M/S. MAHINDRA & MAHINDRA LTD, MUMBAI V. THE ACIT (IT)RG 3(1), MUMBAI

ITA 7648/MUM/2007

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 7797 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 3 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: L
• Next Hearing Date: 29-03-2011
• Assessment Year: misc
• Appeal Filed On: 27-12-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MALATHI SHRIDHARAN
• Assessee Lawyers: H P MAHAJANI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES L : MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI RAJENDRA SINGH, ACCOUNTANT MEMBER ITA. NO. 7648/MUM/2007 MAHINDRA & MAHINDRA LIMITED MUMBAI 400 018 PAN AAACM3025E VS. ASST. DIRECTOR OF INCOME TAX, INTERNATIONAL TAXATION, RANGE 3 (1) MUMBAI 400 038 (APPELLANT) (RESPONDENT) FOR APPELLANT : SHRI H.P. MAHAJANI FOR RESPONDENT : SMT. MALATHI SHRIDHARAN (DR) ORDER PER D. MANMOHAN, V.P. 1. THE ONLY GROUND URGED BY THE ASSESSEE IN THIS A PPEAL READS AS UNDER : ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE APPELLANT CONTENDS THAT THE LEARNED CIT(A) ERRED IN DISMISSING THE APPEAL FILED UNDER SECTION 248 BY HO LDING THAT IT WAS NOT MAINTAINABLE IN THE ABSENCE OF AN O RDER BY THE INCOME TAX AUTHORITIES, ALTHOUGH THE APPELLA NT DEDUCTED/PAID TAX UNDER SECTION 195 OF THE INCOME-T AX ACT AND DENIED HIS LIABILITY TO DO SO. 2. FACTS NECESSARY FOR THE DISPOSAL OF THE APPEAL ARE STATED IN BRIEF. ASSESSEE-COMPANY IS ENGAGED IN THE BUSINE SS OF MANUFACTURE AND SALE OF TRACTORS AND MOTOR VEHICLES. IT ENTERED INTO A MOU WITH M/S. DELOITTE & TOUCHE CORPORATE FINANCE LTD., CHIN A UNDER WHICH THE LATER COMPANY AGREED TO PROVIDE SERVICES RELATI NG TO DUE DILIGENCE, BUSINESS VALUATION, DEAL STRUCTURING, TAX ADVISORY ETC., TOWARDS POTENTIAL ESTABLISHMENT OF A JOINT VENTURE COMPANY IN CHINA. THE SAID 2 SERVICES WERE TO BE PROVIDED IN CHINA. THE ASSESSEE TREATED THE INCOME FROM SERVICES AS FEES FOR TECHNICAL SERVICE S AND DEDUCTED TAX @ 10%. SUBSEQUENTLY, THE ASSESSEE OBTAINED AN OPINI ON OF THE CHARTERED ACCOUNTANT WHEREIN THEY ADVISED ASSESSEE- COMPANY THAT THE AMOUNT PAID IS NOT TAXABLE IN INDIA. ACCORDING TO THE ASSESSEE, SERVICES WERE RENDERED IN CHINA AND HENCE THERE IS NO NEED TO DEDUCT TAX. UNDER THE CIRCUMSTANCES, THE C.A. REVISED THEI R CERTIFICATE STATING THAT NO TAX IS REQUIRED TO BE DEDUCTED. BASED ON TH E SET OF FACTS, ASSESSEE PREFERRED AN APPEAL UNDER SECTION 248 OF T HE ACT BEFORE THE CIT(A) CONTENDING THAT THE ASSESSEE DENIES HIS LIAB ILITY TO DEDUCT TAX UNDER SECTION 195 OF THE I.T. ACT. 4. LEARNED CIT(A) OBSERVED THAT ASSESSEE HAS AN OB LIGATION TO FILE A PETITION BEFORE THE ASSESSING OFFICER UND ER SECTION 195 OF THE ACT AND IN THE ABSENCE OF ANY SUCH APPLICATION AN A PPEAL UNDER SECTION 248 OF THE ACT CANNOT BE PREFERRED. SIMILAR ISSUE WAS CONSIDERED BY THE ITAT, MUMBAI BENCH IN ASSESSEES OWN CASE WHEREIN THE BENCH OBSERVED AS UNDER : WE ARE, THEREFORE, OF THE CONSIDERED VIEW THAT THE COMMISSIONER (APPEALS) ACTED CONTRARY TO THE SCHEME OF THE INCOME TAX ACT IN ADMITTING AN APPEAL AGAINST CERTI FICATE ISSUED BY A FIRM OF CHARTERED ACCOUNTANTS. IN OUR C ONSIDERED VIEW, HE SHOULD HAVE REJECTED THE APPEALS AS NON MA INTAINABLE AND SHOULD HAVE GIVEN THE LIBERTY TO THE ASSESSEE T O APPROACH THE ASSESSING OFFICER (TDS) FOR SEEKING DETERMINATI ON OF WITHHOLDING TAX LIABILITY OF THE ASSESSEE AND TO FO LLOW THE GRIEVANCE REDRESSAL MECHANISM IN CASE HE IS AGGRIEV ED OF THE STAND OF THE ASSESSING OFFICER. THAT IS THE PROPER COURSE OF ACTION. IT IS, IN OUR CONSIDERED, ALSO NECESSARY BE CAUSE APPEAL TO THE COMMISSIONER (APPEALS) IS ONLY ONE OF THE CO URSES OF GRIEVANCE REDRESSAL MECHANISM UNDER THE ACT. AN ASS ESSEE MAY ALSO APPROACH THE ADMINISTRATIVE COMMISSIONER, IF SO ADVISE, UNDER SECTION 264, BUT THEN SUCH A COURSE O F ACTION CAN ONLY BE FOLLOWED WHEN THERE IS AN ORDER BY ANY AU THORITY 3 SUBORDINATE TO THE COMMISSIONER. KEEPING ALL THESE THINGS IN MIND, AS ALSO ENTIRETY OF THE CASE, WE CONSIDER IT FIT AND PROPER TO HOLD THAT NO APPEAL TO COMMISSIONER (APPEALS) IS MAINTAINABLE AGAINST THE CERTIFICATE ISSUED BY A CH ARTERED ACCOUNTANT UNDER CBDT CIRCULAR NO. 759. THE COMMISS IONER (APPEALS) SHOULD HAVE DISMISSED THE APPEALS ON THIS GROUND ALONE. ACCORDINGLY, WE SEE NO NEED TO ADDRESS OURSE LVES TO THE MERITS OF THE CASE AND DECLINE TO CONSIDER THE ASSE SSEES GRIEVANCE ON MERITS OF THE CASE. 5. HOWEVER, IN LINE WITH THE DIRECTION GIVEN BY TH E ITAT (ITA. NO. 2733 TO 2739/MUM/2003 DATED 28 TH JULY, 2006), LEARNED CIT(A) HAS GIVEN LIBERTY TO THE ASSESSEE TO MOVE AN APPLIC ATION UNDER SECTION 195 (2) OF THE ACT BEFORE THE ASSESSING OFFICER AND THE ASSESSING OFFICER WAS DIRECTED TO DISPOSE OF SUCH APPLICATION WITHIN A REASONABLE TIME. PURSUANT TO THE DIRECTION OF THE LEARNED CIT( A), VIDE ORDER DATED 27-9-2007, ASSESSEE-COMPANY FILED AN APPLICATION TO ASSESSING OFFICER. EVEN AFTER 4 YEARS THE APPLICATION FILED B Y THE ASSESSEE WAS NOT DISPOSED OF BY THE ASSESSING OFFICER. 6. LEARNED COUNSEL, APPEARING ON BEHALF OF THE ASS ESSEE, SUBMITTED THAT IN THE LIGHT OF LATER DECISIONS THER E IS NO NEED BY THE ASSESSEE TO DEDUCT TAX AT SOURCE AND HENCE, APPEAL OUGHT TO HAVE BEEN ACCEPTED BY THE LEARNED CIT(A). 