DCIT, New Delhi V. M/s. Linde Aktiengesellschaft, New Delhi

ITA 4782/DEL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5016 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 1 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 21-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANOJ KUMAR SENIOR
• Assessee Lawyers: SHILPA SHARMA
• Keywords: Advance ruling

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E : NEW DELHI) BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.4782/DEL./2015 (ASSESSMENT YEAR : 2009-10) DCIT, VS. M/S. LINDE AKTIENGESELLSCHAFT, CIRCLE 2(2)(1), 1A-D, VANDANA BUILDING, NEW DELHI. 11, TOLSTOY MARG, NEW DELHI. (PAN : AABCL3465G) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RAJAN BHATIA, ADVOCATE AND MS. SHILPA SHARMA, CA REVENUE BY : SHRI MANOJ KUMAR, SENIOR DR DATE OF HEARING : 17.08.2017 DATE OF ORDER : 25.08.2017 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : APPELLANT, DEPUTY COMMISSIONER OF INCOME-TAX, CIRC LE 2(2)(1), NEW DELHI (HEREINAFTER REFERRED TO AS THE REVENUE), BY FILING THE PRESENT APPEAL SOUGHT TO SET ASIDE THE I MPUGNED ORDER DATED 13.05.2015 PASSED BY THE COMMISSIONER OF INCO ME-TAX (APPEALS)-43, NEW DELHI, FOR THE ASSESSMENT YEAR 20 09-10 ON THE GROUNDS INTER ALIA THAT :- ITA NO.4782/DEL./2015 2 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS ERRED IN HOLDING THAT THE CREDIT FOR TDS SHOULD BE ALLOWED TO THE ASSESSEE EV EN WHEN THE ASSESSEE HAD NOT SHOWN ANY ASSESSABLE INCOME. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS ERRED IN IGNORING THE PROVISIONS OF SECTION 199 OF I.T. ACT AND RULE 37B OF IT RULES. 3. THE APPELLANT CRAVES TO ADD, AMEND, MODIFY OR ALTER ANY GROUNDS OF APPEAL AT THE TIME OR BEFORE T HE HEARING OF THE APPEAL. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : ASSESSEE DECLARED AN INCO ME OF RS.9,74,18,017/- BY FILING RETURN OF INCOME. ASSES SEE CLAIMED A REFUND OF TAXES DEDUCTED AT SOURCE OUT OF ITS INCOM E AS THE PORTION OF TAXES DEDUCTED AT SOURCE RELATED TO THE RECEIPTS UNDER THE CONTRACT ENTERED INTO BY THE ASSESSEE WITH ONGC PET RO ADDITIONS LIMITED (OPAL) ON 10.02.2009. ASSESSEE CLAIMED REF UND OF THE SAID AMOUNT ON THE GROUND THAT THE AMOUNT ON WHICH TDS WAS NOT CHARGEABLE TO TAX AND THE RELEVANT AMOUNT WAS RELAT ED TO ADVANCE RECEIVED WHICH WAS NOT CHARGEABLE TO TAX. AO, BY F OLLOWING THE RULING OF HONBLE AUTHORITY FOR ADVANCE RULING (AA R) DATED 20.03.2012 IN ASSESSEES OWN CASE, PROCEEDED TO OBS ERVE THAT THE RELEVANT RECEIPTS ARE CHARGEABLE TO TAX IN THE HAND S OF CONSORTIUM OF ASSESSEE AND SAMSUNG ENGINEERING CORPORATION, KO REA AS AN ASSOCIATION OF PERSONS (AOP). ITA NO.4782/DEL./2015 3 3. ASSESSEE CARRIED THE MARRIED BY WAY OF AN APPEAL BEFORE THE LD. CIT (A) WHO HAS ALLOWED THE APPEAL. FEELING AG GRIEVED, THE REVENUE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF C HALLENGING THE IMPUGNED ORDER PASSED BY LD. CIT. 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. UNDISPUTEDLY, THE AO HAS MERELY DENIED THE REFUN D OF TAXES DEDUCTED AT SOURCE AS CLAIMED BY THE ASSESSEE BY AP PLYING THE RULING OF AAR DATED 20.03.2012 PRONOUNCED IN ASSESS EES OWN CASE WHICH WAS CHALLENGED BY THE ASSESSEE BEFORE HO NBLE HIGH COURT OF DELHI. HONBLE HIGH COURT OF DELHI IN WP(C) NO.3914/2012 & CM NO.8187/2012 DATED 23.04.2014 IN ASSESSEES OWN CASE , IN WHICH THE ASSESSEE HAS CHALLENGE THE DECISION DATED 20.03.2012 RENDERED BY AAR, COPY AVA ILABLE AT PAGES 169 TO 262 OF THE PAPER BOOK, HELD THAT THE A SSESSEE COMPANY AS WELL AS M/S. SAMSUNG ENGINEERING CORPORATION DO NOT CONSTITUTE AN ASSOCIATION OF PERSONS BY RETURNING FOLLOWING FI NDINGS :- 55. IN EVERY PROJECT WHICH IS EXECUTED BY MULTIPLE INDEPENDENT AGENCIES, A CERTAIN LEVEL OF COOPERATIO N AND COORDINATION IS REQUIRED TO ENSURE THAT THE AGENCY INVOLVED PERFORMS ITS WORK IN A TIMELY MANNE R AS PER A PREDETERMINED SCHEDULE IN ORDER TO ENABLE ITA NO.4782/DEL./2015 4 THE OTHER AGENCY TO COMMENCE AND COMPLETE ITS PORTION OF WORK. THE LEVEL OF COOPERATION AS AGREED BETWEEN LINDE AND SAMSUNG WAS ALSO AKIN TO THE LEVEL OF COOPERATION AS EXPECTED FROM INDEPENDENT AGENCIES EXECUTING A PROJECT. THIS CAN BE UNDERSTOO D BY TAKING AN ILLUSTRATION OF A SIMPLE PROJECT FOR CONSTRUCTION OF A BUILDING. IT IS ONLY AFTER AN ARCHITECT OR A DESIGNER PROVIDES THE DETAILED DRAWINGS THAT A CIVIL CONTRACTOR CAN COMMENCE CONSTRUCTION. SIMILARLY, IT IS ONLY AFTER THE CIVIL CONSTRUCTION IS COMMENCED AND PROGRESSED TO A CERTAIN LEVEL THAT SPACE FOR ELECTRICAL CONTRACTORS IS AVAILABLE FOR THEM TO PERFORM THEIR WORK. THE WORK OF INTERIOR FINISHING CAN TAKE PLACE ONLY AFTER THE CI VIL WORKS ARE COMPLETE. THE FACT THAT EACH OF THE AFORESAID AGENCIES, NAMELY THE ARCHITECT, THE CIVIL AND ELECTRICAL CONTRACTORS ARE REQUIRED TO COMPLETE THE IR WORK IN A PRE-DETERMINED SEQUENCE AND ARE REQUIRED TO COOPERATE WITH EACH OTHER IN PROVIDING THE NECESSARY INFORMATION AND ADHERING TO A SPECIFIED SCHEDULE WOULD NOT NECESSARILY IMPLY THAT THE ARCHITECT, CIVIL CONTRACTORS AND ELECTRICAL CONTRAC TORS HAD FORMED AN ASSOCIATION OF PERSONS. IN THIS ILLUSTRATION EACH ONE OF THE PARTICIPANTS WORKS TOWARDS A COMMON PROJECT WITH A CERTAIN LEVEL OF COOPERATION. HOWEVER, SINCE THE SAID PARTICIPANTS D O NOT ACT AS A SINGLE COHESIVE ENTITY, BUT PERFORM TH EIR INDEPENDENT ALLOCATED WORKS, THEY CANNOT BE CONSIDERED AS AN ASSOCIATION OF PERSONS. IN ORDER T O CONSIDER INDEPENDENT AGENCIES AS AN ASSOCIATION OF PERSONS, IT IS NECESSARY THAT THEY FORM A JOINT ENTERPRISE WITH A GREATER LEVEL OF COMMON MANAGEMENT. AN ELEMENT OF MUTUAL AGENCY AND JOINT ACTION FOR MUTUAL PURPOSE IS ALSO NECESSARY. MERE OBLIGATION TO EXCHANGE INFORMATION, BETWEEN INDEPENDENT AGENCIES, FOR CO-ORDINATING THEIR INDEPENDENT TASKS WOULD NOT RESULT IN AN INFERENCE THAT THE AGENCIES HAD CONSTITUTED -AN ASSOCIATION O F PERSONS. 56. IT IS RELEVANT TO KEEP IN MIND THAT LINDE AND SAMSUNG SHARED NEITHER THE COSTS NOR RISKS. BOTH LINDE AND SAMSUNG MANAGED THEIR OWN DELIVERABLES. AS DISCUSSED ABOVE, IN OUR VIEW, THE FACTS OF THIS CASE DO NOT INDICATE A SUFFICIENT DEGREE OF JOINT ACTION BETWEEN LINDE AND SAMSUNG EITHER IN EXECUTION OR ITA NO.4782/DEL./2015 5 MANAGEMENT OF THE PROJECT TO JUSTIFY A CONCLUSION THAT THEY BAD FORMED AN ASSOCIATION OF PERSONS AND IN OUR VIEW, THE AUTHORITY ERRED IN CONCLUDING SO. 6. HONBLE HIGH COURT HAS HELD THAT THE AUTHORITY F OR ADVANCE RULING VIDE IMPUGNED ORDER DATED 20.03.2012 HAS ERR ED IN HOLDING THAT THE ASSESSEE HAS FORMED ASSOCIATION OF PERSONS . SO, WHEN THE ASSESSEE COMPANY AND M/S. SAMSUNG ENGINEERING CORPO RATION DO NOT CONSTITUTE AN ASSOCIATION OF PERSONS, ASSESSEE COMPANY IS ENTITLED FOR CREDIT OF TDS AS CLAIMED FOR. MOREOVE R, FOLLOWING THE JUDGMENT RENDERED BY HONBLE DELHI HIGH COURT IN WP (C) NO.3914/2012 (SUPRA), INCOME-TAX DEPARTMENT HAS ALREADY ISSUED THE DEMAND DRAFT FOR RS.2,51,50,550/-, COPY OF WHIC H IS AVAILABLE AT PAGE 1 OF THE PAPER BOOK. IN THESE CIRCUMSTANCES, WE FIND NO MERIT IN THE APPEAL FILED BY THE REVENUE WHICH HAS OTHERW ISE BECOME INFRUCTUOUS, HENCE THE SAME IS HEREBY DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 25 TH DAY OF AUGUST, 2017. SD/- SD/- (R.K. PANDA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 25 TH DAY OF AUGUST, 2017 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-43, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.