Krung Thai Bank PCL, V. JDIT(IT) 4,

ITA 5265/MUM/2004

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 55984 (ITAT-MUMBAI)
• Duration Of Justice: 7 year(s) 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: L
• Next Hearing Date: 22-11-2011
• Assessment Year: 2000-2001
• Appeal Filed On: 05-07-2004
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MALATHI SRIDHARAN
• Assessee Lawyers: GAJENDRA GALCCHA
• Keywords: Business income; Double taxation relief; Retrospective amendment
• Section: 90

Judgement Text

IN THE INCOME TAX APPELLATE TRIB UNAL MUMBAI BENCHES L, MUMBAI BEFORE SHRI R.S.SYAL, AM AND SHRI N.V.VASUDEVAN, JM ITA NO.5265/MUM/2004 : ASST.YEAR 2000-2001 M/S.KRUNG THAI BANK PCL 62 MAKER CHAMBERS-VI, 6 TH FLOOR NARIMAN POINT, MUMBAI 400 021. PAN : AAACK3475E. THE JOINT COMMISSIONER OF INCOME-TAX (INTERNATIONAL TAXATION) 4 MUMBAI. (APPELLANT) VS. (RESPONDENT) APPELLANT BY : SHRI GAJENDRA GALCCHA. RESPONDENT BY : SMT.MALATHI SRIDHARAN DATE OF HEARING : 22.11.2011 DATE OF PRONOUNCEMENT : 25.11.2011 O R D E R PER R.S.SYAL, AM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ON 09.03.2004 IN RELATION TO THE ASSESSMENT YEAR 2000-2001. 2. THE ONLY ISSUE IS AGAINST THE RATE AT WHICH INCO ME IS LIABLE TO BE TAXED. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A FOREIGN COMPANY. IT CLAIMED TAX RATE AT 35% ON BUSINESS INCOME, WHICH IS APPLICABLE TO THE RESIDENTS. THE ASSESSING OFFICER DID NOT ACCEPT THIS ISSUE AS COVERED UNDER THE NON-DISCRIMINATION CLAUSE IN ARTICLE 24 OF DTAA BETWEEN INDIA AND THAILAND. HE, THEREFORE, HELD THAT TAX WOULD BE CHARGED AT THE RATE OF 48%, BEING THE RATE APPLICA BLE TO NON-RESIDENTS. THE LEARNED CIT(A) UPHELD THE ASSESSMENT ORDER ON THIS POINT. ITA NO.5265/MUM/2004 M/S.KRUNG THAI BANK PCL. 2 3. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD IT IS OBSERVED THAT EXPLANATION 1 TO SECTION 90 HAS BEEN INSERTED WHICH READS AS UNDER:- FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED T HAT THE CHARGE OF TAX IN RESPECT OF A FOREIGN COMPANY AT A RATE HIGHER THAN THE RATE AT WHICH A DOMESTIC COMPANY IS CHARGEABLE, SHALL NOT BE REGARD ED AS LESS FAVOURABLE CHARGE OR LEVY OF TAX IN RESPECT OF SUCH FOREIGN COMPANY. 4. THE LEARNED AUTHORISED REPRESENTATIVE FAIRLY CON CEDED THAT THIS EXPLANATION HAS BEEN INSERTED WITH RETROSPECTIVE EFFECT FROM 01 .04.1962. AS PER THIS EXPLANATION THE CHARGE OF TAX IN RESPECT OF A FOREIGN COMPANY A T A RATE HIGHER THAN THE RATE AT WHICH A DOMESTIC COMPANY IS CHARGEABLE, SHALL NOT BE REGA RDED AS LESS FAVOURABLE CHARGE. IN THAT VIEW OF THE MATTER, THE HIGHER RATE APPLICABLE TO FOREIGN COMPANY CANNOT BE SWITCHED OVER TO LOWER RATE OF TAXATION APPLICABLE TO DOMESTIC COMPANIES UNDER NON- DISCRIMINATION ARTICLE 24 OF THE TREATY. IN VIEW OF THIS EXPLANATION 1, IT IS CLEAR THAT WHEN THE INCOME TAX HAS PROVIDED HIGHER RATE OF TAX ATION APPLICABLE TO FOREIGN COMPANY, THE TAX SHALL BE CHARGED AT SUCH HIGHER RA TE NOTWITHSTANDING THE FACT THAT THE DOMESTIC COMPANY IS CHARGED AT LOWER RATE. THE CONT ENTION OF THE LD. AR THAT WHEN IT FILED THE RETURN OF INCOME, THE ABOVE DISCUSSED EXP LANATION 1, IN THE PRESENT FORM, WAS NOT THERE AND AS SUCH THE APPLICATION OF LOWER RATE WAS WARRANTED, IS OBVIOUSLY SANS MERITS. THERE IS ABSOLUTELY NO DOUBT, WHATSOEVER TH AT THE CORRECT RATE OF TAX HAS TO BE APPLIED. WHEN THE POSITION HAS BEEN SETTLED BEYOND DOUBT BY THE LEGISLATURE AND THAT TOO BY WAY OF EXPLANATION INSERTED FROM RETROSPECT IVE EFFECT, IT CANNOT BE HEARD THAT THAT SUCH A CORRECT RATE OF TAX BE NOT APPLIED. AS THE AUTHORITIES BELOW HAVE APPLIED SUCH HIGHER RATE OF TAX APPLICABLE TO FOREIGN COMPA NY AND THE ASSESSEE IS A FOREIGN COMPANY, IN OUR CONSIDERED OPINION, THE LD. CIT(A) HAS TAKEN AN UNIMPEACHABLE VIEW ON THIS SCORE. WE, THEREFORE, UPHOLD THE IMPUGNED ORDER ON THIS ISSUE. ITA NO.5265/MUM/2004 M/S.KRUNG THAI BANK PCL. 3 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 25 TH DAY OF NOVEMBER, 2011. SD/- SD/- (N.V.VASUDEVAN) (R.S.SYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI : 25 TH NOVEMBER, 2011. DEVDAS* COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT CONCERNED 4. THE CIT(A) - XXXIII, MUMBAI. 5. THE DR/ITAT, MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR, ITAT, MUMBAI.