7. ON THE OTHER HAND, LEARNED DR STRONGLY RELIED U PON THE ORDERS PASSED BY THE TAX AUTHORITIES. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE RECORD. AS RIGHTLY POINTED OUT BY THE ITAT (SUP RA) APPEAL FILED BY THE ASSESSEE IS CONTRARY TO THE SCHEME OF THE INCOM E TAX ACT AND THEREFORE, DESERVES TO BE REJECTED AS NOT MAINTAINA BLE. UNDER THE CIRCUMSTANCES, WE FIND NO MERIT IN THE APPEAL FILED BY THE ASSESSEE AND ACCORDINGLY UPHOLD THE ORDER OF THE LEARNED CIT (A). BEFORE PARTING WE MAY NOTICE THAT IN THE AFORECITED ORDER THE TRIB UNAL HAS DIRECTED 4 THE ASSESSING OFFICER TO PASS A SPEAKING ORDER IN R ESPONSE TO THE APPLICATION FILED BY THE ASSESSEE AND BASED ON THE OBSERVATIONS OF THE TRIBUNAL, THE LEARNED CIT(A), IN THE INSTANT CASE, HAS GIVEN A SPECIFIC DIRECTION TO THE ASSESSING OFFICER TO DISPOSE OF TH E PETITION WITHIN A REASONABLE TIME FRAME. THOUGH AN APPLICATION WAS FI LED ON 28/12/2007, BEFORE THE DY. DIRECTOR OF INCOME TAX, RANGE 4 (1), BALLARD ESTATE, MUMBAI IT WAS BROUGHT TO OUR NOTICE THAT TILL DATE NO ORDER WAS PASSED BY THE CONCERNED OFFICER. IN THE A BSENCE OF ANY EVIDENCE TO POINT OUT TO THE CONTRARY, WE ARE OF TH E VIEW THAT THE CONCERNED OFFICER HAD GIVEN SCANT REGARD TO THE DIR ECTIONS ISSUED BY HIS SUPERIOR AUTHORITY I.E., COMMISSIONER OF INCOME TAX (APPEALS) WHICH INTURN WAS BASED UPON THE OBSERVATIONS OF THE ITAT. HAVING REGARD TO THE PECULIAR CIRCUMSTANCES OF THE CASE, W E DIRECT THE OFFICER TO ACT UPON THE LETTER ADDRESSED BY THE ASSESSEE-CO MPANY AND DISPOSE OF THE MATTER, BY WAY OF A SPEAKING ORDER, WITHIN 4 5 DAYS FROM TODAY. WE HAVE ALSO ANNOUNCED IN THE OPEN COURT THAT THE L EARNED DR SHALL INFORM THE ASSESSING OFFICER FORTHWITH SO AS TO ENA BLE THE OFFICER TO ACT UPON THE LETTER DATED 28-12-2007. IN THE EVENT OF NOT PASSING THE ORDER WITHIN THE TIME FRAME, IT HAS TO BE ASSUMED T HAT THE OFFICER HAD NO OBJECTION TO ACCEPT THE CLAIM OF THE ASSESSEE AN D HE SHALL FORTHWITH REFUND THE TAX DEPOSITED BY THE ASSESSEE. ORDER PRONOUNCED ACCORDINGLY IN THE OPEN COURT ON THIS THE 29 TH DAY OF MARCH, 2011. SD/- (RAJENDRA SINGH) ACCOUNTANT MEMBER SD/- (D. MANMOHAN) VICE PRESIDENT DATED : 29 TH MARCH, 2011 VBP/- 5 COPY TO 1. MAHINDRA & MAHINDRA LIMITED, MAHINDRA TOWERS, GROUN D FLOOR, CORPORATION TAXATION, WORLI ROAD NO.13, WORLI, MUMBAI 400 018 PAN AAACM3025E 2. ASST. DIRECTOR OF INCOME TAX, INTERNATIONAL TAXA TION, RANGE 3 (1) SCINDIA HOUSE, BELLARD ESTATE, MUMBAI 400 038 3. COMMISSIONER OF INCOME TAX (APPEALS)-XXXIII, MUM BAI 4. D.I.T. (I.T), MUMBAI 5. DR L BENCH 6. GUARD FILE. BY ORDER TRUE COPY ASSTT. REGISTRAR, ITAT, MUMBAI