ITO, New Delhi V. M/s Blue Stamping & Forgings Ltd., Faridabad

ITA 2180/DEL/2011

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6963 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 8 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 12-01-2017
• Assessment Year: misc
• Appeal Filed On: 02-05-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Tax effect; TDS
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A : NEW DELHI BEFORE SHRI KULDIP SINGH , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI , ACCOUNTANT MEMBER I TA NO . 2180 & 2181 /DEL/2011 (ASSESSMENT YEAR: 2008 - 09 AND 2009 - 10 ) ITO, TDS WARD 2(2), INTL, TAXN, ROOM NO. 414, NEW DELHI VS. BLUE STAMPING & FORGINGS LTD, PLOT NO. 12, SECTOR - 25, FARIDABAD PAN:AAACB9348K (APPELLANT) (RESPONDENT) C . O . NO. 187 AND 188/DEL/2011 (IN I TA NO .2180 & 2181/DEL/2011 (ASSESSMENT YEAR: 2008 - 09 AND 2009 - 10 ) BLUE STAMPING & FORGINGS LTD, PLOT NO. 12, SECTOR - 25, FARIDABAD PAN:AAACB9348K VS. ITO, TDS WARD 2(2), INTL, TAXN, ROOM NO. 414, NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. RAVI JAIN, CIT DR REVENUE BY: SH. KC SINGHAL, ADV DATE OF HEARING 12/01/ 2016 DATE OF PRONOUNCEMENT 16 / 01 / 2017 O R D E R PER BENCH . 1. THESE ARE THE APPEAL FILED BY THE REVENUE AND CROSS OBJECTIONS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD XXIX, NEW DELHI DATED 04.01.2011 FOR THE ASSESSMENT YEAR 2008 - 09 AND 2009 - 10. 2. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL IN ITA NO. 2180/DEL/2011 FOR THE ASSESSMENT YEAR 2008 - 09: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD CIT(A) HAS ERRED IN HOLDING THAT SCB INDIA WERE CARRYING OUT THEIR COMMERCIAL BANKING ACTIVITIE S IN THE NORMAL COURSE OF THEIR BUSINESS AND NOT AS DEPENDENT AGENT PE OF SCB MAURITIUS. 3. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL IN ITA NO. 2181/DEL/2011 FOR THE ASSESSMENT YEAR 2009 - 10: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD CIT(A) HAS ERRED IN HOLDING THAT SCB INDIA WERE CARRYING OUT THEIR COMMERCIAL BANKING ACTIVITIES IN THE NORMAL COURSE OF THEIR BUSINESS AND NOT AS DEPENDENT AGENT PE OF SCB MAURITIUS. PAGE 2 OF 3 4. THE REVENUE RAISED THE FOLLOWING GROUNDS OF APPEAL IN CO NO. 187/DEL/2 011 FOR THE ASSESSMENT YEAR 2008 - 09: - 1 THAT THE INTEREST INCOME RECEIVED BY THE NON - RESIDENT SCB MAURITIUS FROM THE ASSESSEE WAS NOT CHARGEABLE TO TAX UNDER THE IT ACT, 1961 SINCE INTEREST PAID WAS IN RESPECT OF DEBT INCURRED, OR MONEY BORROWED AND UNSED FOR THE PURPOSE OF BUSINESS CARRIED ON BY THE ASSESSEE OUTSIDE INDIA OR FOR THE PURPOSE OF EARNING INCOME FROM INVESTMENT MADE OUTSIDE INDIA. OR FOR THE PURPOSE OF EARNING INCOME FROM INVESTMENT MADE OUTSIDE INDIA. HENCE, THE INTEREST PAID BY THE ASSESSEE WAS NOT INCOME OF THE NON - RESIDENT CHARGEABLE TO TAX IN INDIA. 2. THAT THE CIT(A) WAS NOT JUSTIFIED IN OBSERVING THAT NO EVIDENCE WAS FILED BY THE ASSESSEE TO PROVE THAT THE BORROWINGS WERE USED BY THE ASSESSEE OUTSIDE INDIA FOR THE PURPOSES MENTIONED IN THE EXCEPTION TO SECTION 9(1)(B) OF THE ACT. IN FACT, THERE WERE SUFFICIENT EVIDENCE ON RECORD TO PROVE THE SAME. EVEN IF ANY OTHER EVIDENCE WAS REQUIRED, THE TAX AUTHORITIES SHOULD HAVE GIVEN ADEQUATE OPPORTUNITY TO ASSESSEE. 5. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL IN CO NO. 188/DEL/2011 FOR THE ASSESSMENT YEAR 2009 - 10: - 1. THAT THE INTEREST INCOME RECEIVED BY THE NON - RESIDENT SCB MAURITIUS FROM THE ASSESSEE WAS NOT CHARGEABLE TO TAX UNDER THE IT ACT, 1961 SINCE INTEREST PAID WAS IN R ESPECT OF DEBT INCURRED, OR MONEY BORROWED AND UNSED FOR THE PURPOSE OF BUSINESS CARRIED ON BY THE ASSESSEE OUTSIDE INDIA OR FOR THE PURPOSE OF EARNING INCOME FROM INVESTMENT MADE OUTSIDE INDIA. OR FOR THE PURPOSE OF EARNING INCOME FROM INVESTMENT MADE OUT SIDE INDIA. HENCE, THE INTEREST PAID BY THE ASSESSEE WAS NOT INCOME OF THE NON - RESIDENT CHARGEABLE TO TAX IN INDIA. 2. THAT THE CIT(A) WAS NOT JUSTIFIED IN OBSERVING THAT NO EVIDENCE WAS FILED BY THE ASSESSEE TO PROVE THAT THE BORROWINGS WERE USED BY THE ASSESSEE OUTSIDE INDIA FOR THE PURPOSES MENTIONED IN THE EXCEPTION TO SECTION 9(1)(B) OF THE ACT. IN FACT, THERE WERE SU FFICIENT EVIDENCE ON RECORD TO PROVE THE SAME. EVEN IF ANY OTHER EVIDENCE WAS REQUIRED, THE TAX AUTHORITIES SHOULD HAVE GIVEN ADEQUATE OPPORTUNITY TO ASSESSEE. 6. AT THE OUTSET OF THE HEARING ITSELF, THE LD. DR BROUGHT TO OUR ATTENTION THAT CBDT VIDE CIRC ULAR NO.21/2015 DATED 10TH DECEMBER, 2015 HAS DECIDED THAT THE REVENUE WOULD NOT PREFER THESE APPEAL S BEFORE THE TRIBUNAL IF THE TAX EFFECT IS LESS THAN RS.10 LAKHS. THEREFORE, HE PLEADED THAT THE APPEAL S OF THE REVENUE BE DECIDED AS PER THE INSTRUCTION OF THE CBDT. LD AR ALSO REITERATED SAME FACTS. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL. WE FIND THAT THE CBDT VIDE CIRCULAR DATED 10.12.2015 HAS REVISED THE MONETARY LIMIT FOR FILING THE A PPEAL BY THE DEPARTMENT BEFORE INCOME TAX APPELLATE TRIBUNAL, HONBLE HIGH COURTS AND HONBLE SUPREME COURT. THE RELEVANT PARA OF THE AFORESAID CIRCULAR IS REPRODUCED AS UNDER : - PAGE 3 OF 3 3. HENCEFORTH, APPEALS/SLPS SHALL NOT BE FILED IN CASES WHERE THE TAX EF FECT DOES NOT EXCEED THE MONETARY LIMITS GIVEN HEREUNDER: - SL.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 MONETARY LIMITS PRESCRIBED ABOVE. FILING OF APPEAL IN SUCH CASES IS TO BE DECIDED ON MERITS OF THE CASE. 8. WE FIND THAT THE TAX EFFECT INVOLVES IN THE APPEAL S OF THE REVENUE IS BELOW RS.10 LAKHS. THERE IS NO DISPUTE THAT THE BOARDS INSTRUCTIONS OR DIRECTIONS ISSUED TO THE INCOME - TAX AUTHORITIES ARE BINDING ON THOSE AUTHORITIES, THEREFORE, THE DEPARTMENT SHOULD HAVE WITHDRAWN/NOT PRESSED THE PRESENT APPEAL IN VIEW OF THE AFORES AID INSTRUCTION SINCE THE TAX EFFECT IN THE INSTANT APPEAL IS LESS THAN THE AMOUNT OF RS.10 LAKHS. 9. IN VIEW OF THE ABOVE, CIRCULAR NO.21 DATED 10.12.2015 WILL APPLY TO ALL PENDING APPEALS. THEREFORE THE PRECEDENT, IT IS HELD THAT THE APPEAL IS NOT MAIN TAINABLE IN THE INSTANT CASE AS THE TAX EFFECT IS LESS THAN RS.10 LAKHS. ACCORDINGLY, IT IS HELD THAT APPEAL FILED BY THE REVENUE IS NOT MAINTAINABLE. 10. SINCE, THE APPEAL S OF THE REVENUE ARE DISMISSED THEREFORE, THE CROSS OBJECTION S FILED BY THE ASSE SSEE BECOMES INFRACTUOUS AND THE SAME ARE DISMISSED. 11. IN THE RESULT, APPEALS FILED BY THE REVENUE AND THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 6 / 01 / 2017 . - S D / - - S D / - ( KULDIP SINGH) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 6 / 01 / 2017 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI