Appeal details
Counselvise Citation
[2010] 136 COUNSELVISE.COM (IT) 1370 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 year(s) 5 month(s) 14 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
30-06-2010
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
H
Next Hearing Date
22-06-2010
Assessment Year
2007-2008
Appeal Filed On
16-01-2008
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, H, MUMBAI BEFORE SHRI R V EASWAR, PRESIDENT AND SHRI T R SOOD, ACCOUNTANT MEMBER I T A NO: 345/MUM/2008 (ASSESSMENT YEAR: 2007-08) KOTAK MAHINDRA BANK LIMITED, MUMBAI APPELLANT (PAN: AAACK4409J) VS INCOME TAX OFFICER (INTERNATIONAL TAXATION) RESP ONDENT TDS 3, MUMBAI APPELLANT BY: SHRI F V IRANI RESPONDENT BY: SHRI R M TIWARI O R D E R R V EASWAR, PRESIDENT: THIS APPEAL BY THE ASSESSEE RELATES TO THE ASSESSM ENT YEAR 2007-08 AND IS DIRECTED AGAINST THE ORDER DATED 12. 10.2007 PASSED BY THE CIT(A), BY WHICH HE HELD THAT THE ASSESSEES AP PEAL WAS NOT MAINTAINABLE. 2. THE ASSESSEE IS A COMPANY AND ENTERED INTO AN AG REEMENT ON 29.09.2006 WITH A JAPANESE COMPANY BY NAME NUMERIX JAPAN CO. LTD. UNDER THE AGREEMENT THE ASSESSEE HAD TO REMIT US$ 1,50,000 TO THE JAPANESE COMPANY. IT REMITTED THE AFORESAID AM OUNT AFTER DEDUCTING THE TAX OF RS.7,90,824/- FROM THE REMITTA NCE UNDER SECTION 195 OF THE INCOME TAX ACT, 1961. THERE IS NO DISPU TE THAT THE AFORESAID TAX WAS PAID TO THE GOVERNMENT OF INDIA. 3. ON 20.04.2007 THE ASSESSEE FILED AN APPEAL BEFOR E THE CIT(A) UNDER SECTION 248 OF THE INCOME TAX ACT, FOR DECLAR ATION THAT IT WAS NOT LIABLE TO DEDUCT TAX FROM THE REMITTANCE. THE CIT( A), RELYING ON AN ITA NO: 345/MUM/2008 2 ORDER OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CA SE OF MAHINDRA & MAHINDRA LTD. VS. ADDITIONAL DIRECTOR OF INCOME TAX (2007) 106 ITD 521 (MUM), HELD THAT THE ASSESSEE DID NOT APPROACH THE ASSESSING OFFICER FOR A CERTIFICATE UNDER SECTION 195(2) FOR REMITTANCE OF THE AMOUNT TO JAPANESE COMPANY WITHOUT DEDUCTION OF TAX AND, THEREFORE, THERE WAS NO ORDER PASSED BY THE ASSESSING OFFICER REJECTING THE ASSESSEES REQUEST, IN WHICH CASE ALONE AN APPEAL C AN BE FILED UNDER SECTION 248. IN THIS VIEW OF THE MATTER HE DISMISS ED THE APPEAL AS NOT MAINTAINABLE. 4. THE ASSESSEE IS IN FURTHER APPEAL BEFORE US AND WE HAVE HEARD THE RIVAL CONTENTIONS. SECTION 248 AS IT STOOD BEF ORE BEING SUBSTITUTED BY THE FINANCE ACT, 2007 WITH EFFECT FROM 01.06.200 7, READS AS FOLLOWS: 248. APPEAL BY PERSON DENYING LIABILITY TO DEDUCT TAX ANY PERSON HAVING IN ACCORDANCE WITH THE PROVISIONS OF SECTIONS 195 AND 200 DEDUCTED AND PAID TAX IN RESPECT OF ANY SUM CHARGEABLE UNDER THIS ACT, OTHER THAN INTEREST, WHO DENIES HIS LIABI LITY TO MAKE SUCH DEDUCTION, MAY APPEAL TO THE COMMISSIONER (APPEALS) TO BE DECLARED NOT LIABLE TO MAKE SUCH DEDUCTION. THE SECTION DOES NOT REFER TO ANY ORDER BEING PASSE D BY THE ASSESSING OFFICER AS A CONDITION PRECEDENT FOR FILING AN APPE AL BY A PERSON WHO DENIES THE LIABILITY TO DEDUCT TAX. IN CONTRAST, S ECTION 246A PROVIDES FOR APPEALABLE ORDERS BEFORE THE CIT(A) AND SUB-SECTION (1) THEREOF MAKES IT A CONDITION THAT AN ASSESSEE MAY FILE AN APPEAL TO THE CIT(A) ONLY IF HE IS AGGRIEVED BY ANY OF THE ORDERS LISTED IN THAT SUB-SECTION. THE APPEAL FILED UNDER SECTION 248 IS BY A PERSON WHO D ENIES HIS LIABILITY TO DEDUCT TAX. SECTION 195(1) PROVIDES THAT ANY PERSO N RESPONSIBLE FOR ITA NO: 345/MUM/2008 3 PAYING TO A NON-RESIDENT ANY INTEREST OR ANY OTHER SUM (EXCEPT SALARIES) CHARGEABLE UNDER THE PROVISIONS OF THE IN COME TAX ACT SHALL, AT THE TIME OF CREDIT OF SUCH INCOME TO THE ACCOUNT OF THE PAYEE OR AT THE TIME OF ACTUAL PAYMENT THEREOF IN CASH, CHEQUE OR ANY OTHER MODE, WHICHEVER IS EARLIER, DEDUCT INCOME-TAX THEREON AT THE RATES IN FORCE. THIS SUB-SECTION IS DECLARATORY OF THE LIABILITY OF THE PERSON WHO PAYS TO A NON-RESIDENT ANY SUM CHARGEABLE TO TAX UNDER THE INCOME TAX ACT. THE LIABILITY OF THE PAYER DOES NOT DEPEND UPON THE PASSING OF AN ORDER BY THE ASSESSING OFFICER OR BY ANY INCOME TAX AUTHO RITY. THE SUB- SECTION ITSELF FASTENS THE LIABILITY UPON THE PAYER TO DEDUCT THE TAX. CONSISTENT WITH THIS POSITION, SECTION 248 AS IT EX ISTED BEFORE 01.06.2007 SAYS THAT ANY PERSON WHO HAS DEDUCTED AN D PAID THE TAX IN ACCORDANCE WITH SECTION 195, BUT DENIES HIS LIABILI TY TO MAKE SUCH DEDUCTION, MAY APPEAL TO THE CIT(A) FOR A DECLARATI ON THAT HE WAS NOT LIABLE TO MAKE SUCH DEDUCTION. IN THE PRESENT CASE THE APPELLANT HAS DEDUCTED THE TAX FROM THE REMITTANCE TO THE JAPANES E COMPANY AND THERE IS NO DISPUTE THAT IT HAS BEEN DEPOSITED WITH THE GOVERNMENT. HAVING THUS FULFILLED THE PROVISIONS OF SECTION 195 (1), IT WAS OPEN TO THE APPELLANT TO FILE AN APPEAL UNDER SECTION 248 TO TH E CIT(A) AND ASK FOR A DECLARATION THAT IT WAS NOT LIABLE TO MAKE SUCH A DEDUCTION. THE RIGHT OF APPEAL GIVEN BY SECTION 248 DOES NOT DEPEND ON T HE EXISTENCE OF ANY ORDER UNDER SECTION 195(1). AS WE HAVE ALREADY NOTICED, THIS SUB- SECTION DOES NOT CONTEMPLATE ANY ORDER BEING PASSED DIRECTING THE PAYER TO DEDUCT TAX. IT IS ONLY SUB-SECTION (2) OF SECTION 195 WHICH CONTEMPLATES THE PASSING OF AN ORDER BY THE ASSESSI NG OFFICER, ON AN ITA NO: 345/MUM/2008 4 APPLICATION TO BE MADE BY THE PAYER OF THE REMITTAN CE, WHEN THERE IS AN AMBIGUITY AS TO WHAT PORTION OF THE REMITTANCE WOUL D REPRESENT INCOME CHARGEABLE TO TAX UNDER THE ACT. IT IS NOBODYS CA SE THAT THE ASSESSEE IN THE PRESENT CASE OUGHT TO HAVE MADE SUCH AN APPL ICATION TO THE ASSESSING OFFICER. TO CLARIFY, THE ASSESSEE ACTED UNDER SUB-SECTION (1) OF SECTION 195 WHICH DOES NOT CONTEMPLATE ANY O RDER BEING PASSED. THE APPEAL TO THE CIT(A) WAS THEREFORE MAINTAINABLE AND THE CIT(A) WAS IN ERROR IN HOLDING TO THE CONTRARY. 5. THE ORDER OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF MAHINDRA & MAHINDRA LTD. (SUPRA) DOES NOT COVER THE PRESENT CONTROVERSY. THERE THE QUESTION WAS WHETHER AN APP EAL TO THE CIT(A) WAS MAINTAINABLE AGAINST THE CERTIFICATE ISSUED BY A CHARTERED ACCOUNTANT UNDER CBDT CIRCULAR NO. 759. IN FACT TH E ORDER ITSELF RECOGNIZES THAT THE CIT(A) SHOULD HAVE GIVEN THE LI BERTY TO THE ASSESSEE TO APPROACH THE ASSESSING OFFICER FOR SEEK ING DETERMINATION OF WITHHOLDING TAX LIABILITY. THIS IMPLIES THAT TH E ASSESSEE IN THAT CASE HAD NOT DEDUCTED THE TAX UNDER SECTION 195(1). THE CONTROVERSY WAS WHETHER IT WAS OPEN TO THE CIT(A) TO ENTERTAIN AN A PPEAL UNDER SECTION 248 AGAINST A CHARTERED ACCOUNTANTS CERTIFICATE HO LDING THAT TAX AT A PARTICULAR RATE IS REQUIRED TO BE DEDUCTED BY AN AS SESSEE FROM A REMITTANCE TO A NON-RESIDENT WHERE THE ASSESSEE IS OF THE VIEW THAT NO SUCH TAX WAS REQUIRED TO BE DEDUCTED BY HIM. THE Q UESTION BEFORE THE TRIBUNAL WAS THUS COMPLETELY DIFFERENT IN THE CITED ORDER. 6. IN THE VIEW WE HAVE TAKEN IT IS NOT NECESSARY FO R US TO EXPRESS ANY OPINION ON THE MERITS OF THE ASSESSEES CLAIM W HICH HAVE NOT BEEN ITA NO: 345/MUM/2008 5 DEALT WITH BY THE CIT(A). WE THEREFORE SET ASIDE H IS ORDER AND RESTORE THE APPEAL TO HIS FILE FOR DISPOSAL ON MERITS IN AC CORDANCE WITH LAW. THE APPEAL OF THE ASSESSEE IS ALLOWED IN THE ABOVE TERMS WITH NO ORDER AS TO COSTS. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH JUNE 2010. SD/- SD/- (T R SOOD) (R V EASWAR) ACCOUNTANT MEMBER PRESIDENT MUMBAI, DATED 30 TH JUNE 2010 SALDANHA COPY TO: 1. KOTAK MAHINDRA BANK LIMITED 36-38A NARIMAN BHAVAN 227 NARIMAN POINT, MUMBAI 400 021 2. ITO (INTERNATIONAL TAXATION) TDS 3 3. DIT-(IT) 4. CIT(A)-XXXIII 5. DR H BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI
