DDIT, New Delhi V. M/s. Elano USA (Now know as Unison Industries LLC ), New Delhi

ITA 558/DEL/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69177 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 20-08-2013
• Assessment Year: 2002-2003
• Appeal Filed On: 30-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y KAKKAR
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B NEW DELHI) BEFORE SHRI U. B. S. BEDI, JUDICIAL MEMBER AND SHRI T. S. KAPOOR, ACCOUNTANT MEMBER ITA NO. 558 / DEL/ 2013 (ASSESSMENT YEAR 2002-03) DCIT CIRCLE 1(2), VS. M/S. UNISON INDUSTRIES LLC NEW DELHI FORMERLY ELANO CORPORATION, C/O PRICEWATERHOUSECOOPERS, 11-A, SUCHETA BHAWAN, VISHNU DIGAMBER MARG, NEW DELHI-110 002 PAN : AAACU9996L (APPELLANTS) (RESPONDENTS) ASSESSEE BY : SHRI SACHIT JOLLY, ADV. DEPARTMENT BY: MS. Y KAKKAR, SR. DR ORDER PER U B S BEDI, JUDICIAL MEMBER: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY LD. CIT(A) XXV, NEW DELHI DATED 30.11.2012 RELEVANT TO ASSESSMENT YEAR 2002-03 WHEREBY DELETION OF INTEREST LEVIED U/S 234 -B HAS BEEN CHALLENGED. 2. AT THE VERY OUTSET, LD. COUNSEL FOR THE ASSESSEE , WHILE FILING COPY OF CONSOLIDATED ORDER OF TRIBUNAL C BENCH IN THE CAS E OF ADIT, CIRCLE 1(2) AND OTHERS VS. G.E. ELECTRONIC POWER SYSTEMS (INC.) AND OTHERS IN I.T.A. NO. 6034/DEL/2010 ETC. DATED, 16.07.2013 HAS SUBMITTED THAT THE CASE OF THE ASSESSEE FOR EARLIER AND SUBSEQUENT YEAR WAS ALSO C OVERED BY THE SAID ORDER WHEREBY ACTION OF LD. CIT(A) IN DELETING THE INTERE ST CHARGED U/S 234B HAS I.T.A. NOS. 558 /DEL/2013 2 BEEN UPHELD, THEREFORE, IT WAS PLEADED THAT THIS IS SUE IS COVERED AND FOLLOWING THE PRECEDENT, THE ORDER OF LD. CIT(A) MA Y BE CONFIRMED. 3. LD. D.R. COULD NOT CONTROVERT THE FACTUAL ASPECT BUT SUBMITTED THAT THE REVENUE HAS NOT ACCEPTED THE JUDGEMENT OF THE HONB LE JURISDICTIONAL HIGH COURT ON THE ISSUE ON THE BASIS OF WHICH THE TRIBUN AL HAS PASSED ITS CONSOLIDATED ORDER AND SLP HAS BEEN FILED BEFORE TH E HONBLE APEX COURT WHICH HAS BEEN ADMITTED, THEREFORE, THE ORDER OF LD . CIT(A) MAY BE REVERSED. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, GONE T HROUGH THE MATERIAL ON RECORD AS WELL AS THE PRECEDENT RELIED UPON BY T HE LD. A.R. OF THE ASSESSEE AND FIND THAT THE ISSUE IN RELATION TO CHA RGING OF INTEREST U/S 234B HAS BEEN CONSIDERED AND DECIDED WHILE DISPOSING OFF VARIOUS APPEALS INCLUDING FEW APPEALS OF THE ASSESSEE BY RELYING UP ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF DIT VS JACA BS CIVIL INC. AS REPORTED IN 330 ITR 578 AS PER PARA 9 AND 9.1OF THE SAID ORDER WHICH IS REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: 9. ON CONSIDERATION OF THE SUBMISSIONS, WE FIND TH AT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSES BY THE JUDGEMENT OF THE JURISDICTIONAL HIGH COURT. THE HONBLE DELHI HIGH COURT IN THE CASE OF DIRECTOR OF INCOME TAX VS JACABS CIVIL INC. 330 ITR 578 HELD AS FOLLOWS: SECTION 2(1) OF THE ACT DEFINES ADVANCE TAX TO ME AN THE ADVANCE TAX PAYABLE IN ACCORDANCE WITH THE PROVISIO NS OF CHAPTER XVII-C OF THE ACT. THESE PROVISIONS ARE CO NTAINED FROM SECTION 207 ONWARDS. SECTION 209 FALLS UNDER THIS CHAPTER. SUB-SECTION (1) THEREOF DEALS WITH FOUR S ITUATIONS UNDER WHICH THE ADVANCE TAX PAYABLE BY THE ASSESSEE IS TO BE COMPUTED. ADMITTEDLY, THESE CASES DO NOT CONCERN W ITH CLAUSES (A) TO (C). CLAUSE (D) OF SUB-SECTION (1) OF SECTI ON 209, WHICH IS RELEVANT READS AS UNDER:- (D) THE INCOME TAX CALCULATED UNDER CLAUSE (A) OR CLAUSE (B) OR CLAUSE (C) SHALL, IN EACH CASE, BE REDUCED BY TH E AMOUNT OF I.T.A. NOS. 558 /DEL/2013 3 INCOME-TAX WHICH WOULD BE DEDUCTIBLE OR COLLECTIBLE AT SOURCE DURING THE SAID FINANCIAL YEAR UNDER ANY PROVISION OF THIS ACT FROM ANY INCOME (AS COMPUTED BEFORE ALLOWING ANY DE DUCTIONS ADMISSIBLE UNDER THIS ACT) WHICH HAS BEEN TAKEN INT O ACCOUNT IN COMPUTING THE CURRENT INCOME OR, AS THE CASE MAY BE , THE TOTAL INCOME AFORESAID; AND THE AMOUNT OF INCOME-TAX AS S O REDUCED SHALL BE THE ADVANCE TAX PAYABLE. 8. THIS CLAUSE CATEGORICALLY USES THE EXPRESSION D EDUCTIBLE OR COLLECTABLE AT SOURCE AND IT IS THIS CLAUSE WHI CH IS INCORPORATED BY THE UTTARANCHAL HIGH COURT IN THE S AID JUDGEMENT (SUPRA) IN THE MANNER ALREADY POINTED ABO VE. THE SCHEME OF THE ACT IN RESPECT OF NON-RESIDENTS IS CL EAR. SECTION 195 OF THE ACT PUTS AN OBLIGATION ON THE PAYER, I.E . ANY PERSON, RESPONSIBLE FOR PAYING TO A NON-RESIDENT, TO DEDUCT INCOME TAX AT SOURCE AT THE RATS IN FORCE FROM SUCH PAYMENTS E XCLUDING THOSE INCOMES WHICH ARE CHARGEABLE UNDER THE HEAD SALARIES. THEREFORE, THE ENTIRE TAX IS TO BE DED UCTED AT SOURCE WHICH IS PAYABLE ON SUCH PAYMENTS MADE BY TH E PAYEE TO THE NON RESIDENT. SECTION 201 OF THE ACT LAYS DOWN THE CONSEQUENCES OF FAILURE TO DEDUCT OR PAY. THESE CO NSEQUENCES INCLUDE NOT ONLY THE LIABILITY O PAY THE AMOUNT WHI CH SUCH A PERSON WAS REQUIRED TO DEDUCT AT SOURCE FROM THE PA YMENTS MADE TO A NON-RESIDENT BUT ALSO PENALTIES ETC. ONC E IT IS FOUND THAT THE LIABILITY WAS THAT OF THE PAYER AND THE SA ID PAYER HAS DEFAULTED IN DEDUCTING THE TAX AT SOURCE, THE DEPAR TMENT IS NOT REMEDY-LESS AND THEREFORE CAN TAKE ACTION AGAINST T HE PAYER UNDER THE PROVISIONS OF SECTION 201 OF THE INCOME T AX ACT AND COMPUTE THE AMOUNT ACCORDINGLY. NO DOUBT, IF THE P ERSON (PAYER) WHO HAD TO MAKE PAYMENTS TO HT NON-RESIDENT HAD DEFAULTED IN DEDUCTING THE TAX AT SOURCE FORM SUCH PAYMENTS, THE NON-RESIDENT IS NOT ABSOLVED FROM PAYMENT OF TA XES THEREUPON. HOWEVER, IN SUCH A CASE, THE NON-RESIDE NT IS LIABLE TO PAY TAX AND THE QUESTION OF PAYMENT OF ADVANCE T AX WOULD NOT ARISE. THIS WOULD BE CLEAR FROM THE READING OF SECTION 191 OF THE ACT ALONG WITH SECTION 209 (1) (D) OF THE AC T. FOR THIS REASON, IT WOULD NOT BE PERMISSIBLE FOR HT REVENUE TO CHARGE ANY INTEREST UNDER SECTION 234B OF THE ACT. 9. WE THUS, ANSWER THE AFORESAID QUESTION IN FAVOUR OF THE ASSESSEE AS WE ARE OF THE OPINION THAT HE TRIBUNAL HAS RIGHTLY HELD THAT THE ASSESSEE WAS NOT LIABLE TO PAY ANY IN TEREST UNDER I.T.A. NOS. 558 /DEL/2013 4 SECTION 234B OF THE ACT FOLLOWING THE JUDGEMENTS OF THE UTTARANCHAL AND BOMBAY HIGH COURTS. 9.1 THE LD. CIT(A) FOLLOWED THIS BINDING DECISION O F THE JURISDICTIONAL HIGH COURT. THE JUDGEMENT OF HONBL E SUPREME COURT IN THE CASE OF CIT VS ANJUM 252 ITR 01 RELIED UPON BY THE LD. D.R. HAS BEEN CONSIDERED BY THE JURISDICTIONAL HIGH CURT IN THE CASE OF JACABS CIVIL INC. (SUPRA). THUS, WE FIND NO INFIRM ITY IN THE ORDER OF THE FIRST APPELLATE AUTHORITY. HENCE, WE UPHOLD TH E SAME. 5. THEREFORE, SINCE THE ISSUE IS SQUARELY COVERED I N FAVOUR OF THE ASSESSEE, FOLLOWING THE SAID DECISION, WE UPHOLD TH E ORDER OF LD. CIT(A) AND DISMISS THE APPEAL OF THE REVENUE BEING A COVERED M ATTER. 6. AS A RESULT, THE APPEAL OF THE REVENUE STANDS DI SMISSED. 7. ORDER PRONOUNCED IN THE OPEN COURT SOON AFTER TH E CLOSE OF HEARING ON 22 ND AUG., 2013. SD./- SD./- (T. S. KAPOOR) (U.B.S.BEDI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 22 ND AUGUST, 2013. SP. COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A)-XXV, NEW DELHI AR, ITAT, 5. CIT(ITAT), NEW DELHI NEW DELHI