Prashanth Fertility Research Centre Private Limited, CHENNAI V. ITO, CHENNAI

ITA 2311/CHNY/2014

• Counselvise Citation: 231121714 RSA 2014
• Duration Of Justice: 1 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2015
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 21-08-2015
• Assessment Year: 2013-2014
• Appeal Filed On: 15-09-2014
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: T G SURESH
• Section: 206AA

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI . . . , . ! , ' # $ [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ] ./ I.T.A.NOS.2311/MDS/2014, 486 & 487/MDS/2015 / ASSESSMENT YEARS : 2013-14, 2012-13 & 2011-12 M/S PRASHANTH FERTILITY RESEARCH CENTRE PVT. LTD NO.76/77 HARRINGTON ROAD CHETPET, CHENNAI 600 031 VS. THE INCOME TAX OFFICER INTERNATIONAL TAXATION II(1) CHENNAI [PAN AACCP 2513 J] ( %& / APPELLANT) ( '(%& /RESPONDENT) / APPELLANT BY : SHRI T .G. SURESH, CA /RESPONDENT BY : SHRI A.V. SREEKANTH, JCIT / DATE OF HEARING : 21 - 08 - 2015 ! / DATE OF PRONOUNCEMENT : 15 - 10 - 2015 / O R D E R PER N.R.S.GANESAN, JUDICIAL MEMBER ALL THREE APPEALS OF THE ASSESSEE ARE DIRECTED A GAINST THE RESPECTIVE ORDERS OF THE COMMISSIONER OF INCOME-TAX (APPEALS), CHENNAI, FOR THE ASSESSMENT YEARS 2013-14, 2012-13 AND 2011-12. SINCE COMMON ISSUE ARISES FOR CONSIDERATION IN ALL THE APPEALS, WE HEARD THEM TOGETHER AND DISPOSING OF THE SAME BY TH IS COMMON ORDER. ITA NO.2311/14 486 & 487/15 :- 2 -: 2. SHRI T.G. SURESH, LD. REPRESENTATIVE FOR THE ASSESS EE SUBMITTED THAT DURING THE ASSESSMENT YEARS UNDER CO NSIDERATION THE ASSESSEE MADE REMITTANCES TO NON-RESIDENT COMPANIES FOR AVAILING THE SERVICES OF EMBRYOLOGISTS WHICH ARE REQUIRED FOR IV F PROCEDURE CARRIED OUT BY THE ASSESSEE-HOSPITAL. ACCORDING TO THE LD . REPRESENTATIVE, AS PER THE AGREEMENT, M/S SAPIENT IN-VITRO LTD., AUSTR ALIA AND M/S DOWN UNDER FERTILITY SERVICES PTY. LTD., AUSTRALIA, DEPU TED THEIR PERSONNEL FOR PROVIDING THE SERVICES. THE ASSESSEE HAS ALSO MAD E PAYMENTS TO M/S SAPIENT IN-VITRO LTD., AUSTRALIA AND M/S DOWN UNDER FERTILITY SERVICES PTY. LTD., AUSTRALIA AFTER DEDUCTING TAX @ 10%. HO WEVER, THE ASSESSING OFFICER TREATED THE ASSESSEE AS AN ASS ESSEE IN DEFAULT ON THE GROUND THAT THE ASSESSEE HAS NOT PRODUCED THE PERMANENT ACCOUNT NUMBER OF THE RECIPIENTS FOR DEDUCTING TAX @ 10%. IN THE ABSENCE OF ANY PERMANENT ACCOUNT NUMBER, THE ASSESS ING OFFICER FOUND THAT THE ASSESSEE OUGHT TO HAVE DEDUCTED TAX @ 20%. REFERRING TO SECTION 139A OF THE ACT, THE LD. REPR ESENTATIVE SUBMITTED THAT SEC. 139(8)(D) OF THE ACT EMPOWERS THE CBDT TO EXEMPT CLASS OR CLASSES OF PERSONS FROM GETTING THE PERMANENT ACCOU NT NUMBER. THE CBDT, WHILE FRAMING RULE 114C(B) OF THE INCOME-TAX RULES, CLARIFIED THAT NON-RESIDENTS REFERRED TO IN CLAUSE (30) OF SE C. 2 OF THE ACT, NEED NOT OBTAIN THE PERMANENT ACCOUNT NUMBER. REFERRING TO SEC. 2(30) OF THE ACT, THE LD. REPRESENTATIVE SUBMITTED THAT THE NON-RESIDENT MEANS ITA NO.2311/14 486 & 487/15 :- 3 -: A PERSON WHO IS NOT A RESIDENT IN INDIA. IN THIS C ASE, ADMITTEDLY, THE RECIPIENTS ARE NOT RESIDENTS IN INDIA, THEREFORE, T HERE IS NO OBLIGATION TO OBTAIN PERMANENT ACCOUNT NUMBER U/S 139A OF THE AC T. SINCE THERE WAS NO OBLIGATION TO OBTAIN PERMANENT ACCOUNT NUMBE R, ACCORDING TO THE LD. REPRESENTATIVE, SEC. 206AA OF THE ACT IS N OT APPLICABLE. 3. ACCORDING TO THE LD. REPRESENTATIVE OF THE ASSESSE E, SEC. 206AA OF THE ACT WAS INTRODUCED BY FINANCE ACT, 200 9, WITH AN OBJECT OF IMPROVING COLLECTION OF TAXES AT SOURCE. THE OB JECT OF SEC. 206AA OF THE ACT IS NOT TO INCREASE THE BURDEN OF THE DEPART MENT BY PROCESSING MORE RETURNS AND GRANT MORE REFUNDS. WHEREVER THE OBJECT DOES NOT REQUIRE THE ASSESSEE TO CLAIM REFUND TOWARDS EXCES S TAX DEDUCTED AT SOURCE WOULD NOT SERVE THE PURPOSE OF INTRODUCING S EC. 206AA. REFERRING TO THE ORDER OF THE ASSESSING OFFICER, TH E LD. REPRESENTATIVE SUBMITTED THAT GENERAL PROVISIONS UNDER THE INCOME- TAX ACT, 1961 MUST YIELD WAY TO SPECIAL PROVISIONS. ACCORDING TO THE LD. REPRESENTATIVE, SEC. 139A(8) R.W. RULE 114C OF INCO ME-TAX RULES, IS A SPECIAL PROVISION PROVIDING A CATEGORY OF PERSONS E XEMPTING FROM GETTING PERMANENT ACCOUNT NUMBER. THEREFORE, SEC. 139A(8) R.W.RULE 114C WOULD PREVAIL OVER SEC. 206AA OF THE ACT. THE LD. REPRESENTATIVE FURTHER SUBMITTED THAT THE NON-RESIDENT RECIPIENTS, IN FACT, OBTAINED THE PERMANENT ACCOUNT NUMBER ON 27.2.2013 DURING THE SA ME FINANCIAL YEAR. ACCORDING TO THE LD. REPRESENTATIVE, PERMANE NT ACCOUNT NUMBER ITA NO.2311/14 486 & 487/15 :- 4 -: WAS NOT AVAILABLE ONLY FOR A PART OF THE YEAR UNDER CONSIDERATION. THE LD. REPRESENTATIVE FURTHER SUBMITTED THAT WHILE CON SIDERING SEC. ,206AA OF THE ACT TO NON-RESIDENTS, THE PROVISIONS OF SEC. 139A(8)(D) CANNOT BE IGNORED. WHEN SEC.139A(8)(D) OF THE ACT EXEMPT S THE NON- RESIDENTS FROM OBTAINING PERMANENT ACCOUNT NUMBER, THE SAME CANNOT BE FURNISHED TO THE DEDUCTOR AS REQUIRED U/S 206AA OF THE ACT. THEREFORE, ACCORDING TO THE LD. REPRESENTATIVE, THE RE IS NO NEED FOR THE NON-RESIDENTS TO PROVIDE PERMANENT ACCOUNT NUMBER T O THE DEDUCTOR AT THE TIME OF MAKING PAYMENTS. ACCORDING TO THE L D. REPRESENTATIVE, THE PROVISIONS CONTAINED IN SEC. 139A(8)(D) R.W.R 1 14C WILL OVERRIDE THE PROVISIONS OF SEC. 206AA OF THE ACT. 4. ACCORDING TO THE LD. REPRESENTATIVE, SEC. 206AA(1) OF THE ACT DOES NOT IMPOSE ANY OBLIGATION TO OBTAIN PERMANENT ACCOUNT NUMBER. THIS SECTION PROVIDES TO FURNISH PERMANENT ACCOUNT NUMBER TO THE DEDUCTOR. IN THE ABSENCE OF ANY OBLIGATION FOR OBT AINING PERMANENT ACCOUNT NUMBER EITHER U/S 139A OR U/S 206AA OF TH E ACT, THE ASSESSEE CANNOT BE TREATED AS AN ASSESSEE IN DEFAU LT FOR NON- DEDUCTION OF TAX @ 20%. 