NOKIA OF AMERICA CORPORATION (AS SUCESSOR OF ALCATEL USA SOURCING LP, HARYANA V. JCIT (OSD) INTERNATIONAL TAX- 1(1) (1), MUMBAI

ITA 2104/MUM/2021

• Counselvise Citation: [2023] 100 COUNSELVISE.COM (IT) 5775 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: I
• Next Hearing Date: 20-08-2023
• Assessment Year: 2006-2007
• Appeal Filed On: 17-11-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Double taxation relief; Set aside
• Section: 143(3); 153(2A)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL "I" BENCH, MUMBAI SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER ITA No. 2104/MUM/2021 & ITA No. 2105/MUM/2021 (Assessment Year: 2006-07) (Assessment Year: 2007-08) Nokia of America Corporation (‘as successor of Alcatel USA Sourcing LP’), C/o Gold View Corporate Tower, B Sector – 42, Sector Road, Haryana, Gurugram - 122002 [PAN: AALFA9998A] Joint Commissioner of Income-Tax, (OSD), International Tax – 1(1)(1), Mumbai Air India Building, Nariman Point, Mumbai - 400021 ............. Vs ............. Appellant Respondent ITA No. 2106/MUM/2021 & ITA No. 2107/MUM/2021 (Assessment Year: 2007-08) (Assessment Year: 2008-09) Nokia of America Corporation (‘as successor of Alcatel USA Sourcing Inc’), C/o Gold View Corporate Tower, B Sector – 42, Sector Road, Haryana, Gurugram - 122002 [PAN: AAGCA4535R] Joint Commissioner of Income-Tax, (OSD), International Tax – 1(1)(1), Mumbai, Air India Building, Nariman Point, Mumbai - 400021 ............. Vs ............. Appellant Respondent Appearance For the Appellant/Assessee For the Respondent/Department : : Shri Madhur Agarwal Shri Anil Sant Date Conclusion of hearing Pronouncement of order : : 21.08.2023 31.10.2023 ITA No.2104, 2105, 2106 & 2107/Mum/2021 (Assessment Years 2006-07, 2007-08, 2007-08 & 2008-09) 2 O R D E R Per Bench 1. This is a batch of four appeals pertaining to Assessment Years 2006-07 to 2008-09 consisting of (a) two appeal filed by Nokia of America Corporation as a successor of Alcatel USA Sourcing LP (AALFA9998A) for Assessment Years 2006-07 & 2007-08 and (b) two appeal filed by Nokia of America Corporation as a successor of Alcatel USA Sourcing Inc (AAGCA4535R) for Assessment Years 2007-08 & 2008-09. 1.1. Since all the four appeals involved common issue, the same were heard together and are being disposed by way of a common order. We would take ITA No. 2104/Mum/2021 (preferred by Nokia of America Corporation as a successor of Alcatel USA Sourcing LP (AALFA9998A) for Assessment Year 2006-07) as the lead matter since both the sides have agreed that our findings/adjudication in relation to the additional ground shall apply mutatis mutandis to the balance three appeals. ITA No. 2104/MUM/2021 (Assessment Year: 2006-07) 2. ITA No. 2104/Mum/2021 is directed against the Final Assessment Order dated, 24/09/2021, passed under Section 143(3) read with Sections 144C(13) & 254 of the Income Tax Act, 1961 [hereinafter referred to as ‘the Act’], as per directions, dated 21/02/2020, issued by the CIT(Dispute Resolution Panel-1)(WZ), Mumbai- (hereinafter referred to as ‘the DRP’) under Section 144C(5) of the Act pertaining to the Assessment Year 2006-07. 2.1. The Appellant had originally raised the 12 grounds of appeal ITA No.2104, 2105, 2106 & 2107/Mum/2021 (Assessment Years 2006-07, 2007-08, 2007-08 & 2008-09) 3 challenging the additions made by the Assessing Officer while assessing the income of the Appellant at INR 16,84,06,993/- as against ‘Nil’ income declared by the Appellant in the return of income and the interest levied under Section 234A/B/C of the Act. Subsequently, vide letter dated 20/02/2023, the Appellant also raised additional ground of appeal challenging the validity of Final Assessment Order, dated 24/09/2021, on the ground of limitation which read as under: “Final assessment order barred by limitation That on the facts and circumstances of the case and in law, the assessment order dated 24 September 2021, passed by the Ld. AO basis directions issued by the DRP, is barred by limitation since the same has been passed beyond the time limit prescribed under the Act.” 3. We have heard both the sides on admission of the above additional ground. We are of the view that the additional ground raised by the Appellant/Assessee is a legal ground which does not require examination of any facts not already on record. Accordingly, in view of the judgment of the Hon’ble Supreme Court in the case of National Thermal Power Co. Ltd. vs. CIT: 229 ITR 383, the additional ground raised by Appellant/Assessee is admitted. Since the additional ground raised by the Appellant goes to the root of the matter, we proceed to first adjudicate the same. 4. The facts relevant for adjudication of the additional ground are that the Appellant/Assessee is a tax resident of United States of America (USA). The Assessee filed return of income for the Assessment Year 2006-07 on 31/10/2006 declaring ‘Nil’ income. 4.1. The case of the Appellant was selected for scrutiny. Vide Draft ITA No.2104, 2105, 2106 & 2107/Mum/2021 (Assessment Years 2006-07, 2007-08, 2007-08 & 2008-09) 4 Assessment Order, dated 31/12/2009, the Assessing Officer proposed (a) an addition of INR 5,41,06,933/- holding the same to be Royalties and Fee for Included Services taxable in India in terms of Article 12(3) & 12(4)(a) of the Double Taxation Avoidance Agreement (for short ‘DTAA’) and (b) an addition of INR 11,43,00,000/- holding the same to be business profits attributable to the Permanent Establishment (PE) taxable in India in terms of Article 5 read with Article 7 of the DTAA as well as the levy of tax and interest on the additions so assessed. 4.2. The objections filed by the Appellant before DRP against Draft Assessment Order, dated 31/12/2009, did not yield any favourable results and the Assessing Officer passed Final Assessment Order, dated 06/10/2010, under Section 143(3) read with Section 144C(13) of the Act assessing income of the Appellant at INR 16,84,06,933/- (INR 5,41,06,933/- + INR 11,43,00,000/-) as per directions, dated 24/09/2010, issued by the DRP under Section 144C(5) of the Act. 4.3. Being aggrieved, the Appellant preferred appeal before the Tribunal against the Final Assessment Order, dated 06/10/2010. Vide common order dated 05/08/2016, passed by the Tribunal disposing off four appeals in the first round, all the additions made by the Assessing Officer were set aside and all the issues were restored to the file of DRP with the direction to decide the same afresh in accordance with law after considering the submissions of the Appellant and after providing adequate opportunity of being heard to the Appellant. 4.4. The above order of the Tribunal was received by the DRP on ITA No.2104, 2105, 2106 & 2107/Mum/2021 (Assessment Years 2006-07, 2007-08, 2007-08 & 2008-09) 5 30/11/2016. Thereafter, on 21/02/2020, again Order giving directions was passed by the DRP under Section 144C(5) read with Section 254 of the Act. The aforesaid order passed by the DRP was received by the Assessing Officer on 13/09/2021 and soon thereafter, on 24/09/2021, the Assessing Officer passed the Final Assessment Order which has been impugned by way of present appeal before the Tribunal. 5. The contention of the Appellant is that the Final Assessment Order, dated 24/09/2021, passed by the Assessing Officer under Section 143(3) read with Section 144C(13) & 254 of the Act are barred by limitation. Per contra, the stand taken by the Revenue is that the aforesaid order is not barred by limitation. 6. We have considered the rival submissions on this issue and have perused the material on record. We note that Section 144C(9) of the Act directions can be issued by DRP within 9 months from the date of receipt of the draft assessment order. In the present case the Tribunal had restored the issues back to the DRP vide order, dated 05/08/2016 which was received by the DRP on 30/11/2016 whereas the directions were issued by DRP on 21/02/2020. Further, on perusal of the common order, dated 05/08/2016, passed by the Tribunal we note that all the additions made in the Final Assessment Order were set aside and the Tribunal had, in effect, directed passing of an order of fresh assessment. Therefore, in our view the provisions of Section 153(2A) of the Act were attracted. As per Section 153(2A) of the Act, the Assessing Officer could have passed the order of fresh assessment in pursuance of the order passed by the Tribunal under Section 254 of the Act at any time before the expiry of nine months from the end of the Financial Year ITA No.2104, 2105, 2106 & 2107/Mum/2021 (Assessment Years 2006-07, 2007-08, 2007-08 & 2008-09) 6 during which the aforesaid order of the Tribunal, dated 05/08/2016, was received by the Commissioner of Income-Tax. As per the order, dated 