Raytheon Company, Gurgaon V. DIT, New Delhi

ITA 2192/DEL/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 4194 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-04-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 01-04-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 22-05-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Permanent establishment; Advance ruling; Assessment record; Set aside
• Section: 263; 63

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : F : NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NOS. 2188 TO 2191 & 2192/DEL/2009 ASSESSMENT YEARS : 1999-2000 TO 2002-03 & 2004-05 M/S RAYTHEON COMPANY, C/O S.R. BATLIBOI & CO., GOLF VIEW CORPORATE TOWER-B, SECTOR-42, SECTOR ROAD, GURGAON, HARYANA-122002. PAN : AAADCR3511P VS. DIRECTOR OF INCOME TAX, INTERNATIONAL TAXATION-II, DRUMSHAPED BUILDING, NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAJAN VORA, C.A. & MISS PREETI GOEL, C.A. RESPONDENT BY : SHRI ASHWANI KUMAR MAHAJAN, CIT, DR . ORDER PER BENCH: ALL THESE APPEALS ARE FILED BY THE ASSESSEE AND TH EY ARE DIRECTED AGAINST FIVE SEPARATE ORDERS DATED 3.3.2009 PASSED BY THE D IRECTOR OF INCOME-TAX, INTERNATIONAL TAXATION-II, NEW DELHI, HEREINAFTER R EFERRED TO AS DIT, FOR ASSESSMENT YEARS 1999-2000 TO 2002-03 AND 2004-05. 2. GROUNDS OF APPEAL IN ALL THE YEARS ARE IDENTICAL AND READ AS UNDER:- 1. THAT THE LEARNED DIRECTOR OF INCOME TAX, INTERNA TIONAL TAXATION HAS GROSSLY ERRED ON FACTS AND IN LAW, IN INITIATIN G PROCEEDINGS UNDER SECTION 263 OF THE INCOME TAX ACT, 1961 (ACT ). 2. THAT THE LEARNED DIRECTOR OF INCOME TAX, INTERNA TIONAL TAXATION HAS ERRED ON FACTS AND IN LAW IN HOLDING THAT THE O RDER PASSED BY ITA NOS.2188 TO 2191 & 2192/DEL/09 2 THE LEARNED DEPUTY DIRECTOR OF INCOME TAX, CIRCLE 2 (1), INTERNATIONAL TAXATION, NEW DELHI (ASSESSING OFFIC ER) IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E WITHOUT APPRECIATING THAT THE SUPPLY REVENUES NOT OTHERWISE TAXABLE IN INDIA (IN ABSENCE OF APPELLANT HAVING A PERMANENT ESTABLISHMENT IN INDIA) HAVE ALREADY BEEN BROUGHT T O TAX AS SERVICE REVENUES BY THE ASSESSING OFFICER AND THE A SSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE APPELLANT AND NOT THAT OF THE REVENUE. 3. THAT THE LEARNED DIRECTOR OF INCOME TAX, INTERNA TIONAL TAXATION HAS ERRED ON FACTS AND IN LAW IN HOLDING THAT THE R OYALTY/FEES FOR INCLUDED SERVICES IS TAXABLE IN INDIA UNDER THE PRO VISIONS OF ARTICLE 7(3) OF THE DOUBLE TAXATION AVOIDANCE AGREE MENT (TAX TREATY) BETWEEN INDIA AND US READ WITH THE LIMITAT ION UNDER SECTION 44D OF THE ACT. 4. THAT THE LEARNED DIRECTOR OF INCOME TAX, INTERNA TIONAL TAXATION HAS ERRED ON FACTS AND IN LAW IN DIRECTING THE ASSE SSING OFFICER TO EXAMINE WHETHER ROYALTY/FEES FOR INCLUDED SERVIC ES ARE ATTRIBUTABLE TO APPELLANTS PERMANENT ESTABLISHMENT IN INDIA UNDER ARTICLE 12(6) OF TAX TREATY BETWEEN INDIA AND US, WITHOUT APPRECIATING THAT THE APPELLANT DID NOT HAVE A PERM ANENT ESTABLISHMENT IN INDIA AND SUPPLY REVENUES ARE NOT CONNECTED WITH ACTIVITIES CARRIED OUT IN INDIA. 5. THAT THE LEARNED DIRECTOR OF INCOME TAX, INTERNA TIONAL TAXATION HAS ERRED IN LAW IN PLACING RELIANCE ON THE RULING PRONOUNCED BY THE HONORABLE AUTHORITY FOR ADVANCE RULINGS IN THE CASE OF ERICSSON TELEPHONE CORPORATION INDIA A.B V. CIT (22 4 ITR 203), WITHOUT APPRECIATING THAT THE FACTS OF THE SAID RUL ING ARE TOTALLY DIFFERENT FROM THE FACTS IN THE CASE OF THE APPELLA NT. ALL OF THE ABOVE GROUNDS OF APPEAL ARE WITHOUT PREJ UDICE AND NOTWITHSTANDING EACH OTHER. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, VARY, OMI T OR SUBSTITUTE ANY OF THE AFORESAID GROUNDS OF APPEAL A T ANY TIME BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. ANY CONSEQUENTIAL RELIEF, TO WHICH THE APPELLANT MAY BE ENTITLED UNDE R THE LAW IN PURSUANCE OF THE AFORESAID GROUNDS OF APPEAL, OR OT HERWISE, MAY BE THUS GRANTED. ITA NOS.2188 TO 2191 & 2192/DEL/09 3 3. THE ORDERS OF LD. DIT PASSED U/S 263 ARE ALMOST IDENTICAL IN RESPECT OF ALL THE ASSESSMENT YEARS UNDER CONSIDERATION EXCEPT DIF FERENCE IN FIGURES. THE LD. DIT HAS INVOKED HIS POWER U/S 263 FOR THE REASON AS STATED IN THE SHOW-CAUSE NOTICE DATED 16.3.2009, A COPY OF WHICH IS PLACED AT PAGE 1 OF THE PAPER-BOOK NO-II. FOR THE SAKE OF CLARITY, THE TEXT OF SHOW-C AUSE NOTICE ISSUED BY LD. DIT IS REPRODUCED BELOW:- NOTICE U/S 263(1) OF THE INCOME TAX ACT I HAVE EXAMINED THE ASSESSMENT RECORD FOR AY 1999-2 000 AND ORDER U/S 147/143(3) DATED 27.12.2006 PASSED BY DDIT, CIRCLE 2(1), INTL. TAXATION, NEW DELHI ASSESSED AT INCOME OF INR 201,84,69,499/- AND TAX CHARGED AT RS.31,12,95,530/ - @ 15%. THIS ORDER APPEARS TO ERRONEOUS AND SO FOR IT IS PR EJUDICIAL TO THE INTEREST OF REVENUE FOR THE FOLLOWING REASONS: ON PERUSAL OF THE RECORD, IT IS OBSERVED THAT INCO ME IN THE NATURE OF FTS/RYALTY HAS BEEN TAXED @ 15% WHEREAS IT SHOULD HAVE TAXED U/S 44D R.W.S. 115A OF THE INCOME TAX ACT, 1961 @ 30% AS THE INCOME WAS EARNED THROUGH TH E PERMANENT ESTABLISHMENT VIDE AN AGREEMENT EFFECTIVE FORM 01.05.1993. IN VIEW OF THE ABOVE FACTS, I THEREFORE, CONSIDER T HE ASSESSMENT ORDER U/S 147/143(3) DATED 27.12.2006 PA SSED IN YOUR CASE IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST O F REVENUE. IN VIEW OF THE ABOVE, I PROPOSE TO INVOKE THE PROVISIONS OF SECTION 263 OF THE INCOME TAX ACT, 1961. YOUR ARE HEREBY GIVEN AN OPPORTUNITY TO APPEAR BEFORE THE UNDERSIGNED ON 23.03.2009 AT 11.3 0 AM IN R.NO.407, DRUM SHAPED BUILDING, I.P. ESTATE, NEW DE LHI TO STATE YOUR CASE AND SHOW CAUSE AS TO WHY THE ABOVE ASSESS MENT ORDER BE NOT SUBJECTED TO THE PROVISION OF SECTION 263 OF THE ACT. IF YOU DO NOT ATTEND ON THE SAID DATE, IT WILL BE A SSUMED THAT YOU HAVE NOTHING TO SAY IN THIS REGARD AND ORDER U/ S 263 SHALL BE PASSED ACCORDINGLY. ITA NOS.2188 TO 2191 & 2192/DEL/09 4 IT CAN BE SEEN FROM THE ABOVE NOTICE THAT THE ONLY GROUND FOR WHICH LD. DIT HAS INVOKED POWER U/S 263 WAS THAT THE INCOME IN THE NA TURE OF FTS/ROYALTY WAS TAXED BY THE ASSESSING OFFICER @ 15% WHEREAS THE SA ME SHOULD HAVE BEEN TAXED U/S 44D R/W SECTION 115 OF THE INCOME-TAX ACT , 1961 (ACT) @ 30% AS THE SAID INCOME WAS EARNED THROUGH THE PERMANENT ESTABL ISHMENT (PE) VIDE AN AGREEMENT EFFECTIVE FROM 1 ST MAY, 1993. 4. LD. DIT IN HIS ORDER PASSED U/S 263 HAS MENTION ED THAT EXAMINATION OF THE ASSESSMENT ORDER REVEALED THAT THE ASSESSING OF FICER HAS PRIMA FACIE WRONGLY COMPUTED THE TAX @ 15% OF THE ROYALTY/FEES FOR INCLUDED SERVICES (FIS). THE ASSESSING OFFICER HELD THAT THE ASSESSEE HAS PE IN INDIA. THUS, ASSESSING OFFICER FAILED TO CONSIDER THE PROVISIONS OF PARAGR APH 6 OF ARTICLE 12 OF THE TAX TREATY BETWEEN INDIA AND USA WHICH PROVIDE THAT IF THE ROYALTY OR FIS ARE ATTRIBUTABLE TO THE PE, THEN THE PROVISIONS OF ARTI CLE 7 SHALL APPLY AND ASSESSING OFFICER HAS ALSO GIVEN A FINDING THAT ASSESSEE HAS BUSINESS CONNECTION AS WELL AS PE IN INDIA. THEN, AFTER REPRODUCING THE SHOW-C AUSE NOTICE, LD. DIT HAS RECORDED THE REPLY OF THE ASSESSEE REGARDING OBJECT ION FOR INVOKING THE POWERS U/S 263 AND CONSIDERING THE SAID REPLY HE HAS OBSER VED THAT THE MAIN CONTENTION OF THE ASSESSEE IS THAT INCOME FROM SUPPLY OF EQUIP MENT CANNOT CONSTITUTE AS ROYALTY/FIS, AS HELD BY THE ASSESSING OFFICER IN TH E ASSESSMENT ORDER. HOWEVER, LD. DIT REFERRING TO THE PROVISIONS OF ARTICLE 12(6 ) OF THE TAX TREATY AND PARA 3 OF ARTICLE 7 OF THE TAX TREATY, OBSERVED THAT DEDUCTIO NS ALLOWABLE TO ASSESSEE UNDER ARTICLE 7 SHALL BE SUBJECT TO DOMESTIC TAX LAWS OF THE STATE OF TAXATION, THEREFORE, U/S 44D, THE ASSESSEE HAS TO BE TAXED @ 30% AND THU S HE TREATED THE ITA NOS.2188 TO 2191 & 2192/DEL/09 5 ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER BE ING ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTERESTS OF REVENUE. FOR THE S AKE OF CONVENIENCE, THE RELEVANT OPERATIVE PART OF THE ORDER OF LD. DIT IS REPRODUCE D BELOW:- AS CAN BE SEEN FROM ABOVE, THE TWO ESSENTIAL CON DITIONS FOR INVOKING THE PROVISIONS OF ARTICLE 12(6) OF THE TAX TREATY BETWEEN INDIA AND US ARE AS UNDER: THE ASSESSEE CARRIES ON BUSINESS IN INDIA, IN WHICH ROYALTIES OR FIS ARISES THROUGH A PE SITUATED THERE IN; AND ROYALTIES/FIS ARE ATTRIBUTABLE TO SUCH PE IN THIS REGARD, I HAVE GONE THROUGH THE ASSESSMENT ORDER IN DETAIL. INDEED THE A.O. HELD THAT: THE ASSESSEE HAS A PE IN INDIA. THAT THE ROYALTIES/FTS HAVE BEEN EARNED AND ARE TAX ABLE AT THE RATE OF 15%. HOWEVER, IT IS PERTINENT TO NOTE HERE THAT THE A.O. HAS NOT ENQUIRED IN DETAIL WHETHER THE FIS/ROYALTIES ARE AT TRIBUTABLE TO THE PE OF THE ASSESSEE. IN VIEW OF THIS, I CONSIDER THE ORDER OF THE A.O. TO BE ERRONEOUS AND PREJUDICIAL TO THE REVENUE INAS MUCH AS EXAMINATION HAS NOT BEEN MADE. IN VIEW OF THE ABOVE, I DIRECT THE A.O. TO MAKE A F RESH EXAMINATION OF THE FACTS OF THE ASSESSEES CASE AS TO WHETHER THE ROYALTIES/FIS ARE ATTRIBUTABLE TO THE PE OF THE ASS ESSEE IN INDIA. THE ITA NOS.2188 TO 2191 & 2192/DEL/09 6 A.O. IS ALSO DIRECTED TO GRANT SUFFICIENT OPPORTUNI TY TO THE ASSESSEE TO PRESENT ITS CASE. THE AR HAS ALSO BROUGHT TO MY NOTICE THAT THERE WER E THREE CONTRACTS RELEVANT FOR THE ASSESSMENT YEAR IN QUEST ION: MATS-BD SUPPLY CONTRACT DATED MARCH 19,1993 MATS-BD SERVICES CONTRACT DATED MARCH 19, 1993 FES CONTRACT DATED 04 JANUARY 1999. THE AR SUBMITTED THAT EVEN IF PROVISIONS OF SECTION 44A READ WITH SECTION 115A ARE TO BE APPLIED TO TAX THE INCO ME FROM ABOVE CONTRACTS, INCOME FROM FES CONTRACT CANNOT BE TAXED @ 30% SINCE THE CONTRACT IS DATED 04 JANUARY 1999 AND AS PER SE CTION 115A OF THE ACT, IF THE CONTRACT IS DATED AFTER MAY 31, 199 7 (BUT BEFORE JUNE 1, 2005), THE SAME IS TAXABLE @ 20%. THE A.O. IS DI RECTED TO EXAMINE THE DATES OF ENTERING INTO CONTRACT BY THE ASSESSEE WITH THE INDIAN PARTY AND APPLY THE CORRECT RATE OF TAX AS PROVIDED IN SECTION 115A OF THE ACT. 8. HENCE, AFTER CONSIDERING THE FACTS AND CIRCUMSTA NCES OF THE CASE, NARRATED ABOVE AND AFTER EXAMINATION OF RECOR DS AND SUBMISSIONS OF THE ASSESSEE, I AM OF THE OPINION TH AT THERE IS A CLEAR FAILURE ON THE PART OF THE A.O. TO EXAMINE A LL THE ASPECTS MENTIONED IN THIS ORDER BEFORE PASSING THE ORDER, A