JDIT, New Delhi V. M/s. Shin Satellite Public Co. Ltd., New Delhi

ITA 5074/DEL/2011

• Counselvise Citation: 507420114 RSA 2011
• Duration Of Justice: 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-01-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2004-2005
• Appeal Filed On: 14-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A MAHAJAN
• Assessee Lawyers: JATINDER SINGH
• Keywords: Double taxation relief; Permanent establishment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G, NEW DELHI BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER & SHRI K.D. RANJAN, ACCOUNTANT MEMBER ITA NOS. 5073 & 5074/DEL/2011 ASSESSMENT YEARS: 2003-04 & 2004-05 JDIT, VS. SHIN SATELLITE PUBLIC CO. LTD., INTL. TAXATION, C/O MOHINDER PURI & CO., CIRCLE 2(2), 1A-D, VANDANA, 11, NEW DELHI. TOLSTOY MARG, NEW DELHI. AAGCS4481E (APPELLANT) (RESPONDENT) APPELLANT BY : A. MAHAJAN, CIT(DR) RESPONDENT BY : JATINDER SINGH, CA ORDER PER BENCH : THESE APPEALS ARE FILED BY THE REVENUE AGAINST THE CONSOLIDATED ORDER DATED 06.07.2011 OF CIT(A)-XXIX, NEW DELHI PERTAINING TO 2003-04 & 2004-05 ASSESSMENT YEARS. IN BOTH THESE APPEALS THE REVENUE IS AGGRIE VED BY THE ACTION OF CIT(A) IN QUASHING THE PENALTY IMPOSED BY THE ASSESSING OFFIC ER U/S 271(1)(C) OF THE ACT. 2. THE RELEVANT FACTS OF THE CASE ARE THAT THE ASSE SSEE IS A COMPANY INCORPORATED IN THAILAND AND WAS ENGAGED IN THE BUSINESS OF PROV IDING DIGITAL BROADCAST SERVICE THROUGH ITS TRANSPONDERS TO ITS CUSTOMERS INCLUDING INDIAN RESIDENTS. FOR THE YEARS UNDER APPEAL, THE ASSESSEE DECLARED NIL INCOME IN T HE RETURN FILED BY IT. THE CLAIM OF THE ASSESSEE WAS THAT ITS RECEIPT FROM THE BUSINESS OF PROVIDING TRANSPONDER SERVICES WAS IN NORMAL COURSE OF CARRYING ON BUSINESS AND, T HEREFORE, CONSTITUTED BUSINESS PROFITS IN THE HANDS OF THE ASSESSEE. FURTHER, SI NCE THE ASSESSEE DID NOT HAVE A PERMANENT ESTABLISHMENT IN INDIA, ITS BUSINESS PROF ITS WERE NOT LIABLE TO TAX IN INDIA AS PER ARTICLE 7 OF THE DTAA BETWEEN INDIA AND THAILAN D. 3. HOWEVER, NOT CONVINCED WITH THE EXPLANATION THE AO HELD THAT THE RECEIPTS OF THE ASSESSEE WERE IN THE NATURE OF ROYALTY AND, THERE FORE, TAXABLE IN INDIA. AS SUCH, THE INCOME OF THE ASSESSEE WAS DETERMINED AT 15% ON ITS GROSS RECEIPTS. CONSEQUENT TO THE CONFIRMATION OF THE ASSESSMENT ORDERS BY THE CI T(A), PENALTY WAS IMPOSED BY THE AO ON THE GROUNDS OF CONCEALMENT IN THE YEARS UNDER CONSIDERATION. IN THE QUANTUM ITA NOS. 5073 & 5074/D/2011 2 PROCEEDINGS ASSESSEE FAILED BEFORE THE TRIBUNAL WHI CH DECIDED THE ISSUE AGAINST THE ASSESSEE RELYING UPON THE DECISION RENDERED BY THE SPECIAL BENCH IN THE CASE OF ASIA SATELLITE TELECOMMUNICATIONS CO. LTD. HOWEVER, IN THE MEANTIME THE HONBLE HIGH COURT REVERSED THE ORDER OF THE SPL. BENCH IN THE C ASE OF ASIA SATELLITE TELECOMMUNICATION CO. LTD. AND DECIDED THE ISSUES A GAINST THE REVENUE VIDE ORDER DATED 31.01.2011 IN ITA NO. 131 OF 2003. FOLLOWING ITS ORDER IN THE CASE OF ASIA SATELLITE TELECOMMUNICATION CO. LTD. THE HONBLE DE LHI HIGH COURT SET ASIDE THE ORDERS OF THE ITAT IN ASSESSEES CASE AND REMITTED THE ISS UE BACK TO THE TRIBUNAL TO DECIDE THE CASE AFRESH IN THE LIGHT OF THE JUDGMENT IN THE CAS E OF ASIA SATELLITE TELECOMMUNICATION CO. LTD. VS. DCIT. THE TRIBUNAL THEREAFTER SEIZED OF THE ISSUE AGAIN IN THE QUANTUM PROCEEDINGS COMPARING THE FACTS OF THE ASSESSEES C ASE WITH THAT OF ASIA SATELLITE TELECOMMUNICATION CO. LTD. (SUPRA), CAME TO A CONCL USION THAT THE FACTS WERE IDENTICAL AND FOLLOWING THE DECISION OF HONBLE DELHI HIGH CO URT IN THE CASE OF ASIA SATELLITE TELECOMMUNICATION CO. LTD., THE ITAT DELETED THE AD DITION MADE BY THE AO VIDE ORDER DATED 11.03.2011 IN ITA NO. 2467 & 2468/DEL/2008. 4. CONSIDERING THE ABOVEMENTIONED FACTS THE CIT(A) QUASHED THE PENALTY PROCEEDINGS ACCEPTING THE ASSESSEES PLEA THAT SINC E THE ENTIRE DEMAND HAD BEEN DELETED THE PENALTY IMPOSED DESERVED TO BE DELETED. THE RELEVANT FINDING OF THE CIT(A) IS AS UNDER: - 6. I HAVE CONSIDERED THE SUBMISSIONS OF THE APPEL LANT. THE STAND TAKEN BY THE APPELLANT IN ITS RETURN OF INCOME HAS BEEN UPHELD B Y THE LD. HIGH COURT. SINCE, THE QUANTUM ADDITIONS IN BOTH THE ASSESSMENT YEARS UNDE R APPEAL HAS ALREADY BEEN DELETED BY THE LD. ITAT, NO PENALTY CAN BE LEVIED U /S 271(1)(C) FOR EITHER CONCEALMENT OR FURNISHING INACCURATE PARTICULARS OF INCOME. TH EREFORE, THE AO IS DIRECTED TO DELETE THE PENALTY LEVIED U/S 271(1)(C) FOR A.YS. 2 003-04 & 2004-05. 5. AGGRIEVED BY THIS, THE REVENUE IS IN APPEAL BEFO RE THE TRIBUNAL. 6. LD. DR PLACED RELIANCE ON THE PENALTY ORDER. 7. THE LD. AR, ON THE OTHER HAND, RELIED UPON THE I MPUGNED ORDER. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ON A CAREFUL CONSIDERATION OF THE SAME, WE ARE OF THE VIEW THAT IN THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE WHERE THE ENTIR E ADDITION HAS BEEN DELETED THE ORDER OF THE CIT(A) HOLDING THAT THE PENALTY ORDER DOES NOT SURVIVE CANNOT BE FAULTED WITH. BEING SATISFIED WITH REASONING AND FINDING O F THE CIT(A) ARRIVED AT IN THE IMPUGNED ORDER ON THE FACTS AS THEY STAND THE DEPARTMENTAL G ROUND IN BOTH THE YEARS IS DISMISSED. ITA NOS. 5073 & 5074/D/2011 3 9. IN THE RESULT, THE APPEALS OF THE REVENUE ARE DI SMISSED. THIS DECISION WAS PRONOUNCED IN THE OPEN COURT ON 27.01.2012. SD/- SD/- (K.D. RANJAN) (DI VA SINGH) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 27.1.12 *KAVITA COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR ITA NOS. 5073 & 5074/D/2011 4