21/02/2020, passed by the DRP in the second round, the order of the Tribunal was received by the DRP on 30/11/2016. Even if we take the receipt of the order by the DRP as the date of receipt of the order of the Tribunal by the Commissioner of Income- Tax for the purpose of computing the time limit specified under Section 153(2A) of the Act, the time limit for passing order in terms of Section 153(2A) of the Act expired on 31/12/2017. In the present case the directions were issued by the DRP on 21/02/2020 and the Final Assessment Order was passed by the Assessing Officer on 24/09/2021. Since both the aforesaid dates fall after 31/12/2017, we hold that the Final Assessment Order, dated 24/09/2021, passed by the Assessing Officer under Section 143(3) read with Section 144C(13) & 254 of the Act is bad in law being barred by limitation. Accordingly, additional ground raised by the Appellant is allowed and all the other grounds raised in appeal are disposed off as being infructuous. ITA No. 2105-2107/MUM/2021 7. We note that Additional Ground, identical to the additional ground raised in ITA No. 2104/Mum/2021, has been raised in ITA No. 2105-2107/Mum/2021, vide three separate letters, in each of the appeals vide separate letter dated, 20/02/2023. The additional ground raised in each of the three appeals reads as under: “Final assessment order barred by limitation That on the facts and circumstances of the case and in law, the assessment order dated 24 September 2021, passed by the Ld. AO basis directions issued by the DRP, is barred by limitation since the same has been passed beyond the time limit prescribed under the Act.” ITA No.2104, 2105, 2106 & 2107/Mum/2021 (Assessment Years 2006-07, 2007-08, 2007-08 & 2008-09) 7 8. During the course of hearing both the sides adopted the arguments advanced in relation to ITA No. 2104/Mum/2021 and agreed that our finding/adjudication in relation to admission and disposal of the additional ground raised in ITA No. 2104/Mum/2021 shall also apply, mutatis mutandis, to the three appeals under consideration. 9. On perusal of record, we note that the date of receipt of the order of the Tribunal, dated 05/08/2016, by the DRP, date of passing of directions by the DRP and the date of passing the Final Assessment Order are as under: Name Nokia of America Corporation as a successor of Alcatel USA Sourcing LP (AALFA9998A) Nokia of America Corporation as a successor of Alcatel USA Sourcing Inc (AAGCA4535R) ITA No. 2104/Mum/2021 AY 2006-07 2105/Mum/2021 AY 2007-08 2106/Mum/2021 AY 2007-08 2107/Mum/2021 AY 2008-09 Date of receipt of order of Tribunal by DRP 30/11/2016 30/11/2016 30/11/2016 30/11/2016 Time Limit Specified in Section 153(2A) expired on 31/12/2017 31/12/2017 31/12/2017 31/12/2017 Date of DRP Directions 21/02/2020 21/02/2020 21/02/2020 21/02/2020 Date of Final Assessment Order 24/09/2021 25/09/2021 25/09/2021 25/09/2021 10. In all the three appeals the directions were issued by the DRP and the Final Assessment Order was passed by the Assessing Officer ITA No.2104, 2105, 2106 & 2107/Mum/2021 (Assessment Years 2006-07, 2007-08, 2007-08 & 2008-09) 8 after the expiry of time limit specified in Section 153(2A) of the Act (i.e. 31/12/2017). Accordingly, in view of paragraph 6 above, in each of the three appeals we hold that the Final Assessment Order passed by the Assessing Officer under Section 143(3) read with Section 144C(13) & 254 of the Act is bad in law being barred by limitation. Accordingly, additional ground raised by the Appellant is each of the three appeals is allowed and all the other grounds raised in appeal are disposed off as being infructuous. 11. In result, all the four appeals are treated as allowed for statistical purposes. Order pronounced on 31.10.2023 Sd/- Sd/- (Prashant Maharishi) Accountant Member (Rahul Chaudhary) Judicial Member म ुंबई Mumbai; दिन ुंक Dated : 31.10.2023 Alindra, PS ITA No.2104, 2105, 2106 & 2107/Mum/2021 (Assessment Years 2006-07, 2007-08, 2007-08 & 2008-09) 9 आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : 1. अपील र्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आय क्त/ The CIT 4. प्रध न आयकर आय क्त / Pr.CIT 5. दिभ गीय प्रदिदनदध, आयकर अपीलीय अदधकरण, म ुंबई / DR, ITAT, Mumbai 6. ग र्ड फ ईल / Guard file. आिेश न स र/ BY ORDER, सत्य दपि प्रदि //True Copy// उप/सह यक पुंजीक र /(Dy./Asstt. Registrar) आयकर अपीलीय अदधकरण, म ुंबई / ITAT, Mumbai