Verizon Communications Singapore Pte Ltd., CHENNAI V. Addl. DIT, CHENNAI

ITA 752/CHNY/2014

• Counselvise Citation: [2019] 111 COUNSELVISE.COM (IT) 6810 (ITAT-CHENNAI)
• Duration Of Justice: 5 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 27-03-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M SRINIVASA RAO
• Assessee Lawyers: R VENKATESAN
• Keywords: TDS
• Section: 234B; 13; 90

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH: CHENNAI , , $ BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI S.JAYARAMAN, ACCOUNTANT MEMBER ./ ITA NOS.752/CHNY/2014, 608/CHNY/2015, 742/CHNY/2016 & 2691/CHNY/2016 /ASSESSMENT YEARS: 2010-11, 2011-12, 2012-13 & 2013 - 14 M/S.VERIZON COMMUNICATIONS SINGAPORE PVT LTD ., C/O.ERNST AND YOUNG,TIDEL PARK, 6 TH & 7 TH FLOOR-A BLOCK, (MODULE 601, 701,702) NO.4,RAJIV GANDHI SALAI,TARAMANI, CHENNAI 600 113. VS. THE DEPUTY COMMISSIONER OF INCOME TAX, INTERNATIONAL TAXATION-1, CHENNAI 600 034. [ PAN: AADCM 6355 L ] ( & /APPELLANT) ( '(& /RESPONDENT) & ) / APPELLANT BY : MR.R. VENKATESAN, FCA '(& ) /RESPONDENT BY : MR.M. SRINIVASA RAO, C.I.T, D.R ) /DATE OF HEARING : 12.12.2019 ) /DATE OF PRONOUNCEMENT : 12.12.2019 / O R D E R PER S.JAYARAMAN, ACCOUNTANT MEMBER : ALL THESE ABOVE FOUR APPEALS OF THE ASSESSEE ARE R EOPENED FOR LIMITED PURPOSES TO ADJUDICATE UPON NON-DISPOSAL OF SPECIFIC GROUNDS IN THE FIRST ROUND OF LITIGATION IN THE TRIBUNAL AS MENTIO NED IN THE ORDER OF ITA NOS.752 & 608 /CHNY/2014 & 2015 ITA NOS.742 ,2691/CHNY/2016 :- 2 -: TRIBUNAL IN MISCELLANEOUS PETITION FILED BY THE ASS ESSEE IN M.P. NOS.250,251,252 & 253/CHNY/2017 VIDE ORDER DATED 18 .01.2018. 2. THE ASSESSEE HAS RAISED THE FOLLOWING ISSUES FO R OUR CONSIDERATION: (I) GROUND NO.8 & 10 FOR THE ASSESSMENT YEARS 2010 -11 & 2013-14 IN RESPECT OF DENIAL OF CREDIT FOR TDS, (II) GROUND NO.8 FOR ASSESSMENT YEAR 2012-13 IN RES PECT OF INCORRECT LEVY OF SURCHARGE AND EDUCATION CESS ON THE RATES UNDER THE TAX TREATY, (III) GROUND NO.9 FOR ASSESSMENT YEAR 2010-11, GRO UND NO.8 FOR ASSESSMENT YEAR 2011-12, AND GROUND NO.9 FOR ASSES SMENT YEAR 2012- 13, IN RESPECT OF LEVY OF INTEREST U/S.234B OF THE ACT, (IV) GROUND NO.11 FOR ASSESSMENT YEAR 2013-14 IN RE SPECT OF INCORRECT LEVY OF EDUCATION CESS. 2.1 SINCE THE ABOVE MENTIONED GROUNDS PERTAINING T O THE RELEVANT ASSESSMENT YEARS WERE NOT DISPOSED OF INADVERTENTL Y BY THIS TRIBUNAL IN THE RESPECTIVE APPEALS VIDE THE ORDERS DATED 31.01. 2017 READ WITH M.P VIDE ORDERS DATED 18.01.2018, THEY ARE DISPOSED OF ON MERITS AS UNDER. 3. THE LD.A.R SUBMITTED THAT IN THE ASSESSEES CAS E, THE TAX WAS DEDUCTIBLE AT SOURCE U/S.195 OF THE ACT ON ALL THE PAYMENTS MADE TO THE ASSESSEE FROM THE INDIAN CUSTOMERS, THE ASSESSEE, B EING A FOREIGN ITA NOS.752 & 608 /CHNY/2014 & 2015 ITA NOS.742 ,2691/CHNY/2016 :- 3 -: COMPANY, IT WAS NOT LIABLE TO PAY ANY ADVANCE TAX U /S.208 OF THE ACT AND CONSEQUENTLY, IT CANNOT BE SUBJECTED TO INTEREST U/ S.234B OF THE ACT. IN THIS REGARD, THE ASSESSEE RELIED ON THE HONBLE JUR ISDICTIONAL HIGH COURTS DECISION IN THE CASE OF CIT VS. MADRAS FERTILIZERS LTD., REPORTED IN [1984] 149 ITR 703(MAD). CONSIDERING SUCH PLEA AND OTHER DECLARED DECISIONS, THIS TRIBUNAL IN THE ASSESSEE'S OWN CASE IN ITA NOS.1311/CHNY/2006,164/CHNY/2007,1507/CHNY/2010 & 1 722/CHNY/2011 FOR ASSESSMENT YEARS 2002-03,2003-04, 2007-08 & 20 08-09 DATED 30.11.2016 HELD THAT THE ASSESSEE WAS NOT LIABLE FO R INTEREST U/S.234B OF THE ACT. THEREFORE, LD.A.R PLEADED THAT GROUND NO. 9 FOR ASSESSMENT YEAR 2010-11, GROUND NO.8 FOR ASSESSMENT YEAR 2011-12, AND GROUND NO.9 FOR ASSESSMENT YEAR 2012-13 BE ALLOWED. 4. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE RELEVANT PORTION OF ORDERS OF THE TRIBUNAL. PARAS 5 & 6 OF WHICH ARE EXTRACTED AS UNDER:- 5. WE FIND THAT SIMILAR VIEW WAS ALSO TAKEN BY MU MBAI BENCH OF THIS TRIBUNAL IN THE CASE OF DE BEERS UK LTD (SUPRA) AT PARA 7 OF ITS ORDER. THE GROUND NO.6 IS AGAINST CHARGING OF INTEREST U/ S.234B. WE FIND THAT THIS GROUND IS COVERED BY THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF DIT (INTER NATIONAL TAXATION) VS. NGC NETWORK ASIA LLC (2009) 313 JTR 1 87 (BOM) HOLDING THAT INTEREST U/S.2348 CANNOT BE CHARGED WH ERE TAX IS DEDUCTIBLE AT SOURCE IN RELATION TO ROYALTY AND FTS . THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE IMMEDIATELY PRECEDING Y EAR HAS DIRECTED THE ASSESSING OFFICER TO COMPUTE INTEREST U/S.234B, IF ITA NOS.752 & 608 /CHNY/2014 & 2015 ITA NOS.742 ,2691/CHNY/2016 :- 4 -: ANY, AFTER REDUCING THE AMOUNT OF TAX DEDUCTIBLE AT SOURCE IN RELATION TO ROYALTY AND FTS FROM THE ADVANCE TAX PA YABLE. RESPECTFULLY FOLLOWING THE PRECEDENT, WE HOLD ACCOR DINGLY. 6. THUS, WE ARE OF THE OPINION THAT ASSESSEE WAS N OT LIABLE FOR INTEREST U/S.234B OF THE ACT. HOWEVER, IN RESPECT O F INTEREST U/S.234A & 234D OF THE ACT, ID. COUNSEL FOR THE ASSESSEE FAI RLY ADMITTED THAT THESE WERE STATUTORY LEVIES FOR DEFAULT IN FURNISHI NG RETURN OF INCOME AND ON EXCESS REFUND GRANTED TO THE ASSESSEE. ACCOR DINGLY, WE ARE OF THE OPINION THAT LEVY OF INTEREST U/S.234A AND 234D WERE JUSTIFIED U/S.234B OF THE ACT IS CANCELLED. THEREFORE, WE FIND MERIT IN THE SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSESSEE AND HENCE, THE CORRESPONDING GROUNDS OF AS SESSEE ON THIS ISSUE ARE ALLOWED. 5. THE LD.A.R SUBMITTED THAT THE ASSESSEE CLAIMED CREDIT FOR TDS OF RS.154,835,440/- IN THE RETURN OF INCOME FOR ASSESS MENT YEAR 2010-11. HOWEVER, IN THE ASSESSMENT ORDER, THE LD. ASSESSING OFFICER HAS GIVEN CREDIT FOR RS.78,50,714/- ONLY. FOR THE ASSESSMENT YEAR 2013-14, WHILE MAKING THE ASSESSMENT ORDER, THE AO CONSIDERED THE RECEIPTS FROM INDIAN CUSTOMERS AS PER FORM-26AS AT RS.7,61,79,974/- AS I NCOME CHARGEABLE TO TAX IN INDIA, HOWEVER, THE CORRESPONDING TDS APPEAR ING IN FORM-26AS WAS RS.88,48,665/-. WHILE COMPLETING THE ASSESSMENT , THE AO HAS GIVEN CREDIT FOR RS.83,11,513/- ONLY, THOUGH THE HON'BLE DRP VIDE ITS DIRECTION DATED 10.06.2016 HAD DIRECTED THE AO TO GIVE THE CR EDIT FOR TAX DEDUCTED ITA NOS.752 & 608 /CHNY/2014 & 2015 ITA NOS.742 ,2691/CHNY/2016 :- 5 -: AT SOURCE IN ACCORDANCE WITH THE RULES, THE ADDITIO NAL TDS CREDIT OF RS.537,152/-, AS APPEARING IN FROM 26AS HAS NOT BEE N GRANTED TO THE ASSESSEE. THEREFORE, LD.A.R SUBMITTED THAT SUITABLE DIRECTIONS BE ISSUED TO THE AO TO GIVE THE DUE CREDIT TO THE ASSESSEE FOR T HE RESPECTIVE ASSESSMENT YEARS. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND MERIT IN THE SUBMISSIONS MADE BY T HE LD.A.R. THEREFORE, THE ASSESSING OFFICER IS DIRECTED TO VERIFY THE A SSESSEES CLAIM IN THE RESPECTIVE YEARS AND GRANT DUE TDS CREDITS IN ACCOR DANCE WITH THE PROVISIONS OF THE RULES. 7. WITH REGARD TO THE LEVY OF SURCHARGE AND EDUCAT ION CESS FOR ASSESSMENT YEAR 2012-13 AND EDUCATION CESS FOR ASSE SSMENT YEAR 2013- 14, THE LD.A.R SUBMITTED THAT WHILE MAKING THE ASSE SSMENTS FOR THE ASSESSMENT YEARS 2012-13 & 2013-14, THE AO LEVIED S URCHARGE AND CESS ON THE TAXES. AS PER SECTION 90 OF THE ACT, IN A C ASE WHERE THE INDIAN GOVERNMENT HAS ENTERED INTO A TAX TREATY WITH ANOTH ER COUNTRY, THE PROVISIONS OF THE TAX TREATY WOULD APPLY TO THE EXT ENT THEY ARE MORE BENEFICIAL TO THE ASSESSEE. THEREFORE, LD.A.R SUBMI TTED THAT WHILE APPLYING THE TAX TREATY RATE, NO SURCHARGE OR EDUCATION CESS CAN BE LEVIED. ITA NOS.752 & 608 /CHNY/2014 & 2015 ITA NOS.742 ,2691/CHNY/2016 :- 6 -: 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIAL ON RECORD. IN THE LIGHT OF THE ANALOGY APPLIED FOR TH E PROVISIONS OF THE SECTION 234B OF THE ACT VIDE THE DECISION CITED SUPRA, WE F IND MERIT IN THE SUBMISSIONS OF THE LD.A.R AND THEREFORE, THE LEVY MADE TOWARDS SURCHARGE AND CESS, AND EDUCATIONAL CESS FOR THE AS SESSMENT YEARS 2012- 13 & 2013-14, RESPECTIVELY, ARE DIRECTED TO BE DELE TED. 9. IN THE RESULT, THE ASSESSEES APPEAL FOR THE ASS ESSMENT YEARS 2010-11 & 2013-14 ARE PARTLY ALLOWED, AND THE ASSES SEES APPEAL FOR THE ASSESSMENT YEARS 2011-12 & 2012-13 ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT AFTER CONCLUSIO N OF HEARING ON 12 TH DECEMBER, 2019 IN CHENNAI. SD/- ( ) ( GEORGE MATHAN ) /JUDICIAL MEMBER SD/ - ( ) ( S. JAYARAMAN ) /ACCOUNTANT MEMBER /CHENNAI, 0 /DATED: 12 TH DECEMBER, 2019. K S SUNDARAM ) '12 32 /COPY TO: 1. & /APPELLANT 4. 4 /CIT 2. '(& /RESPONDENT 5. 2 ' /DR 3. 4 ( ) /CIT(A) 6. /GF