CIENA COMMUNICATIONS INDIA PVT. LTD., NEW DELHI V. ACIT, CIRCLE- 6(1), NEW DELHI

ITA 7322/DEL/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 5152 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 04-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATPAL GUALTI
• Assessee Lawyers: VISHAL KALRA MS REEMA MALIK
• Keywords: Application of stay; Set aside
• Section: 143(3); 234B; 40(a)(ia)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D DELHI BEFORE SHRI G.S. PANNU, HONBLE VICE PRES IDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 7322/DEL/2019 AY : 2015-16 STAY NO. 899/DEL/2019 (IN ITA NO. 7322/DEL/2019) AY : 2015-16 CIENA COMMUNICATIONS INDIA PVT. LTD. C/O KOCHHAR AND CO., LAW HOUSE, SUITE/UNIT NO. 1120-1121, 11 TH FLOOR, TOWER-A, DLF TOWERS, JASOLA, JASOLA DISTRICT CENTRE, NEW DELHI-110025 (PAN: AADCC8462C) VS ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 6(1), NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI VISHAL KALRA, ADVOCAT E MS REEMA MALIK, CA RESPONDENT BY: SHRI SATPAL GUALTI, C.I.T. DR ORDER THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAI NST THE ORDER OF THE ACIT, CIRCLE 6(1), DELHI DATED 5.8.2019 AND PERTAIN S TO ASSESSMENT YEAR 2015- 16. 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE AS UNDER:- APPEAL UNDER SECTION 253(1)(D) OF THE INCOME TAX A CT, 1961 (HEREINAFTER REFERRED TO AS THE 'ACT), AGAINST THE ORDER DATED AUGUST 5, 2019 (RECEIVED ON AUGUST 6, 2019), PASSED BY THE ITA NO. 7322/DEL/2019 & STAY NO.899/D/2019 ASSESSMENT YEAR 2015-16 2 ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 6(1), DELHI (AO) UNDER SECTION 143(3) READ WITH SECTION 144C( 13) OF THE ACT, PURSUANT TO DIRECTIONS ISSUED BY THE DISPUTE RESOLU TION PANEL (DRP) DATED JUNE 14, 2019. 1. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ASSESSING OFFICER (AO) ERRED IN COMPLETING THE AS SESSMENT OF THE APPELLANT AT AN INCOME OF INR 11,49,95,100 AS AGAIN ST RETURNED INCOME OF INR 8,91,68,050. 2. THAT ON FACTS AND IN CIRCUMSTANCES OF THE CASE AND IN LAW, THE AO/ DRP HAVE GROSSLY ERRED IN MAKING DISALLOWANCE O F TECHNICAL ON-CALL ASSISTANCE CHARGES AMOUNTING TO INR 2,58,27 ,018 PAID BY THE APPELLANT INVOKING PROVISIONS OF SECTION 40(A)( I) OF THE ACT BY HOLDING THE SAME TO BE FEE FOR TECHNICAL SERVICES A ND ALLEGING THAT TAX ON SOURCE WAS LIABLE TO BE DEDUCTED FROM SUCH P AYMENTS. 2.1 THAT ON FACTS AND IN CIRCUMSTANCES OF THE CASE AND IN LAW, THE AO / DRP HAVE ERRED IN HOLDING THAT THE CHARGES PAI D BY THE APPELLANT WERE ON ACCOUNT OF SERVICES WHICH WERE T ECHNICAL IN NATURE. 2.2 THAT ON FACTS AND IN CIRCUMSTANCES OF THE CASE AND IN LAW, THE AO / DRP HAVE ERRED IN UPHOLDING THAT THE CHARGES P AID BY THE APPELLANT WERE ON ACCOUNT OF SERVICES WHICH MADE A VAILABLE TECHNICAL KNOWLEDGE, EXPERIENCE, SKILL, KNOW-HOW OR PROCESSES. 3. THAT THE AO / DRP ERRED IN NOT FOLLOWING THE DE CISION OF THE DELHI BENCHES OF THE HONBLE TRIBUNAL IN THE APPELL ANTS OWN CASE FOR AYS 2012-13, 2013-14 AND 2014-15 WHEREIN SUCH D ISALLOWANCE MADE UNDER SECTION 40(A)(I) OF THE ACT HAS BEEN DEL ETED. 4. NOTWITHSTANDING AND WITHOUT PREJUDICE TO THE AB OVE GROUNDS, THE DISALLOWANCE RELATING TO TECHNICAL ON-CALL CHARGES SHOULD HAVE BEEN RESTRICTED TO 30% OF THE SUM PAYABLE IN VIEW OF AME NDMENT TO SECTION 40(A)(IA) OF THE ACT, READ WITH ARTICLE 26 - NON DISCRIMINATION OF INDIA -US DOUBLE TAXATION AVOIDA NCE AGREEMENT. 5. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE ASSESSING OFFICER HAS ERRED IN CHARGING INTEREST UN DER SECTIONS 234B AND 234C OF THE ACT. ITA NO. 7322/DEL/2019 & STAY NO.899/D/2019 ASSESSMENT YEAR 2015-16 3 3. IN THIS APPEAL, ALTHOUGH THE ASSESSEE HAS RAISED MULTIPLE GROUNDS OF APPEAL BUT IN SUM AND SUBSTANCE, THE ONLY GRIEVANCE IS AGAINST THE ACTION OF THE INCOME TAX AUTHORITIES IN SUSTAINING AN ADDITION OF RS. 2,58,27,018/- REPRESENTING TECHNICAL ON-CALL ASSISTANCE CHARGES P AID TO CIENA COMMUNICATIONS INC. (IN SHORT CIENA US). 4. THE ONLY REASON ADVANCED BY THE ASSESSING OFFICE R TO MAKE THE DISALLOWANCE IS ON ACCOUNT OF THE FACT THAT TAX WAS NOT DEDUCTED AT SOURCE AND, THEREFORE, THE PROVISIONS OF SECTION 40(A)(I) OF TH E ACT HAVE BEEN INVOKED. 5. BEFORE US, THE SHORT POINT RAISED BY THE LEARNED REPRESENTATIVE IS THAT THE IMPUGNED DISPUTE IS NO LONGER RES INTEGRA INASMUCH AS IN THE EARLIER ASSESSMENT YEARS OF 2012-13 TO 2014-15, SIMILAR ISSUE HAD COME UP BEFORE THE TRIBUNAL AND THE SAME HAS BEEN ADJUDICATED IN FAVOUR OF THE ASSE SSEE, WHEREBY IT HAS BEEN HELD THAT IMPUGNED SUMS WERE NOT CHARGEABLE TO TAX IN INDIA AND, THUS, NO TAX WAS REQUIRED TO BE DEDUCTED AT SOURCE. IN THIS CON TEXT, A COPY OF THE DECISION OF THE TRIBUNAL IN THE CASE OF CIENA COMMUNICATIONS IN DIA (P) LTD. VS A.C.I.T., CIRCLE - 6(1), NEW DELHI REPORTED IN (2018) 98 TAXM ANN.COM 458(DELHI) DATED 27 TH SEPTEMBER, 2018 HAS BEEN PLACED ON RECORD. 6. IT HAS ALSO BEEN POINTED OUT THAT IN THE INSTANT YEAR, NEITHER THE ASSESSING OFFICER AND NOR THE DRP HAS GIVEN ANY INDEPENDENT F INDING, INASMUCH AS, IT HAS BEEN MERELY NOTED THAT THE DECISION OF THE TRIBUNAL DATED 27.9.2018 (SUPRA) HAS ITA NO. 7322/DEL/2019 & STAY NO.899/D/2019 ASSESSMENT YEAR 2015-16 4 NOT BEEN ACCEPTED BY THE REVENUE, AS AN APPEAL WAS FILED BEFORE THE HONBLE DELHI HIGH COURT. THE LEARNED REPRESENTATIVE POINT ED OUT THAT THE APPEAL OF THE REVENUE BEFORE THE HONBLE HIGH COURT IS STILL PEND ING. 7. PER CONTRA, THE AFORESAID FACTUAL MATRIX HAS NOT BEEN DISPUTED BY THE LD. DR , BUT THE DISALLOWANCE IS SOUGHT TO BE JUSTIFIED FOR THE REASON THAT THE MATTER IS PENDING BEFORE THE HONBLE HIGH COURT. 8. HAVING CONSIDERED THE RIVAL STANDS, WE DO NOT FI ND ANY JUSTIFIABLE GROUND TO SUSTAIN THE ADDITION IN VIEW OF THE SUBSISTING P RECEDENT BY WAY OF THE ORDER OF THE TRIBUNAL DATED 27 TH SEPTEMBER 2018 (SUPRA). THE FACT THAT THE APPEAL OF THE REVENUE AGAINST THE AFORESAID ORDER IS STILL PENDIN G BEFORE THE HONBLE HIGH COURT, DOES NOT DISTRACT FROM THE FACT THAT THE SAI D PRECEDENT CONTINUES TO HOLD THE FIELD AS THERE IS NO STAY ON ITS OPERATION. IN VIEW THEREOF, WE SET ASIDE THE ORDER OF THE ASSESSING OFFICER WITH THE DIRECTION T O DELETE THE IMPUGNED ADDITION AND ALLOW RELIEF TO THE ASSESSEE. ACCORDIN GLY, THE APPEAL OF THE ASSESSEE IS ALLOWED AS ABOVE. 9. THE CORRESPONDING STAY APPLICATION NO. 899/DEL/2 019 HAS SINCE BECOME INFRUCTOUS AND IS HEREBY DISMISSED. ITA NO. 7322/DEL/2019 & STAY NO.899/D/2019 ASSESSMENT YEAR 2015-16 5 THIS ORDER WAS DICTATED AND PRONOUNCED IN THE OPEN COURT AT THE CONCLUSION OF THE HEARING IN THE PRESENCE OF BOTH T HE PARTIES ON 19.02.2020. SD/- SD/- (SUDHANSHU SRIVASTAVA) (G.S. PANNU) JUDICIAL MEMBER VICE PRESIDENT DATED: 19TH FEBRUARY 2020 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER ASSTT. REGISTRAR ITAT, NEW DELHI