DDIT (IT)-1(2), MUMBAI V. M/S. DAIMLER CHRYSLER AG, MUMBAI

ITA 3727/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7251 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 1997-1998
• Appeal Filed On: 09-06-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R N JHA CIR
• Assessee Lawyers: AASHISH KASAD
• Section: 143(3); 234B; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D: MUMBAI BEFORE SHRI S.V. MEHROTRA (AM) AND SHRI R.S. PADVEKAR (JM) ITA NO. 3727/MUM/2009 (ASSTT. YEAR : 1997-98) DDIT(IT)-1(2), MUMBAI APPELLANT ROOM NO. 119, SCINDIA HOUSE, 1 ST FLOOR, BALLARD ESTATE, N.M. ROAD, MUMBAI 400 038 V/S. M/S. DAIMLER CHRYSLER AG RESPONDENT C/O. S.R. BATLIBOI & CO.C.A., 18 TH FLOOR, EXPRESS TOWERS, NARIMAN POINT, MUMBAI-400 021 PAN : AABCD2354C APPELLANT BY : SHRI R.N. JHA (CIR DR) RESPONDENT BY :MS. AASHISH KASAD : O R D E R : PER R.S. PADVEKAR, J.M THE REVENUE HAS FILED THIS APPEAL CHALLENGING THE I MPUGNED ORDER OF THE LD CIT(A)- CENTRAL XXXI, MUMBAI DATED 20.03.2009 F OR THE A.Y. 2003-04 FOR THE A.Y. 1997-98. 2. THE REVENUE HAS TAKEN THE FOLLOWING EFFECTIVE GR OUND : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF HE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT THE FINDINGS OF CI T(APPEALS) THAT INTEREST UNDER SECTION 234B OF THE ACT WAS NOT CHARGEABLE IN THE CASE OF THE NON-RESIDENT ASSESSEE WHOSE INCOME IS LIABLE TO DED UCTION OF TAX AT SOURCE UNDER SECTION 195 OF THE INCOME-TAX ACT, 196 1. ITA NO. 3727/MUM/2009 2 3. THE SHORT CONTROVERSY IS IN RESPECT OF THE INTER EST TO BE CHARGED U/S. 234B OF THE ACT. THE ASSESSEE COMPANY IS A TAX RESIDENT OF GERMANY. THE ASSESSEE FILED THE RETURN OF INCOME IN WHICH THE RO YALTY RECEIVED FROM BAJAJ TEMPO WAS DECLARED. ORIGINALLY, THE ASSESSEES ASS ESSMENT WAS COMPLETED U/S. 143(3) READ WITH SECTION 147 OF THE I.T. ACT VIDE ORDER DT. 28.3.2002 DETERMINING THE INCOME OF THE ASSESSEE AT RS. 6,93, 14,161/-. IT APPEARS THAT THE SAID ASSESSMENT ORDER WAS THE SUBJECT MATTER OF THE CHALLENGE BEFORE THE CIT(A) AND THEN TO THE ITAT. IT FURTHER APPEARS TH AT THE TRIBUNAL SET ASIDE THE MATTER TO THE FILE OF THE A.O. AS PER DIRECTIONS OF THE TRIBUNAL, THE A.O PASSED THE ASSESSMENT ORDER DETERMINING THE TOTAL INCOME O F THE ASSESSEE AT RS. 3,54,28,070/- AND ALSO CHARGED INTEREST U/S. 234-B OF THE ACT. THE ASSESSEE CHALLENGED THE ISSUE OF INTEREST LEVIED BY THE A.O U/S. 234B BEFORE THE FIRST APPELLATE AUTHORITY. THE LD CIT(A) WAS OF THE OPIN ION THAT THE ASSESSEE IS A FOREIGN COMPANY AND HENCE, THE ASSESSEES INCOME WA S SUBJECT TO PROVISIONS OF THE TDS U/S. 195 OF THE ACT AND HENCE, THE ASSES SEE WAS NOT REQUIRED TO PAY ANY ADVANCE TAX U/S. 208 R.W.S 209 OF THE I.T. ACT. THE LD CIT(A) ALSO PLACED HIS RELIANCE ON THE FOLLOWING DECISIONS : I) CIT V/S. HALLIBURTON OFFSHORE SERVICES INC., 271 ITR 395 (UTTARANCHAL), II) MOTOROLA INC. V/S. DCIT, 95 ITD 269 (DEL) (SB) III) SNC-LAVALIN INTERNATIONAL INC. V DCIT, 13 DT R 449 (DEL) (TRIB) IV) SEDCO FOREX INTERNATIONAL, 72 ITD 415 (DEL) ET C., NOW THE REVENUE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD THE PARTIES. THE LD COUNSEL FOR T HE ASSESSEE SUBMITTED THAT NOW THE ISSUE STANDS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF DIT (IT) V/S. NGC NETWORK ASIA LLC, 222 CTR 86 (BOM). IN THIS CASE, IT IS NO T DISPUTED THAT THE ASSESSEE IS A NON-RESIDENT AND PAYMENTS MADE TO THE ASSESSEE COMPANY ARE SUBJECTED TO TDS U/SEC. 195(1) OF THE ACT. THIS FACT HAS NOT BEEN CONTROVERTED BY THE ITA NO. 3727/MUM/2009 3 REVENUE. IN THIS CASE, MERELY BECAUSE THERE IS A F AILURE ON THE PART OF THE PERSON WHO MADE PAYMENTS TO THE ASSESSEE TO DEDUCT TAX AT SOURCE TO WHICH THE PROVISIONS OF SECTION 195(1) ARE ATTRACTED, TO THE EXTENT OF THE INCOME/PAYMENTS WHICH ARE IN THE MISCHIEF OF TDS PR OVISION NO LIABILITY TO PAY ADVANCE TAX IS PUT OF THE RECIPIENT. ONCE THE INCO ME IS SUBJECTED TO TDS PROVISION, THEN THAT IS OUTSIDE THE PROVISIONS OF T HE ADVANCE TAX AS PER THE MANDATE OF SECTION 209 OF THE ACT AND THIS VIEW HAS BEEN FORTIFIED BY THE DECISION OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF NGC NETWORK ASIA LLC (SUPRA). WE DO NOT FIND ANY REASON TO INTERFER E WITH THE ORDER OF THE CIT(A) AS THE PRINCIPLES LAID DOWN IN THE CASE OF NGC NETWORK ASIA LLC (SUPRA) ARE SQUARELY APPLICABLE TO THE FACTS OF THE CASE. WE ACCORDINGLY CONFIRM THE ORDER OF THE CIT(A). 5. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 24TH DAY OF MARCH, 2010. SD/- SD/- (S.V. MEHROTRA) (R.S. PADVEKAR) ACCOUNTANT MEMBER J UDICIAL MEMBER MUMBAI, ON THIS 24TH DAY OF MARCH, 2010. :US COPY TO: 1. APPELLANT 2. RESPONDENT , 3.THE CIT(A)- XXXI, MUMBAI 4.THE CIT CONCERNED, MUMBAI 5.THE DR, D BENCH, MUMBAI 6.GUARD FILE BY ORDER TRUE COPY ASSTT..REGISTRAR, ITAT, MUMBAI. ITA NO. 3727/MUM/2009 4 US DATE INITIALS 1. DRAFT DICTATED ON 17/3/10 --------------- SR.P.S . 2. DRAFT PLACED BEFORE AUTHORITY 18/3/10 -------- ------ SR.P.S. 3. DRAFT PROPOSED & PLACED ----------- ---------- --- JM BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED ----------- ----------- -- JM/AM BY SECOND MEMBER 5. APPROVED DRAFT COMES TO ----------- ------------ - SR.P.S. THE SR. P.S./P.S 6. KEPT FOR PRONOUNCEMENT ON --------- ----------- -- SR.P.S. 7. FILE SENT TO THE BENCH CLERK --------- --------- ---- SR.P.S. 8. DATE ON WHICH FILE GOES TO THE ------- --------- ---- 9. DATE OF DISPATCH OF ORDER --------- --------- ----