ACIT, New Delhi V. M/s. Moser Baer Photovoltaic Ltd., Delhi

ITA 1852/DEL/2015

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7074 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC 2
• Next Hearing Date: 06-12-2016
• Assessment Year: misc
• Appeal Filed On: 31-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMRIT LAL
• Assessee Lawyers: AHARNISH KAPOOR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC - 2 , NEW DELHI BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER ITA NO. 1852 /DEL/201 5 AY: 201 1 - 12 (FY 2010 - 11) ACIT, CIRCLE 75(1) VS. MOSER BAER PHOTOVOLTAIC LTD. ROOM NO.503, AAYAKAR BHVN 43 B, OKHLA INDUSTRIAL AREA LAXMI NAGAR PHASE III NEW DELHI 110 092 DELHI 110 020 PAN: AAECM 4997 P (APPELLANT) (RESPONDENT) APPELLANT BY : SH. AMRIT LAL, SR.D.R RESPONDENT BY : SH. NEERAJ JAIN, ADV. & SH. AHARNISH KAPOOR, C.A ORDER THIS IS AN APPEAL FILED BY THE REVENUE DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 13, NEW DELHI DT. 28.1.2015 P ERTAINING TO THE ASSESSMENT YEAR (A.Y.) 20 11 - 12 ON THE FOLLOWING GROUND. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) HA S ERRED IN NOT TREATING THE ASSESSEE TO BE IN DEFAULT FOR NON DEDUCTION OF TAX ON PROVISION MADE IN THE BOOKS OF ITA 1852/DEL/2015 A.Y. 2011 - 12 (FY 2010 - 11) MOSER BAER PHOTOVOLTAIC LTD. 2 ACCOUNT WHICH IS CONTRAVENTION OF EXPLANATION OF SECTION 194J OF THE I.T.ACT, 1961 (THE ACT). 2. THE ISSUE IN QUESTION IS WHETHER TAX HAS TO BE DEDUCTED AT SOURCE OF AN AMOUNT PROVIDED IN THE BOOKS OF ACCOUNT ON ESTIMATE BASIS ON THE LAST DAY OF THE FINANCIAL YEAR FOR THE PURPOSE OF ACCOUNTING WHICH AMOUNT IS REVERSED ON THE VERY NEXT DAY WHICH IS THE FIRST DAY O F THE NEXT FINANCIAL YEAR . LD.CIT(A) HAD FOLLOW ED THE ORDER OF HIS PREDECESSORS IN THE ASSESSEE S O WN CASE FOR THE A.Y. 2010 - 11. THE REVENUE HAS ACCEPTED THIS DECISION OF THE LD.CIT(A) AND HAS NOT FILED AN APPEAL. THE FINDINGS OF THE LD.CIT(A) ARE AT PARA 4.3 FROM PAGES 5 TO 7 OF HIS ORDER WHICH IS NOT EXTRACTED FOR THE SAKE OF BREVITY . 3. AFTER HEARING RIVAL CONTENTIONS I FIND THAT THE ISSUE IS NO MORE RES INTEGRA. THE HON BLE DELHI HIGH COURT IN THE CASE OF DIT VS. ERICSSON COMMUNICATION LTD. 378 ITR 395 (DEL.) HELD AS FOLLOWED. HELD, DISMISSING THE APPEAL, THAT ASSESSEE HAD DENIED ANY OBLIGATION FOR PAYMENT OF ROYALTY TO ITS HOLDING COMPANY IN RESPECT OF A PERIOD PRIOR TO SEPT.8, 2000 (I.E. THE DATE OF ISSUANCE OF PRESS NOTE (2000 SERIES) BY THE GOVT. OF INDIA). THE ITA 1852/DEL/2015 A.Y. 2011 - 12 (FY 2010 - 11) MOSER BAER PHOTOVOLTAIC LTD. 3 ENTRIES PASSED BY THE ASSESSEE IN ITS BOOKS OF ACCOUNTS WERE INDISPUTABLY REVERSED AND CONSEQUENTLY ITS EFFECT NULLIFIED. THE ASSESSEE HAD ALSO NOT CHARGED THE AMOUNT OF ROYALTY FOR THE RELEVANT PERIOD AS AN EXPENSE IN ITS BOOKS. THIS WAS IN CONFORMITY WITH THE ASSESSEE S VIEW THAT NO AMOUNT WAS PAYABLE TO ITS HOLDING COMPANY DURING THE PERIOD IN QUESTION. THERE WAS NO ALLEGATION THAT THIS POSITION ASSERTED BY THE ASSESSEE WAS NOT BONAFIDE, IT WAS NOT THE CASE OF THE REVENUE THA T NULLIFYING THE ENTRIES PASSED BY THE ASSESSEE WAS A SUBTERFUGE TO AVOID ANY OBLIGATION. THE ASSESSEE NEITHER PAID ROYALTY DURING THE PERIOD NOR REFLECTED THE ROYALTY AS PAYABLE. IN SUCH CIRCUMSTANCES, IT WAS DIFFICULT TO ACCEPT THAT THERE WAS ANY INCOM E CHARGEABLE TO TAX WHICH HAD ACCRUED IN FAVOUR OF THE HOLDING COMPANY. IN ANY VIEW THE ASSESSEE COULD NOT BE HELD TO HAVE ACKNOWLEDGED THE SAME BY CREDITING THE ACCOUNT OF ITS HOLDING COMPANY, AS ADMITTEDLY, THAT ENTRY HAD BEEN REVERSED. MERE PASSING O F BOOK ENTRIES WHICH WERE REVERSED WOULD NOT GIVE RISE TO AN OBLIGATION ON THE ASSESSEE TO DEDUCT TAX AT SOURCE, AS CLEARLY, THERE WAS NO DEBT THAT COULD BE SAID TO BE ACKNOWLEDGED. IT WAS ALSO NOT DISPUTED THAT THE HOLDING COMPANY HAD NOT CLAIMED ROYALTY PAYABLE FROM THE ASSESSEE AND CONCEDEDLY NO ROYALTY FOR THE PERIOD HAD BEEN PAID. IN THE ABSENCE OF ANY INCOME CHARGEABLE TO TAX ARISING ON ACCOUNT OF ROYALTY IN THE HANDS OF THE HOLDING COMPANY AT THE MATERIAL TIME, THE QUESTION OF WITHHOLDING TAX AT SO URCE WOULD NOT ARISE. ITA 1852/DEL/2015 A.Y. 2011 - 12 (FY 2010 - 11) MOSER BAER PHOTOVOLTAIC LTD. 4 4. APPLYING THE PROPOSITION LAID DOWN IN THE ABOVE CASE TO THE FACTS OF THE CASE ON HAND, I UPHOLD THE ORDER OF THE FIRST APPELLATE AUTHORITY AND DISMISS THIS APPEAL BY THE REVENUE. 5 . IN THE RESULT THE APPEAL OF THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 05 TH JANUARY,2017 . SD/ - (J.SUDHAKAR REDDY) ACCOUNTANTMEMBER DATED: THE 05 TH JANUARY, 2017 *MANGA COPY OF THE ORDER FORWARDED TO: 1. APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT(A); 5.DR; 6.GUARD FILE BY ORDER ASST. REGISTRAR