DDIT (IT)-2(1), MUMBAI V. SWIRE PACIFIC OPFFSHORE ( DUBAJI), MUMBAI

ITA 5048/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 1595 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-06-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2005-2006
• Appeal Filed On: 04-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANKUR GARG
• Assessee Lawyers: GEETA RAMRAKHIANI
• Section: 234B; 208

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E : MUMBAI BEFORE SHRI D.MANMOHAN, HONBLE VICE PRESIDENT AND SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER ITA. NO. 5048/MUM/2009 ASSESSMENT YEAR 2005-2006 ADIT (IT)-2(1) MUMBAI 400 038 VS. M/S. SWIRE PACIFIC OFFSHORE (DUBAI) LLC, WORLI, MUMBAI 018. PAN AAGCS-6547-K (APPELLANT) (RESPONDENT) FOR APPELLANT : SHRI ANKUR GARG FOR RESPONDENT : SHRI GEETA RAMRAKHIANI ORDER PER D.MANMOHAN, V.P. 1. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) XXXI, MUMBAI AND IT PERTAINS TO THE ASSESSMENT YEAR 2005-2006. INTEREST CHARGED UNDER SECTION 234B IS THE SUBJECT MATTER OF DISPUTE BEFORE US. 2. THE CASE OF THE ASSESSEE IS THAT IT OWNED CERTA IN VESSELS WHICH WERE GIVEN ON HIRE AND IN TURN RECEIVED HIRE CHARGES FROM VARIOUS CHARTERERS. TAX WAS DEDUCTIBLE AT SOURCE ON SUCH PA YMENTS. THEREFORE, ASSESSEE WAS NOT LIABLE TO PAY ADVANCE TAX ON THE A MOUNTS RECEIVED/RECEIVABLE. RELIANCE WAS PLACED UPON THE D ECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF NGC NET WORK ASIA LTD. 313 ITR 187 IN SUPPORT OF ITS CONTENTION THAT DUTY IS CAST ON T HE PAYER TO DEDUCT TAX AT SOURCE AND MERELY BECAUSE PAYER FAILED TO DEDUCT TAX, ASSESSEE-PAYEE IS NOT LIABLE TO PAY ADVANCE TAX ON SUCH RECEIPTS A ND, CONSEQUENTLY, INTEREST CANNOT BE IMPOSED ON THE ASSESSEE. SINCE T HE ASSESSING OFFICER, IN A ROUTINE, LEVIED INTEREST UNDER SECTION 234B OF THE ACT, LEARNED CIT(A), 2 IN THE LIGHT OF AFORECITED DECISION, DIRECTED THE A SSESSING OFFICER NOT TO CHARGE INTEREST UNDER SECTION 234B OF THE ACT AND T HUS REVENUE IS IN APPEAL BEFORE US. 3. LEARNED DR WAS NOT ABLE TO SUBSTANTIATE HIS CON TENTION. IN OTHER WORDS, HE WAS NOT ABLE TO PLACE ANY CONTRARY DECISION ON THE ISSUE BUT SUBMITTED THAT THE DECISION OF THE HONBLE BOMB AY HIGH COURT HAS LIMITED APPLICATION. HE CONTENDED THAT WHEN RECIPIE NT IS AWARE OF THE FACT THAT THE PAYER HAS NOT DEDUCTED TAX AT SOURCE, THE BURDEN IS UPON THE RECIPIENT TO PAY ADVANCE TAX AND ON FAILURE TO PAY ADVANCE TAX INTEREST IS CHARGEABLE UNDER SECTION 234B OF THE ACT. 4. ON THE OTHER HAND, LEARNED COUNSEL STRONGLY REL IED UPON THE ORDER PASSED BY THE HONBLE BOMBAY HIGH COURT AND S UBMITTED THAT SCHEME OF SECTIONS 208 AND 209 OF THE ACT INDICATE THAT IN ORDER TO COMPUTE ADVANCE TAX THE ASSESSEE HAS TO ESTIMATE IT S CURRENT INCOME AND INCOME TAX HAS TO BE CALCULATED BY REDUCING THE AMOUNT OF TAX WHICH IS DEDUCTIBLE OR COLLECTIBLE AT SOURCE. STRESSING UPON THE EXPRESSION DEDUCTIBLE OR COLLECTIBLE LEARNED COUNSEL SUBMITT ED THAT MERELY BECAUSE THE PAYER HAS NOT DEDUCTED TAX OR FAILED TO DEPOSIT THE SAME, RECIPIENT-ASSESSEE SHOULD NOT BE BURDENED WITH PAYM ENT OF ADVANCE TAX SINCE THE LANGUAGE OF RELEVANT PROVISIONS DOES NOT PROVIDE FOR SUCH A COURSE OF ACTION. 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS AND PERUSED THE RECORD. IN THE LIGHT OF BINDING DECISIO N OF THE HONBLE BOMBAY HIGH COURT CITED (SUPRA), WE ARE OF THE VIEW THAT THE ORDER PASSED BY THE LEARNED CIT(A) DOES NOT SUFFER FROM A NY INFIRMITY. WE THEREFORE, UPHOLD THE ORDER PASSED BY THE LEARNED C IT(A) AND DISMISS THE APPEAL FILED BY THE REVENUE. 3 ITA. NO. 5048/MUM/2009 M/S. SWIRE PACIFIC OFFSHORE (DUBAI) LLC. ORDER PRONOUNCED IN THE OPEN COURT ON 08-06-2010. SD/- SD/- (PRAMOD KUMAR) (D.MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI, DATE 09 TH JUNE, 2010. VBP/- COPY TO 1. ADIT (IT)-2(1), R.NO. 120, 1 ST FLOOR, SCINDIA HOUSE, BALLARD ESTATE, N.M. ROAD, MUMBAI 400 038 2. M/S. SWIRE PACIFIC OFFSHORE (DUBAI) LLC, C/O. CC CHOKSHI & CO. 12, ANNIE BESANT ROAD, OPP. SHIV SAGAR ESTATE, WORLI, MUMBAI 018. PAN AAGCS-6547-K 3. CIT (A)-XXXI, MUMBAI. 4. DIT, (INTERNATIONAL TAXATION) MUMBAI. 5. D.R. E BENCH 6. GUARD FILE. (TRUE COPY) BY ORDER ASST. REGISTRAR, ITAT, MUMBAI BENCHES MUMBAI.