CCORDINGLY, THE SAID ASSESSMENT ORDER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE. HENCE, I HEREBY SET ASIDE THE ASSESSMENT ORDER U/S 147/143(3) FOR A.Y. 1999-2000 AND DIRECT THE A.O. TO PASS FRESH ASSESSMENT IN ACCORDANCE WITH LAW, AFTER GIVI NG DUE OPPORTUNITIES TO THE ASSESSEE. ITA NOS.2188 TO 2191 & 2192/DEL/09 7 THE ASSESSEE IS AGGRIEVED WITH THE AFOREMENTIONED O RDER OF LD. DIT AND HENCE HAS FILED THE ABOVE GROUNDS OF APPEALS. 5. AFTER NARRATING THE FACTS, AT THE OUTSET, IT WAS POINTED OUT BY THE LD. A.R. THAT THE ISSUE REGARDING RATE OF TAXATION APPLICABL E ON ASSESSEE IS SUBJECT MATTER OF ADJUDICATION IN ASSESSEES OWN CASE IN OTHER YEA RS, HENCE ASSESSEE DOES NOT MIND IF THE ORDER OF LD. DIT ON THAT ISSUE IS UPHEL D AS LD. DIT HAS ONLY RESTORED THIS ISSUE TO THE FILE OF ASSESSING OFFICER. HE SU BMITTED THAT AS PER THE CONTENTS OF SHOW-CAUSE NOTICE AND ORDER U/S 263, THE ONLY IS SUE ON WHICH THE POWERS U/S 263 WERE INVOKED WAS REGARDING THE ISSUE OF RATE OF TAX APPLICABLE ON THE INCOME EARNED BY THE ASSESSEE. HE CONTENDED THAT THERE WE RE SEVERAL OTHER ISSUES INVOLVED IN THE ASSESSMENT WHICH WERE ALSO SUBJECT MATTER OF APPEAL AND THE ONLY ISSUE WHICH HAS BEEN RAISED IN THE ORDER U/S 2 63 IS WITH REGARD TO APPLICATION OF RATE OF TAX. HE SUBMITTED THAT IF WE GO THROUGH THE DIRECTION OF LD. DIT, THAT WILL SUGGEST THAT ASSESSING OFFICER HAS TO MAKE FRESH AS SESSMENT AND THUS THE DIRECTION ISSUED BY HIM IS NOT APPARENTLY LIMITED T O THE ISSUE OF APPLICABILITY OF HIGHER RATE OF TAX. HE CONTENDED THAT THE ONLY CAS E OF THE ASSESSEE IN THE PRESENT APPEAL, WHICH HE WILL PRESS, IS THAT SUCH DIRECTION OF LD. DIT SHOULD BE MODIFIED AND THAT SHOULD BE LIMITED TO THE ISSUE IN VOLVED IN THE SHOW-CAUSE NOTICE FOR INITIATION OF PROCEEDINGS U/S 263 AND DI RECTED TO BE REEXAMINED IN THE ORDER PASSED U/S 263. TO CONTEND THAT LD. DIT WHILE EXERCISING HIS POWER U/S 263 HAS NO POWER TO EXTEND THE SCOPE OF APPLICABILITY O F SECTION 263 BEYOND THE ISSUES RAISED IN THE SHOW-CAUSE NOTICE AND ALSO STA TED IN THE ORDER U/S 263, HE RELIED ON THE FOLLOWING DECISIONS:- ITA NOS.2188 TO 2191 & 2192/DEL/09 8 I) EVEREST ADVERTISING PVT. LTD., VS. DCIT, ITAT, M UMBAI BENCH-A ,ITA NO.8403/MUM/04 II) CIT, WARD-II(4), CHENNAI VS. SMT. TASNEEM Z MAD RASWALA (2010 TIOL 06 HIGH COURT MAD IT) III) GEOMETRIC SOFTWARE SOLUTIONS CO. LTD. VS. ACIT , (2009) 32 SOT 428 ITAT, MUMBAI 6 IT WAS SUBMITTED THAT THE DECISION OF MUMBAI BENC H IN THE CASE OF EVEREST ADVERTISING PVT. LTD. (SUPRA) IS EXACTLY ON THE ISS UE AND HE INVITED OUR ATTENTION TOWARDS PARA 3 OF THE SAID ORDER WHICH READS AS UND ER:- 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HA VE GONE THROUGH THE ORDER OF LD.CIT U/S 263 AND WE ARE OF THE CONSI DERED OPINION THAT SINCE, THE ISSUE REGARDING NON-COMPETING FEES WAS A LREADY DECIDED BY LD.CIT(A) BEFORE PASSING OF THE IMPUGNED ORDER U/S 263 BY LD.CIT, THIS ISSUE WAS OUTSIDE THE POWERS OF COMMISSIONER U/S 26 3(1) AS PER EXPLANATION (C) TO SECTION 263(1). WE ARE ALSO OF THE CONSIDERED OPINION THAT CIT CAN MODIFY THE ASSESSMENT OR CAN CANCEL TH E ASSESSMENT AND DIRECT A FRESH ASSESSMENT ON THOSE POINTS ON WHICH ORDER PASSED BY THE AO IS FOUND ERRONEOUS AND PREJUDICIAL TO THE INTERE ST OF REVENUE AND WHILE DOING SO, HE CANNOT AUTHORIZE THE AO TO CONSIDER AN Y OTHER ISSUE, WHICH COMES UP BEFORE HIM DURING THE FRESH ASSESSMENT; AN D HENCE, WE REVISE THE DIRECTIONS/OBSERVATIONS OF LD.CIT IN HIS ORDER U/S 263 BY HOLDING THAT THE ISSUE OF NON-COMPETING FEES HAS BECOME FINAL AS PER ORDER OF LD.CIT(A); HENCE, THE AO CANNOT RE-ADJUDICATE THE S AME WHILE PASSING FRESH ASSESSMENT ORDER AS DIRECTED BY CIT AND WE AL SO HOLD THAT THIS OBSERVATION OF CIT THAT THE AO SHALL BE AT LIBERTY TO CONSIDER ANY OTHER ISSUE, WHICH COMES BEFORE HIM DURING THE FRESH ASSE SSMENT IS NOT VALID AND SHOULD NOT BE ACTED UPON BY THE AO; AND IN THE FRESH ASSESSMENT ORDER ONLY SPECIFIC ISSUES EXCLUDING THE ISSUE OF N ON-COMPETE FEES, ON ITA NOS.2188 TO 2191 & 2192/DEL/09 9 WHICH ASSESSMENT ORDER HAS BEEN SET ASIDE BY CIT, S HOULD BE CONSIDERED AND DECIDED BY THE AO IN THE FRESH ASSESSMENT PROCE EDINGS. 7. REFERRING TO THE DECISION IN THE CASE OF GEOMETR IC SOFTWARE SOLUTIONS CO. LTD. (SUPRA), IT WAS SUBMITTED THAT IN PARA 10 OF T HE SAID DECISION, IT HAS BEEN HELD BY THE TRIBUNAL THAT THE REVISION U/S 263 IS NOT LI KE THE REOPENING OF THE ASSESSMENT WHERE ONCE THE ASSESSMENT IS REOPENED, T HE ENTIRE ASSESSMENT IS OPENED BEFORE THE ASSESSING OFFICER TO BE RECONSI DERED IN ACCORDANCE WITH LAW. IN THE REVISION PROCEEDINGS, THE CIT CANNOT TRAVEL BEYOND THE REASONS GIVEN BY HIM FOR REVISION IN THE SHOW CAUSE NOTICE. THEREFO RE, IT WAS HELD THEREIN THAT REVISION ON THE GROUND THAT PART OF THE SALE PROCEE DS IS YET TO BE RECEIVED BY THE ASSESSEE IS NOT TENABLE AND THUS IT WAS SUBMITTED B Y THE LD. A.R. THAT THE DIRECTIONS OF LD. DIT GIVEN IN THE LATER PART OF HI S ORDER TO PASS FRESH ASSESSMENT ORDER IN ACCORDANCE WITH LAW IS AGAINST THE STATUTO RY INTENDMENT AND SHOULD BE MODIFIED ACCORDINGLY. 8. ON THE OTHER HAND, THE LD. D.R. RELIED ON THE OR DER OF LD. DIT. 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS IN THE LIGHT OF MATERIAL PLACED BEFORE US. THE SHOW-CAUSE NOTICE ISSUED BY LD. DIT FOR INVOCATION OF POWER U/S 263 HAS ALREADY BEEN REPRODUCED IN THE AB OVE PART OF THIS ORDER. WE HAVE CAREFULLY GONE THROUGH THE ORDER PASSED BY THE LD. DIT U/S 263. THE TENOR OF THE ORDER CONVEYS ONLY ONE ISSUE WHICH IS WITH R EGARD TO APPLICATION OF HIGHER RATE OF INCOME TAX AS, ACCORDING TO LD. DIT, THE RA TE APPLICABLE ON SPECIFIC CONTRACTS WAS 30% IN PLACE OF 15% APPLIED BY THE AS SESSING OFFICER. THE RELEVANT CONCLUDING PART OF THE ORDER OF THE DIT IS ALSO REPRODUCED ABOVE. NO ITA NOS.2188 TO 2191 & 2192/DEL/09 10 OTHER ISSUE IS INVOLVED EITHER IN THE SHOW-CAUSE NO TICE OR IN THE IMPUGNED ORDER. THEREFORE, WE FOUND FORCE IN THE CONTENTION OF THE LD. A.R. THAT LD. DIT WAS NOT RIGHT IN SETTING ASIDE THE ENTIRE ASSESSMENT AS THE ISSUE WAS ONE ONLY WHICH COULD BE RESTORED TO THE ASSESSING OFFICER FOR EXAM INATION AND THUS HIS DIRECTION FOR SET ASIDE OF THE ENTIRE ORDER AND FURTHER TO PA SS FRESH ASSESSMENT ORDER IN ACCORDANCE WITH LAW IS AGAINST THE VERY INTENDED PU RPOSE OF INVOKING POWERS U/S 263. WE, THEREFORE, MODIFY THE AFOREMENTIONED DIRE CTION OF LD. DIT AND RESTRICT THOSE DIRECTIONS ONLY TO THE ISSUE REGARDING EXAMIN ATION OF THE APPLICABLE RATE OF INCOME TAX ON THE ASSESSEE ON THOSE SPECIFIC CONTRA CTS WHICH WERE SUBJECT MATTER OF ORDER UNDER SECTION 263 OF THE ACT. 10. BEFORE PARTING, WE MAY MENTION HERE THAT NO OTH ER ISSUE WAS EITHER ARGUED BY LD. A.R. OR OBJECTED BY HIM AND THE ONLY ISSUE RAISED BY HIM WAS MODIFICATION OF DIRECTIONS WHICH HAVE BEEN MODIFIED ACCORDINGLY. THEREFORE, WE ARE NOT GOING INTO OTHER ISSUES INVOLVED IN THE PRE SENT APPEALS AS AT THE TIME OF HEARING WE WERE NOT CALLED UPON TO DECIDE THOSE ISS UES AND THE GRIEVANCE WHICH WAS ADDRESSED BY LD. A.R. HAS BEEN DECIDED. 11. IN THE RESULT, THE APPEALS FILED BY THE ASSESSE E ARE DISPOSED OF IN THE MANNER AFORESAID AND THEY ARE PARTLY ALLOWED FOR ST ATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 09.04.2010. SD/- SD/- ( R.C. SHARMA ) ( I.P. BANSAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 09.4.2010 VSK ITA NOS.2188 TO 2191 & 2192/DEL/09 11 COPY TO: 1. APPELLANT-ASSESSEE 2. RESPONDENT-REVENUE (DIT, INTERNATIONAL TAXATION- II NEW DELHI. 3. DEPUTY DIT, CIRCLE-2(1), INTERNATIONAL TAXATION-II, NEW DELHI. 4. DR, ITAT, NEW DELHI. ASSISTANT REGISTRAR ITA NOS.2188 TO 2191 & 2192/DEL/09 12