ADIT, Dehradun V. M/s. Samsung Heavy Industries Co. Ltd., Gurgaon

ITA 2005/DEL/2014

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6809 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 13-02-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 04-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANUJ ARORA
• Keywords: Permanent establishment
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G , NEW DELHI BEFORE SH. N. K. SAINI, AM AND SMT. BEENA PILLAI , JM ITA NO. 2005/DEL/2014 : ASSTT. YEAR : 2007 - 0 8 ASSTT. DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION), DEHRADUN VS M/S SAMSUNG HEAVY INDUSTRIES CO. LTD., C/O - PRICEWATER HOUSE COOPERS PVT. LTD., BUILDING 10, TOWER - C, 17 TH FLOOR, DLF CYBER CITY, GURGAON - 122002 (APPELLANT) (RESPONDENT) PAN NO. A A JCS7859K ASSESSEE BY : SH. RAVI SHARMA, ADV. & SH. RISHABH MALHOTRA , ADV. REVENUE BY : SH. ANUJ ARORA, CIT DR DATE OF HEARING : 13.02 .201 7 DATE OF PRONOUNCEMENT : 14 . 02 .201 7 ORDER PER N. K. SAINI, AM: THIS IS AN APPEAL BY THE DEPART MENT AGAINST THE ORDER DATED 22.01.2014 OF LD. CIT (A) - II , DEHRADUN . 2. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CI T (APPEALS) HAS ERRED IN ALLOWING THE APPEAL FI LED BY THE ASSESSEE AGAINST THE ASSESSMENT ORDER DATED 30.03 . 2013 PASSED BY THE AS SESSING OFFICER (AO) U/S 143(3)/ 254 OF THE INCOME TAX ACT, 1961 ('THE ACT'), WITHOUT GOING INTO THE MERITS OF THE ISSUES AS AGITATED IN THE GROUNDS OF APPEAL FILED BY THE ASS ESSEE. ITA NO. 2005 /DEL /201 4 SAMSUNG HEAVY INDUSTRIES CO. LTD. 2 1.1 THE LD. CIT (APPEALS) HAS ERRED IN ALLOWING THE APPEAL OF THE ASSESSEE WITHOUT ADMITTING ANY ADDITIONAL GROUNDS RELATING TO EFFECT OF THE JUDGMENT DATED 27.12.2013 OF THE HON'BLE HIGH COURT IN THE SIMULTANEOUSLY CONTINUING FIRST ROUND OF THE APP ELLATE PROCEEDINGS IN THE CASE WHICH HAVE NOT YET ATTAINED FINALITY. 1.2 THE LD. CIT (APPEALS) HAS ERRED IN NOT APPRECIATING THE FACT THAT THE SCOPE OF THE ASSESSMENT U/S 143(3)/254, AND BY EXTENSION THE SCOPE OF THE APPEAL EMANATING FROM THE SAID ASSESSM ENT ORDER, WAS NECESSARILY LIMITED TO THE DIRECTIONS ISSUED BY THE HON'BLE ITAT VIDE ITS ORDER DATED 30.08.2011 WHEREIN THE HON'BLE ITAT HAD, WHILE UPHOLDING THAT A PORTION OF THE REVENUES FROM THE SO CALLED OUTSIDE INDIA ACTIVITIES WERE TAXABLE IN INDIA, DIRECTED THE AO TO ASCERTAIN THE FACTS NECESSARY FOR PROPER QUANTIFICATION/ATTRIBUTION OF SUCH REVENUES T O THE PERMANENT ESTABLISHMENT ( P E ) IN INDIA. 1.3 THE LD. CIT (APPEALS) APPEARS TO HAVE IMPLICITLY INVOKED THE DOCTRINE OF MERGER IN ALLOWING THE APP EAL OF THE ASSESSEE WITHOUT TAKING IT TO LOGICAL CONCLUSION, NOT APPRECIATING THE FACT THAT IN CASE THE ORDER DATED 13.08.2011 OF THE HON'BLE ITAT AND THE CONSEQUENTIAL ORDER U/S 143(3)/ 254 ARE DEEMED AS MERGED IN THE JUDGMENT DATED 27.12.2013 OF THE HON'B LE HIGH COURT, THEN THE APPEAL OF THE ASSESSEE AGAINST THE ASSESSMENT ORDER U/S 143(3)/254, WHICH WAS CONFINED TO THE ISSUE OF ATTRIBUTION EMANATING FROM THE SAID ORDER, SHOULD NECESSARILY AND PROPERLY HAVE BEEN HELD AS IN FRUCTUOUS AND DISMISSED AS SUCH. ITA NO. 2005 /DEL /201 4 SAMSUNG HEAVY INDUSTRIES CO. LTD. 3 1.4 THE LD. CIT (APPEALS) HAS ERRED IN ALLOWING THE APPEAL IN TOTO AND DELETING THE ADDITIONS MADE BY THE AO IN THE ASSESSMENT ORDER U/S 143(3)/254 OF THE ACT ON THE SOLE GROUND THAT SUBSEQUENT TO THE SAID ORDER DATED 30.08.2011, THE HON'BLE HIGH COURT HA D VIDE ITS ORDER DATED 27 . 12.2013 HELD THAT THE INCOME OF THE ASSESSEE FROM THE OUT - SIDE INDIA ACTIVITIES WAS NOT TAXABLE, WITHOUT APPRECIATING THE FACT THAT THE SAID JUDGMENT OF THE HON'BLE HIGH COURT HAS NOT BECOME FINAL AS THE DEPARTMENT IS IN THE PROCE SS OF FILING SPECIAL LEAVE PETITION ('SLP') AGAINST THE SAME. 1.5 THE LD. CI T (APPEALS) HAS ERRED IN NOT APPRECIATING THE FACT THAT HIS ACTION IN ALLOWING THE APPEAL OF THE ASSESSEE, INSTEAD OF DISMISSING THE SAME AS RENDERED IN FRUCTUOUS, MAY BE INTERPRE TED AS FORECLOSING THE OPTION OF REVENUE TO APPEAL FOR RESTORATION OF THE ASSESSMENT ORDER U/S 143(3)/254 AT A LATER STAGE IF AND WHEN THE DEPARTMENTAL SLP AGAINST THE JUDGMENT DATED 27.12.2013 OF THE HON'BLE HIGH COURT IS DECIDED IN FAVOUR OF REVENUE. 2. THE APPELLANT PRAYS FOR LEAVE TO ADD, AMEND, MODIFY OR ALTER ANY GROUNDS OF APPEAL AT THE TIME OR BEFORE THE HEARING OF THE APPEAL. 3. DURING THE COURSE OF HEARING THE LD. COUNSEL FOR THE ASSESSEE AT THE VERY OUTSET STATED THAT THIS APPEAL OF THE DEPART MENT BECOMES INFRUCTUOUS SINCE THE AO VIDE ORDER DATED 12.03.2014 ON THE DIRECTION OF THE HON BLE UTTARAKHAND HIGH COURT GIVEN IN ORDER DATED 27.12.2013 HAD ALLOWED THE CLAIM OF THE ASSESSEE AND REVISED THE ORIGINAL ASSESSMENT ORDER DATED 25.10.2010. THE L D. CIT DR ALTHOUGH SUPPORTED THE ORDER OF ITA NO. 2005 /DEL /201 4 SAMSUNG HEAVY INDUSTRIES CO. LTD. 4 THE AO BUT COULD NOT CONTROVERT T HE AFORESAID CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE. 4. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRE SENT CASE, IT IS NOTICED THAT THE ORIGINAL ASSESSMENT WAS COMPLETED BY THE AO U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) AT AN INCOME OF RS.28,35,94,740/ - AND THE LOSS OF RS.23,33,939/ - WAS DEDUCTED FROM THE SAID INCOME TO ARRIVE AT A TAXABLE INCOME OF RS.28,12,60,801/ - . THE SAID INCOME WAS COMPUTED AFTER HOLDING THAT OUTSIDE INDIA REVENUES AMOUNTING TO RS.113,43,78,960/ - TO BE TAXABLE ON INCOME DETERMINED AT 25% OF GROSS RECEIPTS ON THE BASIS OF ESTIMATE. FINAL ORDER WAS PA SSED BY THE AO AFTER RECEIVING THE DIRECTIONS FROM THE DRP U/S 144C(5) OF THE ACT. AGAINST THE SAID ORDER, THE ASSESSEE FILED AN APPEAL BEFORE THE ITAT IN ITA NO. 5237/DEL/2010 WHEREIN VIDE ORDER DATED 30.08.2011, THE ISSUE WAS SET ASIDE TO THE FILE OF THE AO. THEREAFTER, IN COMPLIANCE OF THE DIRECTIONS OF THE ITAT, T HE AO REVISED THE ASSESSMENT U/S 143(3)/254 OF THE ACT VIDE ORDER DATED 30.03.2013. AGAINST THE SAID ORDER THE ASSESSEE PREFERRED AN APPEAL TO THE LD. CIT(A) - II, DEHRADUN. MEANWHILE, THE ASSESS EE FILED AN APPEAL BEFORE THE HON BLE UTTARAKHAND HIGH COURT AGAINST THE AFORESAID REFERRED TO ORDER OF THE ITAT IN ITA NO. 01/2012 WHEREIN VIDE ORDER DATED 27.12.2013, THE ISSUED WAS DECIDED IN FAVOUR OF THE ASSESSEE. THEREAFTER, THE LD. CIT(A) PASSED THE IMPUGNED ORDER DECIDING THE APPEAL OF THE ASSESSEE IN ITA NO. 2005 /DEL /201 4 SAMSUNG HEAVY INDUSTRIES CO. LTD. 5 ITS FAVOUR AND THE AO VIDE ORDER DATED 12.03.2014 PASSED U/S 143(3)/251/254/260(1A) OF THE ACT REVISED THE ORIGINAL ASSESSMENT. 5. FROM THE AFORESAID NARRATED FACT S , IT IS CLEAR THAT THE ISSUE NOW AG ITATED BY THE DEPARTMENT HAS BEEN SETTLED BY THE HON BLE JURISDICTIONAL HIGH COURT AND THE AO HAD GIVEN EFFECT VIDE ORDER DATED 12.03.2014 . THEREFORE, THIS APPEAL OF THE DEPARTMENT BECOMES INFRUCTUOUS. 6 . IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS D ISMISSED AS INFRUCTUOUS. (ORDER PRONOUNCED IN THE COURT ON 14 /02/2017 ) SD/ - SD/ - (BEENA PILLAI ) (N. K. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DAT ED: 14 /02 /201 7 *SUBO DH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR