GUJARAT PIPAVAV PORT LTD, MUMBAI V. ADDL DIT (IT) RG 3, MUMBAI

ITA 2348/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4105 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2016
• Appeal Filed By: Assessee
• Bench Allotted: L
• Next Hearing Date: 21-04-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 08-04-2014
• Court: TRIBUNAL
• Department Lawyers: POOJA SWAROOP
• Assessee Lawyers: KIRAN NISAR
• Keywords: Difference of opinion
• Section: 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL L BENCH, MUM BAI BEFORE SHRI MAHAVIR SINGH, JM & SHRI RAMIT KOCHAR, AM ITA NOS. 2347 & 2348/MUM/2014 (ASSESSMENT YEARS: 2007-08 & 2008-09) GUJARAT PIPAVAV PORT LTD. APPELLANT 301, TRADE CENTRE, BANDRA-KURLA COMPLEX, BANDRA (EAST), MUMBAI-400051. (PAN: AAACG6975B) VS. ADDL. COMMR. OF INCOME TAX (INTERNATIONAL TAXATION), RANGE-3, 1 ST FLOOR, SCINDIA HOUSE, BALLARD PIER, N.M. ROAD, MUMBAI-400038. RESPONDENT APPELLANT BY: S/SHRI NIRAJ SHETH & KIRAN NISAR RESPONDENT BY: MS. POOJA SWAROOP DATE OF HEARING : 21.04.2016 DATE OF PRONOUNCEMENT : 21.04.2016 O R D E R PER MAHAVIR SINGH, JM: THESE TWO APPEALS BY ASSESSEE ARE DIRECTED AGAINST DIFFERENT ORDERS OF CIT(A)-10, MUMBAI OF EVEN DATE 25.10.2013 IN APP EAL NOS. CIT(A)- 10/ADDL.DIT(IT)-RG.3/IT-25/12-13 & CIT(A)-10/ADDL.D IT(IT)-RG.3/IT- 26/12-13. ASSESSMENTS WERE FRAMED BY ITO (IT) TDS-3 , MUMBAI, FOR ASSESSMENT YEARS 2007-08 & 2008-09 VIDE HIS COMMON ORDER DATED 24.07.2008 U/S 201 R.W.S. 195 OF THE INCOME TAX ACT 1961(HEREIN AFTER REFERRED TO AS THE ACT). PENALTIES UNDER DISPUTE WERE LEVIED BY ADDL. 2 ITA NOS. 2347&2348/MUM/2014 GUJARAT PIPAVAV PORT LTD. AYS. 2007-08 & 2008-09 DIRECTOR OF INCOME-TAX (IT), RANGE-3, MUMBAI U/S 27 1C OF THE ACT VIDE HIS COMMON ORDER DATED 28.03.2012. 2. THE SOLE ISSUE INVOLVED IN THESE TWO APPEALS OF AS SESSEE IS AGAINST THE ORDER OF CIT(A)-10, MUMBAI CONFIRMING T HE PENALTY LEVIED U/S. 271C OF THE ACT BY THE ADDL. DIT(IT) RANGE-3, MUMBAI BY TREATING THE ASSESSEE AS ASSESSEE IN DEFAULT FOR NOT WITHH OLDING TAX ON PAYMENTS MADE TO LIFTECH. FOR THIS, ASSESSEE HAS RA ISED FOLLOWING SOLE GROUND IN ASST. YEAR 2007-08: GROUND I: PENALTY LEVIED ON ALLEGED FAILURE TO WIT HHOLD TAX AT SOURCE ON PAYMENTS MADE TO LIFTECH CONSULTANTS INC. (LIFT ECH): RS.9,21,924. 1.1. THE LD. CIT(A)-10, MUMBAI HAS ERRED IN LAW AND ON F ACTS IN CONFIRMING THE PENALTY LEVIED UNDER SECTION 271C OF THE INCOME- TAX ACT, 1961 (THE ACT) BY THE ADDITIONAL DIRECTO R OF INCOME-TAX (INTERNATIONAL TAXATION) RANGE-3, MUMBAI (AO) BY TREATING THE APPELLANT AS ASSESSEE IN DEFAULT FOR NOT WITHHOLD ING TAX ON PAYMENTS MADE TO LIFTECH. AND ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL IN ASST. YEAR 2008-09: GROUND I: PENALTY LEVIED ON ALLEGED FAILURE TO WITH HOLD TAX AT SOURCE ON PAYMENTS MADE TO LIFTECH CONSULTANTS INC. USA ('LIF TECH'): RS. 394,902. 1. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) - 10 ['CIT(A)'], MUMBAI HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE PENALTY LEVIED UNDER SECTION 271C OF THE INCOME-TAX ACT, 19 61 ('THE ACT') BY THE ADDITIONAL DIRECTOR OF INCOME-TAX (INTERNATIONA L TAXATION) RANGE-3, MUMBAI ('AO') BY TREATING THE APPELLANT AS 'ASSESSEE IN DEFAULT' FOR NOT WITHHOLDING TAX ON PAYMENTS MADE T O LIFTECH. GROUND II: PENALTY LEVIED ON ALLEGED FAILURE TO WIT HHOLD TAX ON PAYMENTS MADE TO SHANGHAI ZHENHUA PORT MACHINERY CO. LIMITED , CHINA ('ZPMC'): RS.L,29,83,700. 2. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE PENALTY LEVIED UNDER SECTION 271C OF THE ACT BY THE AO BY TREATING THE APPELLANT AS 'ASSESSEE IN DEFAULT' FOR NOT WITHHOLDING TAX ON PAYMENTS MADE TO ZPMC. GROUND III: PENALTY LEVIED ON ALLEGED FAILURE TO WI THHOLD TAX ON PAYMENTS MADE BY ZPMC TO APM TERMINALS MANAGEMENT B.V. NETHE RLANDS ('APMT'): RS. 16,75,800. 3. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE PENALTY LEVIED UNDER SECTION 271 C OF THE ACT B Y THE AO BY 3 ITA NOS. 2347&2348/MUM/2014 GUJARAT PIPAVAV PORT LTD. AYS. 2007-08 & 2008-09 TREATING THE APPELLANT AS 'ASSESSEE IN DEFAULT' FOR NOT WITHHOLDING TAX ON PAYMENTS MADE BY THE ZPMC TO APMT. GROUND IV: PENALTY LEVIED ON THE BONA FIDE DIFFEREN CE OF OPINION: 4. THE LEARNED CIT(A) HAS FAILED TO APPRECIATE THE FACT THAT THE MATTER RELATES TO BONA FIDE DIFFERENCE OF OPINION A ND CANNOT TREAT THE APPELLANT AS 'ASSESSEE IN DEFAULT' AND LEVY PEN ALTY FOR FAILURE TO WITHHOLD TAX AT SOURCE. 3. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE FILE D COPIES OF TRIBUNALS ORDER IN ITA NO. 7877/MUM/2010 FOR AY 20 07-08 DATED 31.08.2015, WHEREIN QUANTUM HAS BEEN SET ASIDE BY T HE TRIBUNAL ON THE VERY ISSUE ON WHICH PENALTY WAS LEVIED U/S. 271 C OF THE ACT, AND STATED THAT THE PENALTY CANNOT SURVIVE ONCE THE QUA NTUM HAS BEEN SET ASIDE TO THE FILE OF THE AO FOR RE-ADJUDICATION. L D. COUNSEL FOR THE ASSESSEE ALSO FILED COPY OF TRIBUNALS ORDER IN ITA NO. 7878/MUM/2010 FOR AY 2008-09 DATED 23.03.2016 WHEREIN THE ISSUES ON WHICH THE PENALTY U/S. 271C OF THE ACT WAS LEVIED, THE QUANTU M ADDITION WAS DELETED IN RESPECT TO PAYMENTS MADE TO LIFTECH CONS ULTANTS IN USA FOR FAILURE TO WITHHOLD TAX AT SOURCE, PAYMENTS MADE TO SHANGHAI ZHENHUA PORT MACHINERY CO. LIMITED, CHINA ('ZPMC') FOR FAIL URE TO WITHHOLD TAX AT SOURCE AND PAYMENTS MADE BY ZPMC TO APM TERMINALS M ANAGEMENT B.V. NETHERLANDS ('APMT') FOR FAILURE TO WITHHOLD T AX AT SOURCE. WHEN THESE FACTS WERE CONFRONTED TO LD. SR. DR, SHE FAIR LY AGREED THAT YES, THE QUANTUM IN AY 2007-08 HAS BEEN SET ASIDE TO THE FIL E OF AO BY TRIBUNAL AND IN AY 2008-09 THE QUANTUM HAS BEEN DELETED. 4. IN VIEW OF THE ABOVE POSITION AND THE FACTS OF T HE CASE, WE ARE OF THE VIEW THAT PENALTY U/S. 271C OF THE ACT WILL NOT SURVIVE IN AY 2008- 09 BECAUSE TRIBUNAL HAS DELETED THE QUANTUM ADDITIO NS. ACCORDINGLY, WE DELETE THE PENALTY LEVIED BY AO AND CONFIRMED BY CIT(A). AS REGARDS TO PENALTY FOR AY 2007-08, SINCE THE TRIBUNAL HAS S ET ASIDE THE ISSUE TO THE FILE OF THE AO FOR FRESH ADJUDICATION, WE DELET E THIS PENALTY BECAUSE THIS PENALTY WILL NOT SURVIVE FOR THE REASON THAT T HERE IS NO SUBSISTING ORDER FOR QUANTUM ADDITION. HOWEVER, IF THE AO IS SATISFIED DURING THE 4 ITA NOS. 2347&2348/MUM/2014 GUJARAT PIPAVAV PORT LTD. AYS. 2007-08 & 2008-09 COURSE OF SECOND ROUND OF ASSESSMENT PROCEEDINGS IN AY 2007-08 THAT THIS IS A FIT CASE FOR LEVY OF PENALTY U/S. 271C OF THE ACT, HE MAY INITIATE THE SAME AFRESH. ACCORDINGLY, THE PENALTY IN THESE TWO YEARS IS DELETED. BOTH THE APPEALS OF ASSESSEE ARE ALLOWED. 5. IN THE RESULT, APPEALS FILED BY THE ASSESSEE ARE AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- ( RAMIT KOCHAR ) ( MAHAVIR SINGH ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 21ST APRIL, 2016 JD. SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. CIT(A) -10, MUMBAI 4. CIT-, MUMBAI 5. DR, B BENCH ITAT, MUMBAI 6. GUARD FILE. BY ORDER //TRUE COPY// (ASSTT. REGISTRAR) ITAT, MUMBAI