ATOS INFORMATION TECHNOLOGY HK LTD ( FOMERLY KNON AS ATOS ORIGIN HONGKONG LTD), MUMBAI V. ADIT (IT) 1(1), MUMBAI

ITA 7321/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84154 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-11-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: L
• Next Hearing Date: 27-08-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 10-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NARENDRA KUMAR
• Keywords: Retrospective amendment
• Section: 234B; 2

Judgement Text

L IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH L , MUMBAI . . . . , !' !' !' !' # # # # $ $ $ $ % % % % , !' !' !' !' & & & & BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER ITA NO. : 7321/MUM/2012 (ASSESSMENT YEAR: 2009-10) ATOS INFORMATION TECHNOLOGY HK LTD, (FORMERLY KNOWN AS ATOS ORIGIN HONGKONG LTD), 126-127, SDF-IV SEEPZ, ANDHERI (EAST), MUMBAI -400 006 '' .: PAN: AAKCS 8720 L VS ADIT (INT. TAX.)- 1(1), SCINDIA HOUSE, MUMBAI ') (APPELLANT) *+') (RESPONDENT) APPELLANT BY : SHRI DHANESH BAFNA RESPONDENT BY : SHRI NARENDRA KUMAR , -. /DATE OF HEARING : 27-08-2014 /01 , -. / DATE OF PRONOUNCEMENT : 19-11-2014 ! 3 ! 3 ! 3 ! 3 O R D E R $ $ $ $ % % % % , : :: : PER VIVEK VARMA, JM: INSTANT APPEAL IS FILED AGAINST THE ORDER OF DRP UNDER S ECTION 144C(5), DATED 07.09.2012, WHEREIN, THE FOLLOWING GROUNDS HAVE BEEN TAKEN: THE UNDER MENTIONED GROUNDS OF APPEAL ARE WITHOUT PREJUDICE TO EACH OTHER. 1.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED ASSISTANT DIRECTOR OF INCOME-TAX (INTERNATI ONAL TAXATION) 1(1), MUMBAI (THE LEARNED AO) AND THE DISPUTE RES OLUTION PANEL (THE DRP) ERRED IN HOLDING THE SUM OF RS. 21,39,7 1,104/- AS ROYALTY AND FEES FOR TECHNICAL SERVICES UNDER S ECTION 9(1)(VI) AND 9(1)(VII) OF THE INCOME-TAX ACT, 1961 (THE ACT ). IN DOING SO, THE LEARNED AO AND THE DRP DISREGARDED THE CONTRACT FOR PROVISION OF COMPUTING SERVICES ENTERED INTO BETWEEN THE APPELLA NT AND STANDARD CHARTERED BANK, INDIA (SCB INDIA) FOR TH E SERVICES RENDERED BY THE APPELLANT TO SCB INDIA. THE APPELLANT HUMBLY PRAYS THAT THE AFORESAID RECEI PTS SHOULD NOT BE TAXED IN INDIA AND THE LEARNED AO BE DIRECTED AC CORDINGLY. 1.2 WITHOUT PREJUDICE TO ABOVE GROUND NO. 1.1, THE LEAR NED AO AND THE DRP ERRED IN DENYING THE BENEFIT OF THE RATE PRESCR IBED UNDER SECTION 115A OF THE ACT. IN DOING SO, THE LEARNED A O AND THE DRP HELD THAT SCB INDIA BEING A NON RESIDENT COMPANY DO ES NOT FALL WITHIN THE AMBIT OF THE TERM INDIAN CONCERN AS PE R THE PROVISIONS ATOS I NFORMATION TECHNOLOGY HK LTD (FORMERLY KNOWN AS ATOS ORIGIN HONG KONG LTD) ITA NO. 7321/MUM/2012 2 OF SECTION 115A OF THE ACT AND ACCORDINGLY, THE PRO VISIONS OF SECTION 115A OF THE ACT DO NOT APPLY TO THE PAYMENTS MADE B Y SCB INDIA. THE APPELLANT HUMBLY PRAYS THAT THE LEARNED AO BE D IRECTED TO APPLY THE RATE AS PRESCRIBED UNDER SECTION 115A OF THE ACT. 1.3 WITHOUT PREJUDICE TO GROUND NOS. 1.1 TO 1.2, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, WHILE CALCULA TING THE TAX LIABILITY OF THE APPELLANT, THE LEARNED AO HAS ERRE D IN ADOPTING CHARGEABLE INCOME AS GROSS RECEIPTS INSTEAD OF NET RECEIPTS RECEIVED BUY THE APPELLANT (I.E. AFTER DEDUCTING THE EXPENSE S ATTRIBUTABLE TO GROSS RECEIPTS). THE APPELLANT HUMBLY PRAYS THAT THE LEARNED AO BE D IRECTED TO COMPUTE THE CHARGEABLE INCOME OF THE APPELLANT BY A DOPTING NET RECEIPTS INSTEAD OF GROSS RECEIPTS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED AO ERRED IN GRANTING A SHORT CREDIT OF TDS AMOUNTING TO RS. 9,54,980/-. THE APPELLANT HUMBLY PRAYS THAT THE LEARNED AO BE DIRECTED TO GRANT A CREDIT FOR THE AFORESAID TDS AS PER SECTION 199 OF THE ACT READ WITH RULE 37BA OF THE INCOME-TAX RULES, 1962. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED AO ERRED IN LEVYING INTEREST UNDER SECTION 234A OF THE ACT AMOUNTING TO RS. 42,11,918/-. THE APPELLANT HUMBLY PRAYS THAT THE LEARNED A O BE DIRECTED TO DELETE OR APPROPRIATELY REDUCE THE INTEREST LEVIED UNDER SECTION 234A OF THE ACT. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED AO ERRED IN LEVYING INTEREST UNDER SECTION 234B OF THE ACT AMOUNTING TO RS. 3,01,85,410/- WITHOUT APPRECIATING THAT THE ENTIRE INCOME OF THE APPELLANT IS SUBJECT TO DEDUCTION OF TAX AT SOURCE AND HENCE, THE QUESTION OF ADVANCE TAX DOES NOT ARISE. THE APPELLANT HUMBLY PRAYS THAT THE LEARNED A O BE DIRECTED TO DELETE THE INTEREST LEVIED UNDER SECTION 234B OF TH E ACT. THAT APPELLANT CRAVES LEAVE TO ADD, TO AMEND, TO SU BSTITUTE, TO WITHDRAW, TO MODIFY, TO ALTER AND/OR RE-INSTATE THE FOREGOING GROUNDS OF THE APPEAL AT OR BEFORE THE TIME OF HEARING. 2. THE FACTS AS EMERGING FROM THE ORDERS OF THE REVENUE AUTHORITIES ARE THAT THE ASSESSEE IS A COMPANY INCORPORATED IN HON GKONG AND PROVIDING SERVICES AND FACILITIES FOR PROCESSING DATA THROUGH COMPUTER SOFTWARE. THE ASSESSEE HAD ENTERED INTO A CONTRACT FOR PROVIDING DATA PROCESSING SUPPORT SERVICE TO STANDARD CHARTERED BANK , INDIA, WHO ARE IN THE BUSINESS OF BANKING IN INDIA. THE ASSESSEE ENTE RED INTO A CONTRACT/AGREEMENT DATED 07.08.2005, WHEREBY NEW DATA RELATING TO BRANCH TRANSACTION WAS FED BY SCB FROM THEIR WORKSTATION AND TRANSMITTED TO THE ASSESSEE DATA BASE CENTRE IN HONGK ONG. THE APPLICATION SOFTWARE WAS NEITHER DESIGNED NOR ACQUIRED BY THE ASSESSEE. IN FACT, HARDWARE, NETWORK AND SOFTWARE USED B Y SCB AT THEIR WORKSTATIONS WERE OWNED BY SCB ITSELF. THE ASSESSE E DID NOT ATOS I NFORMATION TECHNOLOGY HK LTD (FORMERLY KNOWN AS ATOS ORIGIN HONG KONG LTD) ITA NO. 7321/MUM/2012 3 HAVE ANY ROLE IN OPERATION AND TRANSMISSION OF DATA FROM SCB WORKSTATIONS IN INDIA TO THE ASSESSEE IN HONGKONG. ONCE THE DATA WAS RECEIVED BY THE ASSESSEE FROM SCB WAS LOOKED INTO, OUTPU T DATA WAS TRANSMITTED BACK TO SCB, USING THE SAME SOFTWARE, AS USE D AND PROVIDED BY SCB, AFTER RETAINING THE BACK OFFICE DATA. 3. IN THE ENTIRETY, ON TO AND FRO OF DATA TRANSMISSION, TH E ASSESSEE HAD NO RIGHT TO ACCESS THE DATA OF SCB INDIA. IT WAS FUR THER SUBMITTED THAT NEITHER SCB HAD ANY RIGHT TO EXPLOIT THE DATA INDEP ENDENTLY NOR THERE WAS ANY USER RIGHTS, PROCURED BY THE ASSESSEE T O ACCESS THE DATA BASE FOR OR IN FAVOUR OR BEHALF OF SCB. SIMILAR SERVICES WER E MADE AVAILABLE BY THE ASSESSEE TO OTHER CLIENTS AS WELL. 4. IN THIS FACTUAL SCENARIO THE PAYMENT MADE BY SCB IND IA, FOR THE USE OF SERVICES PROVIDED BY THE ASSESSEE COULD NOT BE T ERMED AS ROYALTY. 5. THE ASSESSEE FURTHER URGED THAT THE SERVICES COULD NOT BE CHARACTERIZED AS FTS U/S 9(1)(VIII) OF THE INCOME TAX ACT, BE CAUSE, THE TO FALL IN SUCH SERVICE CHARACTERIZATION, THE ASSESSEE SHOU LD HAVE EXPERTISE/SPECIAL SKILL/KNOWLEDGE TO PROVIDE THE SERVICE. IN THE PRESENT CASE, THE ASSESSEE DID NOT HAVE ANY OF THE ABOVE QUALIFICA TIONS BUT IT WAS A COMPANY, WHICH PROVIDED SERVICES TO CLIENTS, WHO REQ UIRED BACK OFFICE RENDITION. 6. THE REVENUE AUTHORITIES AFTER EXAMINING THE WORK MANU AL AND MODUS APPLIED BY THE ASSESSEE, CONCLUDED, THE AO, HOWEVER, HELD THAT THE CONTRACT SUBMITTED BY THE ASSESSEE IN RELATION TO THESE SERVICES WAS ONLY IN THE NATURE O F A CONFIRMATORY LETTER, AND THE SERVICES PERFORMED ACTUALLY FLOWED FORM A C OCTEAU CONTRACT DT. 12.2.2004, WHICH IS A COMPREHENSIVE DOCUMENT OF 113 5 PAGES AND IS SIGNED AND ENTERED INTO BETWEEN ATOS ORIGIN, UK AND STANDARD CHARTERED BANK, UK. THIS FACT IS CLEARLY STATED IN THE CONFIRMATORY LETTER FURNISHED BY THE ASSESSEE. THE AO EXAMINED THE COCT EAU CONTRACT AND FOUND THAT UNDER THE CONTRACT, THE ATOS GROUP COMPA NIES, CALLED THE SUPPLIER COMPANIES, HAVE TO PROVIDE CERTAIN TECHNOL OGY, INFRASTRUCTURE FACILITIES, ENVIRONMENT AND SERVICES TO THE STANDAR D CHARTERED BANK GROUP IN ACCORDANCE WITH CERTAIN AGREED STANDARDS. THE OBJECTIVE SPELT OUT IN THE CONTRACT IS TO CONTINUOUSLY IMPROVE THE PERFORMANCE AND BUSINESS OPERATIONS OF THE BANK ENTITIES. THE OBJEC TIVES INCLUDE ATOS I NFORMATION TECHNOLOGY HK LTD (FORMERLY KNOWN AS ATOS ORIGIN HONG KONG LTD) ITA NO. 7321/MUM/2012 4 PROVIDING THE SCB GROUP WITH A GLOBAL REACHING, FLE XIBLE AND TECHNOLOGICALLY INNOVATIVE APPROACH IN DELIVERING D ATA CENTRE AND RELATED COMPUTING SERVICES, TO ACCESS BROADER AND D EEPER RANGE OF TECHNOLOGICAL SKILLS AND TO LEVERAGE THE CAPABILITI ES AND TECHNOLOGY OF THE ASSESSEE GROUP FOR RAPID BUSINESS GROWTH. THE E XTENT OF TECHNICAL SUPPORT IS EVIDENT FROM THE SUPPORT AND SERVICES PR OVIDED FOR VARIOUS CRITICAL FUNCTIONS LIKE 24 HOURS ATMS, VERIFICATION OF CLEARING CHEQUES, VISA AUTHORIZATION ETC. THE COCTEAU CONTRACT ALSO P ROVIDED THAT ATOS SHALL BE R4EQUIRED TO DO PROCUREMENT AND ASSET MANA GEMENT FOR SCB AND TO PROVIDE A PROCEDURAL MANUAL FOR SCB PERSONNE L IN ORDER TO ENSURE THAT ALL TECHNOLOGICAL DEVELOPMENTS AND CHAN GES ARE DOCUMENTED AND PROPERLY MAINTAINED. THE ENTIRE DOCU MENTATION RELATING TO THE PERFORMANCE OF THE SERVICES WAS TO BE MAINTAINED IN AN ONLINE LIBRARY WHICH IS DIRECTLY ACCESSIBLE BY THE SCB GROUP ENTITIES. THE COCTEAU CONTRACT ALSO PROVIDES FOR CREATION OF THE ASSESSEES DATA CENTRE AT HONGKONG, AS PER THE REQUIREMENTS AND STANDARDS LAID DOWN BY SCB. NEW INFRASTRUCTURE AND OPERATING SYSTEMS WERE REQUIRED TO BE SET UP AT THESE CENTERS AND IT IS SPECIFICALLY PROVIDED THAT OPERATIONAL AND REMOTE TECHNICAL SUPPORT SHALL BE DELIVERED VIA A C OMBINATION OF SERVICES FROM ATOS HONGKONG AND OTHER ATOS ENTITIES. 3.3 IN VIEW OF THE ABOVE FACTS, THE AO HELD THAT TH E ASSESSEE HAS PROVIDED SCB INDIA WITH THE USE OF ITS EQUIPMENTS A ND PROCESSES AND HAS ALSO RENDERED SERVICES IN CONNECTION WITH THE S AME. THE PROCEDURE MANUAL COMPLIED BY ATOS FOR THE BENEFIT OF SCB INDI A WAS HELD TO BE INFORMATION FOR WHICH THE RIGHT TO USE HAD BEEN PRO VIDED TO SCB. THE AO HELD THAT IN THESE CIRCUMSTANCES, THE CHARGES PAID BY THE ASSESSEE AMOUNTED TO ROYALTY AS DEFINED IN SECTION 9(1)(VI). IT WAS FURTHER HELD THE ASSESSEE WAS ALSO PROVIDED ADVANCED TECHNICAL S ERVICES. FOR EXAMPLE, THE COCTEAU CONTRACT PROVIDED THAT THE ATO S GROUP WILL PROACTIVELY MONITOR AND MANAGE RESOURCES AND INDIVI DUAL