DDIT (I) 4(1), MUMBAI V. LINKLATERS LLP, MUMBAI

ITA 7471/MUM/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3691 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 07-05-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 01-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 234B

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES L MUMBAI . , , , BEFORE SHRI B.RAMAKOTAIAH, A. M. AND SHRI VIVEK VARMA, J.M. ITA. NO.7471/MUM/2010 ASSESSMENT YEAR 2008-09 DDIT(IT)-4(1), 133 SCINDIA HOUSE, BALLARD PIER, MUMBAI-400038 V/S M/S LINKLATERS LLP, C/O. DELOITTEE HASKINS & SELLS 264-265, VASWANI CHAMBERS, DR. ANIIE BESANT ROAD, WORLI, MUMBAI-400030 PAN-AABCL5182G (APPLICANT) (RESPONDENT) APPLICANT BY SHRI MAHESH KUMAR RESPONDENT BY SHRI MADHUR AGARWAL DATE OF HEARING : 08-05-2013 DATE OF PRONOUNCEMENT : 08-05-2013 PER VIVEK VARMA, JM THE APPEAL ARISES FROM THE ORDER OF CIT(A)11, MUMBA I DATED 25.08.2010, WHEREIN THE DEPARTMENT HAS RAISED THE FOLLOWING GRO UNDS: 1. ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE A ND IN LAW WHETHER THE LD.CIT(A) WAS CORRECT IN HOLDING THAT WHEN DUTY IS CAST ON THE PAYER TO PAY TAX AT SOURCE , NO INTEREST U/S. 234B AND 234C CAN BE I MPOSED ON THE PAYEE ASSESSEE IGNORING THE FACT THAT IT IS THE LIABILITY OF THE P AYEE TO PAY ADVANCE TAX EVEN ON THE AMOUNT WHICH HAD NOT BEEN DEDUCTED AT SOURCE U/S195 OF THE INCOME-TAX ACT, 1961. 2. THE APPELLANT PRAYS THAT THE ORDER OF THE LD. CI T(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER RESTORE D. 2. AT THE TIME OF HEARING, THE AR POINTED OUT THAT THE ISSUE, THAT NO INTEREST U/S 234B AND 234C IS NOT TO BE LEVIED ON THE PAYEE, WHEN THE LIABILITY OF WITHHOLDING TAX LIABILITY IS CAST UPON THE PAYER, IS SETTLED IN THE CASE OF DIT (IT) VS NGC NETWORK ASIA LLC, REPORTED IN 313 ITR 187(MUM). 3. THE DR RELIED UPON THE DECISION OF THE AO. 4. WE HAVE CAREFULLY PERUSED THE IMPUGNED ORDER A ND THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF DIT(IT) VS NGC NET WORK ASIA LLC, REPORTED IN 313 ITR 187 (MUM), (RELEVANT PORTION AT PAGES 189 AND 1 90), AS POINTED OUT BY THE AR, WHEREIN THE HONBLE BOMBAY HIGH COURT REFERRED TO T HE CASE OF CIT VS DAIMLER BENZ A.G., REPORTED IN 108 ITR 961 (BOM - FB) WHEREIN IT WAS HELD THAT THE ASSESSEE WAS OF THE OPINION THAT IT WAS UNDER NO OBLIGATION TO PAY ADVANCE TAX U/S 18A INASMUCH AS BEING A NON-RESIDENT COMPANY ITS IN COME FELL U/S 18 OF THE ACT, THAT IS TO SAY AN INCOME IN RESPECT OF WHICH THE TAX PAYABLE W AS LIABLE TO BE DEDUCTED AT SOURCE AT THE TIME OF PAYMENT. THE LEARNED FULL BENCH OF THIS COURT TOOK THE VIEW CONSIDERING THE DISCUSSION THAT THE ASSESSEE WOULD NOT BE LIABLE TO PAY THE INTEREST ON THE ADVANCE TAX NOT SO DEDUCTED. 5. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF NGC NETWORK (SUPRA) , ALSO CITED THE CASE OF SEDCO FOREX INTERNATIONAL DRILLING CO. LTD. REPORTED IN 264 ITR 320 (UTTRANCHAL), WHEREIN IT WAS OBSERVED : A LEARNED BENCH OF THIS COURT WAS PLEASED TO PAS S AN ORDER DATED JULY 16, 2008 IN INCOME-TAX APPEAL (L) NO. 1796 OF 2007 IN THE CASE OF DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION) VS MORGAN CORPORATION GUAR ANTEE INTERNATIONAL FINANCE CORPORATION, BY APPLYING THE RATIO OF THAT JUDGMENT . OUR ATTENTION IS ALSO INVITED TO THE JUDGMEN T OF THE MADRAS HIGH COURT, IN THE CASE OF CIT VS MADRAS FERTILISERS LTD. REPORTED IN [1984] 1 49 ITR 703, WHERE THE MADRAS HIGH COURT TOOK THE VIEW THAT THE AMOUNT OF TAX DEDUCTIB LE AT SOURCE IS TO BE TAKEN INTO CONSIDERATION TO DETERMINE THE LIABILITY TO PAY THE INTEREST U/S 215. IN THAT CASE, THE ASSESSEE HAD NOT PAID ADVANCE TAX ON THE INTEREST I NCOME. THE PAYER OF INTEREST HAD NOT DEDUCTED THE TAX. THE LEARNED BENCH OF THE MADRAS H IGH COURT WAS OF THE VIEW THAT LEVY OF INTEREST U/S 215 ON THE ASSESSEE WAS NOT JUSTIFI ED. WE ARE IN RESPECTFUL AGREEMENT WITH THE VIEW TAKEN N THE CASE OF CIT VS SEDCO FOREX INTERNATIONAL DRILLING CO. LTD. [2003] 264 ITR 320, BY THE UTTRANCHAL HIGH COURT. WE ARE CLEARLY OF THE OPINION THAT WHEN A DUTY IS CAST ON THE PAYER TO PAY THE TAX AT SOURCE, ON FAILURE, NO INTEREST CAN BE IMPOSED ON THE PAYEE -ASSESSEE. 6. WE ALSO FIND THAT SIMILAR VIEW WAS TAKEN BY THE COORDINATE BENCH IN THE ASSESSEES OWN CASE PERTAINING TO ASSESSMENT YEAR 1995-96 IN I TA NO. 4896/MUM/2003, ORDER DATED 16.07.2010. 7. RESPECTFULLY FOLLOWING THE DECISION OF THE JUR ISDICTIONAL BOMBAY HIGH COURT AS REFERRED TO BY THE CIT(A) AND BY THE AR AND THE ASS ESSEES OWN CASE, AS REFERRED ABOVE, WE ARE NOT INCLINED TO DISTURB THE DECISION OF THE LEARNED CIT(A) IN THE IMPUGNED ORDER. 8. IN THE RESULT THE APPEAL FILED BY THE DEPARTMENT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 08 TH MAY, 2013. SD/- SD/- ( . ,/ B. RAMAKOTAIAH ) ( /VIVEK VARMA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / MUMBAI, / DATE: 08 TH MAY, 2013 SHEKHAR COPY TO: 1. APPLICANT 2. RESPONDENT 3. THE CONCERNED CIT (A).. 4. THE CONCERNED CIT 5. DR .. BENCH, ITAT, MUMBAI 6. GUARD FILE ! //TRUE COPY// / BY ORDER, '/# $ DY./ASST. REGISTRAR % &' &() *, / ITAT, MUMBAI