OTIS ELEVATOR COMPANY, MUMBAI V. ADIT RG 4(2), MUMBAI

ITA 530/MUM/2013

• Counselvise Citation: 53019914 RSA 2013
• Duration Of Justice: 1 year(s) 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 18-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: FIROZE ANDHYARUJINA
• Keywords: Rectification of order; Double taxation relief; Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C, MUMBAI BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND DR. S.T.M. PAVALAN, JUDICIAL MEMBER ITA NO. 530/MUM/2013 ASSESSMENT YEAR: 2009-10 OTIS ELEVATOR COMPANY 9 TH FLOOR, MAGNUS TOWERS, MALAD LINK ROAD, MALAD(W) MUMBAI-400 064 VS. ADIT RG 4(2) SCINDIA HOUSE MUMBAI (APPELLANT) (RESPONDENT) PERMANENT ACCOUNT NO. :AAACO 5524 E ASSESSEE BY : SHRI FIROZE ANDHYARUJINA REVENUE BY : SHRI SANJEEV JAIN DATE OF HEARING : 08.04.2014 DATE OF PRONOUNCEMENT : 25.04.2014 O R D E R PER DR. S.T.M. PAVALAN, JM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF THE LD.CIT(A)-11, MUMBAI DATED 31.10.2012 FOR THE ASSES SMENT YEAR 2009-10. 2. IN THIS APPEAL, THE ASSESSEE HAS AGITATED THE DE CISION OF THE LD.CIT(A) AS TO THE APPLICABLE RATE OF TAX IN RESPECT OF THE INCOME EARNED BY THE ASSESSEE TO WHOM THE INDIA-USA DTAA IS APPLICABLE. 3. BRIEFLY STATED, THE ASSESSEE, A COMPANY INCORPOR ATED IN USA, DURING THE YEAR UNDER CONSIDERATION EARNED A TOTAL INCOME OF RS.6,6 9,61,160/- COMPRISING OF ROYALTY INCOME OF RS.2,77,55,433/- AND FEES FOR RENDERING T ECHNICAL SERVICES OF RS.3,92,05,724/-. ACCORDING TO THE ASSESSEE, THE NA TURE OF THE SAID INCOME, AS PER ARTICLE 12 OF THE INDIA-USA DTTA, WOULD BE TAXABLE IN INDIA @ 15%. THE TAX LIABILITY OF THE ASSESSEE COMPANY ON THE SAID INCOME WAS DISC HARGED BY WAY OF TAXES WITHHELD AT SOURCE BY THE PAYER. WHILE DISCHARGING THE TAX WITHHOLDING OBLIGATIONS, THE PAYER HAD INADVERTENTLY WITHHELD AN ADDITIONAL TAX OF RS.1,01,43,680/- AND ITA NO. 530/MUM/2013 OTIS ELEVATOR COMPANY ASSESSMENT YEAR: 2009-10 2 HENCE WHILE FILING ITS RETURN, CLAIMED REFUND OF EX CESS TAXES WITHHELD BY THE PAYER TO THE TUNE OF RS.99,506/-. ON PERUSAL OF THE RECEIPT OF INTIMATION U/S 143(1), THE ASSESSEE HAD OBSERVED THAT THE TAX PAYABLE BY THE C OMPANY WAS DETERMINED BY APPLYING THE TAX RATE OF 40% (TAX RATE APPLICABLE T O NON RESIDENT COMPANY AS PER FINANCE ACT 2009) ON THE TOTAL INCOME OF RS.6,69,61 ,160/- AS AGAINST THE BENEFICIAL TAX RATE OF 15% AVAILABLE TO THE ASSESSEE AS PER IN DIA-USA DTTA. ON APPEAL, THE LD.CIT(A) HELD THAT THE RATE OF 40% HAS TO BE APPLI ED ON THE TAXABLE INCOME. AGGRIEVED BY THE IMPUGNED DECISION, THE ASSESSEE IS IN APPEAL BEFORE US. 4. HAVING HEARD BOTH THE SIDES AND PERUSED THE MATE RIAL ON RECORD, IT HAS BEEN BROUGHT TO OUR NOTICE THAT THE ADIT VIDE HIS ORDER DATED 08.10.2012, UNDER SECTION 154, HAS REDRESSED THE GRIEVANCE OF THE ASSESSEE IN RESPECT OF THE CLAIM AS TO THE APPLICABLE RATE OF TAX. HOWEVER, THE LD.CIT(A) WHIL E PASSING THE IMPUGNED ORDER DATED 31.10.2012 HAS NOT TAKEN COGNIZANCE OF THE RE CTIFICATION ORDER PASSED BY THE ADIT WHILE DECIDING THE ISSUE OF RATE OF TAX APPLIC ABLE TO THE TOTAL INCOME OF THE ASSESSEE. MOREOVER, THE FINDINGS OF THE LD.CIT(A) A S APPEAR IN PARA 4 OF THE IMPUGNED ORDER DOES NOT HAVE ANY CLARITY AND IN FAC T THE SAME INADVERTENTLY REFERS TO SOME INCOME FEES FOR DATA INTEREST CHARGES AND INDIA SINGAPORE TREATY, WHICH DO NOT HAVE ANY BEARING ON THE CASE OF THE ASSESSEE . IN VIEW OF THAT MATTER, WE SET ASIDE THE ORDER OF THE LD.CIT(A) AND REMIT THE ISSU E BACK TO HIM FOR RE-ADJUDICATING THE ISSUE AFTER CONSIDERING THE RECTIFICATION ORDER DATED 08.10.2012 PASSED BY THE DIT. NEEDLESS TO EMPHASIS THAT IN THE SAID PROCESS, THE LD.CIT(A) SHALL PROVIDE THE ASSESSEE, A REASONABLE OPPORTUNITY OF BEING HEARD. WE DIRECT AND ORDER ACCORDINGLY. IN VIEW OF THE FACT THAT THE APPEAL IS SET ASIDE TO THE FILE OF THE LD.CIT(A) FOR RE- ADJUDICATION, THE GROUNDS RAISED IN THIS APPEAL ARE NOT ADJUDICATED SEPARATELY. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 2 5 TH DAY OF APRIL, 2014. SD/- SD/- (P.M. JAGTAP) (DR. S.T.M. PAVALAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 25.04.2014. *SRIVASTAVA ITA NO. 530/MUM/2013 OTIS ELEVATOR COMPANY ASSESSMENT YEAR: 2009-10 3 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR C BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.