Appeal details
Counselvise Citation
[2014] 140 COUNSELVISE.COM (IT) 83466 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
10 month(s) 29 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
05-08-2014
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
B
Next Hearing Date
05-08-2014
Assessment Year
2007-2008
Appeal Filed On
06-09-2013
Judgement Text
, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B MUMBAI . . , , BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER /AND SHRI SANJAY ARORA, ACCOUNTANT MEMBER ITA NO.5674/MUM/2013 (A.Y. 2007-08) MARRIOT INTERNATIONAL LICENCING COMPANY BV, C/O. BMR & ASSOCIATES LLP, BMR HOUSE, 36B, DR.RK SHIRODKAR MARG, PAREL, MUMBAI 400 012. (APPELLANT ) VS. THE ASSTT. DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION) 4(1), 133, SCINDIA HOUSE, 1 ST FLOOR, N.M.ROAD, BALLARD PIER, MUMBAI 400 038 (RESPONDENT) APPELLANT BY : SHRI NIRAJ SHETH RESPONDENT BY : SHRI AN URAG SRIVASTAVA. DATE OF HEARING : 05/08/2014 DATE OF PRONOUNCEMENT : 05 /08/2014 ORDER PER I.P.BANSAL, JM: THIS IS AN APPEAL FILED BY THE ASSESSEE AND IT I S DIRECTED AGAINST THE ORDER PASSED BY LD. CIT(A)-11, MUMBAI DATED 18/7/2013 FOR ASSESSMENT YEAR 2007-08. GROUND OF APPEAL READ AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE APPELLANT RESPECTFULLY SUBMITS THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-11 [CIT(A)] HAS IN HIS ORDER DATED JULY 18, 2013 UNDER SECTION 250 OF THE INCOME-TAX ACT, 1961 (THE ACT) ERRED ON THE FOLLOWING GROUNDS (WITHOUT PREJU DICE TO EACH OTHER): 1. IN CONFIRMING THE LEVY OF PENALTY OF RS 939,318 UNDER SECTION 271(1)(C) OF THE ACT; 2. IN PASSING THE PENALTY ORDER ON GROUNDS OTHER TH AN THE GROUND ON WHICH IT WAS INITIATED; ITA NO.7181/MUM/2012, A.Y. 2004-05 2 3. IN HOLDING THAT THE APPELLANT HAS CONCEALED PART ICULARS OF INCOME AND ALSO FURNISHED INACCURATE PARTICULARS OF INCOME; 4. IN HOLDING THAT THE APPELLANT HAS NOT BEEN ABLE TO SUBSTANTIATE ITS EXPLANATION AND FAILED TO PROVE THAT SUCH EXPLANATION WAS BONAF IDE AND THAT THE EXPLANATION OFFERED BY THE APPELLANT DURING THE QUANTUM PROCEED INGS WERE FOUND TO BE MISLEADING AND FALSE; AND 5. IN HOLDING THAT ALL FACTS RELATING TO CLAIMS MAD E IN THE COMPUTATION OF INCOME HAVE NOT BEEN DISCLOSED. 2. AT THE OUTSET IT WAS SUBMITTED BY LD. AR THAT T HE IMPUGNED ADDITION ON WHICH AFOREMENTIONED CONCEALMENT PENALTY HAS BEEN L EVIED HAS BEEN SET ASIDE BY THE TRIBUNAL TO THE FILE OF AO VIDE ORDER DATED 29/ 11/2013 IN ITA NO.2083/MUM/2011, COPY OF THE SAID ORDER WAS PLACE D ON OUR RECORD. THE MATTER WAS RESTORED BACK TO THE FILE OF AO WITH THE FOLLOWING OBSERVATIONS. 8. ON THE ISSUE OF THE RECEIPTS BEING IN THE NATU RE OF REIMBURSEMENT OF EXPENSES AND HENCE NOT CHARGEABLE TO TAX , THE TRIBUNAL HEL D THAT THE RECEIPTS ARE NOT IN THE NATURE OF REIMBURSEMENT OF EXPENSES AS NO MATERIAL HAS BEEN PLACED ON RECORD TO DEMONSTRATE THAT THE ACTUAL EXPENSES INCURRED BY TH E ASSESSEE WERE EQUAL TO THE AMOUNT RECEIVED. IN THE CASE BEFORE US, SITUATION IS THE SAME. AS THE ASSESSEE HAS FAILED TO DEMONSTRATE THAT THE ACTUAL EXPENSES INCU RRED WERE EQUAL TO THE AMOUNT RECEIVED, THUS IN OUR CONSIDERED OPINION, THE IMPU GNED RECEIPTS ARE NOT REIMBURSEMENT OF EXPENSES. IT IS PERTINENT TO NOTE THAT WHETHER THE AMOUNT WILL BE TAXABLE IN INDIA. THE TAXABILITY WILL BE ATTRACTED IN INDIA IF ASSESSEE CARRIES ON BUSINESS IN INDIA THROUGH A PERMANENT ESTABLISHMENT SITUATED IN INDIA. SUCH TAXABILITY WILL BE RESTRICTED TO THE PROFITS OF THE PERMANENT ESTABLISHMENT SUBJECT TO THE OTHER PROVISIONS OF THE DTAA. SINCE THE ENTIRE AMOUNT HAS BEEN TREATED AS ROYALTIES COVERED UNDER ARTICLE-12 OF THE DTAA BY THE LOWER AUTHORITIES, THERE WAS NO OCCASION TO CONSIDER THE TAXABILITY OF THE AMOUN T IN TERMS OF ARTICLE-7 R.W. ARTICLE- 5 OF THE DTAA. FOLLOWING THE FINDINGS OF THE TRIBU NAL IN A.Y. 2004-05, THE VIEW TAKEN BY THE AO ABOUT THE TREATMENT OF THIS AMOUNT AS ROYALTY UNDER ARTICLE-12 HAS BEEN SET ASIDE AS ALSO IN LINE WITH THE FINDINGS OF THE TRIBUNAL IN A.Y. 2004-05 , WE HAVE HELD THAT THIS AMOUNT IS ALSO NOT REIMBURSEMEN T OF EXPENSES. THE NATURAL COROLLARY WHICH FOLLOWS IN THE PRESENT CIRCUMSTANCE S IS THAT THE TAXABILITY OF THIS AMOUNT IS REQUIRED TO BE DETERMINED IN TERMS OF ART ICLE-7 AS HAS BEEN HELD BY THE TRIBUNAL IN A.Y. 2004-05 IN ITA NO. 416/M/08 (SUPRA ). IT WOULD BE PERTINENT TO MENTION HERE CLEARLY THAT IN A.Y. 2004-05, THE BRE AK-UP OF THE SUM WAS AVAILABLE UNDER CLAUSES 3.1, 3.2 AND 3.3 WHICH HAS BEEN MENTI ONED BY US ELSEWHERE WAS NOT MADE AVAILABLE TO US. THEREFORE, THE TOTAL IMPUGNE D RECEIPTS ARE LIABLE TO BE CONSIDERED IN TERMS OF ARTICLE-7. WE, ACCORDINGLY SET ASIDE THE IMPUGNED ORDER AND REMIT THE MATTER TO THE FILE OF THE AO FOR CONSIDER ING THE FACTS IN THE LIGHT OF ARTICLE-7 OF THE DTAA. ITA NO.7181/MUM/2012, A.Y. 2004-05 3 COPY OF THE AFOREMENTIONED ORDER WAS ALSO GIVEN TO LD. DR. 3. IN THIS VIEW OF THE SITUATION, AFTER HEARING BOT H THE PARTIES, WE RESTORE THE ISSUE REGARDING LEVY OR OTHERWISE OF CONCEALMENT PE NALTY IN RESPECT OF IMPUGNED ADDITION TO THE FILE OF AO WITH A DIRECTION TO READ JUDICATE THE SAME AFTER DECIDING THE QUANTUM IN PURSUANCE TO AFOREMENTIONED ORDER OF THE TRIBUNAL. WE DIRECT ACCORDINGLY. 4. FOR STATISTICAL PURPOSES, THE APPEAL FILED BY TH E ASSESSEE IS CONSIDERED TO BE ALLOWED IN THE MANNER AFORESAID. ORDER PRONOUNCED IN THE OPEN COURT ON 05/08/201 4 ! ' #$ % &'( 05/08/2014 ' ) SD/- SD/- ( /SANJAY ARORA ) ( . . / I.P. BANSAL ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; &' DATED 05/08/2014 ! ! ! ! ' '' ' *+, *+, *+, *+, -,$+ -,$+ -,$+ -,$+ / COPY OF THE ORDER FORWARDED TO : 1. ./ / THE APPELLANT 2. *0./ / THE RESPONDENT. 3. 1 ( ) / THE CIT(A)- 4. 1 / CIT 5. ,2) *+' , , / DR, ITAT, MUMBAI 6. )3 4 / GUARD FILE. !' !' !' !' / BY ORDER, 0,+ *+ //TRUE COPY// 5 55 5 / 6 6 6 6 (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI . ' . ./ VM , SR. PS ITA NO.7181/MUM/2012, A.Y. 2004-05 4 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 04/08/2014 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 04/08/2014 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7. FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER
