DCIT, New Delhi V. M/s Harris Stratex Networks (India) Ltd., New Delhi

ITA 5352/DEL/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7491 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 15-12-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 30-09-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIKRAM SAHAY
• Assessee Lawyers: DR RAKESH GUPTA; ABHISHEK ANAND
• Keywords: Services rendered outside India; Difference of opinion; Change of opinion; Reassessment proceedings
• Section: 143(3); 148

Judgement Text

ITA NO. 5352/DEL/2013 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C , NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI H.S. SIDHU, JUDICIAL MEMBER I.T.A. N O. 5352/DEL/2013 A.Y. : 2003 - 04 DCIT, CIRCLE 12(1), NEW DELHI VS. HARRIS STRATEX NETWORKS (INDIA) P. LTD., A - CENTRE, 4 - LSC, SECTOR - C - 6&7, VASANT KUNJ, NEW DELHI 110070 (PAN: AAHCS0822N) (APPELLANT) (RESPONDENT) DEPARTMENT BY : SH. VIKRAM SAHAY, SR. DR ASSESSEE BY : DR. RAKESH GUPTA, ADVOCATE & SH. ABHISHEK ANAND, CA DATE OF HEARING : 15 - 12 - 2014 DATE OF ORDER : 19 - 12 - 2014 ORDER PER H.S. SIDHU : J M THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST THE IMPUGNED O RDER DATED 26 / 7 /20 13 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS ) PERTAINING TO ASSESSMENT YEAR 2003 - 04 ON THE FOLLOWING GROUNDS: - ITA NO. 5352/DEL/2013 2 1. WHETHER LD. CIT(A) WAS CORRECT ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW IN QUASHING THE NOTICE U/S. 148 OF THE I.T. ACT WHICH WAS ISSUED AFTER TAKING PRIOR APPROVAL FROM THE A DDL. CIT? 2. WHETHER LD. CIT(A) WAS CORRECT ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW IN HOLDING THAT THERE IS CHANGE OF OPINION AND ON THAT BASIS ASSESSMENT CANNOT BE REOPENED DESPITE THE FACT THAT AO HAS NOT FORM ANY OPINION THEREFORE THERE IS NO QUESTION OF CHANGE OF OPINION? 3. WHETHER LD. CIT(A) WAS CORRECT ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW IN QUASHING THE PROCEEDINGS U/S. 148 OF THE I.T. ACT DESPITE THE FACT THE REASSESSMENT PROCEEDINGS IN THIS CASE WAS REOPENED ON 14.1.2008 I.E. WITHIN FOUR YEARS THEREFORE THE PROVISION REGARDING FAILURE ON THE PART OF THE ASSESSEE TO DISCHARGE FULL AND TRUE PARTICULARS ARE NOT APPLICABLE IN THIS CASE. 4. THE APPELLANT CRAVES LEAVE, TO ADD, ALTER OR AMEND ANY GROUND OF APPEAL RAISED ABOVE AT THE TIME OF THE HEARING. ITA NO. 5352/DEL/2013 3 2. THE FACTS NARRATED BY THE REVENUE AUTHORITY ARE NOT DISPUTED BY BOTH PARTIES, THEREFORE, NO NEED TO REPEAT THE SAME FOR THE SAKE OF CONVENIENCE. 3. THE AO COMPLETED THE ASSESSMENT U/S 147/143(3) OF THE INCOME TAX ACT, 1961 ON 23 / 10 /2008 ON THE ISSUE IN DISPUT E BY OBSERVING AS UNDER: - IT IS CLEAR THAT INSPITE OF BEING GIVEN A SPECIFIC OPPORTUNITY TO SHOW CAUSE AS TO WHY THE AFORESAID AMOUNT OF RS. 14,12,688/ - PAID TO FOREIGN COMPANY WITHOUT DEDUCTING TAX BE NOT DISALLOWED, THE ASSESSEE HAS BEEN UNABLE TO DO SO. IN ITS SUBMISSION DATED 2.9.2008, THE ASSESSEE HAS STATED THAT THE TRANSACTION UNDER REFERENCE IS ONLY OF PURCHASE OF SPARE PARTS AND DO NOT INCLUDE ANY SERVICE CHARGES; HENCE AT NO STRETCH OF IMAGINATION TDS PROVISIONS ARE ATTRACTED. IN THIS RE GARD, IT IS PERTINENT TO POINT OUT THAT AS PER CLAUSE (F) TO COLUMN NO. 17, THE AUDITORS HAVE CERTIFIED THAT THE COMPANY HAS PAID AN AMOUNT OF RS. 14,12,688/ - TO STRATEX NETWORKS (UK) LIMITED FOR REPAIR SERVICES RENDERED OUTSIDE INDIA ON WHICH NO TAX HA S BEEN DEDUCTED. SINCE THE ASSESSEE HAS ITA NO. 5352/DEL/2013 4 MADE THE AFORESAID EXPLANATION THAT THE TRANSACTION RELATES TO PURCHASE OF SPARE PARTS IS FOUND FALSE AS THE AUDITORS HAVE CATEGORICALLY CERTIFIED THAT THE PAYMENT HAD BEEN MADE FOR REPAIR SERVICES RENDERED OUTSIDE INDIA. SINCE THE ASSESSEE HAS VIOLATED THE PROVISIONS OF SECTION 40(A), THEREFORE, THE AFORESAID AMOUNT OF RS. 14,12,688/ - IS DISALLOWED AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE COMPANY. 4. AGAINST THE A SSESSING OFFICER ORDER DATED 23 / 10 /2008 ASSESSEE FILED AN APPEAL BEFORE THE ID. FIRST APPELLATE AUTHORITY WHO VIDE IMPUGNED ORDER DATED 26 / 7 /20 13 PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. NOW THE REVENUE IS AGGRIEVED AGAINST THE IMPUGNED ORDER AND FILED THE PRESENT APPEAL BEFORE US. 5 . WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RELEVANT RECORD AVAILABLE WITH US SPECIALLY THE IMPUGNED ORDER PASSED BY THE ID. FIRST APPELLATE AUTHORITY THE RELEVANT PARAGRAPH S OF IMPUGNED ORDER IS REPRODUCED HEREUNDER: THE FACTS OF THE PRESENT CASE H AVE BEEN CAREFULLY EXAMINED AND IT IS FOUND THAT THE ASSESSING OFFICER HAD EXAMINED THIS SAME ISSUE AT THE TIME OF ORIGINAL ASSESSMENT U/S. 143(3) OF THE I.T. ACT. IN ITA NO. 5352/DEL/2013 5 VIEW OF THIS FACT AND KEEPING IN VIEW THE DECISION OF USHA INTERNATIONAL OF THE JURISDIC TIONAL HIGH COURT, IT IS CLEAR THAT THE CONTENTION OF THE A.R. OF THE APPELLANT IN THIS REGARD, IS FULLY COVERED BY THE DECISION. THE JUDICIAL PRONOUNCEMENT HAD HELD THAT THE MERE CHANGES OF OPINION WILL NOT JUSTIFY REOPENING OF THE ASSESSMENT U/S. 148 OF THE I.T. ACT. IN THE FACTS OF THE PRESENT CASE, THE A.R. OF THE APPELLANT HAS POINTED OUT THAT THE ASSESSING OFFICER HAD EXAMINED THE ISSUE AND FORMED AN OPINION ON AN EARLIER OCCASION. IN THIS REGARD, THE A.R. HAS REFERRED TO HIS SUBMISSIONS TO THE AO T HROUGH LETTER DATED 20.7.2005. IN VIEW OF THE FINDINGS OF THE JURISDICTIONAL HIGH COURT OF M/S USHA INTERNATIONAL AS WELL AS VARIOUS OTHER DECISIONS OF KELVINATOR OF INDIA (SC) AND OTHERS, I AM INCLINED AGREE WITH THE CONTENTIONS OF THE AR OF THE APPELLAN T. ACCORDINGLY, IN MY OPINION, THE ASSESSING OFFICER HAS ERRED IN INITIATING ACTION U/S. 147/148 OF THE I.T. ACT AND THIS NOTICE U/S. 147/148 DESERVES TO BE QUASHED. THIS GROUND OF THE APPELLANT IS TREATED AS ALLOWED . ITA NO. 5352/DEL/2013 6 THE GROUND RELATED TO DISALLOWANCE M ADE U/S. 40A(I) OF THE I.T. ACT ON REPAIR CHARGES. KEEPING IN VIEW OF ABOVE, THIS GROUND BECOME INFRUCTUOUS AND IS, THEREFORE, TREATED AS DISMISSED FOR STATISTICAL PURPOSES. 6. WE FIND THAT T HE LD. CIT(A) OBSERVED THAT THE ASSESSING OFFICER HAD EXAMI NED THIS ISSUE AT THE TIME OF ORIGINAL ASSESSMENT U/S. 143(3) OF THE I.T. ACT. WE FIND THAT LD. CIT(A) HAS FURTHER OBSERVED THAT I N VIEW OF THIS FACT AND KEEPING IN VIEW THE DECISION OF USHA INTERNATIONAL OF THE JURISDICTIONAL HIGH COURT, IT IS CLEAR THAT THE CONTENTION OF THE A.R. OF THE ASSESSEE IN THIS REGARD, IS FULLY COVERED BY THE DECISION. THE JUDICIAL PRONOUNCEMENT HAD HELD THAT THE MERE CHANGES OF OPINION WILL NOT JUSTIFY REOPENING OF THE ASSESSMENT U/S. 148 OF THE I.T. ACT. IN THE FACTS OF THE P RESENT CASE, THE A.R. OF THE A SSESSEE HAS POINTED OUT THAT THE ASSESSING OFFICER HAD EXAMINED THE ISSUE AND FORMED AN OPINION ON AN EARLIER OCCASION. IN THIS REGARD, THE A.R. HAS REFERRED TO HIS SUBMISSIONS TO THE AO THROUGH LETTER DATED 20.7.2005. LD. CI T(A) FIND THAT I N VIEW OF THE FINDINGS OF THE JURISDICTIONAL HIGH COURT OF M/S USHA INTERNATIONAL AS WELL AS VARIOUS OTHER DECISIONS OF KELVINATOR OF INDIA (SC) AND OTHERS, HE WAS INCLINED TO AGREE WITH THE CONTENTIONS OF THE AR OF THE A SSESSEE . WE FIND THAT LD. CIT(A) HAS RIGHTLY CONCLUDED THAT T HE ASSESSING OFFICER HAS ERRED IN INITIATING ACTION U/S. 147/148 OF THE I.T. ACT AND ITA NO. 5352/DEL/2013 7 THIS NOTICE U/S. 147/148 DESERVES TO BE QUASHED. ACCORDINGLY, LD. CIT(A) ALLOWED THIS GROUND WHICH DOES NOT NEED ANY INTERFEREN CE ON OUR PART, HENCE, WE UPHOLD THE SAME. 7 . IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE O PEN C OURT ON 19 / 12 /20 1 4 . SD/ - SD/ - [ G.D. AGRAWAL] [ H.S. SIDHU ] VICE PRESIDENT JUDICIAL MEMBER DATE 19 / 12 /201 4 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES ITA NO. 5352/DEL/2013 8