Rolls Royce India Ltd, New Delhi V. ADIT, New Delhi

ITA 3172/DEL/2009

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6668 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-03-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I1
• Next Hearing Date: 07-03-2016
• Assessment Year: 1998-1999
• Appeal Filed On: 10-07-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AMRENDRA KUMAR
• Keywords: Double taxation relief; Opportunity of being heard; Competent authority

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH I-1, NEW DELHI BEFORE SH. N.K. SAINI, AM AND SMT. BEENA A PILLAI, JM ITA NOS. 3172 TO 3178/DEL/2009 ASSESSMENT YEARS: 1998-99 TO 2004-05 ROLLS ROYCE INDIA LTD. SECOND FLOOR, BIRLA TOWER (WEST), BARAKHAMBA ROAD, NEW DELHI. VS ADIT CIRCLE 2(1) INTERNATIONAL TAXATION NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SH. VISHAL KALR A, ADV. RESPONDENT BY : SH. AMRENDRA KUMAR, CIT(DR) DATE OF HEARING : 07.03.2016 DATE OF PRONOUNCEMENT : 10.03.2016 ORDER PER BENCH THESE ARE THE APPEALS FILED BY THE ASSESSEE AGAINST THE COMMON ORDER OF THE CIT(A)-XXIX, NEW DELHI DATED 15/02/200 9 FOR THE ASSESSMENT YEARS 1998-99 TO 2004-05. 2. COMMON ISSUES ARE INVOLVED IN THESE APPEALS WHIC H WERE HEARD TOGETHER WHICH ARE BEING DISPOSED OFF BY THIS CONSO LIDATED ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. 2.1 DURING THE COURSE OF THE HEARING THE LD. COUNSE L FOR THE ASSESSEE AT THE VERY OUTSET STATED THAT UNDER A MUTUAL AGREE MENT PROCEDURE (MAP), THE COMPETENT AUTHORITY IN INDIA RECEIVED A REFERENCE FROM COMPETENT AUTHORITY IN UNITED KINGDOM AND A MUTUAL AGREEMENT PROCEDURE HAS TAKEN PLACE FOR THE IMPUGNED ASSESSME NT YEARS AND THAT 2 THE INDIA HAS AGREED TO WITHDRAW THE AMOUNTS OF PRO FITS IT HAS ASSESSED AND THE UK HAD AGREED TO RELIEVE THE AMOUNTS IN DIS PUTE. HE FURNISHED AN APPLICATION DATED 23/01/2014 ADDRESSED TO DEPUTY DIRECTOR OF INCOME TAX, CIRCLE 2(1), INTERNATIONAL TAXATION, CO PY OF WHICH IS PLACED ON THE RECORD AND READS AS UNDER: JANUARY 23, 2014 THE DEPUTY DIRECTOR OF INCOME TAX CIRCLE 2(1), INTERNATIONAL TAXATION ROOM NO. 419, DR. S.P. MUKHARJEE CIVIC CENTER, J.L.N. MARG, NEW DELHI 110002 RE: M/S ROLLS ROYCE INDIA LIMITED/ PAN AAACR4693K SUB: CONCLUSION OF MUTUAL AGREEMENT PROCEDURE (MA P) UNDER THE DOUBLE TAXATION AVOIDANCE AGREEMENT BETWEEN INDIA AND UNITED KINGDO M OF GREAT BRITAIN AND NORTHERN IRELAND (DTAA) FOR THE AY 1998-99 TO AY 2005-06 DEAR SIR THIS IS WITH REFERENCE TO THE CAPTIONED SUBJECT. IN THIS RESPECT, WE UNDER THE