Hewlett - Packard India Sales Private Limited, Bangalore V. ITO, Bangalore

ITA 404/BANG/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0160 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 04-07-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 21-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BIPIN C N JT
• Assessee Lawyers: SRINIVAS MADDURY CAS
• Keywords: Fair market value

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ITA NO.404/BANG/2014 ASSESSMENT YEAR : 2010-11 HEWLETT-PACKARD INDIA SALES PRIVATE LTD., 24, SALARPURIA ARENA, HOSUR MAIN ROAD, ADUGODI, BANGALORE 560 030. PAN: AAACC 9862F VS. THE INCOME TAX OFFICER (TDS), LTU, BANGALORE. APPELLANT RESPONDENT APPELLANT BY : S/SHRI SHARATH RAO & SRINIVAS MADDURY, CAS RESPONDENT BY : SHRI BIPIN C.N., JT. CIT(DR) DATE OF HEARING : 04.07.2016 DATE OF PRONOUNCEMENT : 29.07.2016 O R D E R PER SUNIL KUMAR YADAV, JUDICIAL MEMBER THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST T HE ORDERS OF THE CIT(APPEALS) INTER ALIA ON THE FOLLOWING GROUNDS:- BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE , HEWLETT - PACKARD INDIA SALES PRIVATE LIMITED ( ' HPISPL ' OR ' APPELLANT ' OR ' COMPANY ' ), RESPECTFULLY SUBMITS IN RESPECT OF THE ORDER PAS SED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) , LARGE ITA NO.404/BANG/2014 PAGE 2 OF 5 TAXPAYERS UNIT [UCIT(A) , LTU ' ] UNDER SECTION 250 OF THE INCOME TAX ACT , 1961 ( ' THE ACT' ) : 1. THE LEARNED CIT(A) HAS ERRED IN PASSING AN ORDER , WHICH IS BAD IN LAW AND ON FACTS. 2. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS BY NOT APPRECIATING THAT THE IMPOSSIBIL I TY OF PERFORMANCE IS A VALID REASON FOR I NABILITY TO PERFO R M AN ACT , AS HELD BY VARIOUS COURTS WHICH IS A COMPLETE DISREGARD OF THE SUBMISS ION MADE BY THE APPELLANT. 3. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN FAILING TO APPRECIATE THAT THE METHODOLOGY FOR COMPUTATION OF FAIR MARKET VALUE AS SPECIFIED IN EXPLANATION TO SECTION 1 7(2 ) ( VI) OF THE ACT WAS NOTIF I ED ON DECEMBER 18 , 2009 , THEREFORE , I T COULD NOT HAVE BEEN POSSIBLE FOR THE APPELLANT TO D EDUCT TAX AT SOURCE ( ' TDS ' ) UNDER SECTION 192 OF THE ACT FOR THE PAYMENTS MADE TO ITS EMPLOYEES UNDER THE EMPLOYEE STOCK OPTI ON PLAN ( ' ESOP ' ). 4. THE LEARNED CI T (A) HAS ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THAT THIRTEEN EMPLOYEES BY WHOM THE ES OP WAS EXERCISED DUR I NG THE ASSESSMENT YEAR ( ' AY ' ) 2010- 11 R ESIGNED BEFORE DECEMBER 18 , 2009 , AND THEREFORE, IN THE ABSENCE OF A PRESCRIBED METHODOLOGY TO DETERMINE TH E FAIR MARKET VALUE , THE APPELLANT COULD NOT HAVE DEDUCTED TA X ES ON THE ESOPS AND THEREFORE OUGHT NOT TO BE HELD TO HAV E DEFAULTED IN DEDUCTING TA X E S. 5. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN FAILING TO APPRECIATE THAT THOUGH TWENTY TWO EMPLOYEES BY WHOM THE ESOP WAS EXERCISED DURING THE AY 2010-11 WHO R ESIGNED AFTER DECEMBER 18 , 2009, THE AMOUNT AVAILABLE AT THE CREDIT OF SUCH EMPLOYEES AS ON THE LAST WORKING DAY WAS NOT S UFFICIENT TO DISCHARGE THE LIABILITY . 6. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS BY NOT APPRECIATING THAT IN THE CASE OF THE TWENTY TWO EMP LOYEES MENTIONED ABOVE, THE AMOUNT AVAILABLE AS CREDIT WAS DEDUCTED BY THE APPELLANT AND FOR THE BALANCE AMOUN T AND THE APPELLANT HAS SPECIFICALLY MENTIONED ON THE FORM 16 OF SUCH EMPLOYEES, THAT ESOP BENEFIT PERQUISITE WAS INCLUDE D IN THE ITA NO.404/BANG/2014 PAGE 3 OF 5 TAXABLE SALARY AND HAD ALSO INDICATED THE AMOUNT OF TAXES PAYABLE BY SUCH EMPLOYEES THE BALANCE AMOUNT. 7. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS BY DISREGARDING THE SUBMISSION DATED DECEMBER 26, 2013 MADE BY THE APPELLANT WHEREIN INABILITY FOR NOT HAVING D EDUCTED THE TDS ON THE PAYMENTS MADE TO ITS EMPLOYEES UNDER ESO P ALONG WITH THE NECESSARY DOCUMENTS WERE PROVIDED. THE APPELLANT PRAYS THAT DIRECTIONS BE GIVEN TO GRA NT ALL SUCH RELIEF ARISING FROM THE PRECEDING GROUNDS AS ALSO A LL RELIEFS CONSEQUENTIAL THERETO. THE APPELLANT SUBMITS THAT THE ABOVE GROUNDS ARE IN DEPENDENT AND WITHOUT PREJUDICE TO THE OTHER GROUNDS OF APPEA L PREFERRED BY THE APPELLANT. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, VARY, OMI T, SUBSTITUTE OR AMEND THE ABOVE GROUNDS OF APPEAL, AT ANY TIME BEFO RE OR AT, THE TIME OF HEARING, OF THE APPEAL, SO AS TO ENABLE THE TRIBUNAL TO DECIDE THIS APPEAL ACCORDING TO LAW. 2. DURING THE COURSE OF HEARING, THE LD. COUNSEL F OR THE ASSESSEE HAS CONTENDED THAT THOUGH THE ASSESSEE SOUGHT FOR DEDUC TION OF TAX AT SOURCE, BUT THE PAYEE HAS ALREADY PAID THE TAXES ON THE SAM E RECEIPTS. THEREFORE, THE ASSESSEE CANNOT BE HELD TO BE IN DEFAULT U/S. 2 01(1A) OF THE ACT IN THE LIGHT OF THE JUDGMENT OF THE HONBLE APEX COURT IN THE CASE OF HINDUSTAN COCA COLA BEVERAGE (P) LTD. V. CIT, 293 ITR 226 (SC ) AND THE HONBLE ALLAHABAD HIGH COURT JUDGMENT IN THE CASE OF JAGRAN PRAKASHAN LTD. V. DCIT, 345 ITR 288 (ALL) . ITA NO.404/BANG/2014 PAGE 4 OF 5 3. THE LD. DR, ON THE OTHER HAND, HAS SUBMITTED THA T THE ASSESSEE HAS NOT FILED ANY EVIDENCE IN THIS REGARD AND FOR THIS PURPOSE, THE MATTER CAN BE SENT TO THE ASSESSING OFFICER FOR VERIFICATION. 4. HAVING CAREFULLY EXAMINED THE ORDERS OF THE LOWE R AUTHORITIES, WE FIND THAT THERE WAS SHORTFALL IN DEDUCTION OF TAXES AT SOURCE, WHEREAS THE CONTENTION OF THE ASSESSEE IS THAT THE RECIPIENTS H AVE ALREADY PAID THE TAXES THEREON; BUT THESE FACTS HAVE TO BE VERIFIED FROM THE RECORD. WE, THEREFORE, SET ASIDE THE ORDER OF THE CIT(APPEALS) ON THIS ISSUE AND RESTORE THE MATTER TO THE ASSESSING OFFICER, WITH A DIRECTI ON TO EXAMINE WHETHER THE RECIPIENTS HAVE PAID THE TAXES OR NOT. IF THE RECI PIENTS HAVE PAID THE TAXES, THE ASSESSEE CANNOT BE HELD TO BE IN DEFAULT. BUT SO FAR AS CHARGING OF INTEREST U/S. 201(1A) OF THE ACT IS CONCERNED, THE ASSESSEE IS LIABLE TO PAY THE INTEREST FOR THE DELAY IN MAKING THE PAYMENT OF TDS. ACCORDINGLY, THE MATTER IS RESTORED TO THE ASSESSING OFFICER FOR REA DJUDICATION IN THE TERMS INDICATED ABOVE. 5. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATIST ICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 29 TH DAY OF JULY, 2016. SD/- SD/- ( INTURI RAMA RAO ) (SUNIL KUMAR YAD AV ) ACCOUNTANT MEMBER JUDIC IAL MEMBER BANGALORE, DATED, THE 29 TH JULY, 2016. /D S/ ITA NO.404/BANG/2014 PAGE 5 OF 5 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.