Dy.Director of Income-tax (International Taxation), Bangalore V. M/s. IBM World Trade Corporation, Bangalore

ITA 39/BANG/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51306 (ITAT-BANGALORE)
• Duration Of Justice: 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 13-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ETWA MUNDA CITIII
• Assessee Lawyers: N KRISHNA
• Keywords: TDS; Set aside
• Section: 234B; 260A

Judgement Text

PAGE 1 OF 4 ITA NO.39/BANG/2011 1 INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES A BEFORE SHRI N K SAINI, ACCOUNANT MEMBER AND SHRI GEORGE GEORGE K, JUDICIAL MEMBER ITA NO.39/BANG/2011 (ASST. YEAR 2006-07) THE DEPUTY COMMISSIONER OF INCOME TAX, (INTERNATIONAL TAXATION), CIRCLE-1(1), BANGALORE. - APPELLANT VS M/S IBM WORLD TRADE CORPORATION C/O BMR & ASSOCIATES, EMBASSY ICON, ANNEXE, 2/1, INFANTRY ROAD, BANGALORE-1. - RESPOND ENT PA NO.AAACI1209G DATE OF HEARING : 17/10/2011 DATE OF PRONOUNCEMENT : 17/10/2011 APPELLANT BY : SHRI ETWA MUNDA, CIT-III RESPONDENT BY : SHRI N KRISHNA, C.A. O R D E R PER GEORGE GEORGE K : THIS APPEAL INSTITUTED BY THE DEPARTMENT IS DIRECT ED AGAINST THE ORDER OF THE CIT(A)-IV, BANGALORE DATED 25/10/2 010.. THE RELEVANT ASST. YEAR IS 2006-07. 2. THE EFFECTIVE GROUNDS RAISED BY THE REVENUE READ S AS FOLLOWS:- I) THE LEARNED CIT(A) IS NOT JUSTIFIED IN DIRECTING TH E AO NOT TO CHARGE INTEREST U/S 234B AND 234C OF THE I T ACT. PAGE 2 OF 4 ITA NO.39/BANG/2011 2 II) THE LEARNED CIT(A) ERRED IN HOLDING THAT THE ASSESS EE IS NOT LIABLE TO PAY ADVANCE TAX ON THE GROUND THAT THE ASSESSEE IS NON-RESIDENT AND ITS RECEIPTS ARE LIABL E TO TDS U/S 195, THEREFORE, IT IS NOT LIABLE TO INTERES T U/S 234B AND 234C OF THE ACT. III) THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE WO RD DEDUCTIBLE U/S 209(1)(D) WAS USED BECAUSE AT THE TIME OF COMPUTING ADVANCE TAX, THE WHOLE YEARS INCOME HAS TO BE CONSIDERED AND AT THAT TIME, WHOLE OF THE TDS WO ULD NOT HAVE BEEN DEDUCTED. THESE WORDS OUGHT NOT TO H AVE BEEN CONSTRUED TO MEAN THAT ADV. TAX PROVISIONS ARE NOT APPLICABLE TO CASES COVERED U/S 195. IV) FOR THE AFOREMENTIONED GROUNDS, THE ORDER OF THE CIT(A) BE SET ASIDE AND THAT THE INTEREST U/S 234B & C BECOMES MANDATORY. 3. BRIEFLY STATED THE FACTS ARE AS FOLLOWS:- THE ASSESSEE IS A COMPANY INCORPORATED IN UNITED STATES OF AMERICA. IT IS ENGAGED IN THE BUSINESS OF SOFTWARE DEVELOPMENT AND SUPPORT SERVICES. FOR THE CONCERNED ASST. YEAR, RETURN OF I NCOME WAS FILED ON 28 TH NOVEMBER, 2006 DECLARING A TOTAL INCOME OF RS.84,54 ,75,530/-. THE TAX PAYABLE OF RS.11,31,52,580/- WAS DISCHARGED BY WAY OF TAX DEDUCTION AT SOURCE AMOUNTING TO RS.5,57,79,807/- AND PAYMENT OF SELF ASSESSMENT TAX AMOUNTING TO RS.5,86,16,629/-. THE AO, WHILE COMPL ETING THE ASSESSMENT, DETERMINED THE INTEREST LIABILITY U/S 234B AND 234C OF THE ACT AMOUNTING TO RS.46,89,330/- AND RS.41,32,453/- RESPECTIVELY. 4. AGGRIEVED BY THE LEVY OF INTEREST, THE ASSESSEE C ARRIED THE MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUTHORI TY. PAGE 3 OF 4 ITA NO.39/BANG/2011 3 5. THE FIRST APPELLATE AUTHORITY, BY FOLLOWING THE O RDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASST. YEARS 2003-04 TO 2005-06, ALLOWED THE APPEAL OF THE ASSESSEE AND HELD THAT TH E ASSESSEE IS NOT LIABLE FOR INTEREST U/S 234B AND 234C OF THE ACT. 6. AGGRIEVED BY THE ORDER OF THE CIT(A), THE DEPART MENT IS IN APPEAL BEFORE US. 7. THE LEARNED DR SUPPORTED THE ORDER OF ASSESSMEN T AND SUBMITTED THAT THE ORDER OF THE TRIBUNAL, WHICH IS RELIED ON BY THE CIT(A), HAS NOT BEEN ACCEPTED BY THE REVENUE AND AN APPEAL U /S 260A OF THE ACT HAS BEEN FILED BEFORE THE HONBLE HIGH COURT OF KARNATA KA. 8. THE LEARNED AR SUBMITTED THAT THE ISSUE IN QUES TION IS SQUARELY COVERED BY THE ORDER OF THE TRIBUNAL IN ASSESSEES O WN CASE CITED SUPRA. 9 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE TRIBUNAL IN ASSESSEES OWN CASE ON IDENTICAL FACTS HAD CATEGORICALLY HELD THAT THE ASSESSEE IS NOT LIABLE F OR INTEREST U/S 234B AND 234C OF THE ACT. THE FINDINGS OF THE TRIBUNAL ARE ELABORATELY REPRODUCED IN THE IMPUGNED ORDER OF THE CIT(A). HENCE, IT IS NOT REITERATED HERE. THE FACTS BEING IDENTICAL, WE FOLLOW THE COORDINATE BEN CH DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE AND HOLD THAT THE A SSESSEE IS NOT LIABLE FOR INTEREST U/S 234B AND 234C OF THE ACT. HENCE, WE U PHOLD THE ORDER OF THE CIT(A). PAGE 4 OF 4 ITA NO.39/BANG/2011 4 10. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH DAY OF OCTOBER, 2011 SD/- SD/- (N K SAINI) (GEORGE GEORGE K) ACCOUNTANT MEMBER JUDICIAL MEMBER COPY TO:- 1.THE REVENUE 2. THE ASSESSEE 3. THE CIT CONCE RNED 4. THE CIT(A) CONCERNED 5. THE DR 6. GF MSP/- BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.