INSTRUCTIONS OF AND O N BEHALF OF OUR CLIENT M/S ROLLS ROYCE INDIA LTD. (THE COMPANY) SUBMIT THAT THE COMPANY HAS INITIATED THE MAP PROCEEDINGS UNDER ARTICLE 27 OF THE DTAA IN ITS CASE FOR THE AY 1998-99 TO AY 2005-06. AS PER THE MAP CONCLUSION BETWEEN COMPETENT AUTHORI TY OF INDIA AND UNITED KINGDOM, THE ASSESSED INCOME OF THE COMPANY FOR THE AY 1998-99 T O THE AY 2005-06 IS REQUIRED TO BE REDUCED BY THE AGREED AMOUNTS. THUS, WE HUMBLY REQ UEST YOUR GOODSELF TO KINDLY VERIFY THE ENCLOSED LETTER AT YOUR END AND LET US KNOW THE TAX DEMAND PAYABLE BY THE COMPANY AFTER GIVING EFFECT TO THE MAP CONCLUSION. IT MAY BE NOTED THAT THE COMPANY HAS ALREADY FURNIS HED A BANK GUARANTEE AMOUNTING TO RS. 120 MILLION BEFORE YOUR GOODSELF IN RELATION TO THE AFORESAID MAP PROCEEDINGS. THANKING YOU AND ASSURING YOU OF OUR FULL COOPERATI ON AT ALL THE TIMES. FOR LUTHRA & LUTHRA LAW OFFICES SD/- MAYANK AGGARWAL 3 2.2 THE LD. COUNSEL FOR THE ASSESSEE FURTHER STATED THAT AS PER THE PROVISIONS CONTAINED IN SECTION 44H(4) OF THE INCOM E TAX ACT, 1961, THE ASSESSING OFFICER SHOULD GIVE EFFECT TO THE RES OLUTION ARRIVED AT UNDER MUTUAL AGREEMENT PROCEDURE. 2.3 IN HIS RIVAL SUBMISSIONS THE LD. CIT(DR) ALTHOU GH SUPPORTED THE IMPUGNED ORDER PASSED BY THE LD. CIT(A). HOWEVER, COULD NOT CONTROVERT THE AFORESAID CONTENTIONS OF THE LD. COU NSEL FOR THE ASSESSEE. 3. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON TH E RECORD. IN THE PRESENT CASE IT IS AN ADMITTED FACT THAT THE ASSESS EE FURNISHED A LETTER DATED 23/01/2014 TO THE DEPUTY DIRECTOR OF THE INCO ME TAX, CIRCLE 2(1), INTERNATIONAL TAXATION, NEW DELHI, INFORMING HIM THAT MAP PROCEEDINGS UNDER ARTICLE 27 OF THE DOUBLE TAXATION AVOIDANCE AGREEMENT HAD CONCLUDED AND EFFECT TO THAT CONCLUSI ON WAS TO BE GIVEN. IN THE INSTANT CASE, IT IS ALSO CLEAR THAT THE SAID LETTER WAS NOT AVAILABLE TO THE LD. CIT(A) AT THE TIME OF PASSING THE IMPUGNED ORDER DATED 15/02/2009. 3.1 TO RESOLVE THE PRESENT CONTROVERSY IT IS RELEVA NT TO DISCUSS THE PROVISIONS RULE 44H OF THE INCOME TAX RULES, 1962 C ONTAINED IN PART IX C OF THE IT RULES, 1962 INSERTED BY THE IT(XIITH AMENDMENT) RULES, 2014 EFFECTIVE FROM 28/11/2014 WHICH READ AS UNDER: ACTION BY THE COMPETENT AUTHORITY OF INDIA AND PROC EDURE FOR GIVING EFFECT TO THE DECISION UNDER THE AGREEMENT. 44H. (1) WHERE A REFERENCE HAS BEEN RECEIVED FROM THE C OMPETENT AUTHORITY OF A COUNTRY OUTSIDE INDIA UNDER ANY AGRE EMENT WITH THAT COUNTRY WITH REGARD TO INDIA SHALL CALL FOR AND EXA MINE THE 4 RELEVANT RECORDS WITH A VIEW TO GIVE HIS RESPONSE T O THE COMPETENT AUTHORITY OF THE COUNTRY OUTSIDE INDIA. (2) THE COMPETENT AUTHORITY IN INDIA SHALL ENDEAVO UR TO ARRIVE AT A RESOLUTION OF THE CASE IN ACCORDANCE WITH SUCH AG REEMENT. (3) THE RESOLUTION ARRIVED AT UNDER MUTUAL AGREEME NT PROCEDURE, IN CONSULTATION WITH THE COMPETENT AUTHORITY OF THE COUNTRY OUTSIDE INDIA, SHALL BE COMMUNICATED, WHEREVER NECESSARY, T O THE CHIEF COMMISSIONER OR THE DIRECTOR GENERAL OF INCOME TAX, AS THE CASE MAY BE, IN WRITING. (4) THE EFFECT TO THE RESOLUTION ARRIVED AT UNDER MUTUAL AGREEMENT PROCEDURE SHALL BE GIVEN BY THE ASSESSING OFFICER W ITHIN NINETY DAYS OF RECEIPT OF THE SAME BY THE CHIEF COMMISSION ER OR THE DIRECTOR GENERAL OF INCOME TAX, IF THE ASESSEE,_ (I) GIVES HIS ACCEPTANCE TO THE RESOLUTION TAKEN UNDER MUTUAL AGREEMENT PROCEDURE; AND (II) WITHDRAWS HIS APPEAL, IF ANY, PENDING ON THE I SSUE WHICH WAS THE SUBJECT MATTER FOR ADJUDICATION UNDER MUTUAL AG REEMENT PROCEDURE. (5) THE AMOUNT OF TAX, INTEREST OR PENALTY ALREADY DETERMINED SHALL BE ADJUSTED AFTER INCORPORATING THE DECISION TAKEN UNDER MUTUAL AGREEMENT PROCEDURE IN THE MANNER PROVIDED UNDER TH E INCOME TAX ACT, 1961 (43 OF 1961), OR THE RULES MADE THE T HEREUNDER TO THE EXTENT THAT THEY ARE NOT CONTRARY TO THE RESOLUTION ARRIVED AT. EXPLANATION,- FOR THE PURPOSES OF RULES 44G AND 44H , COMPETENT AUTHORITY OF INDIA SHALL MEAN AN OFFICER AUTHORIZE D BY THE CENTRAL GOVERNMENT FOR THE PURPOSES OF DISCHARGING THE FUNC TIONS AS SUCH. 4. FROM THE PLAIN READING OF THE ABOVE SAID SUB-RUL E (4) OF RULE 44H, IT IS CLEAR THAT THE EFFECT HAS TO BE GIVEN TO THE RESOLUTION ARRIVED AT UNDER MUTUAL AGREEMENT PROCEDURE (MAP) BY THE ASSES SING OFFICER WITHIN 90 DAYS OF RECEIPT OF THE SAME BY THE CHIEF COMMISSIONER OR THE DIRECTOR GENERAL OF INCOME TAX, IF THE ASSESSEE GIV ES HIS ACCEPTANCE TO THE RESOLUTION TAKEN UNDER MUTUAL AGREEMENT PROCEDU RE. IN THE PRESENT CASE IT IS NOT CLEAR AS TO WHEN THE ASSESSEE HAS FU RNISHED THE COPY OF THE RESOLUTION ARRIVED AT UNDER MAP TO THE CONCERNED AU THORITY. WE, 5 THEREFORE, DEEM IT APPROPRIATE TO SET ASIDE THESE A PPEALS TO THE FILE OF THE ASSESSING OFFICER TO BE DECIDED IN ACCORDANCE WITH LAW AFTER PROVIDING DUE AND REASONABLE OPPORTUNITY OF BEING HEARD TO TH E ASSESSEE. 5. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 10.03.2016 SD/- SD/- (BEENA A PILLAI) (N.K. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 10.03.2016 *KAVITA ARORA COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR 6