ADIT (IT) 2(1), MUMBAI V. SGL ENTERTAINMENT LTD, MUMBAI

ITA 2206/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 55072 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 12-11-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 19-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHANTAM BOSE
• Keywords: Revised return
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F, MUMBAI BEFORE SHRI T.R. SOOD, A.M. AND SHRI V. DURGA RAO, J.M. ITA NO. 2206/MUM/2010 ASSESSMENT YEAR : 2007-08 ASSTT. DIRECTOR OF INCOME-TAX, APPELLANT (INTERNATIONAL TAXATION) 2(1), R.NO. 120, 1 ST FLOOR, SCINDIA HOUSE, BALLARD ESTATE, N.M. ROAD, MUMBAI 400 038. VS. M/S SGL ENTERTAINMENT LTD. RESPONDENT C/O STAR INDIA PVT. LTD., STAR HOUSE, OFF. DR. E. MOSES ROAD, MAHALAXMI, MUMBAI. (PAN AAJJCS6874N) APPELLANT BY : MR. SHANTAM BOSE RESPONDENT BY : MR. DIVESH CHAWLA DATE OF HEARING : 28/07/2011 DATE OF PRONOUNCEMENT: 30/08/2 011 ORDER PER V. DURGA RAO, J.M.: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAI NST THE ORDER OF CIT(A)-11, MUMBAI, PASSED ON 22/12/2009 FOR THE ASS ESSMENT YEAR 2007-08 WHEREIN THE REVENUE HAS RAISED THE FOLLOWIN G GROUNDS OF APPEAL:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, WHETHER THE LD. CIT(A) WAS CORRECT IN HOLDING THAT WHEN DUTY IS CAST ON THE PAYER TO PAY TAX AT SOURCE, NO INTEREST U/S 234B AND 234C CAN BE IMPOSED ON THE PAYEE ASSESSEE IGNORING THE FACT THAT IT IS LIABILITY OF THE PAYEE TO PAY ADVANCE TA X EVEN ON THE AMOUNT WHICH HAD NOT BEEN DEDUCTED AT SOURCE U/S 19 5 OF THE IT ACT, 1961. 2. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE AO RESTORED. ITA NO. 2206/MUM/2010 M/S SGL ENTERTAINMENT LTD. 2 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE IS A NON RESIDENT COMPANY INCORPORATED IN BRITISH VIRGIN ISL ANDS AND IS A TAX RESIDENT OF HONG KONG. THE ASSESSEE IS ENGAGED IN T HE BUSINESS OF PROCURING AND SELLING CONTENT FOR TELEVISION CHANN ELS. FOR THIS PURPOSE, THE ASSESSEE IS INVOLVED IN PROCURING OF P ROGRAMMES AND OTHER CONTENT, FROM ACROSS THE WORLD, INCLUDING IND IA. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE SOLD THE CONTENT AND PROGRAMMES TO VARIOUS FOREIGN BROADCASTERS ON A GLOBAL BASIS. THE ASSESSEE FILED ITS ORIGINAL RETURN OF INCOME ON OCTOBER 31, 2007, DECLARING INCOME OF RS. 13,50,000/-, WHICH WAS BASED ON THE UNAUDITED F INANCIAL STATEMENTS OF THE ASSESSEE. THEREAFTER, THE ASSESSE E FILED REVISED RETURN OF INCOME ON SEPTEMBER 30, 2008 BASED ON THE AUDITED FINANCIAL STATEMENTS, WHEREIN IT WAS OFFERED TAXABL E INCOME OF RS. 54,61,000/-. THE ASSESSEE ALONG WITH ITS GROUP ENTI TIES HAD FILED AN APPLICATION BEFORE SETTLEMENT COMMISSION (SETCOM) F OR PREVIOUS YEARS. WITHOUT PREJUDICE TO ITS PAST CONTENTIONS AN D STAND, WITH A VIEW TO BUY PLACE OF MIND AND AVOID PROTRACTED LITI GATION, INCOME FOR THE YEAR UNDER CONSIDERATION WAS OFFERED TO TAX IN LINE WITH ON THE BASIS ADOPTED WHILE FILING THE APPLICATIONS BEFORE THE SETCOM BY THE ASSESSEE AND ITS GROUP . THE AO ISSUED INTIMATION V IDE SECTION 143(1) OF THE ACT, DATED DECEMBER 5, 2008 ACCEPTING THE TA XABLE INCOME OFFERED BY THE ASSESSEE IN ITS REVISED RETURN OF IN COME. HOWEVER, THE AO LEVIED INTEREST U/S 234D AND 234C OF THE ACT AMO UNTING TO RS. 2,28,380/- AND RS. 4,06,272/- RESPECTIVELY. AGGRIEV ED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). 3. BEFORE THE CIT(A), THE ASSESSEE SUBMITTED THAT S INCE THE ASSESSEE IS A NON-RESIDENT, ITS ENTIRE, INCOME, IS LIABLE FOR DEDUCTION OF TAX AT SOURCE U/S 195 OF THE ACT. HE FURTHER SUB MITTED THAT THE PROVISIONS OF SECTION 234B AND 234C OF THE ACT, ARE APPLICABLE IN CASES WHERE AN ASSESSEE WHO IS LIABLE TO PAY ADVANC E TAX DEFAULTS/DEFERS PAYMENT OF SUCH ADVANCE TAX. HE CON TENDED THAT IN ORDER TO BE LIABLE TO INTEREST U/S 234B AND 234C OF THE ACT, THE ITA NO. 2206/MUM/2010 M/S SGL ENTERTAINMENT LTD. 3 ASSESSEE FIRST NEEDS TO BE LIABLE TO PAY ADVANCE TA X UNDER THE PROVISIONS OF SECTIONS 208 & 209 OF THE ACT. THE A SSESSEE IN SUPPORT OF ITS CASE, RELIED ON THE DECISION OF ITAT MUMBAI IN THE CASE OF DDIT VS. NGC NETWORK ASIA LLC (ITA NO. 8353/N/04, WHICH WAS AFFIRMED BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CAS E OF DIT VS. NGC ASIA NETWORK LLC, WHICH IS REPORTED IN 313 ITR 187. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE CIT(A) HELD AS UNDER:- 3.4 THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF NGC NETWOR K ASIA LLC(SUPRA) AND THE DECISION OF ITAT IN STAR LTDS C ASE AS STATED ABOVE, I HOLD THAT THE APPELLANT WAS NOT LIABLE TO PAY ADVANCE TAX AS ITS ENTIRE INCOME WAS LIABLE FOR DEDUCTION OF TA X AT SOURCE. ACCORDINGLY, IN VIEW OF THE ABOVE, THE INTEREST U/S 234B AND 234C OF THE ACT IS NOT LEVIABLE ON THE APPELLANT. 4. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENU E IS IN APPEAL BEFORE US. 5. THE LEARNED COUNSEL FOR THE ASSESSEE HAS CANVASS ED THAT THE ISSUE UNDER CONSIDERATION IS COVERED BY THE DECISIO N OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF DIRECTOR O F INCOME-TAX (INTERNATIONAL TAXATION) VS. NGC NETWORK ASIA LLC, [2009] 313 ITR 187 (BOM.). ON THE OTHER HAND, THE LEARNED DR HAS N OT DISPUTED THE SUBMISSION MADE BY THE LEARNED COUNSEL FOR THE ASSE SSEE. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE RECORD AS WELL AS GONE THROUGH THE ORDERS OF THE AU THORITIES BELOW. IT IS UNDISPUTED FACT THAT THE ASSESSEE IS NRI, THEREF ORE, AGAINST THE PAYMENTS MADE TO THE ASSESSEE TDS HAS TO BE DEDUCTE D AND THE ASSESSEE HAS NO OBLIGATION TO PAY THE ADVANCE TAX. THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF NGC NETWOR K ASIA LLC (SUPRA) HELD THAT WE ARE CLEARLY OF THE OPINION THAT WHEN A DUTY IS C AST ON THE PAYER TO PAY THE TAX AT SOURCE, ON FAILURE, NO INTEREST CAN BE IMPOSED ON THE PAYEE-ASSESSEE. IN VIEW OF THE ABOVE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT, WE DO NOT FI ND ANY INFIRMITY IN THE ORDER OF THE CIT(A) AS THE CIT(A) FOLLOWING THE SAID DECISION, HELD ITA NO. 2206/MUM/2010 M/S SGL ENTERTAINMENT LTD. 4 THAT THE INTEREST U/S 234B AND 234C OF THE ACT IS N OT LEVIABLE ON THE ASSESSEE. ACCORDINGLY, WE CONFIRM THE ORDER OF THE CIT(A) AND DISMISS THE GROUND RAISED BY THE REVENUE IN THIS REGARD. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF AUGUST, 2011. SD/- SD/- (T.R. SOOD) (V. DURGA RAO) ACCOUNTANT MEMBER JUDI CIAL MEMBER MUMBAI, DATED: 30 TH AUGUST, 2011 KV COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE, F BENCH, I.T .A.T., MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR, I.T.A.T., MUMBAI.