DDIT, New Delhi V. M/s. Western Union Financial Service Inc., Gurgaon

ITA 2077/DEL/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 7752 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 01-06-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 03-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S R SENAPATHI
• Assessee Lawyers: ADITYA RAJ SINGH
• Keywords: Principle of natural justice; Tax effect

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER ITA NO. 2077/DEL/2012 ASSESSMENT YEAR: 2006-07 DY. CIT, CIRCLE 2(2), VS. M/S WESTERN UNION INT. TAXATION, FINANCIAL SERVICES INC. NEW DELHI C/O KPMG, BUILDING NO. 10 DLF CYBER CITY, PHASE-II, GURGAON - 122002 (PAN: AAACW1936E) ( APPELLANT) (RESPONDENT) APPELLANT BY : SH. SR SENAPATHI, SR. D R RESPONDENT BY : SH. ADITYA RAJ SINGH, ADV. DATE OF HEARING : 01-06-2016 DATE OF ORDER : 01-06-2016 ORDER PER H.S. SIDHU, J.M. THIS APPEAL BY THE DEPARTMENT IS DIRECTED AGAINST T HE ORDER DATED 24.2.2012 OF LD. CIT(A)-XXV, NEW DELHI PERTAINING T O ASSESSMENT YEAR 2006-07 ON THE FOLLOWING GROUNDS:- 1.WHETHER ON FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT (A) HAS ERRED IN DECIDING THE CASE, WITHOUT GOI NG INTO THE MERITS OF THE CASE, 'SINCE SIMILAR ADDITION IN ASSESSEE'S OWN CASE HAS BEEN DELETED IN THE AY 2001-02 AY 2005 -06 BY THE HON'BLE TRIBUNAL WHICH IS IN VIOLATION OF RU LES OF NATURAL JUSTICE SINCE THE AO HAD MARSHALED CONSIDER ABLE NEW FACTS DURING THE YEAR UNDER REFERENCE AND THE EXISTENCE OF A PE IS A PURELY FACTS DRIVEN EXERCISE . 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE THE CIT(A) HAS ERRED IN NOT EXAMINING THE CASE ON MERIT S AND ITA NO.2077/DEL/2012 2 RELYING ONLY UPON THE COMBINED ORDER OF THE ITAT IN ASSESSEE'S OWN CASE FOR AY 2002-03,2003-04 AND 2005 -06 ( IN ITA NOS. 1572 TO 1574/D/20100) WHICH HAS YET T O BE RECEIVED OFFICIALLY, TO GRANT FULL RELIEF, IGNORING THE FACT THAT DEPARTMENT HAS NOT ACCEPTED THE ITAT'S ORDER FOR AY 2001- 02 AND IS IN HIGH COURT AND THAT AO HAS MARSHALED SEVERAL NEW FACTS THAT IMPACT THE FINDING OF EXISTE NCE OF PE DURING THE CURRENT YEAR. 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE THE CIT(A) HAS ERRED IN RELYING UPON ITAT'S ORDERS WITH OUT EXAMINING THE AO'S ORDERS ON MERITS, WHEN THE ITA T ITSELF HAS HELD THAT, ' ... DISSIMILARITY OF FACTS IS BOUN D TO AFFECT THE CONCLUSIONS DRAWN ... ' AND THAT 'LD DR DID NOT EVEN ATTEMPT TO EXPLAIN THE SIMILARITIES BETWEEN FACTS A ND CIRCUMSTANCES IN DECISION OF THE ITA T IN AMADEUS G LOBAL TRAVEL DISTRIBUTION SA, WHEREAS AO HAS MADE AN EFFO RT DURING THE YEAR TO PLACE ON RECORD FACTS AND MATERI AL IN THIS BEHALF. 4. GIVEN THAT THAT EXISTENCE OF A PE IS A PURELY FA CTS DRIVEN EXERCISE, WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) HAS ERRED IN IGNORING THE COMPREHEN SIVE FINDINGS GIVEN BY THE AO IN HIS ASSESSMENT ORDER TO ESTABLISH THAT ACTIVITIES OF THE LO OF THE ASSESSEE WERE FAR BEYOND PREPARATORY AND AUXILIARY IN NATURE, INCLUDI NG PROVISION OF SOFTWARE FOR TRANSFER OF MONEY, TRAINI NG OF AGENTS, INSTALLATION OF MACHINES AND SOFTWARE, APPO INTMENT AND COORDINATION WITH AGENTS AND MARKETING AND THAT THE LO WAS A VIRTUAL PROJECTION OF HEAD OFFICE, WHICH FACT WAS BASED ON ENQUIRIES FROM AGENTS, AND THUS W AS RIGHTLY HELD TO BE THE FIXED PLACE PE OF THE ASSESS EE AND THE ATTRIBUTION OF 50% OF PROFIT EARNED THROUGH THE PE WAS JUST AND. TAXABLE IN INDIA. 5. WHETHER ON FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT (A) HAS ERRED IN IGNORING THE DETAILED ARGUMENTS OF THE AO ITA NO.2077/DEL/2012 3 INFERRING THAT THE STANDALONE MACHINES WHERE SOFTWA RE APPLICATIONS OF THE ASSESSEE ARE INSTALLED, WHICH A RE DEDICATED TO BUSINESS OF MONEY TRANSFER CANNOT BE T REATED AS FIXED PLACE PE OF THE ASSESSEE WITHOUT EXAMINING THAT THESE HAVE IN-BUILT DIAL-UP MODEMS CONTROLLED BY US ER IDS AND PASSWORDS THAT CONNECT TO INTERNATIONAL HOST SE RVERS OF ASSESSSEE THROUGH PROPRIETARY VOYAGER SOFTWARE A ND THAT THESE CONSTITUTE A CLEARLY DEFINED SPACE AND EQUIPMENT PLACED AT THE ASSESSEES DISPOSAL, AT VARI OUS BRANCHES AND SUB-AGENT LOCATIONS SO AS TO CONSTITUT E A PE. 6. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE THE CIT(A) HAS ERRED IN INFERRING THAT THAT THE REPRESE NTATIVES OF THE ASSESSEE IN INDIA DO NOT CONSTITUTE ITS DEPENDA NT AGENT PE UNDER ARTICLE 5(4)/5(5) OF THE INDO-US TREATY IG NORING THE FACTS MARSHALED BY THE AO TO SHOW THAT THE AGENTS A RE NOT ACTING IN THE ORDINARY COURSE OF THEIR BUSINESS OR INDEPENDENT BOTH LEGALLY AND ECONOMICALLY WHEN WORK ING FOR THE ASSESSEE AND CANNOT HANDLE THE WORK OF CROS S- BORDER MONEY TRANSFERS WITHOUT THE ACTIVE AND CONST ANT SUPPORT OF ASSESSEE. 7. THE APPELLANT PRAYS FOR LEAVE TO ADD, AMEND, MOD IFY OR ALTER ANY GROUNDS OF APPEAL AT THE TIME OR BEFORE T HE HEARING OF THE APPEAL. 2. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. FROM THE ABOVE, WE FIND THAT THE TAX EFFEC T IN THE REVENUES APPEAL IS LESS THAN RS.10,00,000/-, THEREFORE, THE DEPARTMENTS APPEAL IS NOT MAINTAINABLE, IN VIEW OF THE CIRCULAR NO. 2 1/2015 DATED 10 TH DECEMBER, 2015 ISSUED VIDE F.NO. 279/MISC. 142/2007 -ITJ (PT.) BY THE CBDT. FOR THE SAKE OF CONVENIENCE, THE RELEVANT PA RA NOS. 3 & 10 OF THE AFORESAID CBDTS CIRCULAR ARE REPRODUCED AS UNDER:- ITA NO.2077/DEL/2012 4 3. HENCEFORTH, APPEALS/ SLPS SHALL NOT BE FILED IN CASES WHERE THE TAX EFFECT DOES NOT EXCEED THE MONETARY L IMITS GIVEN HEREUNDER: S NO APPEALS IN INCOME-TAX MATTERS MONETARY LIMIT (IN RS) 1 BEFORE APPELLATE TRIBUNAL 10,00,000/- 2 BEFORE HIGH COURT 20,00,000/- 3 BEFORE SUPREME COURT 25,00,000/- IT IS CLARIFIED THAT AN APPEAL SHOULD NOT BE FILED MERELY BECAUSE THE TAX EFFECT IN A CASE EXCEEDS THE MONETA RY LIMITS PRESCRIBED ABOVE. FILING OF APPEAL IN SUCH CASES IS TO BE DECIDED ON MERITS OF THE CASE. 10. THIS INSTRUCTION WILL APPLY RETROSPECTIVELY TO PENDING APPEALS AND APPEALS TO BE FILED HENCEFORTH IN HIGH COURTS/ TRIBUNALS. PENDING APPEALS BELOW THE SPECIFIED TAX LIMITS IN PARA 3 ABOVE MAY BE WITHDRAWN/ NOT PRESSED. APPEALS BEFORE THE SUPREME COURT WILL BE GOVERNED BY THE INSTRUCTI ONS ON THIS SUBJECT, OPERATIVE AT THE TIME WHEN SUCH APPEA L WAS FILED. 3. IT IS NOT IN DISPUTE THAT THE BOARDS INSTRUCTIO N OR DIRECTIONS ISSUED TO THE INCOME-TAX AUTHORITIES ARE BINDING ON THOSE AUTHORI TIES, THEREFORE, THE DEPARTMENT SHOULD HAVE WITHDRAWN/ NOT PRESSED THE P RESENT APPEAL, IN VIEW OF THE AFORESAID INSTRUCTIONS SINCE THE TAX EFFECT IN THE INSTANT APPEAL IS LESS THAN THE AMOUNT OF RS. 10 LACS, PRESCRIBED IN THE ABOVE SAID CBDTS INSTRUCTIONS. ITA NO.2077/DEL/2012 5 4. KEEPING IN VIEW THE CBDT INSTRUCTION NO. 21/2015 DATED 10 TH DECEMBER, 2015, WE ARE OF THE VIEW THAT THE REVENUE SHOULD HA VE WITHDRAWN/ NOT PRESSED THE INSTANT APPEAL BEFORE THE TRIBUNAL. WE ARE ALS O OF THE VIEW THAT THE SAID INSTRUCTIONS ARE APPLICABLE FOR THE PENDING APPEALS AND APPEALS TO BE FILED HENCEFORTH IN TRIBUNAL. ACCORDINGLY, THE REVENUES APPEAL IS DISMISSED. 5. IN THE RESULT, APPEAL FILED BY THE REVENUE STAN DS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 01/06/2016. SD/- SD/- (O.P. KANT) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIA L MEMBER DATED: 01/06/2016 *SR BHATNAGAR* COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR