ADIT Int. Taxation, Dehradun V. M/s Baker Hughes Oil Field Operations, Dehradun

ITA 4839/DEL/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2696 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 14-03-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 11-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAMEER SHARMA
• Section: 143(3); 234B; 154

Judgement Text

1 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `A NEW DELHI BEFORE SHRI B.C. MEENA, ACCOUNTANT MEMBER AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER I.T.A.NO.4839/DEL/2012 ASSTT. YEAR: 2006-07 ASSTT. DIRECTOR OF INCOME TAX, VS BAKER HUG HES OIL FIELD OPERATIONS, INTERNATIONAL TAXATION, C/ O NANGIA & CO., 75/7, DEHRADUN. RAJPUR ROAD, DEHRADUN. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SAMEER SHARMA, SR.DR RESPONDENT BY : SHRI AMIT ARORA O R D E R PER CHANDRA MOHAN GARG, JUDICIAL MEMBER THIS APPEAL HAS BEEN PREFERRED BY THE REVE NUE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX(A)-II, DEHRADUN DATED 18 .04.2012 PASSED U/S 154 OF THE INCOME TAX ACT, 1961(FOR SHORT THE ACT) IN CONSEQUENCE TO HIS OWN ORDER DATED 01.12.2011 IN APPEAL NO. 495/DDN/20 08-09 FOR AY 2006- 07. 2. THE SOLE GROUND RAISED BY THE REVENUE IN THIS AP PEAL READS AS UNDER:- 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT (A) HAS ERRED IN HOLDING THAT INTEREST U/S 234B WAS NOT CHARGEABLE IN THIS CASE BY RELYING UPON THE DECISION OF HON'BLE UTTRAKHAND HIGH COURT IN THE CASE OF MAE RSK (334 ITR 79) WHERE AS THE DEPARTMENT HAS CONTESTED THE ISSUE AND HAS FILED SLP BEFORE THE APEX COURT AGAIN ST IN THE CASE OF JACOBS CIVIL INCORPORATED/MITSUBISHI IN VOLVING SIMILAR ISSUE. 2 2 3. BRIEFLY STATED THE FACTS GIVING RISE TO THIS APP EAL ARE THAT THE APPELLANT FILED RETURN OF INCOME WITH NO AUDITED ACCOUNTS BY NOT INCLUDING PROFIT & LOSS ACCOUNT, BALANCE SHEET, SHOWING NIL INCOME. THE ASSESSEE CLAIMED EXEMPTION FROM TAXABILITY WITH THE CLAIM THAT THE E NTIRE TRANSACTION HAD TAKEN PLACE OUTSIDE INDIA AND THUS, THE APPELLANT C ANNOT BE TAXED AS PER DOUBLE TAX AVOIDANCE AGREEMENT (DTAA). THE ASSESSI NG OFFICER I.E. DDIT, INTERNATIONAL TAXATION, DEHRADUN COMPLETED TH E ASSESSMENT U/S 143(3) OF THE ACT WITH AN OBSERVATION THAT THE ASSE SSEE HAS RELIED ON THE CONTRACT WHICH IN HIS OPINION IS INSUFFICIENT TO ES TABLISH THAT THE SALE HAS CONCLUDED OUTSIDE INDIA. THE ASSESSING OFFICER FINA LIZED THE ASSESSMENT AND HELD THAT SINCE THE MAXIMUM PRESUMPTIVE TAX RATE IS 10% DPR, THE SAME IS APPLIED TO BRING TO TAX THE TOTAL REVENUE OF RS.98, 86,88,607/- AND ASSESSED THE TOTAL INCOME AT RS.9,88,68,860/-. 4. BEING AGGRIEVED WITH THE ABOVE ASSESSMENT ORDER PASSED U/S 143(3) OF THE ACT, THE ASSESSEE PREFERRED AN APPEAL BEFORE TH E COMMISSIONER OF INCOME TAX(A) AND C.I.T.(A) PARTLY ALLOWED THE APPE AL OF THE ASSESSEE. PERTAINING TO GROUND NO. 8 & 9 BEFORE THE COMMISSIO NER OF INCOME TAX(A), THE FIRST APPELLATE AUTHORITY HELD THAT IN THE LIGH T OF FINDINGS GIVEN FOR GROUND NO. 1 TO 6, THESE GROUNDS ARE NOT BEING ADJUDICATED SEPARATELY. SUBSEQUENTLY, THE ASSESSEE FILED AN APPLICATION U/S 154 OF THE AC T AND THE COMMISSIONER OF 3 3 INCOME TAX(A) DECIDED GROUND NO. 9 AND HELD THAT C ONSIDERING THE JUDGMENT IN THE CASE OF DIT (INTERNATIONAL TAXATION) VS MAERSK CO. LTD. REPORTED IN 334 ITR 79(UK)(FB) , NO INTEREST U/S 234B OF THE ACT IS LEVIABLE IN THIS CASE. IN THE CASE OF MAERSK CO. L TD. (SUPRA), FULL BENCH OF HONBLE UTTARAKHAND HIGH COURT HAS HELD THAT UPON F AILURE ON THE PART OF THE EMPLOYER TO DEDUCT TAX AT SOURCE, THE ASSESSEE ONLY BECOMES LIABLE TO PAY THE TAX DIRECTLY U/S 191 OF THE ACT AND DOES NOT BECOME LIABLE TO PAY INTEREST U/S 234B OF THE ACT. NOW, THE REVENUE IS BEFORE THIS T RIBUNAL IN THIS APPEAL WITH THE SOLE GROUND AS MENTIONED HEREINABOVE. 5. WE HAVE HEARD RIVAL ARGUMENTS OF BOTH THE PARTIE S AND CAREFULLY CONSIDERED THE RECORD PLACED BEFORE US, ORDERS OF T HE AUTHORITIES BELOW AND THE RELEVANT CITATIONS RELIED BY BOTH THE PARTIES. AT THE OUTSET, WE OBSERVE THAT THE COMMISSIONER OF INCOME TAX(A) HAS FOLLOWED THE JUDGMENT OF HONBLE HIGH COURT OF UTTARAKHAND; FULL BENCH IN TH E CASE OF DIT(INT. TAXATION) VS MAERSK CO. LTD.(SUPRA) WHEREIN THEIR L ORDSHIPS HELD THAT WHEN ADVANCE TAX IS NOT PAYABLE ON THE SALARY BY AN EMPL OYEE INASMUCH AS THE OBLIGATION TO DEDUCT TAX AT SOURCE IS UPON THE EMPL OYER U/S 192 OF THE ACT AND UPON FAILURE ON THE PART OF THE EMPLOYER TO DED UCT TAX AT SOURCE, THE ASSESSEE ONLY BECOMES LIABLE TO PAY THE TAX DIRECTL Y U/S 191 OF THE ACT AND DOES NOT BECOME LIABLE TO PAY INTEREST U/S 234B OF THE ACT. THE COUNSEL FOR 4 4 THE ASSESSEE HAS ALSO DRAWN OUR ATTENTION TOWARD JU DGMENT OF HONBLE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF D IT VS JACABS CIVIL INCORPORATED (2011) 330 ITR 578 (DELHI) WHEREIN IT HAS BEEN HELD THAT SECTION 195 OF THE ACT PUTS AN OBLIGATION ON THE PA YER I.E. ANY PERSON RESPONSIBLE FOR PAYING ANY AMOUNT TO A NON-RESIDENT , TO DEDUCT TAX AT SOURCE AT THE RATES IN FORCE FROM SUCH PAYMENTS AND THEREF ORE NON-RESIDENT IS NOT LIABLE TO PAY TAX U/S 234B OF THE ACT ON ACCOUNT OF DEFAULT OF THE PAYER IN DEDUCTING TAX AT SOURCE FROM THE PAYMENTS MADE TO T HE ASSESSEE. IN THIS CASE, THEIR LORDSHIPS CONSIDERED THE ISSUE OF TAXAB ILITY OF INTEREST U/S 234B OF THE ACT AND SETTLED THE ISSUE WITH A FINDING THAT I N SUCH A CASE WHERE THE NON- RESIDENT IS FOUND LIABLE TO PAY TAX BUT THERE IS NO QUESTION OF PAYMENT OF ADVANCE TAX, THEREFORE, THE ASSESSEE IS NOT LIABLE TO PAY INTEREST U/S 234B OF THE ACT ON ACCOUNT OF DEFAULT OF THE PAYER IN DEDUC TING TAX AT SOURCE FROM THE PAYMENT MADE TO THE ASSESSEE. 6. IN THE PRESENT CASE, THE COMMISSIONER OF INCOME TAX(A) HAS HELD THAT AS PER JUDGMENT OF HONBLE UTTARAKHAND HIGH COURT I N THE CASE OF MAERSK CO. LTD.(SUPRA), NO INTEREST U/S 234B OF THE ACT IS LEVIABLE ON THE ASSESSEE. LD. DR SUBMITTED THAT SINCE THE DEPARTMENT HAS CONT ESTED THE ISSUE FURTHER AND HAS FILED A SPECIAL LEAVE PETITION BEFORE THE H ONBLE SUPREME COURT IN THE CASES OF DIT VS JACABS CIVIL INCORPORATED (SUPR A), INVOLVING SIMILAR 5 5 ISSUE, THEREFORE, THE COMMISSIONER OF INCOME TAX(A) ERRED IN HOLDING THAT INTEREST U/S 234B OF THE ACT WAS NOT CHARGEABLE IN THE PRESENT CASE. 7. THE ASSESSEES REPRESENTATIVE SUBMITTED THAT JUD GMENT OF HONBLE JURISDICTIONAL HIGH COURT OF UTTARAKHAND HAS BEEN F OLLOWED BY THE COMMISSIONER OF INCOME TAX(A) AND IN ABSENCE OF ANY OTHER ORDER OR JUDGMENT MODIFYING OR SETTING ASIDE THE JUDGMENT OF THIS JURISDICTIONAL HIGH COURT, ALL THE LOWER AUTHORITIES INCLUDING ITAT ARE BOUND TO FOLLOW THE JUDGMENT IN ITS ORDER AND SPIRIT. THE AR FINALLY S UBMITTED THAT THE COMMISSIONER OF INCOME TAX(A) RIGHTLY APPLIED THE R ATIO OF THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT OF UTTARAKHAND IN THE CASE OF MAERSK CO. LTD. AND THIS APPEAL OF THE REVENUE IS DEVOID OF ME RITS. 8. ON CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS, W E HAVE NO HESITATION TO OBSERVE THAT UNTIL AND UNLESS THE JUDGMENT OF HO NBLE JURISDICTIONAL HIGH COURT EXISTS AND IT HAS NOT BEEN MODIFIED OR SET AS IDE BY ANOTHER JUDGMENT OR ORDER OF SUPERIOR COURT, THE REVENUE AUTHORITIES AN D ITAT ARE UNDER OBLIGATION TO FOLLOW THE SAME. ACCORDINGLY, THE CO MMISSIONER OF INCOME TAX(A) RIGHTLY FOLLOWED THE JUDGMENT OF HONBLE JUR ISDICTIONAL HIGH COURT OF UTTARAKHAND IN THE CASE OF MAERSK CO. LTD. AND R IGHTLY HELD THAT NO INTEREST U/S 234B OF THE ACT IS LEVIABLE ON THE ASS ESSEE. IN VIEW OF ABOVE, WE 6 6 HOLD THAT THIS APPEAL OF THE REVENUE IS DEVOID OF M ERITS AND DESERVES TO BE DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.4.2013. SD/- SD/- ( B.C.MEENA ) (CHANDRAM OHAN GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 30TH APRIL 2013 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR TRUE CO PY BY ORDER ASSTT. 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