. FOR EXAMPLE, THE COCTEAU CONTRACT PROVIDED THAT THE ATO S GROUP WILL PROACTIVELY MONITOR AND MANAGE RESOURCES AND INDIVI DUAL CLUSTERED MANAGEMENT SYSTEMS IN ORDER TO DETECT BOTTLENECKS A ND POTENTIAL ITA 1464/MUM/2015 13 PROBLEMS AND TO AUTOMATICALLY RECOVER FROM CRITICAL SITUATIONS. HE, THEREFORE, HELD THAT THE CHARGES PAID CAN ALSO BE C LASSIFIED AS FEES FOR TECHNICAL SERVICES. THE AO ANALYSED SOME OF THE INV OICES RAISED BY THE ASSESSEE AND HELD THAT THE DESCRIPTION OF SERVICES IN THESE INVOICES STRENGTHENED HIS CONCLUSION THAT THE CHARGES WERE P AID AS ROYALTIES AND FEES FOR TECHNICAL SERVICES. THE AO FURTHER HELD TH AT SECTION 115A IS NOT APPLICABLE IN THE PRESENT CASE SINCE IT APPLIES TO PAYMENTS MADE BY THE GOVERNMENT OR AN INDIAN CONCERN, WHILE IN THE PRESE NT CASE, THE STANDARD CHARTERED BANK IS A FOREIGN BANK ONLY RUNN ING BRANCHES IN INDIA. HE, THEREFORE, HELD THAT THE AMOUNT OF US$ 4 2,34,536/- EQUIVALENT TO RS. 21.4 CRORES WAS CHARGEABLE TO TAX @ 40%. IT WAS FURTHER HELD BY THE PANEL THAT , WE HAVE CAREFULLY CONSIDERED THE FACTS SUBMITTED B Y THE ASSESSEE AND THE FACT STATED IN THE ASSESSMENT ORDER. IT IS NOTE D THAT THE AGREEMENTS UNDER WHICH THE SERVICES ARE STATED TO HAVE BEEN PR OVIDED ARE ESSENTIALLY IN THE NATURE OF CONFIRMATION LETTERS A DDRESSED BY THE ASSESSEE TO THE STANDARD CHARTERED BANK. IT IS CLEA RLY STATED IN THESE LETTERS THAT THERE HAS BEEN REGIONAL CONSOLIDATION OF SYSTEMS AND DATA CENTRES AND CUTOVER OF INDIA SYSTEMS COMPLETED ON 7 .8.2005 TO ACHIEVE CENTRALIZATION AND EFFICIENCY OF SERVICES. IT IS F URTHER STATED IN THESE LETTERS THAT THESE SERVICES ARE BEING PROVIDED IN A CCORDANCE WITH THE COCTEAU CONTRACT DT. 12.2.2004 ENTERED INTO BETWEEN THE ASSESSEE GROUP AND STANDARD CHARTERED ENTITIES. THE AO HAS Q UOTED EXTENSIVELY FROM THE COCTEAU CONTRACT IN THE ASSESSMENT ORDER A ND A PERUSAL OF THESE EXTRACTS (SOME OF THEM ARE MENTIONED ABOVE) M AKES IT VERY CLEAR THAT THE SERVICES RENDERED BY THE ASSESSEE ARE NOT MERELY DATA PROCESSING SERVICES OF A LOW-END OR BACK-OFFICE VAR IETY. 4.1 WITH REGARD TO THE CHARACTERIZATION OF THE PAYM ENT, WE FIND FROM THE RELEVANT PORTIONS OF THE COCTEAU CONTRACT CITED BY THE AO THAT THE SERVICES BEING PERFORMED WERE REQUIRED TO BE DOCUME NTED AND MAINTAINED IN THE FORM OF A REFERENCE MANUAL, WHICH WAS ALWAYS ACCESSIBLE TO THE SCB INDIA PERSONNEL WHO COULD PRI NT AND COPY ANY OF THE MATERIALS STORED IN THE LIBRARY. THIS DOCUMENTA TION EVIDENTLY RELATED ITA 1464/MUM/2015 14 TO CRITICAL PROCESSES THAT ARE INVOLVED IN THE EFFI CIENT FUNCTIONING OF THE BANK. THE DOCUMENTATION WAS ALSO IN THE NATURE OF I NFORMATION WHICH IS ACCESSIBLE AND ALWAYS AVAILABLE FOR USE BY THE SCB INDIA PERSONNEL. WE HAVE ALSO NOTED THAT EXPLANATION 5 INSERTED BY T HE FINANCE ACT, 2012 WITH RETROSPECTIVE EFFECT FROM 1.4.1976 PROVID ES THAT ROYALTY INCLUDES CONSIDERATION IN RESPECT OF ANY INFORMATIO N, WHETHER OR NOT THE POSSESSION OR CONTROL OF SUCH INFORMATION IS WITH T HE PAYER, OR IS USED DIRECTLY BY THE PAYER, OR IS LOCATED IN INDIA. FURT HER, EXPLANATION 6 SIMILARLY INSERTED WITH RETROSPECTIVE EFFECT CLARIF IES THAT ROYALTY INCLUDES CONSIDERATION FOR THE USE OF ANY PROCESS, WHETHER O R NOT SUCH PROCESS IS SECRET. THESE CLARIFICATIONS WERE NOT BEFORE THE HO NBLE ITAT WHEN THEY CONSIDERED THE ISSUE IN THE ASSESSEES OWN CASE IN AY 2004-05. MOREOVER, THE NATURE OF SERVICES RENDERED HAS ALSO UNDERGONE A CHANGE WITH A COCTEAU CONTRACT ENTERED INTO IN FEBRUARY, 2 004. IN THE LIGHT OF THE ABOVE FACTS AND THE CLARIFICATIONS MADE BY THE FINANCE ACT, 2012, WE ARE OF THE VIEW THAT THE PAYMENTS MADE BY THE ST ANDARD CHARTERED BANK TO THE ASSESSEE CAN BE CATEGORIZED AS ROYALTY. 4.2 WE ARE ALSO OF THE VIEW THAT THE NATURE OF THE SERVICES PROVIDED, AS BROUGHT OUT BY THE AO, CAN CERTAINLY BE CATEGORIZED AS MANAGERIAL AND TECHNICAL SERVICES. IT IS CLEAR FROM THE TERMS OF T HE COCTEAU CONTRACT THAT THE SERVICES RENDERED ARE NOT MERELY BACK OFFICE OR DATE PR4OCESSING SERVICES BUT ARE SERVICES RELATING TO CRITICAL AREA S OF THE FUNCTIONING OF THE BANK AND THE OBJECTIVE UNDERLYING THE SERVICES IS TO IMPROVE THE MANAGEMENT AND THE OPERATIONS OF THE BANK. EVIDENTL Y, THERE IS A HIGH DEGREE OF SKILL, BOTH MANAGERIAL AS WELL AS TECHNIC AL, INVOLVED IN THE RENDERING OF THESE SERVICES. THIS PANEL THEREFORE H OLDS THAT THE PAYMENT MADE BY THE ASSESSEE CAN ALSO BE CATEGORIZED AS FEE S FOR TECHNICAL SERVICES. 4.3 WITH REGARD TO THE RATE OF TAX, WE ARE IN AGREE MENT WITH THE AO THAT THE BENEFICIAL RATE OF 20% PROVIDED U/S 155A APPLIE S ONLY TO PAYMENTS MADE BY INDIAN ENTITIES. THE OBJECTIVE UNDERLYING T HE BENEFICIAL RATE OF TAX IS CLEARLY TO ENABLE3 INDIAN BUSINESSES TO ACQU IRE BETTER TECHNOLOGY FORM NON-RESIDENTS AND FOREIGN COMPANIES. IN THE PR ESENT CASE, THE ITA 1464/MUM/2015 15 PAYMENTS ARE MADE BY STANDARD CHARTERED BANK WHICH IS A FOREIGN BANK AND NOT AN INDIAN ENTITY. THE DECISION OF THE ITAT IN THE CASE OF BANK OF CREDIT AND COMMERCE WAS RENDERED IN THE CON TEXT OF INTEREST PAID BY A BRANCH TO THE HEAD OFFICE AND IT WAS HELD THAT IN THE CONTEXT, THE BRANCH IS A SEPARATE CONCERN LOCATED IN INDIA. IN THE PRESENT CASE, THE MERE FACT THAT BRANCHES ARE LOCATED IN INDIA DO ES NOT MEAN THAT THE ENTITY MAKING THE PAYMENT ALSO BECOMES AN INDIAN CO NCERN. WE ACCORDINGLY CONFIRM THE ACTION OF THE AO IN TAXING THE TOTAL AMOUNT @ 40%. 7. THE PANEL, THEREFORE, REJECTED THE CONTENTION OF THE ASSESSEE FOR LEVY OF LOWER TAX @ 20% AND SUSTAINED THE FINDINGS AND DECISION OF THE AO TO CHARGE TAX @ 40%. 8. IN THIS CIRCUMSTANCE, THE ASSESSEE IS IN APPEAL BEFORE ITAT. 9. AT THE TIME OF HEARING, THE AR SUBMITTED THAT TH E ISSUE WAS RAISED AND REACHED THE ITAT IN THE CASE OF THE ASSE SSEE IN ASSESSMENT YEARS 2006-07 AND 2008-09 IN ITAS NO. 6562/MUM/2009 AND 6889/MUM/2011, WHEREIN THE COORDINATE BENCH MENTION S, THAT THE LIABILITY OR OTHERWISE OF THE ASSESSEE REGARDING ITS RECEIPTS HAS TO BE RE-ADJUDICATED IN THE LIGHT OF AFOREMENTI ONED RETROSPECTIVE AMENDMENT. THE ORDERS PASSED IN THE ASSESSEES CASE BY THE AO, DRP AND ITAT ARE PRIOR TO THE AFOREMENTIONED AMENDMENT IN THE STATUTE. THEREFORE, WE ARE OF THE OPINION THAT IT WOULD SERV E THE INTEREST OF JUSTICE IF ALL THESE APPEAL EXCEPT ITA NO. 6888/MUM /2011 ARE RESTORED BACK TO THE FILE OF THE AO WITH A DIRECTION TO RE-A DJUDICATE THE ISSUES IN ACCORDANCE WITH LAW AFTER GIVING FURTHER OPPORTUNIT Y TO THE ASSESSEE AND PLACING ALL THE MATERIAL REQUIRED FOR ADJUDICAT ION OF THE ISSUES RAISED IN THE PRESENT APPEALS. AFTER GIVING OPPORTU NITY THE AO WILL READJUDICATE ALL THE ISSUES RAISED IN THE PRESENT APPEALS AS PER PROVISIONS OF LAW. ITA 1464/MUM/2015 16 7.1 SIMILAR IS THE POSITION IN RESPECT OF GROUND NO . 1.3 & 1.4 AND ADDITIONAL GROUND NO. 1.5 IN WHICH THE ASSESSEE HAS RAISED GRIEVANCES REGARDING RATES OF TAX TO BE APPLIED ON THE ABOVE R ECEIPTS. ALL THESE ISSUES ON MERITS ARE TO BE READJUDICATED AS PER LAW IN ITA NO. 6762/MUM/2009 & 219/MUM/2010 BEING CROSS APPEALS IN RESPECT OF ASSESSMENT YEAR 2006-07 AGAINST ORIGINAL ASSESSMENT . 7.2 THE OTHER ISSUES RAISED IN ITA NO. 6888/MUM/201 1 REGARDING LEVIABILITY OF INTEREST UNDER SECTION 234B WHICH WA S ADMITTED TO BE CONSEQUENTIAL AND WITH A RIDER THAT ASSESSEE HAS LI BERTY TO SHOW BEFORE AO WHY IT IS NOT LIABLE FOR LEVY OF INTEREST UNDER SECTION 234B, THE MATTER WOULD BE RE-ADJUDICATED IN ORIGINAL ASSESSME NT PROCEEDINGS AS DISCUSSED IN PARA 5.3 OF THIS ORDER. 10. BASED ON THE ABOVE DECISION OF THE ITAT IN THE PRECEDING YEAR(S), THE AR SUBMITTED THAT FOR THE SAKE OF CONSISTENCY, THE ISSUE, IN THE CURRENT YEARS, DESERVED TO BE RESTORED TO THE FILE OF THE AO. 11. THE DR DID NOT OBJECT TO THE SUBMISSION OF THE AAR FOR RESTORATION OF THE IISUE TO THE FILE OF THE AO. 12. ON HEARING BOTH THE SIDES, WE ARE OF THE VIEW T HAT SINCE THE PRECEDING YEARS WERE AWAITING ADJUDICATION AT THE A O STAGE, IT WOULD BE INAPPROPRIATE FOR US, TO COME TO ANY CONCLUSION. WE, THEREFORE, SET ASIDE THE ORDERS OF THE REVENUE AUTHORITIES AND RES TORE THE ISSUE TO THE FILE OF THE AO FOR A FRESH ADJUDICATION, IN LINE WI TH THE DECISION TAKEN BY HE AO IN THE PRECEDING YEARS(S). NEEDLESS TO MEN TION, ADEQUATE AND REASONABLE OPPORTUNITY SHALL BE GIVEN TO THE ASSESS EE, TO PRESENT ITS CASE. 13. GROUNDS NO. 1.2 & 1.3 PERTAIN TO RATES OF TAX T O BE APPLIED. ITA 1464/MUM/2015 17 THESE GROUNDS BEING LINKED TO GROUND NO. 1, THIS IS SUE IS ALSO SET ASIDE TO THE FILE OF THE AO, WHO SHALL COMPUTE THE TAX AS PER THE AMENDED PROVISIONS, AFTER GIVING ADEQUATE OPPORTUNI TY TO THE ASSESSEE. 14. GROUND NO. 1.1 IS THEREFORE, ALLOWED FOR STATIS TICAL PURPOSES. 15. GROUND NO. 2 PERTAINS TO NOT GIVING CREDIT OF T DS OF RS. 9,54,980/-. 16. THE AO IS LEGALLY BOUND TO ALLOW TDS TO THE ASS ESSEE AS PER LAW. WE, THEREFORE, DIRECT THE AO TO ALLOW THE UNDISPUTE D AND LEGALLY CORRECT CLAIM OF TDS & ON DOING SO, THE AO SHALL ALLOW THE BENEFIT OF TDS, AS CLAIMED IN THE GOA. 17. GROUNDS NO. 3 & 4 PERTAIN TO CHARGEABILITY OF I NTEREST U/S 234A AND 234B. 18. THE EXIGIBILITY OF INTEREST IS CONSEQUENTIAL TO THE TAX COMPUTED. BEND CONSEQUENTIAL, THE AO IS DIRECTED TO RECOMPUTE THE INTEREST U/S 234A & 234B AS PER LAW. 19. IN THE RESULT, THE APPEAL AS FILED BY THE ASSES SEE IS ALLOWED FOR STATISTICAL PURPOSES. 8. RESPECTFULLY FOLLOWING THE AFORE-STATED ORDERS O F THE CO-ORDINATE BENCH OF THE MUMBAI-TRIBUNAL IN THE ASSESSEE COMPANYS OW N CASE FOR THE ASSESSMENT YEAR 2009-10 IN ITA NO. 7321/MUM/2012, W E ALSO SET ASIDE THE ORDERS OF THE REVENUE AUTHORITIES IN THE INSTANT AP PEAL IN ITA NO. 1464/MUM/2015 FOR THE ASSESSMENT YEAR 2011-12 AND R ESTORE ALL THE ISSUES ITA 1464/MUM/2015 18 RAISED BY THE ASSESSEE COMPANY IN THE GROUND OF APP EAL FILED WITH THE TRIBUNAL TO THE FILE OF THE A.O. FOR DE-NOVO DETER MINATION OF ALL THE AFORE- STATED ISSUES ON MERITS IN ACCORDANCE WITH LAW AND ALSO KEEPING IN VIEW THE DIRECTION GIVEN BY THE TRIBUNAL HEREINABOVE IN THE APPEAL IN ITA NO. 7321/MUM/2012 FOR THE ASSESSMENT YEAR 2009-10. NEE DLESS TO SAY, THE ADEQUATE AND PROPER OPPORTUNITY OF HEARING WILL BE GRANTED BY THE AO TO THE ASSESSEE COMPANY IN ACCORDANCE WITH THE PRINCIPLES OF NATURAL JUSTICE IN ACCORDANCE WITH LAW .WE ORDER ACCORDINGLY. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE COMPANY IN ITA N0. 1464/MUM/2015 FOR THE ASSESSMENT YEAR 2011-12 IS AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH MARCH, 2016. # $% &' 04-03-2016 ( ) SD/- SD/- (SAKTIJIT DEY) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER $ MUMBAI ; & DATED 04-03-2016 [ .9../ R.K. R.K. R.K. R.K. , EX. SR. PS !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. : ( ) / THE CIT(A)- CONCERNED, MUMBAI 4. : / CIT- CONCERNED, MUMBAI 5. =>( 99?@ , ?@ , $ / DR, ITAT, MUMBAI L BENCH 6. (BC D / GUARD FILE. / BY ORDER, = 9 //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , $ / ITAT, MUMBAI