Asst.C.I.T., Bangalore V. M/s PharmARC Consulting Services GMBH, Bangalore

ITA 168/BANG/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89970 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 19-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DHIVAHAR
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRI BUNAL BANGALORE BENCH A, BANGALORE BEFORE SHRI ABRAHAM P GEORGE, ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO, JUDICIAL MEMBER IT(IT)A NO.168(BANG) 2015 (ASSESSMENT YEAR : 2011-12) THE ASSTT. COMMISSIONER OF INCOME-TAX, (INTERNATIONAL TAXATION,) CIRCLE-1(2), 6 TH FLOOR, R.P.BHAVAN, NRUPATHUNGA ROAD, BANGALORE APPELLAN T VS M/S PHARMARC CONSULTING SERVICES GMBH SERVICES PVT .LTD., OMEGA EMBASSY TECH SQUARE, MARATHALLI-SARJAPUR RING ROAD, KADUBEESANAHALLI, BANGALORE RESPONDENT REVENUE BY : SHRI P. DHIVAHAR, JCIT ASSESSEE BY : SHRI TATA KRISHNA, ADVOCATE DATE OF HEARING : 04-06-2015 DATE OF PRONOUNCEMENT : 2 2-06-2015 O R D E R PER SHRI VIJAY PAL RAO, JM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 15- 12-2014 OF CIT(A)-12, BANGALORE FOR THE ASSESSMENT YEAR 2011-12. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS. IT(IT)A NO.168(BANG)2015 2 1. THE LD.CIT(A) FAILED TO APPRECIATE THE DECISION OF THE CASE OF ANSALDO ENERGIA SPA VS ADIT 115 TTJ(CHENNAI ) 942 AND THE DECISION OF THE HONBLE SC IN THE CASE OF C IT VS ANJUM M.H.GHUSWALLLA & OTHERS (252 ITR 1) WHEREIN I T WAS HELD THAT THE LEVY OF INTEREST 234A, 234B & 234C IS MANDATORY IN NATURE. 2. THE LD.CIT(A) ERRED IN DIRECTING THE AO TO DELET E THE INTEREST U/S 234B WHICH DEFECTS THE INTENT AND PURP OSE OF THE PROVISIONS CONTAINED IN SECTION 209(1)(D) OF THE IT ACT, 1961 AND WILL NULLIFY THE POWERS OF THE REVENUE AND IS D ETRIMENTAL TO THE INTEREST OF REVENUE. 2. THE ASSESSEE COMPANY IS A TAX RESIDENT OF SWITZ ERLAND AND FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION ON 30-09- 2011, DECLARING TOTAL INCOME AT RS.NIL. THE AO WHI LE COMPUTING THE ASSESSMENT, ASSESSED THE TOTAL INCOME OF THE ASSESS EE AT RS.9,96,27,925/- AND AFTER GIVING THE BENEFIT OF DTA AS WELL AS TAX DEDUCTED AT SOURCE, THE TAX PAYABLE WAS COMPUTED AT RS.5,48,173/-. THE AO HAS LEVIED INTEREST U/S 234B OF THE IT ACT, 1961. THE ASSESSEE CHALLENG ING THE ACTION OF THE AO IN LEVYING THE INTEREST U/S 234B BEFORE THE CIT( A). THE CIT(A) HAS DELETED THE INTEREST LEVIED U/S 234B BY FOLLOWING T HE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2010 -11. 3. WE HAVE HEARD THE LEARNED DR AS WELL AS THE COU NSEL FOR THE ASSESSEE AND CONSIDERED THE MATERIAL AVAILABLE ON R ECORD. AT THE OUTSET, WE NOTE THAT THE ISSUE OF LEVY OF INTEREST U/S 234B HA S BEEN CONSIDERED AND IT(IT)A NO.168(BANG)2015 3 DECIDED BY THIS TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2010-11 VIDE ORDER DATED 17-04-2015 IN ITA NO.138 2(B)/2015 IN PARA-3 TO 4 AS UNDER; 3. WE SEE NO REASONS TO TAKE ANY OTHER VIEW OF THE MA TTER THAN THE VIEW SO TAKEN BY HONBLE COURTS ABOVE, AND BY COORDINATE BENCHES FOLLOWING THESE VIEWS OF HONBLE HIGH COURTS. ON A RATHER RECENT DECISION OF THIS TRIBUN AL, IN THE CASE OF DDIT VS SYNOPSYS INTERNATIONAL LTD AND VICE VERSA (IT(IT)A NOS 1321 AND 1296/BANG/14; ORDER DATED 7 TH APRIL 2015), THE LEGAL POSITION HAS BEEN SUMMED UP AS FOL LOWS: 6. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED TH E MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. 7. IN RESPONSE TO A QUESTION FROM THE BENCH, LEARNE D DEPARTMENTAL REPRESENTATIVE POINTED OUT THAT THERE IS NO JUDICIAL PRECEDENT ON THIS ISSUE BY HONBLE JURISDI CTIONAL HIGH COURT, THOUGH NOW THERE IS A DECISION OF DELHI HIGH COURT ON THIS ISSUE, IN FAVOUR OF THE REVENUE, IN THE CASE O F DIT VS ALCATEL LUCENT INC USA [(2014) 264 ITR 240 (DEL)]. LEARNED COUNSEL FOR THE ASSESSEE SUBMITS THAT EVEN THIS DEC ISION OF HONBLE DELHI HIGH COURT IS NO LONGER GOOD LAW IN V IEW OF SUBSEQUENT DECISION OF THE SAME HONBLE HIGH COURT, WHICH TAKES INTO ACCOUNT THE AMENDMENT IN SECTION 209(1)( D) AND HOLDS THE SAME TO BE ONLY PROSPECTIVE IN EFFECT WIT H EFFECT FROM 1 ST APRIL 2012, IN THE CASE OF DIT VS GE PACKAGED POWE R INC&ORS [(2015) TII 02- HC- DEL- INTL]. IT IS THU S SUBMITTED THAT THE DECISIONS OF THE NON JURISDICTIONAL HONBL E HIGH COURT ARE UNANIMOUSLY IN FAVOUR OF THE ASSESSEE. IN ANY C ASE, ACCORDING TO THE LEARNED COUNSEL, THE ISSUE IS COVE RED IN FAVOUR OF THE ASSESSEE BY DECISION OF A COORDINATE BENCH IN ASSESSEES OWN CASE. 8. WE SEE MERITS IN THE ERUDITE CONTENTIONS OF THE LEARNED COUNSEL. AS HE RIGHTLY STATES, THE ISSUE IS SQUARE LY COVERED, IN IT(IT)A NO.168(BANG)2015 4 FAVOUR OF THE ASSESSEE, BY DECISIONS OF HONBLE NON JURISDICTIONAL HIGH COURTS, AND THAT EVEN THE DECIS IONS OF NON- JURISDICTIONAL HIGH COURT, BEING FROM A HIGHER TIER OF THE JUDICIAL FORUMS, BIND US. AS REGARDS THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF ALCATEL LUCENT (SUP RA), AS LEARNED COUNSEL HAS POINTED OUT, NOTHING REALLY TUR NS ON THAT BECAUSE NOT ONLY THAT THIS DECISION HAS BEEN IN EFF ECT OVERRULED BY A SUBSEQUENT BENCH IN DELHI HIGH COURT IN THE CASE OF GE PACKAGED POWER INC(SUPRA), CONFINING THE RATIO OF THIS DECISION TO PECULIAR FACTS OF THE SAID CASE, E VEN IF THERE ARE CONFLICTING VIEWS OF NON JURISDICTIONAL HIGH CO URT AND WE DONOT HAVE THE BENEFIT OF GUIDANCE FROM THE HONBLE JURISDICTIONAL HIGH COURT, THE VIEW IN FAVOUR OF TH E ASSESSEE IS REQUIRED TO BE ACCEPTED. IN COMING TO THIS VIEW, WE FIND SUPPORT FROM THE DECISION OF A COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF TEJ INTERNATIONAL PVT LTD V S DCIT [(2000) 69 TTJ 650 (DEL)] WHEREIN IT WAS OBSERVED T HUS: IN THE HIERARCHICAL JUDICIAL SYSTEM THAT WE HAVE , BETTER WISDOM OF THE COURT BELOW HAS TO YIELD TO HI GHER WISDOM OF THE COURT ABOVE AND, THEREFORE, ONCE AN AUTHORITY HIGHER THAN THIS TRIBUNAL HAS EXPRESSED A N OPINION ON THAT ISSUE, WE ARE NO LONGER AT LIBERTY TO RELY UPON EARLIER DECISIONS OF THIS TRIBUNAL EVEN IF WE WERE A PARTY TO THEM. SUCH A HIGH COURT BEING A NON- JURISDICTIONAL HIGH COURT DOES NOT ALTER THE POSITI ON AS LAID DOWN BY HONBLE BOMBAY HIGH COURT IN THE MATTE R OF CIT VS. GODAVARI DEVI SARAF (1978) 113 ITR 589 (BOM ). THEREFORE, WE DO NOT CONSIDER IT PERMISSIBLE TO REL Y UPON THE EARLIER DECISIONS OF THIS TRIBUNAL EVEN IF ONE OF THEM IS BY A SPECIAL BENCH. IT WILL BE WHOLLY INAPPROPRI ATE FOR US TO CHOOSE VIEWS OF ONE OF THE HIGH COURTS BASED ON OUR PERCEPTIONS ABOUT REASONABLENESS OF THE RESPECTIVE VIEWPOINTS, AS SUCH AN EXERCISE WILL DE FACTO AMOUN T TO SITTING IN JUDGMENT OVER THE VIEWS OF THE HIGH COUR TS SOMETHING DIAMETRICALLY OPPOSED TO THE VERY BASIC PRINCIPLES OF HIERARCHICAL JUDICIAL SYSTEM. WE HAVE TO, WITH OUR HIGHEST RESPECT OF BOTH THE HONBLE HIGH C OURTS, ADOPT AN OBJECTIVE CRITERION FOR DECIDING AS TO WHI CH OF THE HONBLE HIGH COURT SHOULD BE FOLLOWED BY US. 8. WE FIND GUIDANCE FROM THE JUDGMENT OF HONBLE SUPREME COURT IN THE MATTER OF CIT VS. VEGETABLE PR ODUCTS LTD. 1973 CTR (SC) 177 : (1972) 88 ITR 192 (SC). HO NBLE SUPREME COURT HAS LAID DOWN A PRINCIPLE THAT 'IF TW O IT(IT)A NO.168(BANG)2015 5 REASONABLE CONSTRUCTIONS OF A TAXING PROVISIONS ARE POSSIBLE, THAT CONSTRUCTION WHICH FAVOURS THE ASSES SEE MUST BE ADOPTED'. THIS PRINCIPLE HAS BEEN CONSISTEN TLY FOLLOWED BY THE VARIOUS AUTHORITIES AS ALSO BY THE HONBLE SUPREME COURT ITSELF. IN ANOTHER SUPREME COURT JUDG MENT, PETRON ENGG. CONSTRUCTION (P) LTD. &ANR. VS. CBDT & ORS. (1988) 75 CTR (SC) 20 : (1989) 175 ITR 523 (SC), IT HAS BEEN REITERATED THAT THE ABOVE PRINCIPLE OF LAW IS WELL ESTABLISHED AND THERE IS NO DOUBT ABOUT THAT. HONB LE SUPREME COURT HAD, HOWEVER, SOME OCCASIONS TO DEVIA TE FROM THIS GENERAL PRINCIPLE OF INTERPRETATION OF TA XING STATUTE WHICH CAN BE CONSTRUED AS EXCEPTIONS TO THI S GENERAL RULE. IT HAS BEEN HELD THAT THE RULE OF RES OLVING AMBIGUITIES IN FAVOUR OF TAX-PAYER DOES NOT APPLY T O DEDUCTIONS, EXEMPTIONS AND EXCEPTIONS WHICH ARE ALLOWABLE ONLY WHEN PLAINLY AUTHORISED. THIS EXCEPT ION, LAID DOWN IN LITTMAN VS. BARRON 1952(2) AIR 393 AND FOLLOWED BY APEX COURT IN MANGALORE CHEMICALS & FERTILIZERS LTD. VS. DY. COMMR. OF CT (1992) SUPPL. (1) SCC 21 AND NOVOPAN INDIA LTD. VS. CCE & C 1994 (73) ELT 769 (SC), HAS BEEN SUMMED UP IN THE WORDS OF LORD LOHEN , 'IN CASE OF AMBIGUITY, A TAXING STATUTE SHOULD BE CONST RUED IN FAVOUR OF A TAX-PAYER DOES NOT APPLY TO A PROVISION GIVING TAX-PAYER RELIEF IN CERTAIN CASES FROM A SECTION CL EARLY IMPOSING LIABILITY'. THIS EXCEPTION, IN THE PRESENT CASE, HAS NO APPLICATION. THE RULE OF RESOLVING AMBIGUITY IN FAVOUR OF THE ASSESSEE DOES NOT ALSO APPLY WHERE TH E INTERPRETATION IN FAVOUR OF ASSESSEE WILL HAVE TO T REAT THE PROVISIONS UNCONSTITUTIONAL, AS HELD IN THE MATTER OF STATE OF M.P. VS. DADABHOYS NEW CHIRMIRYPONRI HILL COLLI ERY CO. LTD. AIR 1972 (SC) 614 . 9. IN VIEW OF THE ABOVE DISCUSSIONS AND RESPECTFULL Y FOLLOWING THE ESTEEMED VIEWS OF HONBLE NON JURISDI CTIONAL HIGH COURT IN THE CASES OF KRUPP UDHE GMBH (SUPRA), NGC NETWORK ASIA LLC (SUPRA) AND MAERSK CO LTD (SUPRA), AS ALSO OF THE COORDINATE BENCH IN ASSESSEES OWN CASE, WE UPHOLD THE STAND OF THE CIT(A) AND DECLINE TO INTERFERE IN THE MATTER. 4. RESPECTFULLY FOLLOWING THE ABOVE PRECEDENTS, WE UPHOLD THE RELIEF GIVEN ON THIS ISSUE BY THE COMMISSIONER OF INCOME- TAX(A) AND DECLINE TO INTERFERE IN THE MATTER. IT(IT)A NO.168(BANG)2015 6 4. THE LEARNED DR HAS SUBMITTED THAT LEVY OF INTE REST U/S 234B IS MANDATORY IN NATURE. HE HAS FURTHER SUBMITTED THA T THE TRIBUNAL WHILE DECIDING THE ISSUE FOR THE ASSESSMENT YEAR 2010-11 HAS NOT CONSIDERED THE DECISION OF THE CHENNAI BENCHES OF THE TRIBUNAL IN THE CASE OF ANSALDO ENERGIA SPA VS ADIT(INTL.TAXATION) 15 TTJ 942(CHENN AI). WE ALSO NOTE THAT EVEN IN THE CASE OF ANSALDO ENERGIA SPA THE TR IBUNAL HAS ACCEPTED THE PROPOSITION THAT TO THE EXTENT OF TAX DEDUCTED AT S OURCE IT SHOULD BE REDUCED FROM THE TOTAL TAX FOR THE PURPOSE OF COMPU TING THE INTEREST U/S 234B OF THE IT ACT, 1961. IN THE CASE IN HAND, TH ERE IS NO DISPUTE THAT THE ENTIRE RECEIPT OF THE ASSESSEE WAS SUBJECTED TO TDS . THEREFORE, IN VIEW OF THE VARIOUS DECISIONS AS FOLLOWED BY THIS TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2010-11, THE DECISION RELIE D UPON BY THE LEARNED DR WILL NOT HELP THE CASE OF THE AO. ACCORDINGLY, FOLLOWING THE EARLIER DECISION OF THIS TRIBUNAL IN ASSESSEES OWN CASE, W E DO NOT FIND ANY ERROR OR ILLEGALITY IN THE IMPUGNED ORDER OF THE CIT(A) QUA THIS ISSUE. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. PRONOUNCED IN THE OPEN COURT ON 22 ND JUNE, 2015. SD/- (ABRAHAM P GEORGE) SD/- (VIJAY PAL RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE: D A T E D : 22-06-2015 AM* IT(IT)A NO.168(BANG)2015 7 COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A)-II BANGALORE 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER AR, ITAT, BANGALORE