ITO (IT) TDS-2, MUMBAI V. SUN PHARMACEUTICAL INDUSTRIES LTD, MUMBAI

ITA 6100/MUM/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4259 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 25-06-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 02-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JOTNILAKSHMI NAYAK
• Section: 143(3); 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI . . , . . '# '# '# '# , $ $ $ $ % % % % BEFORE SHRI R.K. GUPTA, JM, AND SHRI N. K. BILLAIYA , AM /. I.T.A. NO.6100/MUM/2011 ( & & & & '& '& '& '& / ASSESSMENT YEAR: 2007-2008) INCOME TAX OFFICER, (INTERNATIONAL TAXATION) TDS-2, MUMBAI / VS. M/S. SUN PHARMACEUTICAL INDUSTRIES LTD., CORP. OFFICE: ACME PLAZA, ANDHERI-KURLA ROAD, ANDHERI, MUMBAI- 400057. ( $ /. )* /. PAN/GIR NO. : AADCS3124K ( (+ / APPELLANT ) : ( ,-(+ / RESPONDENT ) (+ . / APPELLANT BY : SMT. JOTNILAKSHMI NAYAK ,-(+ . / RESPONDENT BY : SHRI VIJAY MEHTA 0$ / DATE OF HEARING : 25.06. 2013 23' 0$ /DATE OF PRONOUNCEMENT : 10 .07.2013 4 4 4 4 / O R D E R PER : R.K. GUPTA, JM THIS APPEAL FILED BY THE DEPARTMENT AGAINST THE OR DER OF LD. CIT(A) -11, DATED 09.06.2011 RELATING TO THE ASSESSMENT YEAR 2007-08. 2. THE FACTS IN THE CASE ARE THAT ASSESSEE REMITTED A SUM OF US$ 4,00,000 TO M/S. SCANDINAVIAN HEALTH OF TAIWAN ON 01-06-2006 ON 01-0 6-2006 ON ACCOUNT OF CONSULTING CHARGES/FEES. HOWEVER, THE ASSESSEE DID NOT DEDUCT TAX AT SOURCE U/S. 195 OF THE ACT, THEREFORE, AO PASSED AN ORDER U/S 201 AND 201(1A) O F THE ACT ON 4.12.2006 AND RAISED A 2 ITA 6100M 2011 I TO VS. SUN PHARMACEUTICALS INDUSTRIES LTD. TOTAL DEMAND OF RS. 24,08,536/-. THE ASSESSEE PREFE RRED APPEAL BEFORE THE CIT(A). THEREAFTER, ASSESSEE MOVED THE APPLICATION BEFORE L D. CIT(A) THAT SINCE OUR APPLICATION U/S 154 IS PENDING BEFORE LD. AO, THEREFORE, THIS A PPEAL MAY BE TREATED AS WITHDRAWN. ACCORDINGLY, THE APPEAL WAS ALLOWED TO BE WITHDRAWN BY LD. CIT(A). AFTER THAT ASSESSING OFFICER REJECTED THE APPLICATION FILED U/ S 154 STATING IN HIS ORDER THAT THERE IS NO MISTAKE APPARENT ON RECORD. ASSESSEE PREFERRED A PPEAL AGAIN BEFORE THE CIT(A) AGAINST THE ORDER OF LD. AO. DETAILED SUBMISSIONS WERE FILED BEFORE THE CIT(A) ALONG WITH THE PAPER BOOKS. 3. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING T HE MATERIAL ON RECORD LD. CIT(A) FOUND THAT THE CONTRACT AGREEMENT WITH A TAI WAN COMPANY, SCANDINAVIAN HEALTH LTD.(HSL) HAS BEEN CANCELLED. CANCELLATION OF CONTR ACT WAS ALSO FILED. RELIANCE WAS PLACED ON THE BOARD CIRCULAR NO.7 OF 2007 DATED 23. 10.2007. THE CIT(A) FOUND THAT SINCE THE CONTRACT HAS BEEN CANCELLED THEREFORE, TH ERE WAS NO POINT TO DEDUCT THE TDS. ACCORDINGLY, THE MATTER WAS SENT BACK TO THE AO TO VERIFY THE CONTENTION LAID DOWN IN CIRCULAR NO. 7 OF 2007 FOR A REFUND OF TAX ALREADY COLLECTED AND REFUND THE TAX SO COLLECTED IF ANY TO THE ASSESSEE. NOW THE DEPARTMEN T IS IN APPEAL BEFORE THE TRIBUNAL. THE LD. DR STATED THAT THE AO WAS CORRECT IN HOLDI NG THAT THERE IS NO APPARENT MISTAKE IN THE ORDER PASSED U/S 143(3) STATED THAT CERTAIN NEW EVIDENCES WERE FILED BEFORE LD. CIT(A) AND AO WAS NOT GRANTED ANY OPPORTUNITY. 4. ON THE OTHER HAND, THE LD. AR STATED THAT THE CI T(A) HAS ALLOWED THE APPEAL OF THE ASSESSEE SUBJECT TO VERIFICATION OF THE DETAIL S AND BOARD CIRCULAR, THEREFORE, IT IS WRONG TO SUGGEST THAT AO WAS NOT ALLOWED ANY OPPORT UNITY. 5. AFTER CONSIDERING THE ORDER OF THE AO, CIT(A) A ND THE SUBMISSION OF BOTH THE PARTIES , WE FOUND NO INFIRMITY TO THE FINDING OF T HE LD. CIT(A). FINDING OF THE CIT(A) ARE ACCORDED IN PARA-3 PAGE 14 TO 16. 3. I HAVE CONSIDERED THE FACTS OF THE CASE, PAPER BOOKS FILED AND EXAMINED THE CIRCULARS CAREFULLY. THE ASSESSEE HAS ALSO FILED THE COPIES OF VARIOUS INVOICES RAISED ON IT IN PURSUANCE TO THE C ONTRACT BY M/S. 3 ITA 6100M 2011 I TO VS. SUN PHARMACEUTICALS INDUSTRIES LTD. SCANDINAVIAN HEALTH LTD. (SHL). ASSESSEE HAS ALSO F ILED COPY OF CREDIT NOTE DATED 19-12-2008 IN PURSUANCE OF CANCELLATION OF CONTRACT WITH SHL AND THE DOCUMENTS SHOWING INWARD REMITTANCE OF US$ 7,99,980/- ISSUED BY STATE BANK OF NOVA SCOTIA DATED 05-02-2009. COPY OF ORIGINAL AGREEMENT AS WELL AS THE COPY OF CANCELLATION LETTER ARE ALSO FILED IN SUPPORT OF THE CASE. 3.1 IN FIND THAT THE CASE OF THE ASSESSEE IS COVER ED BY SUB-CLAUSE (B) OF CLAUSE 2 OF CIRCULAR NO. 7 DATED 23-10-2007 AND IT IS ALSO COVERED BY CLAUSE 2(B) OF CIRCULAR NO. 790 DATED 20.04.2000. I N PARA 2.1 OF CIRCULAR 7 DATED 23-10-2007, IT IS CLEARLY PROVIDED THAT ONC E THE AMOUNT ALREADY REMITTED IN PURSUANCE OF A CONTRACT HAS BEEN REFUND BACK TO THE REMITTED AFTER CANCELLATION OF THE CONTRACT, ANY INCOME DOES NOT ACCRUE TO THE NON- RESIDENT. IT IS ALSO PROVIDED IN THE CIRCULAR THAT THE AMOUNT OF TAX PAID U/S. 195 CAN BE REFUNDED TO THE DEDUCTOR WITH PRIOR APPR OVAL OF THE CHIEF COMMISSIONER OF INCOME TAX. THE DETAILED PROCEDURE IN THIS REGARD IS PROVIDED IN THE SAID CIRCULAR AND CERTAIN PRE-CONDI TIONS ARE TO BE SATISFIED, SUITABLE UNDERTAKING FROM THE DEDUCTOR HAS TO BE OB TAINED BEFORE THE REFUND CAN BE ISSUED. IT ALSO SPECIFIES THAT REFUND CAN BE GIVEN ONLY IF THE NON-RESIDENT HAS NOT FILED ANY RETURN AND THE TIME LIMIT FOR FILING OF RETURN HAS ALREADY EXPIRED. 3.2 I FIND THAT THE SUBMISSION OF THE LD. AUTHORI ZED REPRESENTATIVE HAS MERIT. ONCE, THE CONTRACT HAS BE EN CANCELLED AND THE MONEY HAS BEEN RECEIVED BACK, TAX ALREADY PAID FOR SUCH REMITTANCE IS NO LONGER PAYABLE TO THE CREDIT TO THE GOVERNMENT AS P ER LAW ON BEHALF OF NON RESIDENT AND AS PER THE SAID CIRCULAR, REFUND SHOUL D BE ISSUED TO THE DEDUCTOR FOLLOWING THE SPECIFIED PROCEDURE AND AFTE R SATISFYING THE CONDITIONS PROVIDED IN THE CIRCULAR. 4 ITA 6100M 2011 I TO VS. SUN PHARMACEUTICALS INDUSTRIES LTD. 3.3 ACCORDINGLY, IT IS HELD THAT NO TAX IS PAYABLE BY THE NON- RESIDENT ASSESSEE (SHL) IN RELATION TO TRANSACTIONS IN PURSUANCE OF THE CONTRACT WITH THE APPELLANT DATED 06-07-2006. ACCOR DINGLY, APPEAL OF THE ASSESSEE IS ALLOWED AND THE A.O. IS DIRECTED TO VER IFY THE CONDITION LAID DOWN IN CIRCULAR NO.7 OF 2007 FOR REFUND OF TAX ALR EADY COLLECTED AND REFUND THE TAX SO COLLECTED, IF ANY, TO THE ASSESSE E BY FOLLOWING THE PROCEDURE LAID DOWN IN THE CIRCULAR AND AFTER ENSUR ING THAT THE CONDITIONS GIVEN THEREIN ARE FULLY SATISFIED. 6. THE ABOVE FINDINGS ARE SELF EXPLANATORY WHICH DOES NOT REQUIRE ANY INTERFERENCE, LD. CIT(A) HAS ALLOWED THE ISSUE IN FAVOUR OF ASSES SEE SUBJECT TO VERIFY THE CONTENTION LAID DOWN UNDER BOARD CIRCULAR AND OTHER DETAILS. T HEREFORE, IT CANNOT BE SAID THAT AO WAS NOT ALLOWED ANY OPPORTUNITY AS THE AO HAS TO VE RIFY THE DETAILS BEFORE GRANTING ANY REFUND OF TAX IF ANY. ACCORDINGLY, WE CONFIRM THE O RDER OF THE CIT(A). 7. IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS D ISMISSED. 06 ) $) )0 7' ORDER PRONOUNCED ON 10 TH DAY JULY, 2013 . 4 23' 6 10.07.2013 3 SD/- SD/- ( N. K. BILLAIYA ) ( R.K. GUPTA ) $ / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI: DATED : 10 .07. 2013 . /. PRAMOD KUMAR, PS. 5 ITA 6100M 2011 I TO VS. SUN PHARMACEUTICALS INDUSTRIES LTD. 4 4 4 4 ,0 ,0 ,0 ,0 9'0 9'0 9'0 9'0 / COPY OF THE ORDER FORWARDED TO : 1. (+ / THE APPELLANT 2. ,-(+ / THE RESPONDENT 3. : ) ( / THE CIT(A) 4. : / CIT - CONCERNED 5. ; ,0 , , / DR, ITAT, MUMBAI 6. <& = / GUARD FILE 4 4 4 4 / BY ORDER, > >> > / 7 7 7 7 ) ) ) ) (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI