ACIT, New Delhi V. M/s Expeditors International (India) P. Ltd., New Delhi

ITA 664/DEL/2011

• Counselvise Citation: 66420114 RSA 2011
• Duration Of Justice: 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 04-08-2011
• Assessment Year: misc
• Appeal Filed On: 04-02-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ROHIT GARG
• Assessee Lawyers: S D KAPILA; PRAKASH SHARMA; R R MOURIYA S
• Section: 244A

Judgement Text

BEFORE THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH B, NEW DELHI BEFORE SHRI C.L. SETHI, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.664/DEL.2011 (ASSESSMENT YEAR : 2005-06) ACIT, CIRCLE 49 (1), VS. M/S. EXPEDITORS INTERNATI ONAL (INDIA) P. LTD., NEW DELHI. BLOCK A & D, 5 TH FLOOR, 61, CHIMES, PLOT NO.59 TO 62, SECTOR 44, GURGAON 122 003 (HARYANA). (PAN NO.AAACE1795K) (APELLANT) (RESPONDENT) ASSESSEE BY : SHRI S.D. KAPILA, ADVOCATE AND S/SHRI PRAKASH SHARMA & R.R. MOURIYA, ADVOCATES DEPARTMENT BY : SHRI ROHIT GARG, DR O R D E R PER B.C. MEENA, ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT (APPEALS)-XXX, NEW DELHI DATED 11.11.2010 FOR THE A SSESSMENT YEAR 2005-06. THE GROUNDS OF APPEAL TAKEN BY THE REVENU E ARE AS UNDER :- 1. ACCEPTING THE SUBMISSION OF THE ASSESSEE THAT T HE EXCESS DEDUCTION / PAYMENT OF TDS ON ROYALTY IN EAR LIER PERIOD AMOUNTS TO PAYMENT IN ADVANCED AND THEREFORE TREATING IT AS SHORT PAYMENT NOW AND AGAIN AMOUNTS TO DOUBLE TAXATION AS THERE IS NO PROVISION IN THE INC OME TAX ACT FOR ADJUSTMENT OF EXCESS TDS DEPOSITED IN EARLIER F .Y. IN THE SUCCEEDING YEARS. 2. DIRECTING THE A.O. TO DELETE THE CHARGING OF TDS OF RS.15,34,059/- AND INTEREST THEREON OF RS.9,33,622/ - IGNORING ITA NO.664/DEL/2011 2 THE FACTS MENTIONED IN THE ORDER U/S 201(1)/201(1A) PASSED BY THE ASSESSING OFFICER. 2. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF INTERNATIONAL FREIGHT FORWARDING AND WAREHOUSING AND DISTRIBUTION SERVICES. THE SERVICE WAS CONDUCTED AT THE PREMISES OF THE ASSESS EE TILL 08.09.2008. FOR THE FINANCIAL YEAR 2004-05 RELEVANT TO ASSESSMENT Y EAR 2005-06 WHICH IS THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS INCU RRED ROYALTY EXPENDITURE TO THE TUNE OF RS.13,59,65,489/-. AS P ER THE PROVISIONS OF LAW, THE ASSESSEE WAS LIABLE TO DEDUCT TDS OF RS.2, 71,93,098/- WHILE THE TOTAL TDS DEDUCTED BY THE ASSESSEE WAS RS.2,56,59,5 20/-. THUS, FOR THE YEAR UNDER CONSIDERATION, THERE WAS A SHORT DEDUCTI ON OF TDS BY RS.15,33,578/-. THE ASSESSEE CLAIMED THAT HE HAS D EDUCTED IN EXCESS TDS IN THE EARLIER PREVIOUS YEARS, THEREFORE, THE SAME WERE ADJUSTED AGAINST THE CURRENT YEAR TDS LIABILITY OF THE DEDUCTEE. LEARNE D DR SUBMITTED THAT THE ASSESSEE HIMSELF HAS MADE AN ADJUSTMENT WHICH I S NOT PERMITTED IN LAW IN VIEW OF THE BOARD CIRCULAR NO.7 OF 2007 DATE D 23 RD OCTOBER, 2007. THERE IS NO PROVISION FOR ADJUSTMENT BY DEDUCTOR. THE REFUND CAN BE GRANTED ONLY AFTER OBTAINING AN UNDERTAKING FROM DE DUCTOR THAT NO CERTIFICATE UNDER SECTION 203 OF THE INCOME-TAX ACT HAS BEEN ISSUED TO THE NON-RESIDENT. IN CASES WHERE SUCH A CERTIFICATE HA S BEEN ISSUED, THE PERSON MAKING THE REFUND CLAIM UNDER THIS CIRCULAR SHOULD EITHER OBTAIN IT OR SHOULD INDEMNIFY THE INCOME-TAX DEPARTMENT FROM ANY POSSIBLE LOSS ITA NO.664/DEL/2011 3 ON ACCOUNT OF ANY SEPARATE CLAIM OF REFUND FOR THE SAME AMOUNT BY THE NON-RESIDENT. A REFUND IN TERMS OF THIS CIRCULAR S HOULD BE GRANTED ONLY IF THE DEDUCTEE HAS NOT FILED RETURN OF INCOME AND THE TIME FOR FILING OF RETURN OF INCOME HAS EXPIRED. THE ASSESSEE HAS MAD E A DIRECT ADJUSTMENT WHICH IS NOT PERMITTED IN THE LAW AND THERE IS NO P ROVISION IN THE INCOME- TAX ACT FOR MAKING ADJUSTMENT OF EXCESS TDS DEPOSIT ED IN EARLIER YEARS IN THE SUBSEQUENT YEARS. SUCH EXCESS TDS CLAIM CAN BE DEALT ONLY IN TERMS OF CIRCULAR NO.7 OF 2007 DATED 23.10.1007. LD. DR PLEADED TO SET ASIDE THE ORDERS OF THE CIT (A). 3. ON THE OTHER HAND, THE LEARNED AR SUBMITTED THAT THERE WAS EXCESS DEDUCTION OF TAX UNDER SECTION 195 FOR THE PERIOD J ANUARY 2002 TO MARCH, 2004. THIS EXCESS DEDUCTION WAS ADJUSTED WHILE DED UCTING OF TDS FOR AY 2005-06. IT HAS BEEN ADJUSTED ONLY TOWARDS TDS LIABILITY. THE ASSESSING OFFICER HAS REFUSED TO ALLOW TO ADJUST TH E SAME UNDER SECTION 201 OF THE INCOME-TAX ACT. LD. AR ALSO RELIED ON T HE DECISION OF HONBLE SUPREME COURT IN THE CASE OF SALONAH TEA CO. VS. SU PT. OF TAXES 173 ITR, 42 (SC) FOR THE PROPOSITION THAT TAX COLLECTED WITHOUT AUTHORITY OF LAW FROM A CITIZEN SHOULD BE REFUNDED BECAUSE NO ST ATE HAS RIGHT TO RECEIVE OR TO RETAIN TAXES OR MONIES REALIZED FROM CITIZENS WITHOUT AUTHORITY OF LAW. LD. AR ALSO RELIED ON CST VS. AU RAIYA CHAMBER OF COMMERCE 167 ITR 458 (SC) FOR THE PROPOSITION THAT IN INTERPRETING THE PROCEDURAL PROVISIONS OF AN ACT, FAIRNESS AND JUSTI CE SHOULD BE THE ITA NO.664/DEL/2011 4 APPROACH AND EVEN IN A FISCAL STATUTE, EQUITY SHOUL D PREVAIL WHENEVER THE LANGUAGE PERMITS. LD. AR VEHEMENTLY PLEADED THAT W HEN THERE IS NO EXPRESS PROVISION AGAINST THE GRANTING OF REFUND OF TAX TO DEDUCTOR THEN IN INTERPRETING THE PROCEDURAL PROVISIONS OF AN ACT, F AIRNESS AND JUSTICE SHOULD BE THE APPROACH OF REVENUE AUTHORITIES. EVE N IN A FISCAL STATUTE, EQUITY SHOULD PREVAIL WHENEVER THE LANGUAGE PERMITS . HE ALSO PLEADED THAT THE TAX COLLECTED WITHOUT THE AUTHORITY OF LAW FROM A CITIZEN SHOULD BE REFUNDED BECAUSE NO STATE HAS THE RIGHT TO RECEIVE OR TO RETAIN TAXES OR MONIES REALIZED FROM CITIZENS WITHOUT THE AUTHORITY OF LAW. LD. AR ALSO RELIED ON THE BOARDS CIRCULAR NO.7 OF 2007 DATED 2 3.10.2007 WHICH PROVIDES PROCEDURE FOR REFUND OF TAX DEDUCTED AT SO URCE U/S 195 OF INCOME-TAX ACT TO THE PERSON DEDUCTING TAX. THE DE DUCTEE HAS NOT FILED THE RETURN AND THE TIME OF FILING THE RETURN HAS AL SO EXPIRED. THEREFORE, THE PROCEDURE PROVIDE IN CIRCULAR IS APPLICABLE TO THIS CASE. HE ALSO SUBMITTED THAT THE MATTER MAY BE RESTORED TO THE FI LE OF ASSESSING OFFICER TO COMPLETE THE FORMALITIES AS PRESCRIBED IN CIRCUL AR LIKE SUBMITTING UNDERTAKING AND THE INDEMNITY BONDS ETC. TO THE I.T . DEPARTMENT. 4. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. THER E WAS AN EXCESS DEDUCTION OF TDS FROM ROYALTY FOR THE PERIOD JANUAR Y, 2002 TO MARCH, 2004. THE TOTAL EXCESS TDS WAS OF RS.15,33,578/-. IN VIEW OF THE BOARD CIRCULAR NO.7 OF 2007 DATED 23.10.2007, THE ASSESSE E WAS ENTITLED FOR THE ITA NO.664/DEL/2011 5 REFUND BUT AFTER COMPLETING CERTAIN LEGAL FORMALITI ES. PARAS 5, 6 & 7 OF THE SAID CIRCULAR PROVIDE AS UNDER :- 5. REFUND TO THE PERSON MAKING PAYMENT UNDER SECTI ON 195 IS BEING ALLOWED AS INCOME DOES NOT ACCRUE TO T HE NON- RESIDENT OR IF THE INCOME IS ACCRUING NO TAX IS DUE OR TAX IS DUE AT A LESSER RATE. THE AMOUNT PAID INTO THE GOV ERNMENT ACCOUNT IN SUCH CASES TO THAT EXTENT, IS NO LONGER TAX. IN VIEW OF THIS, NO INTEREST UNDER SECTION 244A IS ADM ISSIBLE ON REFUNDS TO BE GRANTED IN ACCORDANCE WITH THIS CIRCU LAR OR ON THE REFUNDS ALREADY GRANTED IN ACCORDANCE WITH CIRC ULAR NO.769 OR CIRCULAR NO.790. 6. IN CASE OF REFUND BEING MADE TO THE PERSON WHO M ADE THE PAYMENT UNDER SECTION 195, THE ASSESSING OFFICE R MAY, AFTER GIVING INTIMATION TO THE DEDUCTOR, ADJUST IT AGAINST ANY EXISTING TAX LIABILITY OF THE DEDUCTOR UNDER THE IN COME-TAX ACT, 1961, WEALTH-TAX ACT, 1957, OR ANY OTHER DIREC T TAX LAW. THE BALANCE AMOUNT, IF ANY, SHOULD BE REFUNDED TO T HE PERSON WHO MADE SUCH PAYMENT UNDER SECTION 195. A SEPARAT E REFUND VOUCHER TO THE EXTENT OF SUCH LIABILITY UNDE R EACH OF THE DIRECT TAXES SHOULD BE PREPARED BY THE INCOME-T AX OFFICER OR THE ASSESSING OFFICER IN FAVOUR OF THE INCOME-TAX DEPARTMENT AND SENT TO THE BANK ALONG WITH THE CHA LLAN OF THE APPROPRIATE TYPE. THE AMOUNT ADJUSTED AND THE BALANCE, IF ANY, REFUNDED WOULD BE DEBITABLE UNDER THE MAJOR HEAD 020-CORPORATION TAX OR THE MAJOR HEAD 021-TAXES ON INCOMES OTHER THAN CORPORATION TAX DEPENDING UPON WHETHER THE PAYMENT WAS ORIGINALLY CREDITED TO THE MAJOR HEAD 020-CORPORATION TAX OR TO THE MAJOR HEAD 02 1-TAXES ON INCOMES OTHER THAN CORPORATION TAX. 7. A REFUND IN TERMS OF THIS CIRCULAR SHOULD BE GRA TNED ONLY AFTER OBTAINING AN UNDERTAKING THAT NO CERTIFI CATE UNDER SECTION 203 OF THE INCOME-TAX ACT HAS BEEN ISSUED T O THE NON-RESIDENT. IN CASES WHERE SUCH A CERTIFICATE HA S BEEN ISSUED, THE PERSON MAKING THE REFUND CLAIM UNDER TH IS CIRCULAR SHOULD EITHER OBTAIN IT OR SHOULD INDEMNIF Y THE INCOME-TAX DEPARTMENT FROM ANY POSSIBLE LOSS ON ACC OUNT OF ANY SEPARATE CLAIM OF REFUND FOR THE SAME AMOUNT BY THE NON-RESIDENT. A REFUND IN TERMS OF THIS CIRCULAR S HOULD BE ITA NO.664/DEL/2011 6 GRANTED ONLY IF THE DEDUCTEE HAS NOT FILED RETURN O F INCOME AND THE TIME FOR FILING OF RETURN OF INCOME HAS EXP IRED. THE ASSESSEE (THE DEDUCTOR) HAS DIRECTLY ADJUSTED T HE EXCESS TDS IN THE YEAR UNDER CONSIDERATION WHILE MAKING TDS FOR THE M ONTH OF JANUARY, 2005 WITHOUT COMPLYING THE PROCEDURE IN CIRCULAR NO .7 OF 2007. THEREFORE, FOR THE FAIRNESS AND JUSTICE, WE RESTORE THE ISSUE TO THE FILE OF ASSESSING OFFICER TO DECIDE THE SAME IN VIEW OF ABO VE CIRCULAR. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON THE 12 TH DAY OF AUGUST, 2011. SD/- SD/- (C.L. SETHI) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : THE 12 TH DAY OF AUGUST, 2011 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT (A)-XXX, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR/ITAT