ICICI SECURITIES LTD, MUMBAI V. ITO (IT) TDS 3, MUMBAI

ITA 1992/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8644 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2017
• Appeal Filed By: Assessee
• Bench Allotted: I
• Assessment Year: 2008-2009
• Appeal Filed On: 07-04-2015
• Court: TRIBUNAL
• Department Lawyers: JABIR CHOUHAN RAJ GURU M V DRS
• Assessee Lawyers: KRUPA R GANDHI MS RITU PUNJABI
• Keywords: Double taxation relief; Opportunity of being heard; Principle of natural justice; Retrospective amendment
• Section: 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL L BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO.1992/M/2015 (AY 2008 - 2009) ITA NO.1993/M/2015 (AY 2009 - 2010 ) ITA NO.1994/M/2015 (AY 2010 - 2011 ) ICICI SECURITIES LTD., ICICI CENTRE, HT PAREKH MARG, CHURCHGATE, MUMBAI 400 020. / VS. ITO (IT) - TDS - 3, MUMBAI. ./ PAN : AAACI0996E ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : MS. KRUPA R GANDHI / MS. RITU PUNJABI / RESPONDENT BY : SHRI JABIR CHOUHAN / RAJ GURU M.V., DRS / DATE OF HEARING : 02 .02.2017 / DATE OF PRONOUNCEMENT : 10 .02.2017 / O R D E R PER BENCH : THERE ARE THREE APPEALS UNDER CONSIDERATION. THESE THREE APPEALS ARE FILED BY THE ASSESSEE INVOLVING THE ASSESSMENT YEARS 2008 - 09, 2009 - 10 AND 2010 - 11. SINCE, THE ISSUES RAISED IN THESE APPEALS ARE IDENTICAL, THEREFORE, FOR THE SAKE OF CONVENIENCE , THESE APPEALS ARE CL UBBED, HEARD COMBINEDLY AND DISPOSED OF IN THIS CONSOLIDATED ORDER. APPEAL WISE ADJUDICATION IS GIVEN IN THE FOLLOWING PARAS OF THIS ORDER. 2. SINCE, ASSESSEE RAISED IDENTICAL GROUNDS IN ALL THE THREE APPEALS, THEREFORE, FOR THE SAKE OF REFERENCE AND ADJUD ICATION PURPOSE, GROUNDS RAISED IN THE ASSESSEES APPEAL FOR THE AY 2008 - 2009 ARE EXTRACTED AS UNDER: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN CONFIRMING THE ACTION OF THE AO IN TREATING THE APPELLANT AS ASSESSEE IN DEFAULT U/S 201 (1) OF THE ACT ON THE ALLEGED GROUND THAT THE APPELLANT HAS NOT DEDUCTED TAX AT SOURCE AMOUNTING RS. 1,27,252/ - FOR PAYMENT MADE ON ACCOUNT OF SUBSCRIPTION FEES FOR USE OF ONLINE DATABASE. 2. ON THE FACTS AND IN THE CIRCUMSTANC ES OF THE CASE AND IN LAW, CIT (A) ERRED IN CONFIRMING THE ACTION OF THE AO IN HOLDING THAT THE PAYMENT MADE FOR SUPPLY 2 OF ONLINE SOFTWARE DATABASE TO OMGEO PTE LTD BY THE APPELLANT IS IN THE NATURE OF ROYALTY WHICH IS SUBJECT TO TAX DEDUCTION AT SOURCE U/ S 195 OF THE ACT THEREBY DISREGARDING THE PROVISIONS OF ARTICLE 12 OF THE INDO - SINGAPORE DOUBLE TAXATION AVOIDANCE AGREEMENT (DTAA). 3. WITHOUT PREJUDICE TO GROUND NOS. 1 AND 2, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, CIT (A) ERRED IN NOT APPRECIATING THAT THE DISALLOWANCE CANNOT BE MADE U/S 201(1) OF THE ACT ON THE BASIS OF SUBSEQUENT AMENDMENT BROUGHT INTO THE ACT WITH RETROSPECTIVE EFFECT. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT (A) ERRED IN NOT APPR ECIATING THAT THE DISALLOWANCE CANNOT BE MADE U/S 201(1) OF THE ACT ON THE BASIS OF SUBSEQUENT AMENDMENT BROUGHT INTO THE ACT WITH RETROSPECTIVE EFFECT. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT (A) ERRED IN CONFIRMING THE AC TION OF THE AO IN LEVYING THE INTEREST U/S 201(1A) OF RS. 58,382/ - ON THE ALLEGED NON - DEDUCTION OF TAX AT SOURCE U/S 195. 3. THE ONLY ISSUE RAISED IN THESE THREE APPEALS RELATES TO THE CHARGEABILITY OF SUBJECTING THE PAYMENTS TO TDS PROVISIONS WHEN THE P AYMENTS ARE AIMED AT THE SUBSCRIPTION FEES FOR USE OF ONLINE DATABASE. REVENUE CONSIDERED THE PAYMENT MADE BY THE ASSESSEE TO OMGEO PTE. LTD (OMGEO) IS IN THE IN THE NATURE OF ROYALTY SUBJECT TO TDS U/S 195 OF THE ACT. HOWEVER, IT IS THE CLAIM OF THE ASSESSEE THAT THE SAID PAYMENTS DO NOT CONSTITUTE ROYALTY IN VIEW OF THE PROVISIONS OF ARTI C LE 12 OF THE INDIA - SINGAPORE DTAA. 4. BEFORE US, LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE ORDERS OF THE AO U/S 201 / 201(1A) OF THE ACT AS WELL AS THE ORDERS OF THE FAA IN THESE APPEALS AND SUBMITTED THAT THE SAID ORDERS PASSED PRIOR TO THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. SAMSUNG ELECTRONIC S CO. LTD (345 ITR 494) (KAR.) AS WELL AS THE JUDGMENT OF THE HONBLE DELHI HIG H COURT IN THE CASE OF DIT VS. INFRASOFT LTD ( 220 TAXMANN 273) (DELHI) AND MANY OTHERS. THESE JUDGMENTS HAVE DEALT WITH THE CORE ISSUE WHETHER THE PAYMENTS MADE FOR COPY RIGHTED ARTICLE CONSTITUTES ROYALTY OR OTHERWISE . FOR APPL YING THE SAID LEGAL PROPO SITION , LD REPRESENTATIVES OF BOTH THE PARTIES MENTIONED THAT ALL THE GROUNDS RAISED IN THESE APPEALS ARE REQUIRED TO BE REMANDED TO THE FILE OF THE AO FOR FRESH ADJUDICATION AND DECISION. 5. ON HEARING BOTH THE PARTIES, WITHOUT GOING TO THE MERITS OF TH E GROUNDS, WE ARE OF THE OPINION, ALL THE GROUNDS RAISED IN THE PRESENT THREE APPEALS ALONG WITH THE GROUNDS RAISED WITHOUT PREJUDICE ARE REQUIRED TO BE REMANDED TO THE FILE OF THE AO FOR APPLYING THE CITED JUDGMENTS OF THE HIGH COURTS (SUPRA) AND DECIDE T HE ISSUE 3 AFRE SH. IT IS NEEDLESS TO MENTION THAT THE AO SHALL GRANT A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AS PER THE SET PRINCIPLES OF NATURAL JUSTICE. ACCORDINGLY, ALL THE GROUNDS RAISED BY THE ASSESSEE IN THREE APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES. 6. IN THE RESULT, ALL THE THREE APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUN CED IN THE OPEN COURT ON 10 TH FEBRUARY, 2017. SD/ - SD/ - (RAVISH SOOD) (D. KARUNAKARA RAO) (JUDICIAL MEMBER) ACCOUNTANT MEMBER MUMBAI ; 10.02.2017 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI