ACIT CIR 16(1), MUMBAI V. HOMI N.J. DADY ( DECD.), MUMBAI

ITA 1748/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 48570 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 13-04-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 05-03-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: K K VED
• Keywords: Double taxation relief; Principle of natural justice; TDS

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH H, MUMBAI BEFORE SHRI R,S. SYAL, A.M. AND SHRI V. DURGA RAO, J.M. ITA NO. 1917/MUM/2010 ASSESSMENT YEAR: 2006-07 HILLA HOMI DADYASETT, L/H OF MR. HOMI N.J. DADY (DECD), APPELLANT 141-E, MONTE ROSA DADYSETH HILL, AK MARG, MUMBAI 400 030 VS. THE ASSTT. COMMISSIONER OF INCOME-TAX, RESPONDENT CIRCLE 16(1) MUMBAI MATRU MANDIR, TARDEO MUMBAI 400 007. ITA NO. 1748/MUM/2010 ASSESSMENT YEAR: 2006-07 THE ASSTT. COMMISSIONER OF INCOME-TAX, APPELLANT CIRCLE 16(1) MUMBAI MATRU MANDIR, TARDEO MUMBAI 400 007. VS. MR. HOMI N.J. DADY (DECD), RESPONDENT 141-E, MONTE ROSA DADYSETH HILL, AK MARG, MUMBAI 400 030 ASSESSEE BY : MR. K.K. VED REVENUE BY : MR. R.K. GUPTA . ORDER PER V. DURGA RAO, J.M.: THESE ARE THE CROSS APPEALS DIRECTED AGAINST THE O RDER OF CIT(A)- 27, MUMBAI, PASSED ON 02/12/2009 FOR THE ASSESSMENT YEAR 2006-07. ITA NO. 1917/M/2010 & 1748/MUM/10 HOMI NJ DADY 2 ITA NO. 1917/MUM/2010 APPEAL BY THE ASSESSEE 2. THE GROUNDS OF APPEAL OF THE ASSESSEE READ AS UN DER:- 1.0 RE.: ENHANCEMENT OF THE ASSESSMENT: 1.1 THE CIT(A) HAS ERRED IN ENHANCING THE ASSESSMEN T MADE BY THE ASSESSING OFFICER WITHOUT GIVING THE APPELLANT REQUISITE OPPORTUNITY IN ACCORDANCE WITH THE PROVISIONS OF SE CTION 251(2) OF THE ACT. 1.2 THE APPELLANT SUBMITS THAT THE IMPUGNED ENHANCE MENT MADE BY THE CIT(A) IS INCORRECT, ILLEGAL, IN GROSS NEGLE CT OF THE PRINCIPLES OF NATURAL JUSTICE AS INCORPOREAL IN SECTION 251(2) OF THE ACT AND HENCE OUGHT TO BE STRUCK DOWN. WITHOUT PREJUDICE TO THE FOREGOING: 2.0 RE; NON-GRANTING OF DOUBLE TAXATION RELIEF IN R ESPECT OF DIVIDEND INCOME ON SHARES HELD IN A FOREIGN COMPANY : 2.1 THE CIT(A) HAS ERRED IN DECIDING THAT THE NO RE LIEF OF ACCOUNT OF DOUBLE TAX SHOULD BE GRANTED IN RESPECT OF THE N ET DIVIDEND INCOME RECEIVED BY THE APPELLANT ON SHARES HELD IN A FOREIGN COMPANY. 2.2 THE APPELLANT SUBMITS THAT CONSIDERING THE FACT S AND CIRCUMSTANCES OF HIS CASE AND THE LAW PREVAILING ON THE SUBJECT, HE IS ENTITLED TO A RELIEF FROM DOUBLE TAXATION IN RESPECT OF THE SAID DIVIDEND INCOME IN TERMS OF THE PROVISIONS OF ARTICLE 24 OF THE DOUBLE TAXATION AVOIDANCE AGREEMENT BETWEEN IND IA AND THE UNITED KINGDOM AND THE CIT(A) OUGHT TO HAVE HELD AS SUCH. 2.3 THE APPELLANT SUBMITS THAT THE ASSESSING OFFICE R BE DIRECTED TO GRANT RELIEF FROM DOUBLE TAXATION IN RE SPECT OF THE DIVIDEND INCOME AS CLAIMED BY HIM AND TO RECOMPUTED HIS TAX LIABILITY ACCORDINGLY. ITA NO. 1748/MUM/10 APPEAL BY THE REVENUE 3. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THE CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO TAX ONLY THE NET AMOUNT OF DIVIDEND RECEIVED BY ASSESSEE FRO M A UNITED KINGDOM BASED COMPANY DISREGARDING THE BOARDS CIRC ULAR NO. 369 DATED 17/09/1983 WHICH IS APPLICABLE FOR THE AS SESSMENT YEAR IN QUESTION. ITA NO. 1917/M/2010 & 1748/MUM/10 HOMI NJ DADY 3 2. THE CIT(A) ERRED IN CONCLUDING THAT, THE TAX DED UCTED BY THE COMPANY IN THE UNITED KINGDOM AND PAID INTO THE TRE ASURY IN THE UNITED KINGDOM AFTER DEDUCTING THE SAME FROM DIVIDE ND PAID TO THE ASSESSEE TO THE UNITED KINGDOM IS NOT INCLUDIBL E IN THE CHARGEABLE INCOME OF THE ASSESSEE. 4. AT THE TIME OF HEARING BEFORE US, THE LEARNED CO UNSEL FOR THE ASSESSEE HAS SUBMITTED THAT GROUND NO. 1 REGARDING ENHANCEMENT OF ASSESSEE HAS BECOME INFRUCTUOUS, THEREFORE, THE SAM E IS NOT PRESSED. ACCORDINGLY, THIS GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED AS NOT PRESSED. 5. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SING OFFICER HELD THAT THE ASSESSEE WHO HAD RECEIVED DIVIDEND FROM UK BASED COMPANY HSBC HOLDINGS PLC OF RS. 5,28,33,343/- WAS SHOWN NE T OF TAX DEDUCTED AT SOURCE. THE ASSESSEE HAD CLAIMED RELIEF OF RS. 58,70,361/- BEING TDS DEDUCTED BY THE UK BASED PART LY. THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD ALS O CLAIMED RELIEF UNDER DOUBLE TAXATION AVOIDANCE AGREEMENT BETWEEN U K AND INDIA CLAIMING DOUBLE BENEFIT. FOLLOWING THE EARLIER ASS ESSMENT YEARS AND AS PER INSTRUCTIONS ISSUED BY THE CBDT BY CIRCULAR NO. 369 DATED 17/09/83 WHICH STATED THAT DIVIDEND HAD TO BE ASSES SED ON THE GROSS AMOUNT INCLUSIVE OF TDS AND NOT THE NET AMOUNT, THE ASSESSING OFFICER HAD NOT ACCEPTED THE ASSESSEES CONTENTION THAT AS PER THE HONBLE BOMBAY HIGH COURTS DECISION IN THE CASE OF CIT VS. AMBALAL KHILACHAND {1994) (210 ITR 884) WHEREIN THE HONBLE HIGH COURT HAD HELD THAT DIVIDEND FROM UK COMPANIES WAS TO BE ASSE SSED NET OF TAX. AGGRIEVED BY THE ORDER OF ASSESSING OFFICER, THE AS SESSEE IS IN APPEAL BEFORE THE CIT(A). 6. BEFORE THE CIT(A), THE LEARNED AR OF THE ASSESSE E STATED THAT THE PROVISIONS OF SECTION 198 WERE APPLICABLE TO TDS OF INDIAN COMPANIES AND THEY DID NOT APPLY TO TDS OF FOREIGN COMPANIES IN TERMS OF FOREIGN REGISTRATION. THE LEARNED AR HAD RELIED ON A NUMBER OF CASES AND ITA NO. 1917/M/2010 & 1748/MUM/10 HOMI NJ DADY 4 MAINLY ON THE HONBLE BOMBAY HIGH COURTS DECISION REFERRED ABOVE. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE CIT(A) FOLLOWING THE DECISION OF HIS PREDECESSORS AND RESPECTFULLY F OLLOWING THE DECISION OF THE HONBLE BOMBAY HIGH COURT, THE ASSE SSING OFFICER IS DIRECTED TO TAX THIS AMOUNT ON NET DIVIDEND INCOME AND NO RELIEF UNDER DOUBLE TAXATION AGREEMENT IS TO BE ALLOWED. 7. AGGRIEVED BY THE ORDER OF THE CIT(A) BOTH THE AS SESSEE AND THE REVENUE FILED APPEALS BEFORE THE ITAT RAISING THE G ROUNDS OF APPEAL IN THEIR RESPECTIVE APPEALS (SUPRA). 8. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE HAS CANVASSED THAT THE APPEAL OF THE ASSESSEE AS WELL AS THE APPE AL OF THE REVENUE ARE SQUARELY COVERED BY THE DECISION OF THE ITAT IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 1999-00 TO 2004-05 IN ITA NOS. 470 & 471/M/08 AND 2325 TO 2328/MUM/08 (ASSESSEES APPEAL S) AND IN ITA NOS. 950 & 951/M/09 AND 2358 TO 2361/MUM/2009 (REVE NUES APPEALS) VIDE ITS CONSOLIDATED ORDER DATED 30 TH JULY, 2010. A COPY OF THE SAID ORDER OF THE ITAT IS AVAILABLE ON RECORD. 9. THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, HAS FAIRLY CONCEDED THE SUBMISSIONS MADE BY THE ASS ESSEE. 10. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF TH E PARTIES AND PERUSED THE RECORD. WE FIND THAT THE APPEAL OF THE ASSESSEE AS WELL AS THE APPEAL OF THE REVENUE ARE COVERED BY THE DECISI ON OF THE ITAT IN ASSESSEES OWN CASE FOR AY 1999-00 TO 2004-05 (SUPR A). RESPECTFULLY FOLLOWING THE SAID DECISION OF THE ITAT, WE REMIT T HE APPEALS BACK TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO DECIDE THE SAME AFRESH FOLLOWING THE DECISION OF THE ITAT (SUPRA) A FTER PROVIDING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. ITA NO. 1917/M/2010 & 1748/MUM/10 HOMI NJ DADY 5 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSE AND THE APPEAL OF REVENUE IS TR EATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 29 TH APRIL, 2011. SD/- SD/- (R.S.SYAL) (V. DURGA R AO) ACCOUNTANT MEMBER JUDI CIAL MEMBER MUMBAI, DATED: 29 TH APRIL, 2011 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE, H BENCH, I.T .A.T., MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR, I.T.A.T., MUMBAI. KV