M/s Sauber Motorsport AG, New Delhi V. DCIT (International Taxation), Noida

ITA 1805/DEL/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5667 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 9 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2012-2013
• Appeal Filed On: 06-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G K DHALL
• Keywords: Double taxation relief; Opportunity of being heard
• Section: 271(1)(c); 234B

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL, DELHI BENCH F, NEW DELHI BEFORE : SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 1805/DEL/2016 ASSESSMENT YEAR: 2012-13 SAUBER MOTORSPORT AG, C/O PDS LEGAL ATMARAM MANSION OFFICE NO. 7, FIRST FLOOR, KG. MARG, NEW DELHI. PAN-AAQCS 4299G (APPELLANT) VS. DCIT (INTL. TAXATION) NOIDA. (RESPONDENT) APPELLANT BY SH. AJIT KORDE, ADVOCATE RESPONDENT BY SH. G.K. DHALL, CIT/DR ORDER PER L.P. SAHU, A.M.: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ASSESSMENT ORDER DATED 29.01.2016 PASSED U/S 144C/143(3)/144C(5) REA D WITH DIRECTIONS OF DISPUTE RESOLUTION PENAL DATED 23.12.2015 FOR THE A SSESSMENT YEAR 2012-13 ON THE FOLLOWING GROUNDS : ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LEARNED AO, BASED ON THE DIRECTIONS OF THE HONBLE DRP, HAS: 1. THE LEARNED AO/ HONBLE DRP ERRED IN DETERMINING THE TOTAL TAXABLE INCOME OF THE APPELLANT FOR AY 2012-13 AT R S 1,81,99,800 INSTEAD DATE OF HEARING 31.01.2019 DATE OF PRONOUNCEMENT 04.02.2019 ITA NO. 1805/DEL/2016 2 OF THE NIL INCOME OFFERED BY THE APPELLANT FOR THE SUBJECT AY UNDER NORMAL PROVISIONS OF THE ACT IN ITS INCOME-TAX RETURN. 2. THE HONBLE DRP ERRED IN NOTING THAT ADEQUATE OPP ORTUNITY WAS GIVEN TO SHOW-CAUSE WHY PROVISIONS OF ARTICLE 17 OF THE INDIA-SWITZERLAND TAX TREATY (DTAA) SHOULD NOT APPLY TO THE INCOME OF THE APPELLANT. 3. THE LEARNED AO/ HONBLE DRP ERRED IN HOLDING THAT THE RECEIPTS OF THE APPELLANT ARE IN THE NATURE OF RECEIPTS DERIVED FROM PERSONAL ACTIVITIES OF THE ATHLETES EXERCISED IN INDIA AND HENCE, TAXAB LE IN INDIA UNDER ARTICLE 17 OF THE DTAA WITHOUT GIVING OPPORTUNITY TO THE AP PELLANT TO SHOW-CAUSE WHY ARTICLE 17 OF THE DTAA SHOULD NOT APPLY. 4. THE LEARNED AO/ HONBLE DRP ERRED IN HOLDING THAT THE SPONSORSHIP REVENUES FROM DRAFT FCB ULKA ADVERTISING PRIVATE LI MITED ARE IN THE NATURE OF INCOME DERIVED FROM PERSONAL ACTIVITIES O F THE DRIVERS EXERCISED IN INDIA AND HENCE, TAXABLE IN INDIA UNDER ARTICLE 17(2) OF 1 THE DTAA WITHOUT GIVING OPPORTUNITY TO THE APPELLANT TO SHOW -CAUSE WHY ARTICLE 17 OF THE DTAA SHOULD NOT APPLY. 5. THE LEARNED AO/ HONBLE DRP ERRED IN SEEKING INFO RMATION REGARDING RECEIPTS FROM ANY SOURCE AND SPONSORSHIP REVENUE EARNED IN CONTEXT OF GRAND PRIX OF INDIA WITHOUT APPRECIATING THE APPELLANTS SUBMISSIONS THAT NO RECEIPTS HAVE BEEN EARNED BY TH E APPELLANT IN CONNECTION WITH THE GRAND PRIX OF INDIA AND HENCE, SUCH DETAILS ARE NOT RELEVANT. 6. THE LEARNED AO/ HONBLE DRP ERRED IN TAXING PAYME NTS TO KAMUI KOBAYASHI AND SERGIO PEREZ, ON WHICH TAXES HAD BEEN DEDUCTED AND DEPOSITED INTO THE INDIAN GOVERNMENT TREASURY, AS T AXABLE UNDER ARTICLE 17 OF THE DTAA, THEREBY LEADING TO DOUBLE TAXATION. 7. THE LEARNED AO/ HONBLE DRP ERRED IN NOT ALLOWING PAYMENTS MADE TO KAMUI KOBAYASHI AND SERGIO PEREZ AS A DEDUCTIBLE EXPENSE INSPITE OF THE FACT THAT APPLICABLE TAX HAS BEEN DULY DEDUCTED AND DEPOSITED INTO THE INDIAN GOVERNMENT TREASURY. ITA NO. 1805/DEL/2016 3 8. THE LEARNED AO/ HONBLE DRP ERRED IN NOT GRANTING THE CORRESPONDING CREDIT FOR TAX DEDUCTED AT SOURCE AMO UNTING TO RS 13,80,000 AS PER THE PROVISIONS OF SECTION 199 OF T HE ACT. 9. THE LEARNED AO/ HONBLE DRP ERRED IN LEVYING INTE REST UNDER SECTION 234A, 234B AND 234C OF THE ACT. 10. THE LEARNED A.O./HONBLE DRP ERRED IN LEVYING IN TEREST UNDER SECTION 234D OF THE ACT. 11. THE LEARNED ASSESSING OFFICER/HONBLE DRP ERRED IN INITIATING PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT. 2. WE HAVE HEARD THE SUBMISSIONS OF BOTH THE SIDES AND HAVE GONE THROUGH THE ENTIRE MATERIAL AVAILABLE ON RECORD. DURING THE COURSE OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED AT THE OUTSET TH AT THE LD. AUTHORITIES BELOW WHILE DECIDING THE ISSUES, AS INVOLVED IN THE AFORE SAID GROUNDS OF APPEAL DID NOT GIVE ADEQUATE OPPORTUNITY OF BEING HEARD TO SHO W CAUSE AS TO WHY THE PROVISIONS OF ARTICLE NO. 17 OF THE DTAA SHOULD NOT APPLY WITH RESPECT TO RECEIPTS FROM ACTIVITIES OF THE ATHLETES, SPONSORSH IP RECEIPTS FROM FCB ULKA ADVERTISING PVT. LTD. ETC. IT WAS ALSO SUBMITTED TH AT NO RECEIPTS WERE EARNED BY APPELLANT IN CONNECTION WITH THE GRAND PRIX OF INDI A AND THAT THE TAX LIABILITY HAS WRONGLY BEEN FASTENED ON THE PAYMENTS MADE TO A THLETS AFTER DEDUCTING TDS AND ITS DEPOSIT IN THE GOVT. TREASURY. IT IS SU BMITTED SINCE NO ADEQUATE OPPORTUNITY WAS GRANTED BY THE ASSESSING OFFICER TO EXPLAIN THE APPLICABILITY OF ARTICLE 17 OF THE DTAA, THE MATTER MAY BE RESTOR ED TO THE FILE OF ASSESSING OFFICER FOR DECIDING THE ISSUES INVOLVED IN THIS AP PEAL DE NOVO AFTER AFFORDING REASONABLE OPPORTUNITY OF BEING. THE LD. DR, ON BEI NG ASKED, HAS NO OBJECTION ON THE REQUEST OF THE LD. AR OF THE ASSESSEE FOR RE MITTING THE MATTER BACK TO ITA NO. 1805/DEL/2016 4 ASSESSING OFFICER. WE ACCORDINGLY THINK IT APPROPRI ATE IN THE INTEREST OF JUSTICE TO REMIT THE MATTER BACK TO THE FILE OF ASSESSING O FFICER FOR DECIDING ALL THE ISSUES DE NOVO AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 3. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATIST ICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 04.02.2019. SD/- SD/- (H.S. SIDHU) (L.P. SA HU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 04.02.2019 *AKS* COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI