DDIT (IT)-4(1), MUMBAI V. MERRILL LYNCH CAPITAL MARKET ESPANA, S.A., MUMBAI

ITA 5090/MUM/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 8689 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-01-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: L
• Next Hearing Date: 17-01-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 07-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KESHAVE SAXENA
• Section: 234B

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL L BENCH, MUMBAI BEFORE SHRI R.S.PADVEKAR (JM) AND SHRI RAJENDRA SI NGH(AM) ITA NO.5090/M/2009 ASSESSMENT YEAR 2005-06 THE DY.DIRECTOR OF INCOME-TAX M/S. MERRILL LYNCH C APITAL MARKET ESPANA, (INTERNATIONAL TAXATION)-4(1) S.A. C/O. M/S. G.M. KAPADIA & CO., 1001, 133, SCINDIA HOUSE, BALLARD PIER REHEJA CHAMBERS, 213, NARIMAN POINT MUMBAI 400 038. MUMBAI 400 021. PAN : AACCM7105R APPELLANT RESPONDENT REVENUE BY : SHRI KESHAVE SAXENA ASSESSEE BY : SHRI NITESH JOSHI O R D E R PER RAJENDRA SINGH (AM) THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 10.6.2009 OF CIT(A) FOR THE ASSESSMENT YEAR 2005-06. THE ONLY DISPUTE RAISED IN THIS APPEAL IS REGARDING LEVY OF INTEREST UNDER SECTION 234B OF THE INCOME-TAX ACT. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE FOR THE RELEVANT YEAR HAD DECLARED TOTAL INCOME OF RS.32,53,529/-. THE AO IN THE ASSESSMENT MADE ADDITION OF RS.97,25,000/- ON ACCOUNT OF THE T RANSFER PRICING ADJUSTMENTS AND ASSESSED THE TOTAL INCOME AT RS.1,2 9,78,529/-. AO ALSO CHARGED INTEREST UNDER SECTION 234B ON ACCOUNT OF S HORTFALL IN PAYMENT OF ADVANCE TAX. THE ASSESSEE DISPUTED THE DECISION OF THE AO AND SUBMITTED BEFORE CIT(A) THAT TAX PAYABLE ON THE RETURNED INCO ME WAS RS.4,88,029/- AND THE ASSESSEE HAD PAID ADVANCE TAX OF RS.2,23,321/- AND TAX DEDUCTED AT SOURCE 2 WAS RS.3,61,768/- AND THERE WAS REFUND OF RS.97,060 /-. THE ASSESSEE WAS THEREFORE NOT LIABLE TO PAY INTEREST UNDER SECTION 234B. IT WAS ALSO SUBMITTED THAT ENTIRE INCOME OF THE NON RESIDENT WAS TAX DEDU CTIBLE AT SOURCE AS PER SECTION 195 OF THE INCOME-TAX ACT AND THEREFORE WHE THER TAX WAS FULLY DEDUCTED OR NOT THE ASSESSEE WAS NOT LIABLE FOR ADV ANCE TAX. THE ASSESSEE PLACED RELIANCE ON THE DECISION OF THE SPECIAL BENC H OF THE TRIBUNAL IN CASE OF MOTOROLA INC VS DCIT (95 ITD 269). CIT(A) WAS SATIS FIED BY THE EXPLANATION GIVEN AND DELETED THE LEVY OF INTEREST AGGRIEVED BY WHICH THE REVENUE IS IN APPEAL. 3. AFTER HEARING BOTH THE PARTIES WE FIND THAT THE ISSUE RAISED IN THIS APPEAL IS COVERED BY THE JUDGMENT OF HONBLE HIGH COURT OF MUMBAI IN CASE OF DIRECTOR OF INCOME-TAX (INTERNATIONAL TAXATION) VS NGC NETWO RK ASIA LLC (313 ITR 187) IN WHICH IT HAS HELD THAT WHEN THE ENTIRE TAX WAS D EDUCTIBLE AT SOURCE FAILURE ON THE PART OF THE PAYER TO DO SO, COULD NOT BE GROUND FOR LEVY OF INTEREST UNDER SECTION 234B. THE LEARNED DR HAS NOT DISPUTED THE F ACT THAT THE ENTIRE INCOME OF THE ASSESSEE WAS TAX DEDUCTIBLE AT SOURCE AND TH EREFORE FOLLOWING THE SAID JUDGMENT OF THE JURISDICTIONAL HIGH COURT (SUPRA) W E SEE NO INFIRMITY IN THE ORDER OF CIT(A) DELETING THE INTEREST CHARGED UNDER SECTION 234B. THE ORDER OF CIT(A) IS THEREFORE UPHELD. 4. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMI SSED. 5. THE ORDER WAS PRONOUNCED IN OPEN COURT ON 28.01. 2011. SD/- SD/- ( R. S. PADVEKAR) (RAJEN DRA SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE : 28.01.2011 AT :MUMBAI 3 COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A), MUMBAI CONCERNED 4. THE CIT, MUMBAI CITY CONCERNED 5. THE DR L BENCH, ITAT, MUMBAI // TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI ALK