DDIT(IT) 1(2), MUMBAI V. DAIMLER CHRYSLER AG, MUMBAI

ITA 2955/MUM/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 7739 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: misc
• Appeal Filed On: 15-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R R VORA
• Keywords: TDS
• Section: 143(3); 234B; 195

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D,MUMBAI BEFORE SHRI N.V. VASUDEVAN (JM) & SHRI B. RAMAKOT AIAH (AM) I.T.A.NO.2955/MUM/2010 (A.Y. 2001-02) DY.DIRECTOR OF INCOME-TAX (IT)-1(2), ROOM NO.119, SCINDIA HOUSE, 1 ST FLOOR, BALLARD ESTATE, N.M.ROAD, MUMBA-400 038. VS. M/S. DAIMLER CHSRYSLER AG, C/O. S.R. BATLIBOI & CO., C.AS., 18 TH FLOOR, EXPRESS TOWERS, NARIMAN POINT,MUMBAI-400 021. PAN: AABCD2354C APPELLANT RESPONDENT APPELLANT BY SHRI R.K. GUPTA. RESPONDENT BY SHRI R .R. VORA. O R D E R PER N.V. VASUDEVAN, JM : THIS IS AN APPEAL BY THE REVENUE AGAINST THE ORDER DATED 14-01-2010 OF CIT(A)-10, MUMBAI, RELATING TO ASSESSMENT YEAR 2001 -02. THE EFFECTIVE GROUND OF APPEAL OF THE REVENUE READS AS UNDER : ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE A ND IN LAW, WHETHER THE LD. CIT(A) WAS CORRECT IN HOLDING TH AT WHEN DUTY IS CAST ON THE PAYER TO PAY TAX AT SOURCE, N O INTEREST U/S. 234B CAN BE IMPOSED ON THE PAYEE ASSESSEE IGNORI NG THE FACT THAT IT IS THE LIABILITY OF THE PAYEE TO PAY ADV ANCE TAX EVEN ON THE AMOUNT WHICH HAD NOT BEEN DEDUCTED AT SOU RCE UNDER SECTION 195 OF THE INCOME-TAX AC T, 1961. 2. THE ASSESSEE, A NON-RESIDENT COMPANY, WHICH IS I NCORPORATED IN GERMANY, CARRIES ON THE BUSINESS OF AUTOMOBILE MANUFACTURE. ORIGINALLY, THE ASSESSMENT FOR ASSTT. YEAR 2001-02 WAS COMPLETED BY THE A.O. U/S. 143(3) OF THE ACT BY AN ORDER DATED 30-03-2004. THE ASSESSEE LATER ON RECEI VED A SUM OF RS.26,033/- AS ADDITIONAL COMMISSION. THE ASSESSEE FILED A LETTER DATED 25-08-2006 POINTING OUT ITA NO. 2955/M/10 DAIMLER CHRYSLER AG 2 TO THE AO THAT IT HAD NOT REPORTED THE INCOME REFER RED TO ABOVE RELATABLE TO THE ASSTT. YEAR 2001-02. THE AO ISSUED NOTICE U/S.147 O F THE ACT AND BROUGHT TO TAX THE ADDITIONAL INCOME DECLARED BY THE ASSESSEE. THE AO CHARGED INTEREST U/S.234B OF THE ACT. 3. THE ASSESSEE CHALLENGED THE ACTION OF THE AO BE FORE THE CIT(A). BEFORE THE CIT(A), THE ASSESSEE SUBMITTED THAT THE INCOME OF THE ASSESSEE IS SUBJECT TO TDS AND, THEREFORE, THE ASSESSEE IS NOT LIABLE TO PAY ADVANCE TAX AS PER THE PROVISIONS OF THE ACT. THE CIT(A), FOLLOWING THE DE CISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF DIT(IT) VS. NGC NETWORK A SIA LLC REPORTED IN 313 ITR 187 (BOM), ACCEPTED THE CLAIM OF THE ASSESSEE AND H ELD THAT NO INTEREST CAN BE CHARGED U/S.234B OF THE ACT. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENUE HAS PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNA L. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF NGC NETWORK ASIA LLC HAS HELD THAT U/S. 209(1)(D) OF THE ACT ADVANCE TAX HAS TO BE PAID ON THE BASIS OF ESTIMATE OF CURRENT INCOME. WHILE DOING SO, INCOME-TAX HAS TO BE CALCULATED BY REDUC ING THE AMOUNT OF TAX WHICH WOULD BE DEDUCTIBLE AT SOURCE OR COLLECTIBLE AT SOU RCE. SINCE THE ENTIRE INCOME OF THE ASSESSEE IS SUBJECT TO TAX DEDUCTION AT SOURCE, IT BEING A NON-RESIDENT IN TERMS OF SEC. 195 OF THE ACT, THERE WOULD BE NO MOR E TAX PAYABLE. IN THE PRESENT CASE, ADMITTEDLY, THE ASSESSEE IS A NON-RESIDENT AN D THE ENTIRE RECEIPTS BY THE ASSESSEE ARE SUBJECT TO TAX DEDUCTION AT SOURCE IN VIEW OF THE PROVISIONS OF SEC.195 OF THE ACT. SUCH ASSESSEES ARE NOT LIABLE T O PAY INTEREST U/S. 234 OF THE ACT, SINCE THE LIABILITY IS THAT OF THE PERSON MAK ING PAYMENT TO THE ASSESSEE AND DEDUCTING TAX AT SOURCE WHILE MAKING SUCH PAYMENT. SIMILAR VIEW HAS ALSO BEEN EXPRESSED BY THE HONBLE DELHI HIGH COURT IN THE C ASE OF DIRECTOR OF INCOME-TAX VS. JACABS CIVIL INCORPORATED REPORTED IN (2010) 4 5 DTR (DEL) 163. IN VIEW OF ITA NO. 2955/M/10 DAIMLER CHRYSLER AG 3 THE ABOVE, WE DO NOT FIND ANY MERIT IN THIS APPEAL BY THE REVENUE. CONSEQUENTLY, THE APPEAL BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON THE 31ST DAY OF MARCH, 2011. SD/- SD/- (B. RAMAKOTAIAH) (N.V. VASUDEVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI: 31ST MARCH , 2011. NG: COPY TO : 1. DEPARTMENT. 2.ASSESSEE. 3 CIT(A)-10,MUMBAI. 4 DIT (IT),RANGE-1,MUMBAI. 5.DR,D BENCH,MUMBAI. 6.MASTER FILE. (TRUE COPY) BY ORDER, ASST.REGISTRAR, ITAT, MUMBAI. ITA NO. 2955/M/10 DAIMLER CHRYSLER AG 4 DETAILS DATE INITIALS DESIGNA TION 1. DRAFT DICTATED ON 24-03-2011 SR.PS/ 2. DRAFT PLACED BEFORE AUTHOR 24-03-2011 SR.PS/ 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/ AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/ 6. KEPT FOR PRONOUNCEMENT ON SR.PS/ 7. FILE SENT TO THE BENCH CLERK SR.PS/ 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9. DATE ON WHICH FILE GOES TO THE AR 10. DATE OF DISPATCH OF ORDER