5. ON A QUERY FROM THE BENCH WHETHER THE PAYMENT MADE BY THE ASSESSEE IS LIABLE FOR DEDUCTION OF TAX U/S 1 94, THE LD. REPRESENTATIVE VERY FAIRLY SUBMITTED THAT THE PAYME NT BEING A FEE FOR ITA NO.2311/14 486 & 487/15 :- 5 -: TECHNICAL SERVICES, THE ASSESSEE HAS TO NECESSARIL Y DEDUCT TAX WHILE MAKING PAYMENT TO THE NON-RESIDENTS. THE DISPUTE I S ONLY WITH REGARD TO THE RATE OF TAX TO BE DEDUCTED I.E @ 10% OR @ 20 %. IF THE ASSESSEE OBTAINS PERMANENT ACCOUNT NUMBER THEN DEDU CTION OF TAX @ 10% WOULD MEET THE REQUIREMENTS. IN THE ABSENCE OF ANY PERMANENT ACCOUNT NUMBER, THIS SECTION REQUIRES THE ASSESSEE TO DEDUCT TAX @ 20%. IN THIS CASE, ACCORDING TO THE LD. REPRESENTA TIVE, THERE IS NO OBLIGATION ON THE RECIPIENTS, NAMELY, NON-RESIDENT COMPANIES, TO OBTAIN PERMANENT ACCOUNT NUMBER U/S 139A R.W.RULE 114C. T HEREFORE, THERE IS NO QUESTION OF DEDUCTION OF TAX @ 20%. EVEN OTH ERWISE, IN THE VERY SAME FINANCIAL YEAR I.E ON 27.2.2013, THE NON-RESI DENTS OBTAINED THE PERMANENT ACCOUNT NUMBER. THEREFORE, AT ANY STRETC H OF IMAGINATION, THE ASSESSEE CANNOT BE TREATED AS AN ASSESSEE IN DEFAULT. 6. ON THE CONTRARY, SHRI A.V.SREEKANTH, LD. DEPARTMENT AL REPRESENTATIVE SUBMITTED THAT ADMITTEDLY, THE ASSE SSEE PAID FEE FOR TECHNICAL SERVICES TO NON-RESIDENT COMPANIES AT AUS TRALIA. IT IS ALSO AN ADMITTED FACT THAT THE EMPLOYEES OF THE NON-RESIDEN T COMPANIES PROVIDED TECHNICAL SERVICES IN THE LABORATORY OF TH E ASSESSEE-HOSPITAL IN INDIA. THEREFORE, THE INCOME RECEIVED BY THE NON-R ESIDENT COMPANIES IS TAXABLE IN INDIA. HENCE, THE ASSESSEE HAS TO N ECESSARILY DEDUCT TAX WHILE MAKING THE PAYMENT. ITA NO.2311/14 486 & 487/15 :- 6 -: 7. NOW THE QUESTION ARISES FOR CONSIDERATION IS WHETHE R THE TAX HAS TO BE DEDUCTED @ 20% OR @ 10%. THE ASSESSEE C LAIMS THAT THE NON-RESIDENT COMPANIES NEED NOT TO OBTAIN THE PERMA NENT ACCOUNT NUMBER U/S 139A R.W.RULE 114C OF THE INCOME-TAX RU LES. REFERRING TO SEC. 206AA OF THE ACT, THE LD. DR SUBMITTED THAT TH IS SECTION STARTS WITH NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PRO VISIONS OF THIS ACT , THEREFORE, NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISIONS OF THE INCOME-TAX ACT, 1961, THE NON-RES IDENT COMPANY HAS TO NECESSARILY FURNISH THE PERMANENT ACCOUNT NUMBER TO THE ASSESSEE WHO IS RESPONSIBLE FOR MAKING THE PAYMENT. IF THE PERMANENT ACCOUNT NUMBER WAS NOT FURNISHED TO THE DEDUCTOR, THE TAX S HALL BE DEDUCTED @ 20%. ACCORDING TO THE LD. DR, THE PROVISIONS OF SEC. 206AA ARE MANDATORY, THEREFORE, THE CONTENTION OF THE ASSESS EE THAT OBTAINING PERMANENT ACCOUNT NUMBER IS ONLY A PROCEDURAL FORMA LITY IS MISCONSTRUED. ACCORDING TO THE LD. DR, THE ASSESSI NG OFFICER BY PLACING RELIANCE ON THE DECISION OF THE BANGALORE B ENCH OF THIS TRIBUNAL IN THE CASE OF BOSCH VS CIT, 28 TAXMANN.COM 228, FO UND THAT THE PROVISIONS OF SEC. 206AA WOULD OVERRIDE THE OTHER P ROVISIONS OF THE INCOME-TAX ACT, 1961. THEREFORE, THE ASSESSEE WAS RIGHTLY TREATED AS AN ASSESSEE IN DEFAULT. ITA NO.2311/14 486 & 487/15 :- 7 -: 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE, ADMITTEDLY, PAID FEE FOR TECHNICAL SERVICES TO AUST RALIAN COMPANIES FOR PROVIDING TECHNICAL SERVICES IN INDIA. IT IS ALSO AN ADMITTED FACT THAT THE AUSTRALIAN COMPANIES DEPUTED THEIR EMPLOYEES TO INDIA FOR PROVIDING THE TECHNICAL SERVICES. IT IS ALSO NOT I N DISPUTE THAT THE PAYMENT MADE BY THE ASSESSEE TO THE NON-RESIDENT C OMPANIES IS TAXABLE IN INDIA. IN FACT, THE ASSESSEE HAS DEDUC TED TAX @ 10%. NOW THE QUESTION ARISES FOR CONSIDERATION IS APPLIC ABILITY OF SEC. 206AA OF THE ACT. 9. WE HAVE GONE THROUGH THE PROVISIONS OF SEC. 206AA O F THE ACT WHICH READS AS FOLLOWS: 206AA-REQUIREMENT TO FURNISH PERMANENT ACCOUNT NUMBER (1) NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISIONS OF THIS ACT, ANY PERSON ENTITLED TO RECEIVE ANY SUM OR INCOME OR AMOUNT, ON WHICH TAX IS DEDUCTIBLE UNDER CHAPTER XVII-B (HEREAFTER REFERRED TO AS DEDUCTEE) SHALL FURNISH H IS PERMANENT ACCOUNT NUMBER TO THE PERSON RESPONSIBLE FOR DEDUCTING SUCH TAX (HEREAFTER REFERRED TO AS DEDUCTO R), FAILING WHICH TAX SHALL BE DEDUCTED AT THE HIGHER OF THE FOLLOWING RATES, NAMELY : (I) AT THE RATE SPECIFIED IN THE RELEVANT PROVISION OF THIS ACT ; OR (II) AT THE RATE OR RATES IN FORCE ; OR (III) AT THE RATE OF TWENTY PER CENT. ITA NO.2311/14 486 & 487/15 :- 8 -: 10. AS RIGHTLY SUBMITTED BY THE LD. DR, SEC. 206AA OF T HE ACT STARTS WITH NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISIONS OF THIS ACT. IT MEANS NOTWITHSTANDING ANYTHING CO NTAINED IN THE PROVISIONS OF THE INCOME-TAX ACT, 1961, SEC. 206AA OF THE ACT WOULD COME INTO OPERATION. AT THE BEST, WE MAY SAY THAT IF THE RECIPIENT HAS NO TAXABLE INCOME IN INDIA THEN THE QUESTION OF DED UCTION OF TAX MAY NOT ARISE FOR THE YEAR UNDER CONSIDERATION. IN THA T CASE, THERE IS NO QUESTION OF DEDUCTION OF TAX EITHER @ 10% OR @ 20%. WHEN THE INCOME RECEIVED BY A RESIDENT OR NON-RESIDENT, AS T HE CASE MAY BE, IS TAXABLE IN INDIA, TAX HAS TO BE DEDUCTED UNDER THE PROVISIONS OF CHAPTER XVII OF THE ACT. SEC. 206AA OF THE ACT AL SO FALLS IN CHAPTER XVII. IN VIEW OF THE SPECIFIC PROVISION IN SEC. 20 6AA WHICH PROVIDES FOR DEDUCTION OF TAX @ 20% WHEREVER THE RECIPIENT FAILE D TO FURNISH THE PERMANENT ACCOUNT NUMBER, THIS TRIBUNAL IS OF THE C ONSIDERED OPINION THAT IN VIEW OF THE LANGUAGE USED BY THE PARLIAMENT NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISIONS OF THIS ACT, SEC.206AA WOULD OVERRIDE THE OTHER PROVISIONS OF THE INCOME-T AX ACT, INCLUDING SEC.139A OF THE ACT. SINCE ADMITTEDLY THE AMOUNT R ECEIVED BY THE RECIPIENT IS TAXABLE IN INDIA, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT IN THE ABSENCE OF ANY PERMANENT ACCOUNT NUMBER , TAX HAS TO BE NECESSARILY DEDUCTED @ 20%. THEREFORE, THE CIT(A) HAS RIGHTLY CONFIRMED THE ORDER OF THE ASSESSING OFFICER TREA TING THE ASSESSEE AS ITA NO.2311/14 486 & 487/15 :- 9 -: AN ASSESSEE IN DEFAULT. WE DO NOT FIND ANY INFIR MITY IN THE ORDER OF THE CIT(A) AND ACCORDINGLY THE SAME IS CONFIRMED. 11. IN THE RESULT, ALL THE THREE APPEALS OF THE ASSESSE E ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH OCTOBER,2015, AT CHENNAI. SD/- SD/- ( . ! ) (A. MOHAN ALANKAMONY) ' / ACCOUNTANT MEMBER ( . . . ' ) (N.R.S. GANESAN) / JUDICIAL MEMBER #$ / CHENNAI %& / DATED: 15 TH OCTOBER, 2015 RD &' ()*) / COPY TO: 1 . / APPELLANT 4. + / CIT 2. / RESPONDENT 5. ),- . / DR 3. +/' / CIT(A) 6. -01 / GF