ADIT (IT) 4(1), MUMBAI V. MSM SATELLITE (SINGAPORE ) PTE LTD (FORMELRY KNOWN AS SET SATELLITE (SINGAPORE) PTE LTD, MUMBAI

ITA 5757/MUM/2012

• Counselvise Citation: 575719914 RSA 2012
• Duration Of Justice: 1 year(s) 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 14-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PREETAM SINGH; RAJESH R PRASAD
• Assessee Lawyers: RAJAN VORA; CHETAN MEHTA
• Keywords: Business income; Double taxation relief
• Section: 11; 244A; 201(1)

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI - B BENCH. . , ! ! ! ! ' ' ' ' #$%& #$%& #$%& #$%& , $ $ $ $ '( '( '( '( BEFORE S/SH.D.MANMOHAN,VICE-PRESIDENT & RAJENDRA, A CCOUNTANT MEMBER ./ ITA NO.5757/MUM/2012 &C.O.268/MUM/2012 ) ) ) ) / A.Y.-2009-10 ADIT (IT) 4(1) 133, SCINDIA HOUSE, BALLARD PIER MUMBAI- 400038 VS. M/S MSM SATELLITE (SINGAPORE) PTE. LTD. (FORMERLY KNOWN AS SET SATELLITE (SINGAPORE) PTD. LTD. PAN: AABCM1026G ( *+ / APPELLANT) ( ,-*+ / RESPONDENT) MSM SATELLITE (SINGAPORE) PTE. LTD. C/O KPMG LODHA EXCELUS, 1 ST FLOOR, APOLLOI MILLS COMPOUND, N.M. JOSHI MARG, MUMBAI-400011 VS. ADIT (IT) 4(1) 133, 1 ST FLOOR, SCINDIA HOUSE, BALLARD ESTATE, MUMBAI- 400038 PAN: AABCM1026G ( *+ / APPELLANT) ( ,-*+ / RESPONDENT) *+ . $ *+ . $ *+ . $ *+ . $ / / / / APPELLANT BY :SHRI RAJESH R.PRASAD & SHRI PR EETAM SINGH ,-*+ 0 . $ / RESPONDENT BY :SHRI RAJAN VORA & CHETAN MEHTA 0 1 0 1 0 1 0 1 / // / DATE OF HEARING : 18/11/2013 2) 0 1 / DATE OF PRONOUNCEMENT : 27/11/2013 PER RAJENDRA, A.M. CHALLENGING THE ORDER DATED 01.06.2012 OF THE CIT(A )-11,MUMBAI, ASSESSING OFFICER(AO) AS WELL AS ASSESSEE-COMPANY HAS FILED THE FOLLOWING GROUND S OF APPEAL/CROSS OBJECTION : ITA NO.5757/MUM/2012 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN HOLDING THAT INT EREST U/S.244A IS ADMISSIBLE ON REFUND OF TAX PAID IN PURSUANCE OF ORDER U/S. 195 O F THE L.T. ACT WITHOUT APPRECIATING THE FOLLOWING: (I).THAT UNDER THE PROVISIONS OF THE ACT, REFUND CA N ONLY BE MADE TO THE EARNER OF THE INCOME AND SINC E IN THE PRESENT CASE REFUND WAS BEING MADE TO THE DEDUC TOR OF THE TAX AND NOT TO THE DEDUCTEE OR WHOSE BEH ALF TAX HAD BEEN DEDUCTED AT SOURCE, THE QUESTION OF PA YMENT OF INTEREST ON REFUND WILL NOT ARISE. (II).THAT IT IS ONLY UNDER THE BENEFICIAL CIRCULAR NO. 7 OF 2007 DATED 23.10.2007 OF CBDT THAT IN THE PRESENT CASE REFUND TO A DEDUCTOR OF TAX U/S. 195 C OULD BE ALLOWED AND EVEN THIS BENEFICIAL CIRCULAR D OES NOT PROVIDE FOR PAYMENT OF INTEREST U/S. 244 A TO T HE DEDUCTOR OF TAX. 2.THE APPELLANT PRAYS THAT THE ORDER OF THE LD.CIT( A) ON THE ABOVE GROUND(S) BE SET ASIDE AND THAT OF THE ASSESSING OFFICER RESTORED. 3.THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 2 ITA NO.5757/MUM/2012 & C.O. 268/MUM/2012 MSM SATELLITE FOLLOWING ARE THE GROUNDS OF CROSS OBJECTION: 1.ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN NOT DIRECTING THE ASSESSING OFFI CER (AO) TO GRANT INTEREST UNDER SECTION 244A OF THE INCOME TAX ACT, 1961, ON THE INTEREST DUE TO MSM SA TELLITE (SINGAPORE) PTE. LTD., BUT NOT GRANTED BY T HE AO. FACTS OF THE CASE: 2. ASSESSEE-COMPANY HAD FILED AN APPLICATION U/S.195 O F THE ACT ON 20.03.2009 FOR ISSUE OF A ZERO DEDUCTION OF TAX AT SOURCE CERTIFICATE IN RESPECT O F PAYMENT TO BE MADE BY IT TO M/S.GLOBAL CRICKET CORPORATION PVT.LTD.(GCC) UNDER THE AGREEMENT DATED 25.01.2002 FOR ACQUIRING RIGHTS TO TELECAST LIVE CRICKET MATCHES OVER VARIOUS COUNTRIES INCLUDI NG THE INDIAN SUB-CONTINENT.AO FOUND THAT ASSESSEE WAS A COMPANY INCORPORATED IN SINGAPORE,TH AT IT WAS ENGAGED IN THE BUSINESS OF TELECASTING CHANNELS BY THE NAME OF SET MAXOVER T HE INDIAN TERRITORY,THAT IT HAD MADE AN APPLICATION WITH REQUEST NOT TO DEDUCT TAX AT SOURC ES.AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE,AO HELD THAT ALL THE PAYMENTS WHICH WERE A TTRIBUTABLE TO INDIA ATTRACTED THE PROVISIONS OF THE ACT,THAT NATIONALITY OF THE RECIPIENT AND THE PAYER AND THE PLACE OF PAYMENT WAS IRRELEVANT, THAT IT WAS ONLY THE PLACE;WHERE THE SERVICES FOR WHICH THE PAYMENTS WERE BEING DONE WAS EFFECTIVELY UTILISED;DETERMINED THE APPLICABILITY OF SECTION 19 5, THAT IN THE INSTANT CASE THE PAYMENT HAD BEEN MADE FOR THE PURPOSE OF BROADCAST OF LIVE MATCHES O VER THE INDIAN TERRITORY, THAT THE PAYER WOULD HAVE SUBSTANTIAL INCOME FROM INDIA IN THE FORM OF A DVERTISEMENT TIME SLOT SALE AND ROYALTY ON ACCOUNT OF DISTRIBUTION OF THE CHANNEL,THAT ULTIMAT ELY THE SERVICES WERE BEING UTILISED IN INDIA, THAT PROVISIONS OF SECTION 195 WERE APPLICABLE TO THE TR ANSACTION-IN-QUESTION.HE FURTHER HELD THAT ASSESSEE HAD AN AGENCY PE IN THE FORM OF ITS INDIAN AGENT,THAT SITUATION REQUIRED A DETAILED EXAMINATION OF THE ACTIVITIES OF THE DEPENDANT AGEN T PE AND ITS CASH FLOW, THAT IT WOULD BE PREMATURE AT THAT STAGE TO HELD THAT PAYMENT WAS NO T ATTRIBUTABLE TO THE PE IN INDIA AND HENCE NOT ARISING OR ACCRUING IN INDIA,THAT DETAILED EXAMINAT ION WAS MORE APPROPRIATE AT THE TIME OF REGULAR ASSESSMENT OF THE RECIPIENT AND NOT AT THE STAGE OF TAX WITHDRAWING ORDER, THAT ORDER U/S.195 WAS NOT AFFECT THE RIGHTS OF THE APPLICANT OR THE DEPARTMEN T,THAT THE PAYMENT WAS TO BE MADE TO A BANK ACCOUNT IN NEW JERSEY AND NOT TO A BANK ACCOUNT IN SINGAPORE,THAT DTAA WAS SIMILAR WORDED AS THE ACT WITH RESPECT TO DEFINITION OF ROYALTY,THAT THE ASSESSEE WAS NOT ENTITLED TO GET ANY BENEFIT AS IT HAD ALREADY BEEN HELD THAT PAYMENT WAS IN THE NA TURE OF ROYALTY,THAT IN EARLIER YEARS FAA HAD NOT ADJUDICATED THE ISSUE AS TO WHETHER THE PAYMENT WAS IN THE FORM OF ROYALTY OR NOT,THAT EVEN IF IT WAS NOT IN THE NATURE OF ROYALTY THE SAME WOULD BE TAXA BLE AS BUSINESS INCOME OF GCC. DURING THE ASSESSMENT PROCEEDINGS,ALTERNATE SUBMISS ION MADE BY THE ASSESSEE-COMPANY,THAT ENTIRE PAYMENT COULD NOT BE ATTRIBUTABLE TO INDIA,WAS ACCE PTED BY THE AO.HE HELD THAT THE NET PROFIT OF THE ASSESSEE WAS TO BE TAXED PROVISIONALLY @ 15% AS PER THE NORMAL PROVISIONS OF THE ACT,THAT TAX LIABILITY WAS TO BE BORNE BY THE PRAYER, THAT RECEI PTS OF THE ASSESSEE HAD TO BE GROSSED UP. HE HELD THAT TAX WERE TO BE WITHHELD ON THE GROSS PAYMENT M ADE TO THE ASSESSEE @10.96%.IN PURSUANT OF THE ORDER OF THE AO, ASSESSEE WITHHELD AND DEPOSITED A TAX AMOUNTING TO US$ 13, 13,782/- (EQUIVALENT TO RS.6.25 CRORES) WITH THE GOVERNMENT TREASURY TOW ARDS PAYMENT TO GCC. 3. ASSESSEE-COMPANY PREFERRED AN APPEAL BEFORE THE FIR ST APPELLATE AUTHORITY(FAA).AFTER CONSID - ERING SUBMISSIONS OF THE ASSESSEE,FAA HELD THAT PAY MENT MADE BY THE ASSESSEE TO GCC WERE NOT ACCRUING OR ARISING IN INDIA AS PER THE ARTICLE 12( 7) OF THE TREATY,THAT AMOUNT WAS NOT LIABLE TO TAX DEDUCTION AT SOURCE IN INDIA. IN PURSUANCE OF THE ORDER OF THE FAA,AO PASSED AN O RDER U/S.251 READ WITH SECTION 195 OF THE ACT ON 13.09.2011.AS PER THE ASSESSEE,AO GRANTED ONLY R EFUND OF TAXES WITHHELD AS PER THE ORDER U/S.195 AMOUNTING TO RS.62,25,19,187/-, THAT AO DID NOT GRANT INTEREST U/S.244A OF THE ACT ON THE REFUND OF TAXES SO WITHHELD BY THE ASSESSEE. 3 ITA NO.5757/MUM/2012 & C.O. 268/MUM/2012 MSM SATELLITE 4. BEFORE US,AR SUBMITTED THAT AS PER THE PROVISIONS O F SECTION 244A(1)(B) OF THE ACT,AO HAD GRANTED INTEREST ON THE SAID REFUND OF TAXES WITHHE LD BY THE ASSESSEE, THAT THE EXPRESSION IN ANY OTHER CASE APPEARING IN SECTION 244A(1)(B) WAS WID E ENOUGH TO COVER REFUND OF TAX PAID IN PURSUANCE OF AN ORDER UNDER SECTION 195 OF THE ACT. HE FURTHER SUBMITTED THAT ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE BY THE L BENCH OF MUMBAI T RIBUNAL VIDE ITS ORDERS DATED 26.09.2009 AND 26.11.2010 FOR THE AYS.2003-04,2007-08&2008-09 RESP ECTIVLEY.HE FURTHER SUBMITTED THAT HONBLE BOMBAY HIGH COURT THAT UPHELD THE ORDER OF THE TRIB UNAL FOR THE AY.2007-08 AND 2008-09 WHILE DISMISSING THE APPEAL OF THE DEPARTMENT,THAT WHILE DECIDING THE ISSUE IN FAVOUR OF THE ASSESSEE HONBLE HIGH COURT HAD RELIED UPON THE ORDER OF THE HONBLE SUPREME COURT DELIVERED IN THE CASE OF DELHI DEVELOPMENT AUTHORITY (252ITR772).DEPARTME NTAL REPRESENTATIVE (DR) SUPPORTED THE ORDER OF THE AO. 5. WE HAVE HEAR THE RIVAL SUBMISSION AND PERUSED MATER IALS ON RECORDS.WE FIND THAT IN THE ASSESSEES OWN CASE IN ITA NO. 4975/MUM/2005 VIDE ORDER DATED 26.09.2009 TRIBUNAL HAS HELD AS UNDER; (PAGE NO.23 AND 24 OF THE PAPER) 6. IN THE CASE OF DELHI DEVELOPMENT AUTHORITY (SUP RA),IDENTICAL ISSUE HAS BEEN CONSIDERED BY THE APEX COURT AND IT IS HELD AS UNDER: IN THE CASE IN HAND, AS INDICATED EARLIER THE DIREC TION TO REFUND THE AMOUNT HAS BEEN MADE IN APPELLAT E PROCEEDINGS BEFORE THE TRIBUNAL,THE AMOUNT IS TO BE REFUNDED TO THE ASSESSEE. IT CANNOT BE SAID THAT T HE REFUNDEE WILL NOT BE AN ASSESSEE ONLY FOR THE REASO N THAT ACTUALLY NO ASSESSMENT PROCEEDINGS HAD TAKEN PLACE. IT WOULD BE PERTINENT TO REFER TO THE PROVIS ION CONTAINED UNDER SECTION 201 WHICH CLEARLY PROVI DES THAT IF THS PRINCIPAL OFFICER OR THE COMPANY LIABLE TO D EDUCT THE INCOME-TAX AT SOURCE FAILS TO DO SO,HE. S HALL BE DEEMED TO BE ASSESSEE IN DEFAULT IN RESPECT OF THE TAX, THE DEFINITION OF THE WORD ASSESSEE AS CONTAIN ED UNDER CLAUSE (7) OF SECTION 2 READS AS UNDER: (7)ASSESSEE MEANS A PERSON BY WHOM [ANY TAX] OR A NY OTHER SUM OF MONEY IS PAYABLE UNDER THIS ACT, AN D INCLUDES(A)EVERY PERSON IN RESPECT OF WHOM ANY PRO CEEDING UNDER THIS ACT HAS BEEN TAKEN FOR THE ASSESSMENT OF HIS INCOME [OR ASSESSMENT OF FRINGE B ENEFITS OR OF THE INCOME OF ANY OTHER PERSON IN RES PECT OF WHICH HE IS ASSESSABLE, OR OF THE LOSS SUSTAINED BY HIM OR BY SUCH OTHER PERSON, OR OF THE AMOUNT OF R EFUND DUE TO HIM OR TO SUCH OTHER PERSON;(B)EVERY PERSON WHO IS DEEMED TO BE AN ASSESSEE UNDER ANY PROVISION OF THIS ACT; (C,) EVERY PERSON WHO. IS DEEMED TO BE AN ASSESSEE IN DEFAULT UNDER ANY PROVISION OF THIS AC T; FROM THE ABOVE PROVISION, IT IS CLEAR THAT TERM ASS ESSEE INCLUDES ACTUAL ASSESSEES AS WELL AS DEEMED ASSESSEES UNDER THE PROVISIONS OF THE ACT.IT IS THE REFORE;NOT CORRECT TO CONTEND THAT UNLESS THERE ARE ACTUAL ASSESSMENT PROCEEDINGS PERTAINING TO ANY PERSON,HE CANNOT BE CONSIDERED TO BE AN ASSESSEE. IN THE PRES ENT CASE DDA WAS CONSIDERED TO BE LIABLE TO DEDUCT THE TAX AT SOURCE. IT FAILED TO DO SO, HENCE ORDER UNDE R SECTION 201(1) AND 201(IA) WAS PASSED RAISING THE D EMAND AND AMOUNT OF TAX WAS PAID. THE ORDER OF REFU ND WAS PASSED IN APPELLATE PROCEEDINGS UNDER THE MT AT TRACTING SECTION 240. CERTAIN DECISIONS WERE CITED AT THE BAR TO SHOW THE MEANING OF THE WORDS ASSESSEE AND ASSESSMENT AND DIFFERENT STAGES OF THE ASSESSMEN T PROCEEDINGS NEED NOT BE DEALT WITH IN VIEW OF CLEAR DEFINITION OF THE WORD ASSESSEE UNDER THE ACT AS QUOTED ABOVE 6. IN OUR OPINION, ANSWER TO THE ARGUMENTS OF THE I D. DR I FOUND IN THE DECISION OF THE APEX COURT IN THE CASE OF DELHI DEVELOPMENT AUTHORITY (SUPRAO. THE ISSUE I S SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE APEX COURT IN DEIHI DEVELOPMENT AUT HORITY (SUPRA). WE FIND NO REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A)AND THE SAME IS ACCORDINGLY CONFIRMED . 22.IN VIEW OF THE ABOVE DISCUSSIONS AS WELL AS THE ORDERS OF CO-ORDINATE BENCHES OF THIS TRIBUNAL, WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE. THE ORDER OF THE CIT(A) IS UPHELD. WE FIND THAT APPEAL FILED BY THE DEPARTMENT BEFORE THE HONBLE HIGH COURT AGAINST THE ORDER OF THE TRIBUNAL HAS BEEN DISMISSED BY THE HONBLE HIGH COU RT OF BOMBAY.(PAGE NOS.26 TO 28 OF THE PAPER BOOK).FOLLOWING THE ORDER OF THE EARLIER YEARS PASS ED BY MUMBAI TRIBUNAL, WE DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE AND CONFIRM THE ORDER OF THE FAA. AS A RESULT, AP PEAL FILED BY THE AO STANDS DISMISSED. C.O.268/MUM/2012 , A.Y.2009-10 : 4 ITA NO.5757/MUM/2012 & C.O. 268/MUM/2012 MSM SATELLITE 6. THE ONLY GROUND TAKEN BY THE ASSESSEE IN THE CROSS OBJECTION IS ABOUT INTEREST ON INTEREST. DURING THE COURSE OF HEARING BEFORE US,AR FAIRLY ADMITTED THAT THE ISSUE HAD BEEN DECIDED AGAINST THE ASSESSEE IN THE CASE OF GUJARAT FLOURO CHEMICALS DE LIVERED BY THE HONBLE SUPREME COURT. RESPECTFULLY FOLLOWING THE ORDER OF THE HONBLE APE X COURT, WE DECIDE THE EFFECTIVE GROUND FOR CROSS OBJECTION AGAINST THE ASSESSEE AND DISMISS TH E SAME. AS A RESULT APPEAL AND CO FILED BY THE AO AND THE A SSESSEE STAND DISMISSED. 4 15 1* 41 6 '7 0 8 / 9 :; #< 0 #1 =. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH NOVEMBER,2013 . '$> 0 2) $ % ? @' 27 , 2013 0 8 A SD/- SD/- . / D. MANMOHAN ) ( #$%& #$%& #$%& #$%& / RAJENDRA ) ! ! ! ! / VICE-PRESIDENT $ $ $ $ '( '( '( '( /ACCOUNTANT MEMBER / MUMBAI, @' /DATE: 27. 11 .2013 SK '$> '$> '$> '$> 0 00 0 ,1: ,1: ,1: ,1: B$:)1 B$:)1 B$:)1 B$:)1 / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / *+ 2. RESPONDENT / ,-*+ 3. THE CONCERNED CIT(A)/ C D , 4. THE CONCERNED CIT / C D 5. DR B BENCH, ITAT, MUMBAI / :E8 ,1 . , . . % . 6. GUARD FILE/ 8 F -:1 ,1 //TRUE COPY// '$> / BY ORDER, / # DY./ASST. REGISTRAR , /ITAT, MUMBAI