DDIT, New Delhi V. M/s. Sumitomo Corporation, Japan, New Delhi

ITA 5142/DEL/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81835 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 14-10-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 04-10-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SANJEEV SHARMA
• Assessee Lawyers: C S AGARWAL SENIOR
• Keywords: Double taxation relief
• Section: 143(3); 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G : NEW DELHI) BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.5142/DEL./2012 (ASSESSMENT YEAR : 2003-04) DDIT, CIRCLE 2 (2), VS. M/S. SUMITOMO CORPORATION, JAPAN NEW DELHI. C/O MAHESH NARANG & CO., G 195, SARITA VIHAR, NEW DELHI 110 076. (PAN : AABCS6011P) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI C.S. AGARWAL, SENIOR ADVOCATE AN D SHRI RAVI PRATAP MALL, ADVOCATE REVENUE BY : SHRI SANJEEV SHARMA, CIT DR ORDER PER B.C. MEENA, ACCOUNTANT MEMBER : THIS APPEAL FILED BY THE REVENUE EMANATES FROM THE ORDER OF THE CIT (APPEALS)-XXIX, NEW DELHI DATED 18.07.2012 FOR THE ASSESSMENT YEAR 2003- 04. THE GROUNDS OF APPEAL TAKEN BY THE REVENUE A RE AS UNDER:- 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE CIT(A) HAS ERRED IN QUASHING ORDER U/S 154, WHEREIN THE AO HAD ADDED DIVIDEND INCOME OF RS.94,56,169/- TO BE TAXED @ 20%, IGNORING THE CLEAR CUT FINDING GIVEN BY THE AO IN T HE ORDER U/S 143(3) DATED 28.03.2006 WHEREIN IT WAS HELD, THAT T HE ASSESSEE WAS CARRYING ON THE BUSINESS IN INDIA THROUGH A PE. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE THE CIT(A) HAS ERRED IN HOLDING THAT THERE WAS NO MISTA KE APPARENT FROM THE RECORD TO HOLD THAT THE DIVIDEND INCOME OF THE ASSESSEE ITA NO.5142/DEL/2012 2 COMPANY WAS NOT EFFECTIVELY CONNECTED WITH THE PE, WHICH WAS TAXABLE @ 20% U/S 115A(1)(A). 3. THE APPELLANT PRAYS FOR LEAVE TO ADD, AMEND, MOD IFY OR ALTER ANY GROUNDS OF APPEAL AT THE TIME OR BEFORE T HE HEARING OF THE APPEAL. 2. BRIEF FACTS OF THE CASE ARE AS UNDER. THE RETURN OF INCOME WAS FILED BY THE ASSESSEE DEC LARING INCOME AT RS.11,64,63,820/- AFTER SETTING OFF THE BROUGHT FOR WARD BUSINESS LOSSES OF THE PRECEDING YEARS. THE INCOME WAS OFFERED TO TAX AS PER RATES SPECIFIED IN DTAA BETWEEN INDIA AND JAPAN. THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT INCLUDING DIVIDEND INCOME OF RS.94,56,169/- AND WHI CH WAS OFFERED TO TAX TO BE TAXABLE @ 15% AS PER ARTICLE 10(2) OF THE DTAA. ASSESSEE HAS TAKEN INTO ACCOUNT THIS INCOME IN THE COMPUTATION OF INCOME AN D THE DUE TAX WAS DULY PAID. THE COMPANIES FROM WHOM THE DIVIDEND WAS REC EIVED WERE ALSO MENTIONED. HOWEVER, THE ASSESSING OFFICER HAS NOT CONSIDERED THIS DIVIDEND INCOME WHILE MAKING THE ASSESSMENT U/S 143(3) OF TH E INCOME-TAX ACT, 1961. THERE WAS NO DISPUTE FROM ASSESSEES SIDE WITH REGA RD TO THE TAXABILITY OF THIS DIVIDEND INCOME @ 15%. ASSESSING OFFICER ISSUED A NOTICE U/S 154 OF THE ACT TO THE ASSESSEE AND MADE AN ADDITION OF RS.94,56,16 9/- AND THE TAX WAS HELD TO BE LEVIABLE @ 20%. THE CIT (A) QUASHED THE ORDER U /S 154 OF THE ACT BY HOLDING THAT IN ORDER TO APPLY ARTICLE 10 (4) OF TH E DOUBLE TAXATION AVOIDANCE AGREEMENT (DTAA), IT HAS TO BE PROVED THAT DIVIDEND IS EFFECTIVELY CONNECTED WITH THE PE AND THE CONCERNED INVESTMENT IN THE ECO NOMIC OWNERSHIP OF THE PE IN INDIA AND SUCH ASPECT REQUIRES ASCERTAINMENT OF CERTAIN FACTS WHICH HAVE NOT BEEN BROUGHT OUT IN THE ASSESSMENT ORDER U/S 143(3) AND BY INVOKING THE ITA NO.5142/DEL/2012 3 PROVISIONS OF SECTION 154, NEW FACTS CANNOT BE INVE STIGATED IN GUISE OF RECTIFICATION AND IT WAS HELD THAT NO MATERIAL WAS AVAILABLE U/S 143(3). THEREFORE, THERE ARE NO MISTAKES WHICH ARE OBVIOUS AND PATENT FROM THE RECORD WHICH CAN BE RECTIFIED U/S 154 OF THE ACT. LD. AR PLEADED TO SUSTAIN THE QUASHING OF ORDER U/S 154 OF THE ACT WHILE LD. DR P LEADED THAT THERE WAS APPARENT MISTAKE, HENCE CIT (A) SHOULD NOT HAVE QUA SHED THE ORDER. 3. AFTER HEARING BOTH THE SIDES, WE FIND THAT ASSES SEE HIMSELF HAS OFFERED THE DIVIDEND INCOME AND PAID THE TAX @ 15%. ASSESS ING OFFICER HAS NOT CONSIDERED THIS INCOME WHILE MAKING THE ORDER U/S 1 43(3) ON 28.03.2006. THUS, THERE WAS AN APPARENT AND PATENT MISTAKE IN T HE ORDER PASSED U/S 143(3) OF THE ACT. THIS MISTAKE WAS APPARENT FROM THE REC ORDS AVAILABLE WITH ASSESSING OFFICER. THEREFORE, WE SUSTAIN THE ORDER PASSED U/S 154 OF THE ACT TO THE EXTENT THE DIVIDEND INCOME IS TAXABLE @ 15% AND ALLOW THE REVENUES APPEAL TO THAT EXTENT ONLY. 4. IN THE RESULT, THE APPEAL OF THE REVENUE IS PART LY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 21 ST DAY OF OCTOBER, 2014. SD/- SD/- (I.C. SUDHIR) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 21 ST DAY OF OCTOBER, 2014 TS ITA NO.5142/DEL/2012 4 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XXIX, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR/ITAT