THE DCIT -11(2), MUMBAI V. M/S. KPMG, MUMBAI

ITA 3303/MUM/2008

• Counselvise Citation: 330319914 RSA 2008
• Duration Of Justice: 3 year(s) 8 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: L
• Next Hearing Date: 05-10-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 12-05-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MRS MALATHI SRIDHARAN
• Assessee Lawyers: ARVIND SONDE

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL L BENCH, MUMBAI BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER, A ND SHRI VIJAY PAL RAO, JUDICIAL MEMBER ITA NO. 6286/MUM./2008 (ASSESSMENT YEAR : 2000-01 ) ITA NO. 1952/MUM./2009 (ASSESSMENT YEAR : 2002-03 ) KMPG, KMPG HOUSE KAMALA MILLS COMPOUND 448, SENAPATI BAPAT MARG LOWER PAREL, MUMBAI 400 013 PAN AAAFK1415H .. APPELLANT V/S JT. COMMISSIONER OF INCOME TAX RANGE-11(2), AAYAKAR BHAVAN 101, M.K. ROAD, MUMBAI 400 020 .... RESPONDENT ITA NO. 3303/MUM./2008 (ASSESSMENT YEAR : 2003-04 ) JT. COMMISSIONER OF INCOME TAX RANGE-11(2), AAYAKAR BHAVAN 101, M.K. ROAD, MUMBAI 400 020 .. APPELLANT V/S KMPG, KMPG HOUSE KAMALA MILLS COMPOUND 448, SENAPATI BAPAT MARG LOWER PAREL, MUMBAI 400 013 PAN AAAFK1415H .... RESPONDENT K M P G ITA NO.6286/M/2008 ITA NO.1952/M/2009 ITA NO.3303/M/2008 ITA NO.4266/M/2008 2 ITA NO. 4266/MUM./2008 (ASSESSMENT YEAR : 2003-04 ) KMPG, KMPG HOUSE KAMALA MILLS COMPOUND 448, SENAPATI BAPAT MARG LOWER PAREL, MUMBAI 400 013 PAN AAAFK1415H .. APPELLANT V/S JT. COMMISSIONER OF INCOME TAX RANGE-11(2), AAYAKAR BHAVAN 101, M.K. ROAD, MUMBAI 400 020 .... RESPONDENT REVENUE BY : MRS. MALATHI SRIDHARAN ASSESSEE BY : MR. ARVIND SONDE DATE OF HEARING 18.01.2012 DATE OF ORDER 25.01.2012 O R D E R PER J. SUDHAKAR REDDY, A.M. THE APPEALS PREFERRED BY THE ASSESSEE IN ITA NO.62 86/MUM./2008, FOR ASSESSMENT YEAR 2000-01, IS DIRECTED AGAINST THE IM PUGNED ORDER DATED 7 TH 30 TH JULY 2008, AND ITA NO.1952/MUM./2009, FOR ASSESSME NT YEAR 2002-03, IS DIRECTED AGAINST THE IMPUGNED ORDER DATED 17 TH NOVEMBER 2008, WHICH ARE PASSED BY THE COMMISSIONER (APPEALS)-XI, MUMBAI. TH E CROSS APPEALS ARE DIRECTED AGAINST THE IMPUGNED ORDER DATED 14 TH MARCH 2008, FOR ASSESSMENT YEAR 2003-04, WHICH IS ALSO PASSED BY THE COMMISSIO NER (APPEALS)-XI, MUMBAI. 2. WE FIRST TAKE UP ASSESSEES APPEALS IN ITA NO.6286/ MUM./2008, FOR ASSESSMENT YEAR 2000-04 AND ITA NO.1952/MUM./2009, FOR ASSESSMENT YEAR 2002-03, RESPECTIVELY. K M P G ITA NO.6286/M/2008 ITA NO.1952/M/2009 ITA NO.3303/M/2008 ITA NO.4266/M/2008 3 3. THE SOLE EFFECTIVE GROUND IN THESE APPEALS, EXCEPT VARIATION IN FIGURES, IS WHETHER OR NOT THE COMMISSIONER (APPEALS) WAS JU STIFIED IN UPHOLDING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDER SE CTION 40(A)(I) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT ). 4. WE HAVE HEARD THE LEARNED COUNSEL, MR. ARVIND SONDE , REPRESENTING THE ASSESSEE, AS WELL AS THE LEARNED DEPARTMENTAL R EPRESENTATIVE, MRS. MALATHI SRIDHARAN, REPRESENTING THE REVENUE. 5. BEFORE US, BOTH THE LEARNED REPRESENTATIVES SUBMITT ED THAT SIMILAR ISSUE HAS COME UP BEFORE THE MUMBAI L BENCH OF TH E TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 20001-02, AS WELL AS 1999-2000, 2001-02, AND THAT THE APPEALS SHOULD BE RESTORED TO THE FILE OF COMMISSIONER (APPEALS) TO ADJUDICATE THE ISSUE OF CHARGEABILITY OF INCOME OF PAYMENTS MADE TO KMPG INTERNATIONAL. THE TRIBUNAL IN ITA NO. 1959 AND 1823/MUM./ 2007, AT PARAS-9 AND 10 / PAGE-7, HELD AS FOLLOWS:- 9. THE HAS RAISED LEGAL ARGUMENT THAT THE PAYMENT M ADE TO M/S KPMG INTERNATIONAL IS NOT CHARGEABLE UNDER THE PROV ISIONS OF THE ACT, FOR THE REASON THAT M/S KPMG INTERNATIONAL IS A MUT UAL ORGANIZATION AND THE ASSESSEE IS A MEMBER OF SUCH MUTUAL ORGANIZ ATION. THIS ARGUMENT HAS NOT BEEN ADJUDICATED UPON BY THE FIRST APPELLATE AUTHORITY FOR THE REASONS GIVEN AT PARA 5.5 AT PAG E 15 OF HIS ORDER, WHICH IS ALREADY EXTRACTED BY US HEREIN ABOVE. IN O UR CONSIDERED VIEW THE FIRST APPELLATE AUTHORITY WAS IN ERROR IN NOT A DJUDICATING THE ISSUE. THE ASSESSEE HAS A RIGHT TO ARGUE THAT, THE AMOUNT PAID BY IT TO M/S KPMG INTERNATIONAL DOES NOT GIVE RISE TO ANY INCOME CHARGEABLE TO TAX IN INDIA AND THUS THE AGES DEDUCT ANY TAX AT SOURCE . THE ISSUE WHETHER THE ASSESSEE CAN TAKE SUCH AN ARGUMENT HAS ATTAINED FINALITY BY THE DECISION OF THE HONBLE SUPREME OF INDIA IN THE CAS E OF G.E. INDIA TECHNOLOGY CENTRE PVT. LTD. V/S CIT AND OTHERS, CIV IL APPEAL NO.7541- 7542 OF 2010 JUDGMENT DATED 9 TH SEPTEMBER 2010. IN VIEW OF THE ABOVE, WE ARE OF THE OPINION, THAT THE FIRST APPELL ATE AUTHORITY SHOULD HAVE ADJUDICATED ON THE GROUND WHETHER THE PAYMENT MADE BY THE ASSESSEE IS CHARGEABLE TO TAX UNDER THE ACT. THE AP PREHENSION OF THE LEARNED DR, THAT THE DECISION ON THIS MATTER WOULD HAVE REMIFICATION IN THE OTHER CASES AND ALSO THE ARGUMENT THAT, THE ISS UE WHETHER M/S. KPMG INTERNATIONAL IS A MUTUAL CONCERN OR NOT, CANN OT BE DECIDED IN THIS CASE, IS DEVOID OF MERIT. THE ASSESSEE IS A ME MBER OF KPMG INTERNATIONAL AND IT IS FOR THE ASSESSEE TO SATISFY THE ADJUDICATOR, WITH ALL POSSIBLE EVIDENCES, THAT M/S. KPMG INTERNATIONA L IS A MUTUAL CONCERN. WHEN THE ASSESSEE IS MAKING A CLAIM IT IS FOR THE ASSESSEE TO PROVE ITS CASE. THUS, WE REJECT THIS ARGUMENT OF TH E LEARNED DR. K M P G ITA NO.6286/M/2008 ITA NO.1952/M/2009 ITA NO.3303/M/2008 ITA NO.4266/M/2008 4 10. IN VIEW OF THE ABOVE DISCUSSION, WE SET ASIDE B OTH THE APPEALS TO THE FILE OF CIT(APPEALS) WITH A DIRECTION TO ADJ UDICATE THE ISSUE RAISED BY THE ASSESSEE ON THE CHARGEABILITY TO INCO ME TAX OF PAYMENTS MADE TO M/S. KPMG INTERNATIONAL . 6. THE AFORESAID FINDINGS OF THE TRIBUNAL WAS SUBSEQUE NTLY FOLLOWED BY A CO-ORDINATE BENCH OF THE TRIBUNAL IN ITA NO.4605/MU M./2005, AND OTHER APPEALS, ORDER DATED 31 ST JANUARY 2011. 7. CONSISTENT WITH THE VIEW TAKEN THEREIN, WE SET ASID E THE IMPUGNED ORDERS PASSED BY THE COMMISSIONER (APPEALS) AND RES TORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR DENOVO ADJUDICATI ON IN ACCORDANCE WITH LAW. THUS, THE GROUND RAISED IN THESE APPEALS IS ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, BOTH THE APPEALS ARE ALLOWED FOR STA TISTICAL PURPOSES. 9. WE NOW PROCEED TO DISPOSE OFF THE CROSS APPEALS IN ITA NO.3303/ MUM./2008 (PREFERRED BY THE REVENUE), AND ITA NO.42 66/MUM./2008 (PREFERRED BY THE ASSESSEE), FOR ASSESSMENT YEAR 20 03-04, WHICH ARE DIRECTED AGAINST THE IMPUGNED ORDER DATED 14 TH MARCH 2008, PASSED BY THE COMMISSIONER (APPEALS)-XI, MUMBAI. 10. BEFORE US, BOTH THE LEARNED REPRESENTATIVES SUBMITT ED BEFORE US THAT THE TRIBUNAL SHOULD TAKE A CONSISTENT VIEW AND REST ORE THE ISSUE BACK TO THE FILE OF COMMISSIONER (APPEALS) FOR DENOVO ADJUDICAT ION IN LINE WITH THE DECISION RENDERED BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2000-01 AND 2002-03, AS THE SAME ISSUE ARISES IN THESE CROSS APPEALS ALSO. 11. AFTER HEARING BOTH THE LEARNED REPRESENTATIVES, WE SET ASIDE THE IMPUGNED ORDER PASSED BY THE COMMISSIONER (APPEALS) AND RESTORE THE ISSUE TO THE FILE OF ASSESSING OFFICER FOR DENOVO ADJUDIC ATION IN ACCORDANCE WITH LAW. THUS, THE GROUND RAISED IN THESE CROSS APPEALS IS ALLOWED FOR STATISTICAL PURPOSES. 12. IN THE RESULT, CROSS APPEALS ARE ALLOWED FOR STATIS TICAL PURPOSES. K M P G ITA NO.6286/M/2008 ITA NO.1952/M/2009 ITA NO.3303/M/2008 ITA NO.4266/M/2008 5 13. TO SUM UP, ALL THE APPEALS ARE ALLOWED FOR STATISTI CAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH JANUARY 2012 SD/- VIJAY PAL RAO JUDICIAL MEMBER SD/- J. SUDHAKAR REDDY ACCOUNTANT MEMBER MUMBAI, DATED: 25 TH JANUARY 2012 COPY TO : (1) THE ASSESSEE; (2) THE RESPONDENT; (3) THE CIT(A), MUMBAI, CONCERNED; (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, L BENCH, ITAT, MUMBAI. TRUE COPY BY ORDER PRADEEP J. CHOWDHURY ASSISTANT REGISTRAR SR. PRIVATE SECRETARY ITAT, MUMBAI BENCHES, MUMBAI DATE INITIAL 1. DRAFT DICTATED ON 16.1.2012 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 16.1.2012 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 18.1.2012 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 18.1.2012 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 18.1.2012 SR.PS 6. DATE OF PRONOUNCEMENT 25.1.2012 SR.PS 7. FILE SENT TO THE BENCH CLERK 25.1.2012 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER