ADIT (IT)-2(1), MUMBAI V. M/S. RELIANCE INFOCOMM LTD.(NOW MERGED WITH M/S. RELIANCE COMMUNICATIONS LTD.), NAVI MUMBAI

ITA 6094/MUM/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7780 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-02-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: misc
• Appeal Filed On: 10-10-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N K BALODIA
• Assessee Lawyers: ARVIND DALAL; SUNIL DOSHI
• Keywords: Double taxation relief; Non-deduction of tax; Reasonable cause; Tax effect; TDS
• Section: 244A; 195; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH L-1, MUMBAI BEFORE SHRI T.R. SOOD, A.M. & SMT. P. MADHAVI DEVI , J.M. I.T.A. NOS. 6094, 6095, 6096, 6097, 6098 AN D 6099/MUM/2008 ASSISTANT DIRECTOR OF INCOME-TAX (INTERNATIONAL TAXATION)-2(1), R.NO. 120, LST FLOOR, SCINDIA HOUSE, BALLARD ESTATE, N.M. ROAD, MUMBAI 400 038 VS. M/S. RELIANCE INFOCOMM LTD., (NOW MERGED WITH RELIANCE COMMUNICATIONS LTD.,) H-BLOCK, LST FL., DHIRUBHAI AMBANI KNOWLEDGE CITY, NAVI MUMBAI 400 710. PAN: AACCR 4472 J (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI N.K. BALODIA RESPONDENT BY : S/SHRI ARVIND DALAL & SUNIL DOSHI O R D E R PER BENCH: THESE APPEALS FILED BY THE REVENUE ARE DIRECTED AG AINST THE ORDERS DATED 08.07.2008 OF THE COMMISSIONER OF INCOME-TAX (APPEA LS)-XXXI, MUMBAI. SINCE COMMON ISSUE IS INVOLVED IN ALL THESE APPEALS, THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER, FOR THE SAK E OF CONVENIENCE. 2. IN ALL THESE APPEALS THE REVENUE HAS RAISED THE FOLLOWING COMMON GROUND: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT THE ASSESSEE IS ENTITL ED TO INTEREST UNDER SECTION 244A OF THE ACT ON THE REFUND OF TDS UNDER SECTION 195(2) OF THE ACT. 3. BEFORE US THE LEARNED DEPARTMENTAL REPRESENTATIV E RELIED ON THE GROUND AND STRONGLY SUPPORTED THE ORDERS OF THE ASSESSING OFFICER. 4. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE A SSESSEE SUBMITTED THAT THE ISSUE RAISED IS COVERED AGAINST THE REVENUE IN THE ASSESSEES OWN CASE DECIDED BY THE TRIBUNAL AND COPY OF THE WHICH IS PL ACED ON RECORD. ITA NOS. 6094 - 6099/M/08 M/S. RELIANCE INFOCOMM LTD. 2 5. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE FIN D THAT IDENTICAL ISSUE CAME UP FOR CONSIDERATION BEFORE THE TRIBUNAL IN THE CAS E OF ADDITIONAL DIRECTOR OF INCOME-TAX (INTERNATIONAL TAXATION)-2(1), MUMBAI VS . M/S. RELIANCE INFOCOMM LTD., (NOW MERGED WITH RELIANCE COMMUNICATION LTD., IN ITA NOS. 6100, 6101, 6102, 6103, 6104, 6105, 6106, 6107, 6108, 6109 AND 6110/MUM/2008, DATED 9 TH SEPT., 2009 AND THE SAME WAS DECIDED AGAINST THE RE VENUE BY FOLLOWING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F SANDVIK ASIA LTD., (280 ITR 643) AND THE DECISION OF THE TRIBUNAL IN TATA CHEMI CALS LTD. (16 SOT 481). THE OPERATIVE PORTION OF THE ORDER IS REPRODUCED BELOW: WE HAVE HEARD THE LEARNED REPRESENTATIVES OF THE PARTIES AND PERUSED THE RECORD. WE FIND THAT THE IS SUE IS COVERED AGAINST THE REVENUE BY VARIOUS DECISIONS INCLUDING THE DECISION OF ITAT IN CASE OF TATA CHEM ICALS LTD., 16 SOT 418 AND IN THE CASE OF STAR CRUISES IN DIA TRAVEL SERVICES PVT. LTD. IN ITA NO. 6498 & 6500/MUM/06 ORDER DATED 24 TH MARCH, 2009. THE CIT(A) FOLLOWED THOSE DECISIONS AND REPRODUCED THE FINDING OF THE ITAT FROM TATA CHEMICALS LTD. CITED SUPRA. FOR THE SAKE OF REFERENCE WE REPRODUCE THE HEAD NOTE FROM T HE ORDER OF TATA CHEMICALS LTD., AS UNDER:- UNDER THE PROVISIONS OF SECTION 195(2), THE ASSESSE E IS EMPOWERED TO MAKE AN APPLICATION TO THE ASSESSING OFFICER FOR NON-DEDUCTION OF TAX ON SUCH SUMS REMITTED TO A NON-RESIDENT WHICH A CCORDING TO THE ASSESSEE ARE NOT SUBJECT TO TAX AT SOURCE. IN VIEW OF THE PROVISIONS OF DTAA BETWEEN THE TWO COUNTRIES, UNDER THE SAID S UB-SECTION (2) OF SECTION 195, THE ASSESSING OFFICER IS EMPOWERED TO DETERMINE SUCH SUMS WHICH ARE DEDUCTIBLE OUT OF REMITTANCE TO BE SENT TO THE RECIPIENT AND ONLY AFTER DEDUCTION AND PAYMENT OF S UCH SUMS, THE BALANCE AMOUNT IS TO BE REMITTED TO THE NON-RESIDEN T. IN THE INSTANT CASE, IN COMPLIANCE OF THE ORDER OF THE ASSESSING O FFICER, THE ASSESSEE HAD DEDUCTED THE TAX AT SOURCE BEFORE REMI TTING THE AMOUNTS TO GERMANY AND DENMARK. [PARA 8] THE ORDER UNDER SECTION 195(2) IS APPEALABLE UNDER THE PROVISIONS OF SECTION 248. SECTION 248 CLEARLY PROVIDES THAT AFTE R DEDUCTION AND PAYMENT OF TAX IN ACCORDANCE WITH THE PROVISIONS OF SECTIONS 195 AND 200, IF THE ASSESSEE DENIES HIS LIABILITY TO MAKE S UCH DEDUCTION, HE IS EMPOWERED TO FILE AN APPEAL BEFORE THE COMMISSIONER (APPEALS) IN ORDER TO GET A DECLARATION THAT HE/IS NOT LIABLE TO MAKE SUCH DEDUCTION. IN THE INSTANT CASE, THE COMMISSIONER (A PPEALS) GRANTED RELIEF TO THE ASSESSEE HOLDING THAT NO TAX WAS DEDU CTIBLE OUT OF THE REMITTANCES MADE TO DENMARK AND GERMANY AND DIRECTE D THE ASSESSING OFFICER TO REFUND THE AMOUNT OF TAX SO DE POSITED BY IT. [PARAS 9, 10, 11] ITA NOS. 6094 - 6099/M/08 M/S. RELIANCE INFOCOMM LTD. 3 FURTHER THE PROVISIONS OF SECTION 240 VERY CATEGORI CALLY PROVIDE THAT WHERE AN ORDER IS PASSED IN APPEAL, OR OTHER PROCEE DINGS UNDER THE ACT, THE ASSESSING OFFICER IS DUTY-BOUND TO REFUND AMOUNT DUE TO THE ASSESSEE EVEN WITHOUT THE ASSESSEE MAKING ANY CLAIM IN THAT BEHALF. IN ADDITION TO THE REFUND OF AMOUNT DUE, THE ASSESS EE IS ALSO ENTITLED TO INTEREST ON SUCH REFUND UNDER THE PROVISIONS OF SECTION 244A. ONCE THE PROVISIONS OF SECTION 240 ARE APPLICABLE TO THE AMOUNT PAID BY THE ASSESSEE AS TAX, THEN THE PROVISIONS OF SECTION 244 A WILL APPLY THEREAFTER. [PARA 13] IN THE INSTANT CASE, THE REFUND BECAME DUE TO THE A SSESSEE PURSUANT TO THE ORDER OF THE COMMISSIONER (APPEALS), WHEREIN IT WAS HELD THAT ASSESSEE WAS NOT TO DEDUCT TAX AT SOURCE ON THE AMO UNTS REMITTED TO THE RECIPIENT OUTSIDE INDIA. THE REFUND OF MONEY PA ID BY THE ASSESSEE BECAME DUE TO IT ON THE PASSING OF THE APPELLATE OR DER IN APPEAL AS PER THE PROVISIONS OF SECTION 240. THE ASSESSEE WAS NOT TO MAKE ANY CLAIM IN THIS REGARD FOR THE ISSUE OF REFUND AS PER THE PROVISIONS OF SECTION 240, WHICH PROVIDES THAT REFUND IS AUTOMATI CALLY DUE TO THE ASSESSEE AFTER THE ORDER IS PASSED IN APPEAL OR ANY OTHER PROCEEDINGS UNDER THE ACT. SECTION 244A(1) FURTHER PROVIDES THA T IN ADDITION TO REFUND OF ANY AMOUNT BECOMING DUE TO THE ASSESSEE U NDER THE ACT, THE ASSESSEE IS ALSO ENTITLED TO RECEIVE INTEREST O N SUCH REFUNDS WHICH HAVE BECOME DUE TO THE ASSESSEE UNDER THE ACT. THE REFUND IN THE INSTANT CASE WAS DETERMINED ON ACCOUNT OF THE ORDER GIVING EFFECT TO THE ORDER IN APPEAL PASSED BY THE COMMISSIONER (APP EALS). [PARA 20] CLAUSE (A) OF SECTION 244A(1) COVERS THE INSTANCES OF PAYMENT OF SUMS OF MONEY BY WAY OF ADVANCE TAX OR TDS. CLAUSE (B) O F SECTION 244A(1) COVERS ALL OTHER CASES WHEREIN REFUND HAS BECOME DU E TO THE ASSESSEE. THE PHRASE USED IN CLAUSE (B) OF SECTION 244A(1) IS IN ANY OTHER CASE. THE EXPLANATION TO CLAUSE (B) OF SECTI ON 244A(1) FURTHER PROVIDES THAT DATE OF PAYMENT OF TAX OR PENALTY M EANS THE DATE ON WHICH THE AMOUNT OF TAX OR PENALTY SPECIFIED IN THE NOTICE OF DEMAND ISSUED UNDER SECTION 156 IS PAID. THE EXPLANATION A TTACHED TO THE MAIN SECTION DOES NOT IN ANY WAY OBLITERATE THE MEA NING OF THE SECTION. [PARA 21] SECTION 156 TALKS OF SERVICE OF A NOTICE OF DEMAND IN THE PRESCRIBED FORM, WHERE ANY TAX, INTEREST, PENALTY, FINE OR ANY OTHER SUM IS PAYABLE IN CONSEQUENCE OF ANY ORDER PASSED UNDER THIS ACT. THE ORDER UNDER SECTION 195(2) HAD BEEN PASSED UNDER THE PROVISIONS OF THE ACT AND ANY NOTICE OF DEMAND FOR THE SAID AMOUNT DUE PURSUA NT TO ORDER PASSED UNDER SECTION 195(2) WAS BOUND TO BE ISSUED UNDER SECTION 156. [PARA 22] THE PROVISIONS OF CLAUSE (B) OF SECTION 244A(1) VER Y CATEGORICALLY PROVIDE INTEREST ON ANY REFUND ARISING BECAUSE OF P AYMENT OF TAX IN ANY OTHER CASE, WHICH SHALL INCLUDE THE PAYMENT MA DE BY THE ASSESSEE PURSUANT TO ORDER UNDER SECTION 195(2), BY WHICH THE ASSESSING OFFICER REQUISITIONED THE ASSESSEE TO DED UCT THE TAX AND DEPOSIT THE SAME IN TREASURY BEFORE REMITTING THE A MOUNTS DUE TO THE RECIPIENTS OUTSIDE INDIA. ACCORDINGLY, THE ASSESSEE WAS ENTITLED TO RECEIVE INTEREST UNDER SECTION 244A(1)(B) ON AMOUNT S DEPOSITED PURSUANT TO ORDER PASSED UNDER SECTION 195(2), WHIC H IN-TURN HAD BECOME DUE TO THE ASSESSEE BECAUSE OF THE ORDER PAS SED IN APPEAL AGAINST THE SAID ORDER UNDER SECTION 195(2). [PARA 23] ITA NOS. 6094 - 6099/M/08 M/S. RELIANCE INFOCOMM LTD. 4 THE BOARD BY WAY OF CIRCULAR NO. 769, DATED 6-8-199 8 AND CIRCULAR NO. 790, DATED 20-4-2000 PROVIDED THAT THE ASSESSEE SHALL BE ENTITLED TO REFUND OF SUCH PAYMENTS MADE UNDER SECTION 195, BUT THE AMOUNT PAID INTO THE GOVERNMENT ACCOUNT IN SUCH CASES IS N O LONGER TAX. IN VIEW OF THIS, NO INTEREST UNDER SECTION 244A IS ADM ISSIBLE ON REFUNDS TO BE GRANTED IN ACCORDANCE WITH THESE CIRCULARS. [PAR A 25] THE CIRCUMSTANCES MENTIONED IN THE AFORESAID CIRCUL ARS WERE DIFFERENT FROM THE FACTS AND CIRCUMSTANCES OF THE INSTANT CAS E. IN THE CIRCUMSTANCES REFERRED TO IN THE CIRCULARS, THE TAX WAS DEPOSITED BY THE PERSONS ON THEIR OWN AND VOLUNTARILY, WITHOUT ANY D EMAND BEING MADE BY THE ASSESSING OFFICER OR ANY OTHER AUTHORITY UND ER THE ACT. BUT, IN THE INSTANT CASE, THE AMOUNT WAS PAID PURSUANT TO A N ORDER PASSED BY ASSESSING OFFICER UNDER THE PROVISIONS OF SECTION 1 95(2) AGAINST WHICH THE ASSESSEE FILED AN APPEAL BEFORE THE COMMISSIONE R (APPEALS). IN THE ORDER GIVING APPEAL EFFECT TO THE ORDER OF THE COMM ISSIONER (APPEALS), REFUND BECAME DUE TO THE ASSESSEE WHICH IN FACT ARO SE BECAUSE OF THE PROVISIONS OF SECTION 240. THE PROVISIONS OF THE AC T PREVAIL OVER THE INSTRUCTIONS ISSUED BY THE BOARD BY WAY OF CBDT CIR CULARS. THE SUPREME COURT IN SANDVIK ASIA LTD. V. CIT [2006] 280 ITR 643/150 TAXMAN 591 HAS HELD THAT WHERE EXCESS AMOUNT OF TAX IS COLLEC TED FROM ASSESSEE, THE REVENUE MUST COMPENSATE ASSESSEE AND THE COMPENSATION IN THE INSTANT CASE WAS BY WAY OF INTE REST UNDER SECTION 244A FOR THE PERIOD WHEN THE AMOUNT WAS WITHHELD. A CCORDINGLY, THE ASSESSING OFFICER WAS TO BE DIRECTED TO ALLOW THE I NTEREST UNDER SECTION 244A(1)(B) ON THE AMOUNT DUE TO THE ASSESSEE PURSUA NT TO THE ORDER PASSED GIVING EFFECT TO COMMISSIONER (APPEALS)S OR DER IN APPEAL. [PARA 26] FOLLOWING THE ABOVE ORDER, WE DECIDE THE ISSUE AGAI NST THE REVENUE. 6. IN THE RESULT, THE REVENUES APPEALS ARE DISMISS ED. ORDER PRONOUNCED ON THIS 2 ND DAY OF FEBRUARY, 2010. SD. SD. (P. MADHAVI DEVI) (T. R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI DATED THE 2 ND FEBRUARY, 2010. KN COPY TO: 1. THE ASSESSEE 2. THE REVENUE 3. THE DIT(INTERNATIONAL TAXATION), MUMBAI 4. THE CIT(A)-XXXI, MUMBAI 5. THE DR L-1 BENCH, MUMBAI BY ORDER /TRUE COPY/ ASST. REGISTRAR, ITAT, MUMB AI ITA NOS. 6094 - 6099/M/08 M/S. RELIANCE INFOCOMM LTD. 5 S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 21.01.2010 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 21.01.2010 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/A M 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 ITA NOS. 6094 - 6099/M/08 M/S. RELIANCE INFOCOMM LTD. 6 ORDER PRONCOUNCED ON . 2. AT THE TIME OF HEARING NONE APPEARED ON BEHALF O F THE ASSESSEE- APPELLANT AS WELL AS NO PETITION FOR ADJOURNMENT WA S FILED. WE FIND FROM THE RECORDS THAT ASSESSEE-APPELLANT WAS SERVED NOTICE B Y REGISTERED POST ACKNOWLEDGEMENT DUE TWICE AND THE ACKNOWLEDG EMENT CARDS DULY SIGNED BY THE ASSESSEE ON 25.07.2007 AND 16.11.2 007 , RECEIVED BACK. IT IS THEREFORE, PRESUMED THAT THE ASSESSEE IS NOT INT ERESTED IN PURSUING THE APPEAL FILED BY IT. IT HAS BEEN HELD BY THE HONBLE MADHYA PRADESH HIGH COURT IN ESTATE OF LATE TUKOJIRAO HOLKAR VS. CWT (2 23 ITR 480)(MP) THAT IF THE PARTY, AT WHOSE INSTANCE THE REFERENCE IS MADE, FAILS TO APPEAR AT THE HEARING OR FAILS IN TAKING STEPS FOR PREPARATION OF PAPER-BOOKS, SO AS TO ENABLE HEARING OF THE REFERENCE, THE COURT IS NOT B OUND TO ANSWER THE REFERENCE. THE DECISION OF THE DELHI BENCH OF THE TRIBUNAL IN CIT VS. MULTIPLAN (INDIA) PVT. LTD., 38 ITD 320 (DEL.) IS A LSO TO THE SAME EFFECT. IN THE FACTS OF THE CASE WE HOLD THAT THE ASSESSEE IS NOT INTERESTED IN PURSUING THE PRESENT APPEAL BEFORE THE TRIBUNAL, ACCORDINGLY THE APPEAL OF THE ITA NOS. 6094 - 6099/M/08 M/S. RELIANCE INFOCOMM LTD. 7 ASSESSEE IS DISMISSED AS UNADMITTED. THE ASSESSEE, IF SO ADVISED, SHALL BE FREE TO MOVE THE TRIBUNAL PRAYING FOR RECALLING OF THIS ORDER PROVIDED THE ASSESSEE IS ABLE TO ESTABLISH THE REASONABLE CAUSE BEHIND THE NON- APPEARANCE ON THE DATE OF HEARING AND IN THAT CASE THE TRIBUNAL MAY IN ITS DISCRETION RECALL THIS ORDER AND THE APPEAL MAY BE RESTORED FOR RE-HEARING. 3. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 18.12.2 007. 2. FROM THE GROUNDS FILED BY THE ASSESSEE BEFORE TH E LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) WE FIND THAT THE LEVY PERTA INED TO CONCEALMENT OF INCOME OF RS. 1,02,744/- AND THE PENALTY LEVIED WAS RS. 22 ,248/-. THEREFORE IN VIEW OF CBDT CIRCULAR F.NO. 279/MISC.142/2007-IT DATED 15 TH MAY, 2008 THE APPEAL IS NOT MAINTAINABLE, TAX EFFECT BEING LESS THAN RS. 2 LAKH S. VIDE PARA 4 OF THIS CIRCULAR IT IS CLEARLY MENTIONED THAT THE TAX EFFECT IN ASCERTA INING MONETARY LIMITS FOR FILING OF APPEALS, IN THE CASE OF PENALTY ORDERS, WOULD MEAN QUANTUM OF PENALTY DELETED OR REDUCED. 3. THEREFORE, APPEAL OF THE REVENUE IS DISMISSED AS NOT MAINTAINABLE. ORDER PRONOUNCED ON THIS _______ DAY OF MAY, 2009 . (G.C. GUPTA) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI DATED THE ______MAY, 2009. KN COPY TO: 6. THE ASSESSEE 7. THE ITO-26(1)(2), MUMBAI. 8. THE CIT, CITY-XXVI, MUMBAI 9. THE CIT(A)-XXVIII, MUMBAI 10. THE DR, G BENCH, MUMBAI BY ORDER /TRUE COPY/ ASST. REGISTRAR, ITAT, MUMBAI ITA NOS. 6094 - 6099/M/08 M/S. RELIANCE INFOCOMM LTD. 8 S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 18.05.09 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 18.05.09 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 ITA NOS. 6094 - 6099/M/08 M/S. RELIANCE INFOCOMM LTD. 9