M/s. Verizon Communications Singapore Pte Ltd., CHENNAI V. ITO, CHENNAI

ITA 2059/CHNY/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73759 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-03-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 03-03-2014
• Assessment Year: 2001-2002
• Appeal Filed On: 15-12-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: SHANMUGAM T
• Keywords: Reopening of assessment; Difference of opinion; Change of opinion
• Section: 143(3); 147

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . . . , !' , # $! % BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENTAND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ./ ITA NOS. 2059, 2060, 2061 & 2062(MDS)/2011 & ./ ITA NO. 2304(MDS)/2011 # & '& / ASSESSMENT YEARS : 2001-02, 2004-05, 2005-06, 2006-07 & 2009-10. M/S VERIZON COMMUNICATIONS SINGAPORE PTE LIMITED, C/O S.R. BATLIBOI & CO., 6 TH & 7 TH FLOOR, A BLOCK (MODULE 601, 701-702), NO.4, RAJIV GANDHI SALAI, TARAMANI, CHENNAI - 600 113. PAN : AADCM 6355 L V. THE INCOME TAX OFFICER, INTERNATIONAL TAXATION I, CHENNAI - 600 034. (')/ APPELLANT) (+,')/ RESPONDENT) ') - / APPELLANT BY : SHRI SHANMUGAM. T., ADVOCATE +,') - / RESPONDENT BY : SHRI T.N. BETGERI, IRS, JCIT 2 I.T.A. NOS.2059 TO 2062/MDS/11 I.T.A. NO. 2304/MDS/12 . - /0 / DATE OF HEARING : 3 RD MARCH, 2014 12' - /0 / DATE OF PRONOUNCEMENT : 3 RD MARCH, 2014 / O R D E R PER DR.O.K.NARAYANAN, VICE-PRESIDENT THIS IS A BUNCH OF FIVE APPEALS. THE APPEALS ARE FILED BY THE ASSESSEE. THE RELEVANT ASSESSMENT YEARS ARE 2001-0 2, 2004-05, 2005-06, 2006-07 AND 2009-10. 2. THE APPEALS FOR THE ASSESSMENT YEARS 2001-02, 20 04-05, 2005-06 AND 2006-07 ARE DIRECTED AGAINST THE COMMON ORDER PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) IV AT CHENNAI, ON 29.8.2011. THE APPEALS ARISE OUT OF TH E ASSESSMENTS COMPLETED UNDER SECTION 143(3) READ WITH SECTION 14 7 OF THE INCOME-TAX ACT, 1961. 3. THE APPEAL FOR THE ASSESSMENT YEAR 2009-10 IS DI RECTED AGAINST THE ASSESSMENT ORDER PASSED UNDER SECTION 1 43(3) READ WITH SECTION 144C(13) OF THE INCOME-TAX ACT, 1961. 3 I.T.A. NOS.2059 TO 2062/MDS/11 I.T.A. NO. 2304/MDS/12 4. EXCEPT FOR THE ISSUE OF REOPENING OF ASSESSMENT RAISED FOR THE ASSESSMENT YEAR 2001-02, THE ISSUE RAISED IN AL L THESE APPEALS IS THE SAME. THE SAID ISSUE IS THAT THE LOWER AUTHO RITIES HAVE ERRED IN HOLDING THAT THE PAYMENTS RECEIVED BY THE ASSESS EE FROM ITS INDIAN CUSTOMERS FOR PROVISION OF BANDWIDTH SERVICE S OUTSIDE INDIA IS ROYALTY FOR THE USE OF/OR RIGHT TO USE OF EQUI PMENT AND/OR PROCESS UNDER ARTICLE 12(3) OF THE INDIA SINGAPORE TAX TREA TY. 5. THIS ISSUE WAS CONSIDERED BY THE INCOME TAX APPE LLATE TRIBUNAL, CHENNAI BENCH C IN ASSESSEE'S OWN CASE (2011) 45 SOT 263 (CHENNAI). THE TRIBUNAL HAS HELD THAT THE PAYMENTS MADE BY INDIAN CUSTOMERS TO THE ASSESSEE-COMPANY ARE ROY ALTY FOR THE USE OF PROCESS AND THEREFORE, THE LOWER AUTHORITI ES HAVE RIGHTLY BROUGHT SUCH PAYMENTS TO TAX UNDER SECTION 9(1)(VI) . THE ORDERS OF THE TRIBUNAL WERE TAKEN BEFORE THE HONBLE HIGH COU RT OF MADRAS IN APPEALS. THE HONBLE HIGH COURT CONSIDERED THE VER Y SAME ISSUE FOR THE ASSESSMENT YEARS 2002-03, 2003-04, 2007-08 AND 2008-09. THE HONBLE MADRAS HIGH COURT, THROUGH THE JUDGMENT OF THEIR LORDSHIP, DELIVERED ON 7 TH NOVEMBER, 2013 (2013) 39 TAXMANN.COM 70 (MADRAS), UPHELD THE ORDERS OF THE TRIBUNAL AND HELD THAT THE DISPUTED PAYMENTS ARE IN THE NATURE OF INCOME IN TH E HANDS OF THE ASSESSEE-COMPANY. 4 I.T.A. NOS.2059 TO 2062/MDS/11 I.T.A. NO. 2304/MDS/12 6. FROM THE ABOVE, IT IS CLEAR THAT THE ISSUE HAS S INCE BEEN DECIDED BY THE HON'BLE JURISDICTIONAL HIGH COURT AN D THEREFORE, WE HOLD THAT THE GROUNDS RAISED BY THE ASSESSEE-COMPAN Y ON THE QUESTION OF TAXABILITY OF ITS INDIAN RECEIPTS ARE L IABLE TO BE DISMISSED. 7. FOR THE ASSESSMENT YEAR 2001-02, THE ASSESSEE HA S RAISED ANOTHER GROUND THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE INCOME ESCAPING ASSESSMENT COMPLETED BY THE ASSESSING AUTHORITY UNDER SECTION 147/143(3). 8. IT IS TO BE SEEN THAT INITIALLY THE RETURN FOR T HE ASSESSMENT YEAR 2001-02 WAS PROCESSED BY THE ASSESSING OFFICER UNDER SECTION 143(1). AT THAT POINT OF TIME, NO OPINION WAS FORMED BY THE ASSESSING AUTHORITY. THEREFORE, THERE IS NO GROUND TO ARGUE THAT THE REASSESSMENT WAS INITIATED ON THE GROUND OF CHANGE OF OPINION. AS RIGHTLY DISCUSSED IN THE ORDER PASSED BY THE COMMIS SIONER OF INCOME TAX (APPEALS), THE ASSESSING OFFICER HAS REC ORDED HIS REASONS FOR ISSUING NOTICE UNDER SECTION 148. IN T HESE CIRCUMSTANCES, WE FIND THAT THE CONTENTION OF THE A SSESSEE ON THE REOPENING OF ASSESSMENT DOES NOT CARRY MUCH CONVICT ION. 9. IN RESULT, THESE APPEALS FILED BY THE ASSESSEE A RE DISMISSED. 5 I.T.A. NOS.2059 TO 2062/MDS/11 I.T.A. NO. 2304/MDS/12 ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON MONDAY, THE 3 RD OF MARCH, 2014 AT CHENNAI. SD/- SD/- (VIKAS AWASTHY) (DR. O.K. NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED, THE 3 RD MARCH, 2014. KRI. COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT (INTER NATIONAL TAXATION), CHENNAI 4. CIT(A)-IV, CHENNAI-34 5. DR 6. GF.