CLUSTERED MANAGEMENT SYSTEMS IN ORDER TO DETECT BOTTLENECKS A ND POTENTIAL PROBLEMS AND TO AUTOMATICALLY RECOVER FROM CRITICAL SITUATIONS. HE, THEREFORE, HELD THAT THE CHARGES PAID CAN ALSO BE C LASSIFIED AS FEES FOR TECHNICAL SERVICES. THE AO ANALYSED SOME OF THE INV OICES RAISED BY THE ASSESSEE AND HELD THAT THE DESCRIPTION OF SERVICES IN THESE INVOICES STRENGTHENED HIS CONCLUSION THAT THE CHARGES WERE P AID AS ROYALTIES AND FEES FOR TECHNICAL SERVICES. THE AO FURTHER HELD TH AT SECTION 115A IS NOT APPLICABLE IN THE PRESENT CASE SINCE IT APPLIES TO PAYMENTS MADE BY THE GOVERNMENT OR AN INDIAN CONCERN, WHILE IN THE PRESE NT CASE, THE STANDARD CHARTERED BANK IS A FOREIGN BANK ONLY RUNN ING BRANCHES IN INDIA. HE, THEREFORE, HELD THAT THE AMOUNT OF US$ 4 2,34,536/- EQUIVALENT TO RS. 21.4 CRORES WAS CHARGEABLE TO TAX @ 40%. IT WAS FURTHER HELD BY THE PANEL THAT , WE HAVE CAREFULLY CONSIDERED THE FACTS SUBMITTED B Y THE ASSESSEE AND THE FACT STATED IN THE ASSESSMENT ORDER. IT IS NOTE D THAT THE AGREEMENTS UNDER WHICH THE SERVICES ARE STATED TO HAVE BEEN PR OVIDED ARE ESSENTIALLY IN THE NATURE OF CONFIRMATION LETTERS A DDRESSED BY THE ASSESSEE TO THE STANDARD CHARTERED BANK. IT IS CLEA RLY STATED IN THESE LETTERS THAT THERE HAS BEEN REGIONAL CONSOLIDATION OF SYSTEMS AND DATA CENTRES AND CUTOVER OF INDIA SYSTEMS COMPLETED ON 7 .8.2005 TO ACHIEVE CENTRALIZATION AND EFFICIENCY OF SERVICES. IT IS F URTHER STATED IN THESE LETTERS THAT THESE SERVICES ARE BEING PROVIDED IN A CCORDANCE WITH THE COCTEAU CONTRACT DT. 12.2.2004 ENTERED INTO BETWEEN THE ASSESSEE GROUP AND STANDARD CHARTERED ENTITIES. THE AO HAS Q UOTED EXTENSIVELY FROM THE COCTEAU CONTRACT IN THE ASSESSMENT ORDER A ND A PERUSAL OF THESE EXTRACTS (SOME OF THEM ARE MENTIONED ABOVE) M AKES IT VERY CLEAR ATOS I NFORMATION TECHNOLOGY HK LTD (FORMERLY KNOWN AS ATOS ORIGIN HONG KONG LTD) ITA NO. 7321/MUM/2012 5 THAT THE SERVICES RENDERED BY THE ASSESSEE ARE NOT MERELY DATA PROCESSING SERVICES OF A LOW-END OR BACK-OFFICE VAR IETY. 4.1 WITH REGARD TO THE CHARACTERIZATION OF THE PAYM ENT, WE FIND FROM THE RELEVANT PORTIONS OF THE COCTEAU CONTRACT CITED BY THE AO THAT THE SERVICES BEING PERFORMED WERE REQUIRED TO BE DOCUME NTED AND MAINTAINED IN THE FORM OF A REFERENCE MANUAL, WHICH WAS ALWAYS ACCESSIBLE TO THE SCB INDIA PERSONNEL WHO COULD PRI NT AND COPY ANY OF THE MATERIALS STORED IN THE LIBRARY. THIS DOCUMENTA TION EVIDENTLY RELATED TO CRITICAL PROCESSES THAT ARE INVOLVED IN THE EFFI CIENT FUNCTIONING OF THE BANK. THE DOCUMENTATION WAS ALSO IN THE NATURE OF I NFORMATION WHICH IS ACCESSIBLE AND ALWAYS AVAILABLE FOR USE BY THE SCB INDIA PERSONNEL. WE HAVE ALSO NOTED THAT EXPLANATION 5 INSERTED BY T HE FINANCE ACT, 2012 WITH RETROSPECTIVE EFFECT FROM 1.4.1976 PROVID ES THAT ROYALTY INCLUDES CONSIDERATION IN RESPECT OF ANY INFORMATIO N, WHETHER OR NOT THE POSSESSION OR CONTROL OF SUCH INFORMATION IS WITH T HE PAYER, OR IS USED DIRECTLY BY THE PAYER, OR IS LOCATED IN INDIA. FURT HER, EXPLANATION 6 SIMILARLY INSERTED WITH RETROSPECTIVE EFFECT CLARIF IES THAT ROYALTY INCLUDES CONSIDERATION FOR THE USE OF ANY PROCESS, WHETHER O R NOT SUCH PROCESS IS SECRET. THESE CLARIFICATIONS WERE NOT BEFORE THE HO NBLE ITAT WHEN THEY CONSIDERED THE ISSUE IN THE ASSESSEES OWN CASE IN AY 2004-05. MOREOVER, THE NATURE OF SERVICES RENDERED HAS ALSO UNDERGONE A CHANGE WITH A COCTEAU CONTRACT ENTERED INTO IN FEBRUARY, 2 004. IN THE LIGHT OF THE ABOVE FACTS AND THE CLARIFICATIONS MADE BY THE FINANCE ACT, 2012, WE ARE OF THE VIEW THAT THE PAYMENTS MADE BY THE ST ANDARD CHARTERED BANK TO THE ASSESSEE CAN BE CATEGORIZED AS ROYALTY. 4.2 WE ARE ALSO OF THE VIEW THAT THE NATURE OF THE SERVICES PROVIDED, AS BROUGHT OUT BY THE AO, CAN CERTAINLY BE CATEGORIZED AS MANAGERIAL AND TECHNICAL SERVICES. IT IS CLEAR FROM THE TERMS OF T HE COCTEAU CONTRACT THAT THE SERVICES RENDERED ARE NOT MERELY BACK OFFICE OR DATE PR4OCESSING SERVICES BUT ARE SERVICES RELATING TO CRITICAL AREA S OF THE FUNCTIONING OF THE BANK AND THE OBJECTIVE UNDERLYING THE SERVICES IS TO IMPROVE THE MANAGEMENT AND THE OPERATIONS OF THE BANK. EVIDENTL Y, THERE IS A HIGH DEGREE OF SKILL, BOTH MANAGERIAL AS WELL AS TECHNIC AL, INVOLVED IN THE RENDERING OF THESE SERVICES. THIS PANEL THEREFORE H OLDS THAT THE PAYMENT MADE BY THE ASSESSEE CAN ALSO BE CATEGORIZED AS FEE S FOR TECHNICAL SERVICES. 4.3 WITH REGARD TO THE RATE OF TAX, WE ARE IN AGREE MENT WITH THE AO THAT THE BENEFICIAL RATE OF 20% PROVIDED U/S 155A APPLIE S ONLY TO PAYMENTS MADE BY INDIAN ENTITIES. THE OBJECTIVE UNDERLYING T HE BENEFICIAL RATE OF TAX IS CLEARLY TO ENABLE3 INDIAN BUSINESSES TO ACQU IRE BETTER TECHNOLOGY FORM NON-RESIDENTS AND FOREIGN COMPANIES. IN THE PR ESENT CASE, THE PAYMENTS ARE MADE BY STANDARD CHARTERED BANK WHICH IS A FOREIGN BANK AND NOT AN INDIAN ENTITY. THE DECISION OF THE ITAT IN THE CASE OF BANK OF CREDIT AND COMMERCE WAS RENDERED IN THE CON TEXT OF INTEREST PAID BY A BRANCH TO THE HEAD OFFICE AND IT WAS HELD THAT IN THE CONTEXT, THE BRANCH IS A SEPARATE CONCERN LOCATED IN INDIA. IN THE PRESENT CASE, THE MERE FACT THAT BRANCHES ARE LOCATED IN INDIA DO ES NOT MEAN THAT THE ENTITY MAKING THE PAYMENT ALSO BECOMES AN INDIAN CO NCERN. WE ACCORDINGLY CONFIRM THE ACTION OF THE AO IN TAXING THE TOTAL AMOUNT @ 40%. 7. THE PANEL, THEREFORE, REJECTED THE CONTENTION OF THE ASSESSEE FOR LEVY OF LOWER TAX @ 20% AND SUSTAINED THE FINDINGS AND DEC ISION OF THE AO TO CHARGE TAX @ 40%. ATOS I NFORMATION TECHNOLOGY HK LTD (FORMERLY KNOWN AS ATOS ORIGIN HONG KONG LTD) ITA NO. 7321/MUM/2012 6 8. IN THIS CIRCUMSTANCE, THE ASSESSEE IS IN APPEAL BEFORE ITAT. 9. AT THE TIME OF HEARING, THE AR SUBMITTED THAT THE ISS UE WAS RAISED AND REACHED THE ITAT IN THE CASE OF THE ASSESSE E IN ASSESSMENT YEARS 2006-07 AND 2008-09 IN ITAS NO. 6562/MUM/2009 A ND 6889/MUM/2011, WHEREIN THE COORDINATE BENCH MENTIONS, THAT THE LIABILITY OR OTHERWISE OF THE ASSESSEE REGARDING ITS RECEIPTS HAS TO BE RE-ADJUDICATED IN THE LIGHT OF AFOREMENTI ONED RETROSPECTIVE AMENDMENT. THE ORDERS PASSED IN THE ASSESSEES CASE BY THE AO, DRP AND ITAT ARE PRIOR TO THE AFOREMENTIONED AMENDMENT IN THE STATUTE. THEREFORE, WE ARE OF THE OPINION THAT IT WOULD SERV E THE INTEREST OF JUSTICE IF ALL THESE APPEAL EXCEPT ITA NO. 6888/MUM /2011 ARE RESTORED BACK TO THE FILE OF THE AO WITH A DIRECTION TO RE-A DJUDICATE THE ISSUES IN ACCORDANCE WITH LAW AFTER GIVING FURTHER OPPORTUNIT Y TO THE ASSESSEE AND PLACING ALL THE MATERIAL REQUIRED FOR ADJUDICAT ION OF THE ISSUES RAISED IN THE PRESENT APPEALS. AFTER GIVING OPPORTU NITY THE AO WILL RE- ADJUDICATE ALL THE ISSUES RAISED IN THE PRESENT APP EALS AS PER PROVISIONS OF LAW. 7.1 SIMILAR IS THE POSITION IN RESPECT OF GROUND NO . 1.3 & 1.4 AND ADDITIONAL GROUND NO. 1.5 IN WHICH THE ASSESSEE HAS RAISED GRIEVANCES REGARDING RATES OF TAX TO BE APPLIED ON THE ABOVE R ECEIPTS. ALL THESE ISSUES ON MERITS ARE TO BE READJUDICATED AS PER LAW IN ITA NO. 6762/MUM/2009 & 219/MUM/2010 BEING CROSS APPEALS IN RESPECT OF ASSESSMENT YEAR 2006-07 AGAINST ORIGINAL ASSESSMENT . 7.2 THE OTHER ISSUES RAISED IN ITA NO. 6888/MUM/201 1 REGARDING LEVIABILITY OF INTEREST UNDER SECTION 234B WHICH WA S ADMITTED TO BE CONSEQUENTIAL AND WITH A RIDER THAT ASSESSEE HAS LI BERTY TO SHOW BEFORE AO WHY IT IS NOT LIABLE FOR LEVY OF INTEREST UNDER SECTION 234B, THE MATTER WOULD BE RE-ADJUDICATED IN ORIGINAL ASSESSME NT PROCEEDINGS AS DISCUSSED IN PARA 5.3 OF THIS ORDER. 10. BASED ON THE ABOVE DECISION OF THE ITAT IN THE PREC EDING YEAR(S), THE AR SUBMITTED THAT FOR THE SAKE OF CONSISTENCY, THE IS SUE, IN THE CURRENT YEARS, DESERVED TO BE RESTORED TO THE FILE OF THE AO. 11. THE DR DID NOT OBJECT TO THE SUBMISSION OF THE AAR FOR RESTORATION OF THE IISUE TO THE FILE OF THE AO. 12. ON HEARING BOTH THE SIDES, WE ARE OF THE VIEW THAT S INCE THE PRECEDING YEARS WERE AWAITING ADJUDICATION AT THE AO STA GE, IT WOULD BE INAPPROPRIATE FOR US, TO COME TO ANY CONCLUSION. WE, TH EREFORE, SET ASIDE THE ORDERS OF THE REVENUE AUTHORITIES AND RESTORE THE ISSUE TO THE FILE OF THE AO FOR A FRESH ADJUDICATION, IN LINE WITH THE DECIS ION TAKEN BY HE AO IN THE PRECEDING YEARS(S). NEEDLESS TO MENTION, ADEQUATE AND ATOS I NFORMATION TECHNOLOGY HK LTD (FORMERLY KNOWN AS ATOS ORIGIN HONG KONG LTD) ITA NO. 7321/MUM/2012 7 REASONABLE OPPORTUNITY SHALL BE GIVEN TO THE ASSESSEE, TO PRESENT ITS CASE. 13. GROUNDS NO. 1.2 & 1.3 PERTAIN TO RATES OF TAX TO BE A PPLIED. THESE GROUNDS BEING LINKED TO GROUND NO. 1, THIS ISSUE IS A LSO SET ASIDE TO THE FILE OF THE AO, WHO SHALL COMPUTE THE TAX AS P ER THE AMENDED PROVISIONS, AFTER GIVING ADEQUATE OPPORTUNITY TO THE ASSES SEE. 14. GROUND NO. 1.1 IS THEREFORE, ALLOWED FOR STATISTICAL PURPOSES. 15. GROUND NO. 2 PERTAINS TO NOT GIVING CREDIT OF TDS OF R S. 9,54,980/-. 16. THE AO IS LEGALLY BOUND TO ALLOW TDS TO THE ASSESSEE AS PER LAW. WE, THEREFORE, DIRECT THE AO TO ALLOW THE UNDISPUTED AND LE GALLY CORRECT CLAIM OF TDS & ON DOING SO, THE AO SHALL ALLOW THE BENEFIT OF T DS, AS CLAIMED IN THE GOA. 17. GROUNDS NO. 3 & 4 PERTAIN TO CHARGEABILITY OF INTEREST U/S 234A AND 234B. 18. THE EXIGIBILITY OF INTEREST IS CONSEQUENTIAL TO THE TAX CO MPUTED. BEND CONSEQUENTIAL, THE AO IS DIRECTED TO RECOMPUTE THE INTEREST U/S 234A & 234B AS PER LAW. 19. IN THE RESULT, THE APPEAL AS FILED BY THE ASSESSEE IS A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH NOVEMBER, 2014. SD/- SD/- ( . . . . ) ( $ $ $ $ % % % % ) (D. KARUNAKARA RAO) ( VIVEK VARMA ) ACCOUNTANT MEMBER J UDICIAL MEMBER MUMBAI, DATE: 19 TH NOVEMBER, 2014 ATOS I NFORMATION TECHNOLOGY HK LTD (FORMERLY KNOWN AS ATOS ORIGIN HONG KONG LTD) ITA NO. 7321/MUM/2012 8 *-/ COPY TO:- 1) ') / THE APPELLANT. 2) *+') / THE RESPONDENT. 3) THE CIT (A)-CONCERN___, MUMBAI/DRP-I, MUMBAI 4) THE CIT-CONCERNED _____/CIT INT. TAXATION, MUMBAI, 5) $67 *- , , / THE D.R. L BENCH, MUMBAI. 6) 7% 8 COPY TO GUARD FILE. !3 / BY ORDER / / TRUE COPY / / 9 / : ; , DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI *=>: .. * CHAVAN