UAE Exchange Centre LLc Abudhabi, Ernakulam V. Dy.Director of Income-tax, Cochin

ITA 151/COCH/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68900 (ITAT-COCHIN)
• Duration Of Justice: 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2013
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 23-07-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 15-03-2013
• Court: TRIBUNAL
• Department Lawyers: VIVEK C GOVIND
• Assessee Lawyers: S VIJAYAPRABHA
• Keywords: Advance ruling
• Section: 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND B.R.BASKAR AN, AM I.T.A. NOS. 139-144/COCH/2013 ASSESSMENT YEAR : 2007-08 &2008-09 THE DEPUTY COMMISSIONER OF INCOME TAX (INTL.TAXATION), KOCHI. VS. 1. M/S. UAE EXCHANGE CENTRE, W.I.I., KUWAIT, GROUND FLOOR, POULOSE TOWERS, T.D. ROAD, KOCHI-682035. [PAN:AHFPB 6741H] 2. M/S. UAE EXCHANGE CENTRE, LLC, ABUDHABI, LIAISON OFFICE, OPPOSITE MAHARAJAS COLLEGE M.G. ROAD, KOCHI-11. [PAN: AAACU455D] 3. M/S. OMAN & UAE EXCHANGE CENTRE, LLC, III FLOOR, HOTEL AIRLINES BUILDING, OPPOSITE MAHARAJAS COLLEGE, M.G. ROAD, KOCHI-11. [PAN: AAACO 7018D] (REVENUE -APPELLANT) (ASSESSEE-R ESPONDENT) I.T.A. NOS. 147-152/COCH/2013 ASSESSMENT YEARS : 2007-08, 2008-09 & 2009-10 1. M/S. OMAN & UAE EXCHANGE CENTRE, LLC, III FLOOR, HOTEL AIRLINES BUILDING, OPPOSITE MAHARAJAS COLLEGE, M.G. ROAD, KOCHI-11. [PAN: AAACO 7018D] 2. M/S. UAE EXCHANGE CENTRE, W.I.I., KUWAIT, GROUND FLOOR, POULOSE TOWERS, T.D. ROAD, KOCHI-682035. [PAN:AHFPB 6741H] VS. THE DEPUTY COMMISSIONER OF INCOME TAX (INTL.TAXATION), KOCHI. I.T.A. NOS. 139 TO 144 & 147-152/COCH/2013 2 3. M/S. UAE EXCHANGE CENTRE, LLC, ABUDHABI, LIAISON OFFICE, OPP. MAHARAJAS COLLEGE, M.G. ROAD, KOCHI-11. [PAN: AAACU455D] (ASSESSEE-APPELLANT) (REVENUE-R ESPONDENT) REVENUE BY SHRI VIVEK C. GOVIND, CA ASSESSEE BY SMT. S. VIJAYAPRABHA, JR. DR DATE OF HEARING 23/07/2013 DATE OF PRONOUNCEMENT 02/08/2013 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: ALL THESE APPEALS FILED BY THE ASSESSEES AND THE REVENUE ARE DIRECTED AGAINST THE ORDERS PASSED BY THE LD. CIT(A)-II, KOCHI IN THE RE SPECTIVE HANDS OF THE ASSESSEE FOR THE ASSESSMENT YEARS MENTIONED ABOVE. ALL THESE AP PEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER, FOR THE SAK E OF CONVENIENCE. 2. THE ONLY ISSUE THAT ARISES FOR OUR CONSIDERATION RELATES TO THE DETERMINATION OF INCOME IN THE HANDS OF THE ASSESSEES HEREIN FOR THE YEARS UNDER CONSIDERATION. 3. THE FACTS RELATING TO THE SAID ISSUE ARE STATED IN BRIEF. THE ASSESSEE-COMPANIES ARE CARRYING ON BUSINESS OF PURCHASE AND SALE OF FO REIGN CURRENCIES, TRAVELLERS CHEQUES, HANDLING OF REMITTANCES ETC. THESE ASSESSEES HAVE SET UP LIAISON OFFICES IN INDIA IN ORDER TO ENABLE THE REMITTANCES INTO INDIA ON BEHAL F OF THE PEOPLE WORKING ABROAD. THE ASSESSING OFFICER ESTIMATED INCOME PERTAINING TO TH E INDIAN OPERATIONS AT 25% OF THE TOTAL COMMISSION INCOME EARNED OUT OF THE REMITTANC ES MADE THROUGH THEIR INDIAN OFFICES. THE LD CIT(A), BY FOLLOWING THE DECISION OF THE COCHIN BENCH OF THE ITAT RENDERED IN ONE OF THE ASSESSEES CASE FOR AN EARLI ER ASSESSMENT YEAR, DIRECTED THE ASSESSING OFFICER TO ADOPT 110% OF THE EXPENSES AS GROSS TOTAL INCOME OF THE ASSESSEE I.T.A. NOS. 139 TO 144 & 147-152/COCH/2013 3 AND ACCORDINGLY COMPUTE THE INCOME. AGGRIEVED BY T HE ORDERS OF THE LD. CIT(A), BOTH THE PARTIES ARE IN APPEAL BEFORE US. 3. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERU SED THE RECORD. THE CO-ORDINATE BENCH OF TRIBUNAL CONSIDERED AN IDENTICAL ISSUE IN THE CASE OF UAE EXCHANGE CENTRE, M.G. ROAD, ERNAKULAM IN ITA NOS. 461 TO 467/COCH/200 6 AND THE DECISION RENDERED IN THAT CASE IS EXTRACTED BELOW:- 4.3 AS REGARDS THE MERITS OF THE CASE, WE FIND THA T IN VIEW OF THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE ASSESSEES O WN CASE (SUPRA) THE ASSESSMENTS, WHICH WE FIND TO HAVE BEEN FRAMED BY I NVOKING THE PROVISIONS OF SECTION 147 OF THE ACT FOR ALL BUT TH E LAST TWO YEARS, WOULD HAVE TO BE MADE BY DELETING THE ENTIRE INCOME ATTRI BUTABLE TO THE SERVICES PERFORMED IN INDIA IN RELATION TO THE FOREIGN REMIT TANCES. IN FACT, FOR ALL WE KNOW, THE HONBLE COURT MAY HAVE EVEN QUASHED THE A SSESSMENTS, THOUGH THE ASSESSEE HAS NOT STATED SO. HOWEVER, TH E COPY OF ITS ORDER DISPOSING THE ASSESSEES WRIT PETITION BEING NOT ON RECORD WE ARE UNABLE TO ISSUE ANY FINAL DIRECTIONS IN THIS REGARD. THE MATTER SHALL THUS HAVE TO NECESSARILY TRAVEL TO THE ASSESSEE AUTHORITY TO ACT IN COMPLIANCE WITH THE DIRECTIONS OF HONBLE COURT WITH REGARD TO THE ASSE SSMENT OF THE IMPUGNED INCOME DELETING THE SAME ALTOGETHER IF THA T IS WHAT THE HONBLE COURT HAS HELD. FURTHER, WE ARE ALSO CONSCIOUS OF THE FACT THAT THE REVENUE MAY NOT ACCEPT THE SAID ORDER AND MAY CONTE ST THE SAME BEFORE THE APEX COURT. AS SUCH, TO SAFE GUARD THE INTERES T, IT IS ALSO HELD THAT THE IMPUGNED ASSESSMENT(S) WOULD BE SUBJECT TO ANY MODI FICATION IN THE ORDER OF TRH HONBLE DELHI HIGH COURT AS DIRECTED U NDER A DUE PROCESS OF LAW. 4. SUBSEQUENTLY, WHEN THE APPEALS FILED BY OTHE R ASSESSEES ON IDENTICAL ISSUE, THIS BENCH OF THE TRIBUNAL PASSED ORDER UPHOLDING THE OR DER OF LD CIT(A) IN DETERMINING THE GROSS RECEIPTS OF THE ASSESSEES @ 110% OF THE EXPEN SES, ON THE IMPRESSION THAT THE CO-ORDINATE BENCH OF TRIBUNAL HAS TAKEN AN IDENTICA L VIEW. HOWEVER, THESE ASSESSEES FILED MISCELLANEOUS PETITIONS POINTING OUT THAT THE CO-ORDINATE BENCH OF TRIBUNAL HAS, IN FACT, SET ASIDE THE MATTER TO THE FILE OF THE ASSES SING OFFICER WITH THE DIRECTION TO EXAMINE THE ISSUE IN THE LIGHT OF THE DECISION REND ERED BY HONBLE HIGH COURT OF DELHI IN THE CASE OF UAE EXCHANGE CENTRE LTD VS. UOI AND ANR. (W.P.(C) NO. 14869/2004 DATED 13-02-2009 (2009)(313 ITR 94). ACCORDINGLY, THIS B ENCH OF TRIBUNAL DISPOSED OF THE MISCELLANEOUS PETITIONS ALLOWING THE PLEA RAISED BY THE ASSESSEE. ONE SUCH CASE IS M.P. I.T.A. NOS. 139 TO 144 & 147-152/COCH/2013 4 NOS. 27-29/COCH/2013 ARISING OUT OF ITA NOS. 12, 13 & 14/COCH/2011 IN THE CASE OF M/S UAE EXCHANGE CENTRE, KOCHI AND OTHERS. FOR THE S AKE OF CONVENIENCE, THE RELEVANT OBSERVATIONS MADE BY THIS BENCH OF TRIBUNAL, VIDE I TS ORDER DATED 24/05/2013 IS EXTRACTED BELOW:- 3. HOWEVER, NOW IT IS POINTED OUT BY THE LD A.R T HAT THE TRIBUNAL HAS, IN FACT, REMITTED THE MATTER BACK TO THE FILE OF THE A SSESSING OFFICER WITH A DIRECTION TO FOLLOW THE DECISION RENDERED BY THE HONBLE DELH I HIGH COURT IN THE ASSESSEES OWN CASE. IN THIS REGARD THAT LD COUNSEL INVITED O UR ATTENTION TO PARAGRAPH NO.4.3 OF THE ORDER DATED 31.3.2010 PASSED BY THE T RIBUNAL. HE FURTHER SUBMITTED THAT THE TRIBUNAL, FOR ACADEMIC INTEREST ONLY, CONFIRMED THE ORDER OF THE LD. CIT(A) IN ESTIMATING THE GROSS INCOME AT 11 0% OF THE EXPENDITURE. ACCORDINGLY, HE SUBMITTED THAT THE FINDING GIVEN BY THE TRIBUNAL FOR ACADEMIC INTEREST, SHOULD NOT HAVE BEEN TAKEN NOTE OF BY THE TRIBUNAL WHILE PASSING THE ORDERS IN THE INSTANT CASES. 4. ON A CAREFUL PERUSAL OF THE ORDER DATED 30-03-20 10 RENDERED BY THE CO- ORDINATE BENCH ( REFERRED SUPRA), WE FIND MERIT IN THE CONTENTIONS RAISED BY THE LD. AR. 5. ACCORDINGLY, WE SUBSTITUTE THE PARAGRAPHS 4 TO 7 OF THE IMPUGNED COMMON ORDER DATED 10-08-2012 WITH THE FOLLOWING P ARAGRAPHS. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. WE NOTICE THAT THE CO-ORDINATE BENCH OF THE TRIBUNAL I N THE CASE OF UAE EXCHANGE CENTRE, M.G. ROAD, ERNAKULAM IN I.T.A. NOS. 461 TO 467/COCH/2006 AND OTHERS HAS CONSIDERED AN IDENTICA L ISSUE AND HAS REMITTED THE MATTER BACK TO THE FILE OF THE ASSESSI NG OFFICER WITH A DIRECTION TO FOLLOW THE DECISION RENDERED BY THE HO NBLE DELHI HIGH COURT IN THE ASSESSEES OWN CASE. FOR THE SAKE OF CONVEN IENCE, WE EXTRACT BELOW THE OBSERVATIONS MADE BY THE TRIBUNAL IN THIS REGARD. 4.3 AS REGARDS THE MERITS OF THE CASE, WE FIND THA T IN VIEW OF THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE ASS ESSEES OWN CASE (SUPRA) THE ASSESSMENTS, WHICH WE FIND TO HAVE BEEN FRAMED BY INVOKING THE PROVISIONS OF SECTION 147 OF THE ACT F OR ALL BUT THE LAST TWO YEARS, WOULD HAVE TO BE MADE BY DELETING THE EN TIRE INCOME ATTRIBUTABLE TO THE SERVICES PERFORMED IN INDIA IN RELATION TO THE FOREIGN REMITTANCES. IN FACT, FOR ALL WE KNOW, THE HONBLE COURT MAY HAVE EVEN QUASHED THE ASSESSMENTS, THOUGH THE ASSES SEE HAS NOT STATED SO. HOWEVER, THE COPY OF ITS ORDER DISPOSIN G THE ASSESSEES I.T.A. NOS. 139 TO 144 & 147-152/COCH/2013 5 WRIT PETITION BEING NOT ON RECORD WE ARE UNABLE TO ISSUE ANY FINAL DIRECTIONS IN THIS REGARD. THE MATTER SHALL THUS H AVE TO NECESSARILY TRAVEL TO THE ASSESSEE AUTHORITY TO ACT IN COMPLIAN CE WITH THE DIRECTIONS OF HONBLE COURT WITH REGARD TO THE ASSE SSMENT OF THE IMPUGNED INCOME DELETING THE SAME ALTOGETHER IF THA T IS WHAT THE HONBLE COURT HAS HELD. FURTHER, WE ARE ALSO CONSC IOUS OF THE FACT THAT THE REVENUE MAY NOT ACCEPT THE SAID ORDER AND MAY CONTEST THE SAME BEFORE THE APEX COURT. AS SUCH, TO SAFE G UARD THE INTEREST, IT IS ALSO HELD THAT THE IMPUGNED ASSESSM ENT(S) WOULD BE SUBJECT TO ANY MODIFICATION IN THE ORDER OF TRH HON BLE DELHI HIGH COURT AS DIRECTED UNDER A DUE PROCESS OF LAW. 6. CONSISTENT WITH THE VIEW TAKEN BY THE CO-ORDINA TE BENCH IN THE CASES CITED ABOVE, WE SET ASIDE THE IMPUGNED ORDER S PASSED BY LD. CIT(A) AND REMIT THE MATTER BACK TO THE FILE OF T HE ASSESSING OFFICER WITH A DIRECTION TO FOLLOW THE DECISION RENDERED BY THE HONBLE DELHI HIGH COURT IN THE CASE OF U.A.E EXCHANGE CENTRE LTD VS. UOI AND ANR. (W.P (C) NO.14869/2004 DATED 13-02-2009), WHICH WAS REFERRE D BY THE CO-ORDINATE BENCH. 5. THE LD A.R SUBMITTED THAT THE REVENUE HAD FI LED AN APPEAL BEFORE HONBLE HIGH COURT OF KERALA, AGAINST THE ORDER DATED 30-03-2010 PASSED BY THE TRIBUNAL IN THE CASE OF M/S UAE EXCHANGE CENTRE, M.G. ROAD, KOCHI IN ITA N O.533/2010 AND THE JURISDICTIONAL HIGH COURT, VIDE ITS ORDER DATED 12- 12-2011, DISPOSED OF THE SAME WITH THE FOLLOWING OBSERVATIONS:- ASSESSMENTS GIVING RISE TO THESE APPEALS FILED BY THE REVENUE WERE MADE BASED ON ADVANCE RULING GIVEN BY THE AUTHORITY FOR ADVANCE RULING CONSTITUTED UNDER THE INCOME TAX ACT HOLDING THAT R ESPONDENTS OPERATIONS IN INDIA ATTRACT TAX UNDER THE INCOME TAX ACT. THE REFORE, THE LIMITED DISPUTE SETTLED BEFORE THE TRIBUNAL IS ON THE QUANT UM AGAINST WHICH THE REVENUE IS IN APPEALS. HOWEVER, WHEN THE APPEALS WERE TAKEN UP, BOTH S IDES SUBMITTED THAT THE ADVANCE RULING RENDERED BY THE AUTHORITY STANDS CANCELLED BY THE DIVISION BENCH JUDGMENT OF THE DELHI HIGH COURT IN U.A.E. EXCHANGE CENTRE LTD. V. UNION OF INDIA & ANOTHER, REPORTED IN 313 I TR 94. SINCE THE LEARNED SENIOR STANDING COUNSEL FOR THE REVENUE SUBMITTED T HAT SLP IS ADMITTED BY THE SUPREME COURT, WE CLOSE THESE INCOME TAX APPEAL S AS INFRUCTUOUS LEAVING IT OPEN TO THE REVENUE TO MOVE APPLICATION BEFORE THIS COURT FOR REOPENING THE APPEALS IN THE EVENT THE SUPREME COUR T ALLOWS THE SLP FILED I.T.A. NOS. 139 TO 144 & 147-152/COCH/2013 6 BY THE REVENUE. IN THE EVENT OF RE-OPENING OF APPE ALS, BOTH SIDES ARE FREE TO ARGUE ON MERITS OF THE APPEALS AT THAT TIME. THUS, IT IS SEEN THAT THE HONBLE JURISDICTIONAL HI GH COURT HAS CHOSEN NOT TO DISTURB THE FINDING GIVEN BY THE TRIBUNAL. 6. ACCORDINGLY, CONSISTENT WITH THE VIEW TAKEN BY T HE CO-ORDINATE BENCH AS WELL AS THIS BENCH IN THE CASES CITED ABOVE, WE SET ASIDE T HE IMPUGNED ORDERS PASSED BY LD. CIT(A) AND REMIT THE MATTERS BACK TO THE FILE OF T HE ASSESSING OFFICER IN ALL THE CASES WITH A DIRECTION TO FOLLOW THE DECISION RENDERED BY THE HONBLE DELHI HIGH COURT IN THE CASE OF U.A.E EXCHANGE CENTRE LTD VS. UOI AND ANR. (R EFERRED SUPRA). 7. IN THE RESULT, ALL THE APPEALS FILED BY THE ASSE SSEES AND REVENUE ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED ACCORDINGLY ON 02-08-20 13. SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 2ND AUGUST, 2013 GJ COPY TO: 1. M/S. UAE EXCHANGE CENTRE, W.I.I., KUWAIT, GROUND FLOOR, POULOSE TOWERS, T.D. ROAD, KOCHI-682035. 2. M/S. UAE EXCHANGE CENTRE, LLC, ABUDHABI, LIAISON O FFICE, OPP. MAHARAJAS COLLEGE, M.G. ROAD, KOCHI-11 3. OMAN & UAE EXCHANGE CENTRE, III FLOOR, HOTEL AIRLI NES BUILDING, OPPOSITE MAHARAJAS COLLEGE, M.G. ROAD, KOCHI-11. 4. THE DEPUTY COMMISSIONER OF INCOME TAX (INTL. TAX ATION), KOCHI. 5. THE COMMISSIONER OF INCOME-TAX(APPEALS)-II, KOCH I. 6.THE COMMISSIONER OF INCOME-TAX, KOCHI 7. D.R., I.T.A.T., COCHIN BENCH, COCHIN. BY ORDER 8. GUARD FILE. (ASSISTANT REGISTRAR ) I.T.A.T, COCHIN I.T.A. NOS. 139 TO 144 & 147-152/COCH/2013 7