M/s. Tristar Container Services (Asia) Private Limited, CHENNAI V. ACIT, CHENNAI

ITA 402/CHNY/2012

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3960 (ITAT-CHENNAI)
• Duration Of Justice: 4 year(s) 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 21-11-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 24-02-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M M BHUSARI
• Assessee Lawyers: V S JAYAKUMAR
• Keywords: Reopening of assessment; Non-deduction of tax
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , B B ENCH, CHENNAI . , ' # . $ , & ' BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICI AL MEMBER ./ I.T.A.NOS.401 & 402/MDS/2012 ( / ASSESSMENT YEARS: 2005-06 & 2006-07) M/S. TRISTAR CONTAINER SERVICES (ASIA) PVT.LTD., 18, SWAMY SIVANANDA SALAI, CHEPAUK, CHENNAI-600 005. VS THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE-III(2), CHENNAI-34. PAN: AAACT4043K ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. V.S.JAYAKUMAR, ADVOCATE /RESPONDENT BY : MR. M.M.BHUSARI, CIT /DATE OF HEARING : 22 ND NOVEMBER, 2016 /DATE OF PRONOUNCEMENT : 23 RD NOVEMBER, 2016 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THESE TWO APPEALS ARE FILED BY THE ASSESSEE AGGRIEV ED BY THE SEPARATE ORDERS OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-VI, CHENNAI BOTH DATED 16.12.2 011 IN ITA NOS. 58 & 60/2011-12 PASSED UNDER SECTION 143(3 ) R.W.S. 147 & 250(6) OF THE ACT FOR THE ASSESSMENT YEARS 20 05-06 & 2006-07. 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN ITS APPEALS, HOWEVER THE CRUXES OF THE COMMON ISSUES AR E AS FOLLOWS:- 2 ITA NOS. 401 & 402/MDS/2012 I) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE REOPENING OF ASSESSMENT MADE BY THE LEARNED ASSESSING OFFICER UNDER SECTION 147 OF THE ACT. II) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ADDITION MADE BY THE LEARNED ASSESSING OFFICER AMOUNTING TO RS.4,25,71,340/- AND RS.5,13,55,740/- FOR THE ASSESSMENT YEARS 2005-06 & 2006-07 RESPECTIVELY BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT, DUE TO NON-DEDUCTION OF TAX AT SOURCE UNDER SECTION 195 OF THE ACT. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CONTAINER LEASING THROUGHOUT IND IA AND ABROAD FILED ITS RETURNS OF INCOME FOR THE RELEVANT ASSESSMENT YEARS. THE CASE WAS SELECTED FOR SCRUTINY AND NOTIC E UNDER SECTION 143(2) WAS ISSUED TO THE ASSESSEE AND THER EAFTER THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS COMP LETED BY THE LEARNED ASSESSING OFFICER FOR THE ASSESSMENT YEAR 2005-06 ON 02.12.2008 AND UNDER SECTION 143(3) R.W .S. 147 OF THE ACT FOR THE ASSESSMENT YEAR 2006-07 ON 29.12 .2010. GROUND NO.1: REOPENING OF ASSESSMENT: 4. FOR THE ASSESSMENT YEAR 2005-06, INITIALLY THE ASSESSMENT WAS PROCESSED UNDER SECTION 143(1) OF TH E ACT. 3 ITA NOS. 401 & 402/MDS/2012 SUBSEQUENTLY, IT WAS POINTED OUT IN THE AUDIT REPOR T DATED 28.07.2009 THAT THE ASSESSEE HAD NOT SUBMITTED ITS UNDERTAKING IN THE PRESCRIBED FORM BEFORE THE LEARN ED ASSESSING OFFICER WITH RESPECT TO FOREIGN REMITTANC E, IN COMPLIANCE OF THE BOARD CIRCULAR NO.759 DATED 18.11 .1997. THEREFORE, THE LEARNED ASSESSING OFFICER REOPENED T HE ASSESSMENT FOR THE ASSESSMENT YEAR 2005-06 WHEREIN ONLY SUMMARY ASSESSMENT UNDER SECTION 143(1) WAS PASSED AND ALSO REOPENED THE ASSESSMENT FOR THE ASSESSMENT YEA R 2006-07, THOUGH THE ASSESSMENT WAS EARLIER COMPLETE D UNDER SECTION 143(3) OF THE ACT WHEREIN THESE ISSU ES WERE NOT CONSIDERED BY THE REVENUE AUTHORITIES. FURTHER THE ISSUE WAS WITH RESPECT TO TAX DEDUCTED AT SOURCE UNDER SE CTION 195 OF THE ACT AGAINST THE INTEREST PAYMENT ON THE FORE IGN BORROWINGS. SINCE FRESH INFORMATION WAS REVEALED B EFORE THE LD. A.O BY VIRTUE OF THE AUDIT REPORT, WE ARE OF TH E CONSIDERED VIEW THAT REOPENING OF ASSESSMENT FOR BOTH THE ASSE SSMENT YEARS WHICH IS WELL WITHIN THE PERIOD OF FOUR YEARS IS VALID IN LAW. HENCE, THIS GROUND RAISED BY THE ASSESSEE FOR BOTH THE 4 ITA NOS. 401 & 402/MDS/2012 ASSESSMENT YEARS 2005-06 & 2006-07 DOES NOT SURVIVE AND ACCORDINGLY DISMISSED. GROUND NO.2: NON-DEDUCTION OF TAX AT SOURCE UNDER SECTION 195 OF THE ACT THEREBY INVOKING PROVISIONS OF SECTION 40(A)(IA) OF THE ACT : 5. THE LEARNED ASSESSING OFFICER HAD INVOKED THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT BECAUSE THE ASSESSEE HAD NOT DEDUCTED TAX AT SOURCE ON THE PAYM ENT MADE TOWARDS INTEREST AGAINST BORROWINGS AND ACCORD INGLY MADE ADDITION OF RS.4,25,71,340/- FOR THE ASSESSMEN T YEAR 2005-06 AND RS.5,13,55,740/- FOR THE ASSESSMENT YEA R 2006- 07. 6. AT THE OUTSET, THE LEARNED AUTHORIZED REPRESENTA TIVE SUBMITTED BEFORE US THAT THE ASSESSEE HAD PAID INTE REST OUTSIDE INDIA IN REGARD TO THE BORROWINGS OBTAINED FROM OUTSIDE INDIA AND WHICH WAS DEPLOYED OUTSIDE INDIA AGAINST THE SERVICES RECEIVED OUTSIDE INDIA. THE LEARNED A UTHORIZED REPRESENTATIVE FURTHER POINTED OUT THAT AS PER SECT ION 9(1)(V)(B) OF THE ACT, THE PAYMENT MADE BY THE AS SESSEE TOWARDS INTEREST AGAINST THE BORROWINGS MADE OUTSI DE INDIA 5 ITA NOS. 401 & 402/MDS/2012 FOR THE PURPOSE OF BUSINESS OR PROFESSION CARRIED O N BY THE RECIPIENT OUTSIDE INDIA WILL NOT BE INCOME DEEMED T O ACCRUE OR ARISE IN INDIA. THEREFORE, THE PROVISIONS OF SEC TION 195 OF THE ACT WILL NOT BE APPLICABLE IN THE CASE OF THE A SSESSEE. THE LEARNED AUTHORIZED REPRESENTATIVE FURTHER POINTED O UT THAT THESE ASPECTS WERE NOT CONSIDERED BY THE LEARNED AS SESSING OFFICER AND THEREFORE, THE MATTER MAY BE REMITTED B ACK TO HIS FILE FOR VERIFYING THE SAME. 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE COULD NO T SUCCESSFULLY CONTROVERT TO THE SUBMISSIONS OF THE L EARNED AUTHORIZED REPRESENTATIVE BECAUSE THERE WAS NO FIND ING ON THESE ASPECTS BY THE REVENUE AUTHORITIES IN THEIR R ESPECTIVE ORDERS. 8. AFTER HEARING BOTH SIDES, WE ARE ALSO OF THE CON SIDERED VIEW THAT IN THE INTEREST OF JUSTICE, THE MATTER HA S TO BE REMITTED BACK TO THE FILE OF THE LEARNED ASSESSING OFFICER TO VERIFY THESE ASPECTS POINTED OUT BY THE LEARNED AUT HORIZED REPRESENTATIVE. THEREFORE, WE HEREBY REMIT THE MATT ER BACK TO THE FILE OF THE LEARNED ASSESSING OFFICER FOR BO TH THE 6 ITA NOS. 401 & 402/MDS/2012 ASSESSMENT YEARS WITH A DIRECTION TO VERIFY WHETHER THE PROVISIONS OF SECTION 9(1)(V)(B) OF THE ACT WILL BE APPLICABLE IN THE CASE OF THE ASSESSEE, AND IF FOUND THAT THE INT EREST PAID BY THE ASSESSEE IS TOWARDS THE DEBT INCURRED OR MON EY BORROWED OUTSIDE INDIA AND USED FOR THE PURPOSE OF BUSINESS OR PROFESSION CARRIED ON BY THE RECIPIENT OUTSIDE I NDIA, THEN DELETE THE ADDITION MADE AND SUSTAINED BY THE REVEN UE AUTHORITIES INVOKING THE PROVISIONS OF SECTION 40( A)(IA) OF THE ACT BECAUSE IN SUCH CASE, PROVISIONS OF SECTION 195 OF THE ACT WILL NOT BE APPLICABLE IN THE CASE OF THE ASSES SEE. IT IS ORDERED ACCORDINGLY. 9. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES AS INDICATE D HEREINABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON THE 23 RD NOVEMBER, 2016 SD/- SD/- ( ' # . $ ) ( . ) ( DUVVURU RL REDDY ) ( A. MOHAN ALANKAMONY ) # % / JUDICIAL MEMBER % / ACCOUNTANT MEMBER # /CHENNAI, ( /DATED 23 RD NOVEMBER, 2016 SOMU 7 ITA NOS. 401 & 402/MDS/2012 *+ ,+ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. - () /CIT(A) 4. - /CIT 5. + 1 /DR 6. /GF