IPR International Ltd., Dehradun V. ADIT, Dehradun

ITA 4408/DEL/2011

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 4079 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 25-04-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 04-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G K DHALL
• Assessee Lawyers: ASHWANI TANEJA; SHAANTANU JAIN S
• Keywords: Difference of opinion; Revised return; Change of opinion; Reassessment proceedings
• Section: 143(3); 148; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : C : NEW DELHI BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SMT. BEENA A. PILLAI, JUDICIAL MEMBER ITA NO.4408/DEL/2011 ASSESSMENT YEAR : 2005-06 IPR INTERNATIONAL LTD., C/O MATTA SUDHIR & CO., 15, ASTLEY HALL, RAJPUR ROAD, DEHRADUN. PAN: AABCI5296C VS. ADIT, INTERNATIONAL TAXATION, INCOME TAX OFFICE, 13, SUBHASH ROAD, DEHRADUN. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI ASHWANI TANEJA & SHAANTANU JAIN, ADVOCATES DEPARTMENT BY : SHRI G.K. DHALL, CIT, DR DATE OF HEARING : 22.01.2017 DATE OF PRONOUNCEMENT : 23.01.2017 ORDER PER R.S. SYAL, VP: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE FINAL ASSESSMENT ORDER DATED 24.08.2011 PASSED BY THE ASS ESSING OFFICER ITA NO.4408/DEL/2011 2 (AO) U/S 143(3) READ WITH SECTION 144C(13) OF THE I NCOME-TAX ACT, 1961 (HEREINAFTER ALSO CALLED THE ACT) IN RELATION TO THE ASSESSMENT YEAR 2005-06. 2. THE FIRST ISSUE RAISED IN THIS APPEAL IS AGAINST THE INITIATION OF REASSESSMENT PROCEEDINGS. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE, A COMPANY INCORPORATED UNDER THE LAWS OF USA, IS ENGAGED IN T HE BUSINESS OF HIRING OF SERVICES FOR PROFILE MODIFICATION JOB IN MUMBAI HIGH ASSET AND N&H ASSET. IT FILED A RETURN DECLARING TOTAL INCOME OF RS.21,38,740/- ON 29.11.2005. GROSS REVENUE OF RS.2.13 CRORE WAS OFFE RED FOR TAXATION U/S 44BB OF THE ACT. THEREAFTER, A REVISED RETURN WAS FILED WITH THE GROSS REVENUE OF RS.2,95,41,930/-. ASSESSMENT ORDER WAS P ASSED ON 21.05.2007 ACCEPTING THE TAXABILITY OF THE OPERATIO NAL REVENUE U/S 44BB @ 10%, WHICH LED TO THE DETERMINATION OF THE TOTAL INCOME AT RS.29,54,193/-. THEREAFTER, A NOTICE U/S 148 OF THE ACT WAS ISSUED AND THE IMPUGNED ORDER WAS FINALLY PASSED TAXING THE AS SESSEES REVENUE @ ITA NO.4408/DEL/2011 3 20% U/S 44DA READ WITH SECTION 115A OF THE ACT. TH E ASSESSEE, INTER ALIA, IS AGGRIEVED AGAINST THE INITIATION OF REASSESSMENT PROCEEDINGS. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE REASONS RECORDED BY THE ASS ESSING OFFICER, WHOSE COPY IS AVAILABLE AT PAGE 42 OF THE PAPER BOO K, INDICATE THAT THE ORIGINAL ASSESSMENT WAS MADE ON 21.05.2007 U/S 44BB (1) AT THE TOTAL INCOME OF RS.29,54,190/-. CONSIDERING THE JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT DATED 15.12.2005 IN ONGC AS AGENT OF FORAMER, FRANCE, DEHRADUN, IN WHICH SERVICES OF TECHNICAL NATURE WERE HELD TO BE NOT COVERED U/S 44BB(1) OF THE ACT, THE ASSESSING OFFICER OPINED THAT INCOME OF THE ASSESSEE WAS FROM FEES F OR TECHNICAL SERVICES AND, HENCE, TAXABLE U/S 44DA READ WITH SE CTION 115A OF THE ACT. THIS IS HOW, THE EXTANT ASSESSMENT WAS COMPLET ED BY TAXING THE INCOME @ 20% OF GROSS REVENUE. 5. IT IS PERTINENT TO MENTION THAT THE SECOND P ROVISO TO SECTION 44DA WAS INSERTED BY THE FINANCE ACT, 2010 W.E.F. 01.04. 2011, WHICH PROVIDES: THAT THE PROVISIONS OF SECTION 44BB SHAL L NOT APPLY IN RESPECT ITA NO.4408/DEL/2011 4 OF THE INCOME REFERRED TO IN THIS SECTION. IT IS T HIS AMENDMENT WHICH HAS TRIGGERED THE INITIATION OF REASSESSMENT ALONG WITH THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN FORARMER FRANCE (SUPRA) , WHICH WAS IN EXISTENCE AT THE TIME OF FINALIZING THE ORIG INAL ASSESSMENT U/S 143(3) OF THE ACT. 6. THE HON'BLE JURISDICTIONAL HIGH COURT IN B.J. SERVICES COMPANY MIDDLE EAST LTD. & ORS. VS. DDI(IT) (2011) 339 ITR 169 (UTTARAKHAND) , CONFRONTED WITH A SIMILAR SITUATION AS IS INSTANTLY OBTAINING, HAS HELD THAT ASSESSMENT U/S 143(3) COMPLETED BY APPLYING THE PRO VISIONS OF SECTION 44BB, AFTER MAKING PROPER ENQUIRIES, COULD NOT HAV E BEEN LEGALLY REOPENED ON THE BASIS OF A DECISION IN THE CASE OF FORAMER FRANCE (SUPRA). IT HAS FURTHER BEEN LAID DOWN THAT THE AMENDMENTS PROPOSED BY THE FINANCE BILL, 2010 IN SECTION 44BB AND SECTION 44DA ARE PROSPECTIVE IN NATURE. 7. IT IS SIGNIFICANT TO MENTION THAT AN ORDER U/ S 195(2) OF THE ACT WAS PASSED IN THE CASE OF ONGC ON 21.09.2005 WITH REFER ENCE TO THE ASSESSEES CONTRACT, IN WHICH SERVICES PROVIDED BY THE ASSESSEE WERE ITA NO.4408/DEL/2011 5 FOUND TO BE COVERED BY THE PROVISIONS OF SECTION 44 BB OF THE ACT. A COPY OF SUCH ORDER IS AVAILABLE ON PAGE 34 OF THE P APER BOOK. SIMILARLY, AN ORDER WAS PASSED ON THE ASSESSEES REQUEST FOR D ETERMINATION OF PROFIT RATE U/S 197 OF THE ACT, IN WHICH SERVICES PROVIDED BY THE ASSESSEE WERE AGAIN HELD TO BE COVERED U/S 44BB OF THE ACT. A COP Y OF SUCH ORDER IS AVAILABLE ON PAGE 35 OF THE PAPER BOOK. THESE FACTS AMPLY INDICATE THAT THE DEPARTMENT WAS OF THE CONSISTENT CONSIDERED VIE W THAT INCOME OF THE ASSESSEE IS LIABLE TO BE COMPUTED AS PER THE PROVIS IONS OF SECTION 44BB OF THE ACT. 8. FURTHER, WE ARE FACED UP TO A SITUATION IN WHI CH ALL THE NECESSARY DETAILS ABOUT THE TAXABILITY OF THE ASSESSEES INCO ME U/S 44BB WERE AVAILABLE BEFORE THE ASSESSING OFFICER AT THE TIME OF ORIGINAL ASSESSMENT. THIS INCLUDES THE ASSESSEES LETTER DATED 11.01.200 7 FILED TOGETHER WITH A COPY OF THE CONTRACT AND LETTER OF AWARD FROM ONGC. THUS, IT IS MANIFEST THAT THE ORIGINAL ASSESSMENT WAS MADE BY THE ASSESS ING OFFICER WITH FULL KNOWLEDGE OF THE NATURE OF WORK CARRIED OUT BY THE ASSESSEE AND TAXABILITY OF ITS INCOME U/S 44BB OF THE ACT. NO F RESH MATERIAL CAME ITA NO.4408/DEL/2011 6 INTO EXISTENCE IGNITING THE ASSESSING OFFICER TO IN ITIATE THE REASSESSMENT. IT IS A CLEAR CUT CASE OF CHANGE OF OPINION, WHICH CANNOT JUSTIFY INITIATION OF REASSESSMENT. 9. PROVISIONS OF SECTION 44DA, AS REFERRED TO IN THE REASONS, WERE INSERTED FROM THE ASSESSMENT YEAR 2011-12, WHICH HA VE BEEN HELD TO BE PROSPECTIVE BY THE HON'BLE JURISDICTIONAL HIGH COUR T IN THE CASE OF B.J. SERVICES (SUPRA). THIS DECISION, SETTING ASIDE THE INITIATION OF REASSESSMENT, HAS BEEN RENDERED AFTER DUE CONSIDERA TION OF THE EARLIER DECISION IN FORAMER FRANCE (SUPRA) , WHICH HAS BEEN RELIED BY THE AO IN THE REASONS. SINCE THE HON'BLE JURISDICTIONAL H IGH COURT IN THE CASE OF B.J. SERVICES (SUPRA) UNDER SIMILAR CIRCUMSTANCES HAS HELD THE INITIATION OF REASSESSMENT AS INVALID, RESPECTFULLY FOLLOWING THE PRECEDENT, WE ALSO DECLARE THE INITIATION OF REASSESSMENT PROCEEDINGS AS ILLEGAL. CONSEQUENTLY, ALL THE PROCEEDINGS FLOWING FROM SUCH INVALID INITIATION ARE HEREBY SET ASIDE. ITA NO.4408/DEL/2011 7 10. IN THE RESULT, THE APPEAL IS ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 23.01.201 8. SD/- SD/- [BEENA A. PILLAI] [R.S. SYAL] JUDICIAL MEMBER VICE PRESIDENT DATED, 23 RD JANUARY, 2018. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.