DDIT (IT) 1(1), MUMBAI V. A.P. MOLLER, MUMBAI

ITA 1577/MUM/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 8196 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 10-02-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 26-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JI TENDRA YADAV
• Assessee Lawyers: DINESH CHOWLA
• Keywords: Retrospective amendment; Question of law
• Section: 143(1); 208; 147; 154; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH G, MUMBAI BEFORE SHRI P.M. JAGTAP, AM AND SHRI N.V. VASUDEV AN, JM I.T.A.NO. 1577/MUM/2010 ASSESSMENT YEAR : 2002-03 THE ASST. DIRECTOR OF INCOME-TAX (INTERNATIONAL TAXATION)-1(1), R.NO.117, SCINDIA HOUSE, LST FLOOR, BALLARD ESTATE, N.M. ROAD, MUMBAI 400 038. VS. M/S. A.P. MOLLER,C/O. MAERSK (I) P. LTD., EMPIRE INDUSTRIES COMPEX, 414, SENAPATI BAPAT MARG, LOWER PAREL, MUMBAI 400 013. PAN: AAACA 8917 F (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI JITENDRA YADAV RESPONDENT BY : SHRI DINESH CHOWLA O R D E R PER P.M. JAGTAP, AM : THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST TH E ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-10, MUMBAI, DA TED 15.12.2009 FOR THE ASSESSMENT YEAR 2006-07 WHEREBY HE DELETED THE INTE REST LEVIED BY THE ASSESSING OFFICER UNDER SECTION 234-B AND 234-D OF THE INCOME -TAX ACT, 1961. 2. THE ASSESSEE IN THE PRESENT CASE IS A NON-RESIDE NT FIRM. THE RETURN FILED BY IT FOR THE YEAR UNDER CONSIDERATION WAS ORIGINAL LY PROCESSED BY THE ASSESSING OFFICER UNDER SECTION 143(1) ON 3.2.2003 GRANTING R EFUND OF PRE-PAID TAXES AMOUNTING TO RS.2,68,27,730/- ALONG WITH INTEREST T HEREON. SUBSEQUENTLY, IT WAS NOTICED BY THE ASSESSING OFFICER THAT WHILE PASSIN G THE ORDER U/S.150 READ WITH SECTION 147 OF THE ACT ON 08.04.2008 , THE CREDIT F OR PRE-PAID TAXES UNDER SECTION 172(4) WAS GIVEN IN THE CASE OF TWO COMPANIES ON PR OPORTIONATE BASIS FOR THE REASON THAT THE ASSESSEE HAD OFFERED SHIPPING INCOM E IN THE HANDS OF THE SAID TWO COMPANIES IN THE RETURN OF INCOME FILED IN PURSUANC E TO THE NOTICE U/S.148. ACCORDING TO THE ASSESSING OFFICER, THE CREDIT FOR THE SAID PRE-PAID TAXES THUS WAS WRONGLY GIVEN TO THE ASSESSEE AND IN ORDER TO WITHD RAW THE SAID CREDIT, NOTICE ITA NO. 1577/M/2010 M/S. A.P. MOLLER 2 UNDER SECTION 154 WAS ISSUED BY HIM TO THE ASSESSEE . IN REPLY TO THE SAID NOTICE, THE ASSESSEE FILED A LETTER DATED 01.08.2008 ACCEPT ING THEREIN THAT THE CREDIT FOR PRE-PAID TAXES TO THE EXTENT OF RS. 2,68,27,730/- G IVEN EARLIER MAY BE WITHDRAWN. ACCORDINGLY, AN ORDER UNDER SECTION 154 WAS PASSED BY THE ASSESSING OFFICER ON 22.12.2008 WITHDRAWING THE CREDIT GIVEN TO THE ASSE SSEE FOR PRE-PAID TAXES AMOUNTING TO RS. 2,68,27,730/-. HE HAS CHARGED IN TEREST UNDER SECTION 234-B AND 234-D AS A RESULT OF WITHDRAWAL OF THE SAID CREDIT. 3. THE INTEREST CHARGED BY THE ASSESSING OFFICER UN DER SECTION 234-B AND 234-D IN AN ORDER PASSED UNDER SECTION 154 WAS CHAL LENGED BY THE ASSESSEE IN AN APPEAL FILED BEFORE THE LEARNED CIT(A) AND AFTER CO NSIDERING THE SUBMISSIONS MADE ON BEHALF OF THE ASSESSEE BEFORE HIM, THE LEARNED C IT(A) DELETED THE INTEREST CHARGED BY THE ASSESSING OFFICER U/S.234-B AND 234- D FOR THE FOLLOWING REASONS GIVEN IN PARA 1.2 AND 2.2 OF HIS IMPUGNED ORDER: 1.2. I HAVE CONSIDERED THE FACTS. INTEREST U/S.234 B IS CHARGEABLE PROVIDED THE ASSESSEE, WHO IS LIABLE TO PAY ADVANCE TAX U/S. 208, HAS FAILED TO PAY SUCH TAX. THUS, THE PRE-CONDITION FOR LEVY OF INTER EST U/S.234B IS THE LIABILITY TO PAY ADVANCE TAX U/S.208. UNDER SECTION 208 OF TH E ACT, ADVANCE TAX SHALL BE PAYABLE WHERE THE AMOUNT OF SUCH ADVANCE T AX PAYABLE AS COMPUTED IN ACCORDANCE WITH PROVISIONS OF CHAPTER X VII IS RS.5,000/- OR MORE. THE ADVANCE TAX WILL BE COMPUTED AS PER SECTI ON 209 ON THE ACT. UNDER SECTION 209, THE ASSESSEE IS TO ESTIMATE HIS CURRENT INCOME AND FIND OUT THE TAX PAYABLE THEREIN AS PER SUB-CLAUSE(1) OF SECTION 209(1). UNDER CLAUSE (D) OF SUB-SECTION (1) OF SECTION 209, THE I NCOME-TAX CALCULATED UNDER CLAUSE (A) IS TO BE REDUCED BY AMOUNT OF INCO ME-TAX, WHICH WOULD BE DEDUCTIBLE AT SOURCE DURING THE SAID FINANCIAL Y EAR. THUS, THE ASSESSEE CAN TAKE CREDIT OF THE TAX DEDUCTIBLE AT SOURCE. WH ETHER THE TAX IS DEDUCTIBLE @ 15% OR 20% IS TO BE DECIDED BY THE PAY ER AND NOT THE PAYEE I.E. THE ASSESSEE. THUS, THE ASSESSEE CAN TAKE CRE DIT OF THE TAX BY THE PAYER AND NOT THE PAYEE I.E. THE ASSESSEE. THEREFOR E, THE TAX PAYABLE BY THE ASSESSEE DOES NOT EXCEED THE TAX DEDUCIBLE AT S OURCE. IN SUCH A SITUATION, THE ASSESSEE IS NOT REQUIRED TO PAY ANY ADVANCE TAX. FURTHER RELIANCE IS PLACED ON THE JURISDICTIONAL MUMBAI I.T .A.T IN THE CASE OF APPELLANTS OWN CASE FOR A.Y. 2001-02 DATED 12.08.2 009 IN DIT(IT), MUMBAI VS. M/S. NGC NETWORK ASIA LLC (313 ITR 187) (DTD. 14 TH JAN., 2009) WHEREIN IT WAS HELD THAT WHEN A DUTY IS CAST ON THE PAYER TO PAY THE TAX AT SOURCE, ON FAILURE, NO INTEREST CAN BE IMPOS ED ON THE PAYEE- ASSESSEE. RESPECTFULLY FOLLOWING THESE DECISIONS, T HE LEARNED AO IS DIRECTED NOT TO CHARGE INTEREST U/S.234B OF THE ACT. THUS, A PPEAL ON THIS GROUND IS ALLOWED. XXX XX XX ITA NO. 1577/M/2010 M/S. A.P. MOLLER 3 I HAVE CONSIDERED THE FACTS. THE PROVISIONS OF SEC TION 234D INSERTED W.E.F. LST JUNE 2003, THEREFORE, THESE ARE APPLICABLE FROM A.Y.2004-05 AS LAID DOWN BY HONBLE SPECIAL BENCH DELHI IN THE CASE OF M/S. EKTA PROMOTERS (P) LTD.(305 ITR 1)(DEL.) (SPECIAL BENCH) AND THE JURIS DICTIONAL TRIBUNAL MUMBAI IN THE CASE OF VAN OORD DREDGING & MARINE CO NTRACTORS BV VS. DDIT & OTHERS (297 ITR 115)(AT)(MUM). THEREFORE, NO INTEREST U/S.234D COULD BE CHARGED IN THE CASE OF THE APPELLANT FOR A .Y. 2002-03. THIS GROUND IS THEREFORE ALLOWED IN FAVOR OF THE APPELLANT. 4. AGGRIEVED BY THE ORDER OF THE LEARNED CIT(A) CANCEL ING THE INTEREST CHARGED BY THE ASSESSING OFFICER U/S.234-B AND 234- D, THE REVENUE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 5. WE HAVE HEARD THE ARGUMENTS OF BOTH SIDES AS WEL L AS PERUSED THE RELEVANT MATERIAL ON RECORD. AS REGARDS THE ISSUE RELATING TO LEVY OF INTEREST U/S.234-B, IT IS OBSERVED THAT THE SAME IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF DIRECTOR OF INCOME-TAX(INTERNATIONAL TAXATION) VS. NGC NETWO RK ASIA LLC (313 ITR 187), WHEREIN IT WAS HELD THAT WHEN THE ENTIRE INCOME OF NON-RESIDENT ASSESSEE WAS LIABLE FOR DEDUCTION OF TAX AT SOURCE BY THE PAYER, THERE WAS NO OBLIGATION ON THE PAYEE TO PAY ADVANCE-TAX IN RESPECT OF HIS INCOME A ND NO INTEREST UNDER SECTION 234-B, THEREFORE, COULD BE CHARGED. WE, THEREFORE, FIND NO INFIRMITY IN THE IMPUGNED ORDER OF THE LEARNED CIT(A) DELETING THE I NTEREST CHARGED BY THE ASSESSING OFFICER U/S.234-B FOLLOWING THE SAID DECI SION OF THE HONBLE JURISDICTIONAL HIGH COURT AND UPHOLDING THE SAME ON THIS ISSUE, WE DISMISS THIS GROUND NO.1 OF THE REVENUES APPEAL. 6. AS REGARDS THE ISSUE RAISED IN GROUND NO. 2, RE LATING TO LEVY OF INTEREST U/S.234-D, IT IS OBSERVED THAT A SIMILAR ISSUE HAD COME UP FOR CONSIDERATION IN THE CASE OF M/S. BAJAJ HINDUSTAN LTD. BEFORE THE CO-ORD INATE BENCH OF THIS TRIBUNAL WHEREIN INTEREST LEVIED U/S.234-D WAS DELETED BY TH E TRIBUNAL ON THE GROUND THAT THE RELEVANT RETURN OF INCOME GRANTING THE REFUND T O THE ASSESSEE WAS PROCESSED BEFORE INSERTION OF THE PROVISIONS OF SECTION 234-D IN THE STATUTE ON 01.06.2003 AND WHILE CHALLENGING THE SAID DECISION OF THE TRIBUNAL IN AN APPEAL FILED BEFORE THE ITA NO. 1577/M/2010 M/S. A.P. MOLLER 4 HONBLE BOMBAY HIGH COURT, THE FOLLOWING QUESTION O F LAW WAS SOUGHT TO BE RAISED BY THE REVENUE: WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE I.T.A.T WAS RIGHT IN HOLDING THAT THE INTE REST U/S.234-D CANNOT BE CHARGED IN RESPECT OF REFUNDS GRANTED PRI OR TO 1.6.2003? THE HONBLE BOMBAY HIGH COURT VIDE JUDGMENT DATED 1 5.4.2009 PASSED IN I.T. APPEAL NO. 198 OF 2009 HAS HELD THAT THE PROVISIONS OF SECTION 234-D HAVING COME ON THE STATUTE BOOK ONLY WITH EFFECT FROM 1.6.2003 AND THE SAID PROVISIONS HAVING NO RETROSPECTIVE EFFECT, NO SUBSTANTIAL QUESTION OF LAW ARISES FROM THE ORDER OF THE TRIBUNAL AS SOUGHT TO BE RAISED BY THE REVENUE IN I TS APPEAL. IN THE PRESENT CASE, THE REFUND WAS GRANTED TO THE ASSESSEE ON 03.02.200 3 VIDE AN INTIMATION ISSUED U/S.143(1) AND THIS BEING THE UNDISPUTED POSITION, WE UPHOLD THE IMPUGNED ORDER OF THE LEARNED CIT(A) DELETING THE INTEREST CHARGED BY THE ASSESSING OFFICER U/S.234-D. RESPECTFULLY FOLLOWING THE DECISION OF T HE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF BAJAJ HINDUSTAN LTD. (SUPRA), GROUND NO. 2 OF THE REVENUES APPEAL IS ACCORDING DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 25 TH DAY OF FEBRUARY, 2011. SD. SD. (N.V. VASUDEVAN) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI DATED THE 25 TH FEBRUARY, 2011. KN COPY TO: 1. THE ASSESSEE 2. THE REVENUE 3. THE DIT(INTERNATIONAL TAXATION), MUMBAI 4. THE CIT(A)-10, MUMBAI 5. THE DR G BENCH, MUMBAI BY ORDER /TRUE COPY/ ASST. REGISTRAR, ITAT, MUMBAI ITA NO. 1577/M/2010 M/S. A.P. MOLLER 5 SR.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 22.02.2011 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 23.02.2011 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/A M 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON 25.02.11 SR.PS/PS 7. FILE SENT TO THE BENCH CLERK 25.02.11 SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE ON WHICH THE FILES GOES TO THE A.R. 10. DATE OF DISPATCH OF ORDER