Building Design Partnership Ltd., New Delhi V. DCIT, CPC, Bangalore

ITA 7453/DEL/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 5877 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 11-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Double taxation relief; Opportunity of being heard; Permanent establishment; Revised return; TDS; Set aside
• Section: 44AD; 143(1); 201; 13; 22; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: A NEW DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER [THROUGH VIDEO CONFERENCING] ITA NO.7453/DEL./2017 ASSESSMENT YEAR: 2014-15 M/S. BUILDING DESIGN PARTNERSHIP LTD., 201, SOUTH EX PLAZA, 1/389, MASJID MOTH, SOUTH EXT. PART-II, NEW DELHI VS. DCIT, CPC, BENGALURU PAN : AADCB5345H (APPELLANT) (RESPONDENT) ORDER PER O.P. KANT, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST OR DER DATED 13/09/2017 PASSED BY THE LEARNED CIT (APPEALS)-42, NEW DELHI [IN SHORT THE LD. CIT(A)] FOR ASSESSMENT YEAR 201 4-15 IN RELATION TO ORDER DATED 20/10/2016 UNDER SECTION 154 OF THE INCOME-TAX APPELLANT BY SH. VED JAIN, ADV. & SH. ASHISH GOYAL, CA RESPONDENT BY SH. SATPAL GULATI, CIT(DR) DATE OF HEARING 23.03.2021 DATE OF PRONOUNCEMENT 27.04.2021 2 ITA NO.7453/DEL./2017 ACT, 1961 (IN SHORT THE ACT) PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL PROCESSING CENTRE (CPC), BAN GALORE. THE GROUNDS RAISED BY THE ASSESSEE ARE REPRODUCED AS UN DER: 1. THAT THE LD. AO ERRED IN TAXING THE SAME INCOME O F ASSESSEE TWICE, ONCE AT SPECIAL RATE OF 15% UNDER DOUBLE TAXATION TREATY BETWEEN UK AND INDIA AS PER ARTICLE 13 OF THE SAID TREATY AND AGAIN AS NORMAL BUSINESS INCOME AT THE RATE OF 40% BEING THE RATE APPLICABLE TO FOREIGN COMPANIES. 2. THAT LD. AO ERRED IN REJECTING THE REQUEST OF THE ASSESSEE U/S 154 OF THE INCOME TAX ACT TO RECTIFY TH E SAID ORDER. 3. THAT IT IS GROSS INJUSTICE TO THE ASSESSEE WHO I S BEING FORCED TO PAY TAX TWICE ON THE SAME INCOME RESULTIN G IN AGGREGATE TAX RATE OF 55% ON THE INCOME. 2. BOTH PARTIES HAVE BEEN HEARD THROUGH VIDEO CONFEREN CING FACILITY. THE LEARNED COUNSEL OF THE ASSESSEE HAS A LSO FILED A PAPER-BOOK CONTAINING PAGES 1 TO 95. 3. BRIEFLY STATED FACTS OF THE CASE AS CULLED OUT FRO M THE ORDER OF THE LOWER AUTHORITIES AND THE PAPER-BOOK OF THE ASSESSEE ARE AS UNDER: (I) THAT THE ASSESSEE IS A FOREIGN COMPANY AND DOES NOT HAVE ANY PERMANENT ESTABLISHMENT (PE) IN INDIA. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE EARNED INCOME OF 26,43,090/- WHICH HAS BEEN CLAIMED BY THE ASSESSEE AS IN THE NATURE OF FEE FO R TECHNICAL SERVICES(FTS) AS SPECIFIED UNDER ARTICLE 3 ITA NO.7453/DEL./2017 13 OF INDIA UK DOUBLE TAX AVOIDANCE AGREEMENT (DTAA) AS WELL AS UNDER THE INCOME TAX ACT. (II) THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE YEA R UNDER CONSIDERATION ELECTRONICALLY ON 30/09/2014. IN THE RETURN OF INCOME, THE ASSESSEE OFFERED THE S AID INCOME UNDER THE HEAD PROFIT AND GAINS OF BUSINESS AND PROFESSION. THE SAME INCOME WAS ALSO OFFERED FOR TAX AT A SPECIAL RATE UNDER SCHEDULE SI OF TH E RETURN OF INCOME (PAPER-BOOK AT PAGE 35) (III) ON PAGE 40 OF THE PAPER-BOOK, THE ASSESSEE HAS FILE D ACTIVITY CHART IN RELATION TO THE RETURN OF INCOME FILED. ACCORDING TO THIS CHART, THE ASSESSEE FILED RETURN OF INCOME ON 30/09/2014 AND THEREAFTER, THE ASSESSEE WAS COMMUNICATED ON 30/11/2014 THAT THE ITR FILED BY THE ASSESSEE WAS DEFECTIVE/INCOMPLETE. THEREAFTER, THE ASSESSEE FILE D ANOTHER RETURN OF INCOME ON 30/03/2015, WHEREIN ALSO THE ASSESSEE WHILE COMPUTING TOTAL INCOME, SHOWN THE INCOME OF 26,43,090/- UNDER THE HEAD PROFIT IN GAINS OF THE BUSINESS (PAGE 55 OF THE PAP ER- BOOK) BUT UNDER THE SCHEDULE SI SHOWN THE NIL INCOME. THE ASSESSEE WAS AGAIN COMMUNICATED ON 23/06/2015 REGARDING DEFECTS IN THE RETURN OF INCOME FILED AS EVIDENT FROM THE ACTIVITY REPORTED ON PAGE 40 OF THE PAPER-BOOK. (IV) IN VIEW OF NO RESPONSE FROM THE ASSESSEE, THE RETUR N WHICH WAS CONSIDERED AS DEFECTIVE WAS TAKEN UP FOR PROCESSING ON 6/03/2016 (ACTIVITY REPORTED ON PAGE 4 ITA NO.7453/DEL./2017 40 OF THE PAPER-BOOK). IN VIEW OF SAME INCOME OFFERED BY THE ASSESSEE AT TWO PLACES IN THE RETURN OF INCOME, THE ASSESSING OFFICER AT CPC PROCESSED THE RETURN OF INCOME VIDE INTIMATION UNDER SECTION 143(1) OF THE ACT DATED 10/03/2016 AND COMPUTED TAX LIABILITY ON THE INCOME DECLARED UNDER THE HEAD PROFIT AND GAINS OF BUSINESS AND PROFESSION AND ALS O COMPUTED TAX AT SPECIAL RATE OF 15%. TOTAL TAX LIABILITY OF 14,15,190/-WAS RAISED ON THE ASSESSEE. (V) THE ASSESSEE SOUGHT RECTIFICATION OF THE ORDER UNDE R SECTION 143(1) ON 27/09/2016 BEFORE THE CENTRAL PROCESSING CENTRE. THE DEPUTY COMMISSIONER OF INCOME-TAX, CPC, REJECTED THE RECTIFICATION AND AFT ER TAKING INTO CONSIDERATION THE PREPAID TAXES, RAISED THE OUTSTANDING TAX LIABILITY OF 13,99,730/-. (VI) AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A), WHO DISMISSED THE APPEAL OF THE ASSESSEE ON THE GROUND THAT THERE WAS NO ERROR IN THE ORDER UNDER SECTION 143(1) OF THE ACT AND WHATEVER MISTAKE WAS IN THE RETURN OF INCOME FILED BY THE ASSESSEE, WHICH COULD BE CORRECTED BY WAY OF FILING A REVISED RETURN. (VII) AS THE PERIOD FOR FILING REVISED RETURN WAS ALREADY EXPIRED, THE ASSESSEE PREFERRED APPEAL BEFORE THE INCOME-TAX APPELLATE TRIBUNAL (IN SHORT THE TRIBUNAL), RAISING THE GROUNDS AS REPRODUCED ABOVE . 5 ITA NO.7453/DEL./2017 4. BEFORE US, THE LEARNED COUNSEL OF THE ASSESSEE SUB MITTED THAT THE ASSESSEE IS GOVERNED BY THE PROVISIONS OF SECTION 115A(1)(B) READ WITH SECTION 44AD AND IS LIABLE TO PAY TAX AT THE RATE OF 25% PLUS SURCHARGE PLUS CESS, HOWEVER, UNDE R ARTICLE 13 OF INDIA UK TAX TREATY, THE RATE OF TAX ON FTS IS P ROVIDED AT 15%. THE RATE SPECIFIED UNDER THE ARTICLE 13 OF INDIA UK TREATY, BEING MORE BENEFICIAL TO THE ASSESSEE, THE INCOME IS LIAB LE TO BE TAX AT THE RATE OF THE 15% AND ACCORDINGLY, THE ASSESSEE W HILE FILING RETURN OF INCOME DEPOSITED TAX OF 4,08,358/- ALONG WITH THE INTEREST. THE ASSESSEE FILED A COPY OF COMPUTATION OF TOTAL INCOME AND TAX THEREON ON PAGE 2 OF THE PAPER-BOOK. THE LE ARNED COUNSEL SUBMITTED THAT INCOME OF THE ASSESSEE HAS B EEN TAXED TWICE. HE FURTHER SUBMITTED THAT IT IS THE DUTY OF THE INCOME TAX AUTHORITIES TO ASSESS THE CORRECT INCOME. HE REFERR ED TO CBDT CIRCULAR NO.14 (XL-35) DATED 11 TH APRIL 1955, WHEREIN THE ASSESSING OFFICERS WERE DIRECTED NOT TO TAKE ADVANT AGE OF ASSESSEES IGNORANCE OR MISTAKE. THE LEARNED COUNSE L ALSO SUBMITTED THAT TIME LIMIT FOR FILING REVISED RETURN HAD ALREADY EXPIRED AND THEREFORE THE ASSESSEE IS UNABLE TO COM PLY WITH THE DIRECTION OF THE LEARNED CIT(A) FOR FILING THE REVI SED RETURN. 5. THE LEARNED DR, ON THE OTHER HAND, SUBMITTED THAT THE ASSESSEE IS SOLELY RESPONSIBLE FOR THE MISTAKE IN T HE RETURN OF INCOME FILED AND THE ASSESSING OFFICER HAS PROCESSE D THE RETURN AS PER THE INFORMATION PROVIDED BY THE ASSESSEE. AC CORDING TO HIM, THERE IS NO MISTAKE IN THE INTIMATION ORDER UN DER SECTION 143(1) OF THE ACT. 6. WE HAVE HEARD RIVAL SUBMISSION OF THE PARTIES AND PERUSED THE RELEVANT MATERIAL ON RECORD. ON PERUSAL OF THE ORIGINAL AS WELL 6 ITA NO.7453/DEL./2017 AS RETURN OF INCOME FILED IN COMPLIANCE TO DEFECTIV E MEMO UNDER SECTION 139(9), WE FIND THAT THE ASSESSEE WAS HAVIN G VERY CASUAL APPROACH TOWARDS FILING RETURNS OF INCOME. THE RETU RN OF INCOME FILED BY THE ASSESSEE ON 30/09/2014 CONTAINS PARTS A AND B. AFTER THESE TWO PARTS, THERE IS A VERIFICATION BY T HE ASSESSEE AND THEREAFTER DIFFERENT SCHEDULES ARE AVAILABLE IN THE RETURN OF INCOME. ON PERUSAL OF PART A-BS (BALANCE-SHEET AS O N 31 ST MARCH 2014) OF THE RETURN OF INCOME, WE FIND THAT ASSESSE E HAS REPORTED NIL FIGURES. SIMILARLY, IN PART A-P & L (PROFIT AND LOSS ACCOUNT FOR FINANCIAL YEAR 2013-14) ALSO THE ASSESSEE HAS REPOR TED NIL FIGURE. IN PART B-TI (COMPUTATION OF TOTAL INCOME) ALSO THE ASSESSEE HAS REPORTED NIL INCOME. IN CLAUSE 14 OF PART B -TI, TH E ASSESSEE HAS REPORTED INCOME CHARGEABLE TO TAX AT SPECIAL RATES. IN SCHEDULE SI ALSO THE ASSESSEE DECLARED INCOME OF RS.26,43,090/- AND COMPUTED TAX AT THE RATE OF 1% UNDER DTAA AMOUNTING TO 3,96,464/-. IN ANOTHER RETURN FILED IN COMPLIANCE T O NOTICE U/S 139(A), WHICH HAS BEEN VERIFIED ON 30/03/2015, WE F IND THAT NO DETAILS IN RESPECT OF ASSETS AND LIABILITIES AND PR OFIT AND LOSS ACCOUNTS ARE FILED EXCEPT GROSS AND NET RECEIPTS O F 26,43,090/-. IN THE PART A-TI (COMPUTATION OF INCOME), THE ASSES SEE DECLARED [IN THE ROW 2(I)] PROFIT AND GAINS FROM BUSINESS OT HER THAN SPECULATIVE BUSINESS AT 26,43,090/-. THE ASSESSEE ALSO DECLARED INCOME CHARGEABLE TO SPECIAL RATES AS PER SCHEDULE SI AT 26,43,090/-. THE LEARNED COUNSEL HAS CLAIMED BEFORE US THAT INCOME OF THE ASSESSEE WAS LIABLE UNDER SECTION 44D HAS BEEN BUT IN THE RETURN OF INCOME FILED ON 30/03/2015 IN THE ROW 34(VI) (ON PAGE 58 OF THE PAPER-BOOK) THE INCOME AGAIN SECTION 44D REPORTED 7 ITA NO.7453/DEL./2017 AS NIL. THUS, DEFINITELY, RETURN OF INCOME HAS BEEN FILED IN NEGLIGENT AND CASUAL MANNER WITH ERRORS AND OMISSIO NS. 6.1 FURTHER, ON PERUSAL OF THE ORDER UNDER SECTION 143(1) DATED 10/03/2016 , AVAILABLE ON PAGE 78 TO 83 OF THE PAPE R-BOOK, WE FIND THAT IN ROW HAVING SERIAL NO. 10, INCOME CHARG EABLE TO TAX AT A SPECIAL RATE HAS BEEN REPORTED NIL IN BOTH COLUMN S, I.E., AS PROVIDED BY THE TAXPAYER AS WELL AS COMPUTED UNDER SECTION 143(1) OF THE ACT. DESPITE NIL INCOME REPORTED IN B OTH COLUMNS, AGAINST SERIAL NO. 10, THE ASSESSING OFFICER IN SER IAL NO. 22 HAS COMPUTED TAX AT SPECIAL RATE OF 3,96,464/- IN BOTH THE COLUMNS FOR TAXPAYER AS WELL AS UNDER SECTION 143(1) OF THE ACT. THUS, THERE IS AN APPARENT MISTAKE OF COMPUTING TAX AT A SPECIAL RATE WITHOUT ANY INCOME REPORTED FOR TAX AT A SPECIAL RA TE. 6.2 IN VIEW OF THIS APPARENT MISTAKE IN THE ORDER UNDE R SECTION 143(1), THE FINDING OF THE LD. CIT(A) THAT THERE IS NO MISTAKE IN THE ORDER OF THE ASSESSING OFFICER, IS NOT CORRECT. IT IS EVIDENT THAT THE ASSESSEE IS AT FAULT FOR NOT REPORTING THE INCO ME IN PROPER COLUMNS, BUT THE ASSESSING OFFICER, HAS ALSO COMMIT TED APPARENT MISTAKES OF COMPUTING TAX WITHOUT CONSIDERING THE I NCOME FOR SPECIAL RATE. IN VIEW OF THE ABOVE OBSERVATION AND IN THE INTEREST OF THE SUBSTANTIAL JUSTICE, WE SET ASIDE THE ORDER OF THE LEARNED CIT(A) ON THE ISSUE IN DISPUTE AND RESTORE THE MATT ER BACK TO THE FILE OF THE ASSESSING OFFICER FOR DECIDING THE RECT IFICATION APPLICATION OF THE ASSESSEE ON MERIT KEEPING IN VIE W THE CARDINAL PRINCIPLE THAT ASSESSEE CANNOT BE TAXED TWICE FOR T HE SAME INCOME, ONE UNDER THE HEAD PROFIT AND GAIN OF BUSI NESS AND PROFESSION AND OTHER UNDER SPECIAL RATE SPECIFIED IN DTAA. IT IS NEEDLESS TO MENTION THAT THE ASSESSEE SHALL BE PROV IDED ADEQUATE 8 ITA NO.7453/DEL./2017 OPPORTUNITY OF BEING HEARD. THE GROUNDS OF THE APPE AL OF THE ASSESSEE ARE ACCORDINGLY ALLOWED FOR STATISTICAL PU RPOSES. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH APRIL, 2021 SD/- SD/- (BHAVNESH SAINI) (O.P. KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 27 TH APRIL, 2021. RK/- (DTDS) COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI