Steel Authority Of India Ltd., New Delhi V. ITO, New Delhi

ITA 2872/DEL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65959 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 12-09-2012
• Assessment Year: misc
• Appeal Filed On: 02-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: G : NEW DELHI BEFORE SHRI I. C. SUDHIR, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOU NTANT MEMBER ITA NO. 2872/DEL/2011 ASSESSMENT YEAR: 1999-2000 STEEL AUTHORITY OF INDIA LTD . VS. ITO ISPAT BHAVAN, LODHI ROAD, WARD 2 (2) DELHI 110 003. NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI M.P. RASTOGI, ADVOCATE RESPONDENT BY : SHR I SANJAY KUMAR JAIN, SR. DR DATE OF HEARING : 12.9.2012 DATE OF PRONOUNCEMENT : ORDER PER I.C. SUDHIR, JUDICIAL MEMBER THE ASSESSEE HAS QUESTIONED FIRST APPELLATE ORDER ON THE FOLLOWING GROUNDS :- 1. THE AUTHORITIES BELOW HAVE ERRED IN NOT FOLLOWIN G THE DIRECTIONS GIVEN BY THE ITAT AND DETERMINING THE TA X RATE AS IN THE EARLIER YEARS. 2 THE AUTHORITIES BELOW HAVE ERRED IN STATING THAT TDS RATE CANNOT BE DETERMINED OTHER THAN IN A REGULAR ASSESS MENT PROCEEDINGS IN UTTER DISREGARD OF SUB-SECTION [2] O F SECTION 195 OF THE INCOME TAX ACT 3 THE VIEW TAKEN BY THE AUTHORITIES BELOW IS ERRON EOUS IN VIEW OF THE PROVISIONS OF SECTIONS 195[2] AND 248 O F THE INCOME TAX ACT ITA NO. 2872/DEL/2011 2 4 THE LEARNED CIT [A] HAS ERRED IN CONFIRMING THE ORDER OF THE AO 5. THAT THE ABOVE GROUNDS ARE INDEPENDENT AND WITHOUT PREJUDICE TO EACH OTHER. 2. THE MAIN GRIEVANCE OF THE ASSESSEE IS THAT TH E AO DID NOT FOLLOW THE DIRECTIONS GIVEN BY THE TRIBUNAL. THE RELEVANT FACT S ARE THAT THE ASSESSEE COMPANY HAD ENTERED INTO AN AGREEMENT FOR TECHNICAL KNOWHOW ETC. FOR SUPERVISORY SERVICES FOR THE ERECTION, INSTALMENT A ND COMMISSION OF STEEL PLANTS WITH M/S. TYAZHPROMEXPORT, MOSCOW RUSSIA (TPE). THE TPE PROVIDED SUPERVISORY SERVICES IN ACCORDANCE WITH THE AGREEMENT FOR WHICH THE APPELLANT MADE CERTAIN REMITTANCE TO IT. IN RESPONSE TO THE APPELLANTS AP PLICATION FOR DETERMINATION OF THE RATE OF TAX TO BE DEDUCTED FROM THIS REMITTANC E, THE AO HELD THE PAYMENTS IN NATURE OF FEE FOR TECHNICAL SERVICES (FTS). HOWE VER AS TPE WAS HELD TO HAVE A PE IN INDIA, THE PAYMENTS MADE BY THE APPELLANT TO T PE WERE HELD TAXABLE AS BUSINESS PROFIT UNDER ARTICLE 7 READ WITH ARTICLE 1 2(5) OF THE INDIA RUSSIA TREATY. ACCORDINGLY, THE REMITTANCE MADE BY THE APPELLANT T O TPE WAS HELD AS TAXABLE IN THE HANDS OF TPE IN TERMS OF PROVISIONS OF SECTION 4 4D READ WITH SECTION 115A OF THE ACT AND THE RATE OF TDS WAS DETERMINED AS 30% A S AGAINST 20% WHICH THE APPELLANT ITSELF HAD APPLIED TREATING PAYMENT AS FT S. THIS ORDER OF THE AO WAS CONFIRMED BY THE LD. CIT(A). THE APPELLANT PREFERRE D AN APPEAL AGAINST THE ORDER OF THE LD. CIT(A) AND DELHI BENCH OF THE TRIBUNAL I N ITS ORDER DATED 30.9.2008 IN ITA NO. 1275 TO 1280/D/2004 RESTORED THE MATTER BAC K TO THE AO TO DECIDE THE ITA NO. 2872/DEL/2011 3 MATTER IN THE LIGHT OF DECISION OF THE LD. CIT(A) I N THE APPELLANTS OWN CASE IN ASSESSMENT YEARS 1995-96 TO 1997-98 AND THE FINAL V IEW TAKEN BY THE AO IN GIVING APPEAL EFFECT IN ACCORDANCE WITH THE ORDER O F THE LD. CIT(A) FOR THOSE YEARS. 3. THE AO IN RESPONSE TO THESE DIRECTIONS PAS SED THE PRESENT ORDER U/S 254/195 OF THE ACT ON 30.12.2009 IN WHICH HE AGAIN DETERMINED THE RATE OF TDS AT 30% AS DONE IN THE ORIGINAL ORDER. THE AGGRIEVED ASSESSEE PREFERRED FIRST APPEAL BEFORE THE LD. CIT(A). LD. CIT(A) AFTER DISC USSING THE ISSUE IN DETAIL HAS UPHELD THE ASSESSMENT ORDER AND DISMISSED THE FIRST APPEAL OF THE ASSESEE. AGAINST THIS FIRST APPELLATE ORDER DATED 3.3.2011, THE ASSESSEE HAS PREFERRED PRESENT APPEAL BEFORE THE TRIBUNAL. 4. REITERATING THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW LD. AR SUBMITTED THAT INSTEAD OF FOLLOWING DIRECTION OF TH E TRIBUNAL THE AO HAS DECIDED THE ISSUE AFRESH WHICH IS AGAINST THE BASIC PRINCIP LE OF JUSTICE. HE PLACED RELIANCE ON THE DECISION OF HONBLE SUPREME COURT IN THE CAS E OF BHOPAL SUGAR INDUSTRIES LTD. VS. ITO (1960) 40 ITR 618(SC). 5. LD. DR ON THE OTHER HAND PLACED RELIANCE ON THE ORDERS OF THE AUTHORITIES BELOW AND CITED THE DECISION OF DELHI BENCH OF THE TRIBUNAL IN THE CASE OF ASSESSEE ON THE ISSUE REPORTED IN 301 ITR 235 (AT) . ITA NO. 2872/DEL/2011 4 6. THE LD. AR REJOINED WITH THIS INFORMATION TH AT IN THE ASSESSMENT YEARS 1995-1996 TO 1997-98 ON AN IDENTICAL ISSUE UNDER SI MILAR FACTS THE REVENUE HAD NOT PREFERRED ANY APPEAL AGAINST THE ORDER OF LD. C IT(A). THE AO HIMSELF HAD GIVEN APPEAL EFFECT IN ACCORDANCE WITH THE ORDER OF THE LD. CIT(A) FOR THOSE YEARS. THE AO WAS THUS BOUND TO FOLLOW ITS EARLIER ORDER FOR THOSE ASSESSMENT YEARS 1995-96 TO 1997-98. KEEPING IN MIND THE PRINC IPLE OF MAINTENANCE OF CONSISTENCY UNDER SIMILAR CIRCUMSTANCES THE LD. AR PLACED RELIANCE ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF RA DHASOAMI SATSANG VS. CIT (1992) 193 ITR 321 (SC). HE SUBMITTED FURTHER THAT ON THE ISSUE OF MAINTENANCE OF CONSISTENCY IN HIS ORDER BY THE AO UNDER SIMILA R FACTS AND CIRCUMSTANCES IN LATER YEARS THE LATER DECISION OF THE TRIBUNAL IS B INDING AND PLACED RELIANCE ON THE DECISION IN THE CASE OF BHIKA RAM & ORS. VS. UOI (1 999) 238 ITR 113 (DELHI). 7. CONSIDERING THE ABOVE SUBMISSIONS AND HA VING GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW, MATERIAL AVAILABLE ON REC ORD AND THE DECISIONS RELIED UPON WE ARE OF THE VIEW THAT THE AO IS BOUND TO FOL LOW THE DIRECTION OF THE TRIBUNAL AND IF HE FEELS AGGRIEVED WITH THE ORDER O F THE TRIBUNAL, THE ONLY REMEDY AVAILABLE WITH THE AO/ DEPARTMENT IS TO PREFER APPE AL AGAINST THE ORDER OF THE TRIBUNAL. IN THE PRESENT CASE THE TRIBUNAL IN THE F IRST ROUND OF THE APPEAL PREFERRED BY THE APPELLANT VIDE ITA NOS. 1275 TO 12 80/DEL/2004 HAD DIRECTED ON 30.9.2008 THE AO TO DECIDE THE MATTER IN THE LIGHT OF DECISION OF FIRST APPELLATE AUTHORITY IN THE APPELLANTS OWN CASE FOR THE ASSES SMENT YEARS 1995-96 TO 1997- ITA NO. 2872/DEL/2011 5 98 AND THE FINAL VIEW TAKEN BY THE AO IN GIVING APP EAL EFFECTED IN ACCORDANCE WITH THE ORDERS OF THE LD. CIT(A) FOR THOSE YEARS. THE AO INSTEAD WITHOUT COMPLYING WITH THE SAID DIRECTION OF THE TRIBUNAL H AS AGAIN DETERMINED THE RATE OF TDS AT 30% AS DONE IN THE ORIGINAL ORDER. THE LD . CIT(A) HAS UPHELD THIS ACTION OF THE AO ON THE BASIS THAT THE LD. CIT(A) I N THE ASSESSMENT YEARS 1995- 96 TO 1997-98 HAD NOT EXAMINED THE ISSUE OF THE TAX IBILITY OF BUSINESS PROFIT AS PER ARTICLE 7 OF THE INDIA RUSSIA TREATY AND CONSEQ UENTLY THE APPLICATION OF THE PROVISIONS OF SECTION 44D AND SECTION 115A OF THE A CT THE LD. CIT(A) IN THOSE YEARS HAD PASSED THE ORDER FOLLOWING THE ORDER OF T HE TRIBUNAL IN THE CASE OF M/S ELECTRIM WARSAW WHEREIN THE TRIBUNAL HAD HELD THE PR OFIT RATE OF 10% IN THAT CASE. THE LD. CIT(A) ACCORDINGLY OBSERVED IN HIS OR DER THAT THE AO MAY CONSIDER THIS CASE WHILE DETERMINING PROFIT OF TPE IN VIEW OF ITS BUSINESS NECESSITIES. WE DO NOT CONCUR WITH THIS APPROACH OF THE LD. CIT(A) BECAUSE BEFORE HIM THE FIRST AND FOREMOST ISSUE TO DECIDE WAS AS TO WHETHER THE AO WAS JUSTIFIED IN NOT FOLLOWING THE DIRECTION OF THE TRIBUNAL WHICH WAS G IVEN TO HIM IN FIRST ROUND OF THE APPEAL VIDE ORDER DATED 30.9.2008 OF THE TRIBUN AL IN ITA NOS. 1275 TO 1280/D/2004. THE AO AND LD. CIT(A) MAY BE JUSTIFIED IN SAYING THAT DIFFERENT VIEW TAKEN BY THEM WAS MORE APPROPRIATE IN THE INTE REST OF REVENUE BUT WE HAVE TO KEEP IN MIND THAT THE EARLIER ORDER DATED 30.9.2 008 OF THE TRIBUNAL WAS PASSED AFTER AFFORDING OPPORTUNITY OF BEING HEARD T O THE PARTIES AND IF THE DEPARTMENT WAS AGGRIEVED WITH THE SAID ORDER OF THE TRIBUNAL THE REMEDY WAS AVAILABLE WITH THE DEPARTMENT TO PREFER AN APPEAL B EFORE THE HONBLE HIGH COURT. ITA NO. 2872/DEL/2011 6 EVEN THE TRIBUNAL IS NOT ALLOWED TO REVIEW ITS EARLI ER ORDER OF THE SAME ASSESSMENT YEAR AND IT IS ONLY PERMITTED TO RECTIFY THE MISTAKE IF ANY WHICH IS APPARENT FROM RECORD IN ITS EARLIER ORDER WITHIN A PRESCRIBED TIME LIMIT U/S 254 (2) OF THE ACT. THE HONBLE SUPREME COURT IN THE CA SE OF BHOPAL SUGAR INDUSTRIES LTD. VS. ITO (SUPRA) RELIED UPON BY THE LD. AR HAS BEEN PLEASED TO HOLD THAT BY HIS LETTER DATED MARCH 24, 1955, ITO REFUSED TO CAR RY OUT THE DIRECTIONS WHICH SUPERIOR TRIBUNAL HAD GIVEN IN EXERCISE OF ITS APPE LLATE POWERS IN RESPECT OF AN ORDER OF ASSESSMENT MADE BY HIM. SUCH REFUSAL WAS I N EFFECT A DENIAL OF JUSTICE, THE ORDER OF APPELLATE TRIBUNAL HAVING BECOME FINAL , IT WAS NOT OPEN TO THE JUDICIAL COMMISSIONER TO HOLD THAT THE ORDER WAS WR ONG. AS THE INCOME TAX OFFICER HAD FAILED TO CARRY OUT A LEGAL DUTY IMPOS ED ON HIM AND SUCH FAILURE WAS DESTRUCTIVE OF A BASIC PRINCIPLE OF JUSTICE, A WRIT OF MANDAMUS SHOULD ISSUE EX DEBITO JUSTITIAE TO COMPEL HIM TO CARRY OUT THE DIR ECTION GIVEN BY THE APPELLATE TRIBUNAL HELD THE HONBLE SUPREME COURT. RESPECTFUL LY FOLLOWING THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN SUCH A SITUATI ON WE HOLD THAT THE ACTION OF THE AO IN NOT COMPLYING WITH THE DIRECTIONS OF T HE TRIBUNAL GIVEN VIDE ITS ORDER DATED 30.9.2008 IN ITA NO. 1275 TO 1280/D/2004 IS F AILURE ON HIS PART WHICH IS AGAINST THE BASIC PRINCIPLE OF JUSTICE AND IS THUS HIGHLY CONDEMNABLE. WE ALSO FIND THAT ON THE OCCASION WHEN ORDER DATED 30.9.200 8 WAS PASSED BY THE TRIBUNAL, THE ORDER DATED 11.8.2006 OF THE TRIBUNAL (301 ITR 235) IN THE CASE OF ASSESSEE WAS ALSO BROUGHT TO ITS NOTICE BY THE LD. DR. WE THUS DIRECT THE AO TO GIVE COMPLIANCE OF THE SAID ORDER OF THE TRIBUNAL W ITHIN THREE MONTHS OF RECEIPT ITA NO. 2872/DEL/2011 7 OF THE PRESENT ORDER AFTER AFFORDING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. IN THE RESULT THE ISSUE REFERRED IN THE GROUNDS IS DECIDED IN FAVOUR OF THE ASSESSEE. THE SAID GROUNDS ARE ALLOWED. 8. CONSEQUENTLY APPEAL IS ALLOWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 7.12.2012. SD/- SD/- (SHAMIM YAHYA) ( I.C. SUDHIR ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 7.12.2012 *VEENA COPY OF ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER DEPUTY REGISTRAR, ITAT