Larsen & Toubro Limited, CHENNAI V. DCIT, Tambaram

ITA 812/CHNY/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 95907 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 23-06-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 29-04-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N MADHAVAN
• Assessee Lawyers: R VIJAYARAGHAVAN
• Keywords: Permanent establishment
• Section: 143(3); 234B; 154

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , B B ENCH, CHENNAI . , ' $ , % ' BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./ I.T.A.NO . 812/MDS/2013 ( / ASSESSMENT YEAR: 2004-05) M/S. LARSEN & TOUBRO LTD. SHAPOORJI PALLONI & CO.LTD. MOUNT POONAMALLEE ROAD MANAPAKKAM, CHENNAI-600 089. VS. DEPUTY COMMISSIONER OF INCOME TAX, BUSINESS CIRCLE TAMBARAM. PAN:AAAAL0656Q ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR.R.VIJAYARAGHAVAN, ADVOCATE /RESPONDENT BY : MR. N.MADHAVAN, JCIT /DATE OF HEARING : 23 RD JUNE, 2015 /DATE OF PRONOUNCEMENT : 19 TH AUGUST, 2015 / O R D E R PER CHALLA NAGENDRA PRASAD, JM: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-IX, CHE NNAI DATED 26.02.2013 FOR THE ASSESSMENT YEAR 2004-05. T HE ONLY ISSUE IN THE APPEAL OF THE ASSESSEE IS THAT COMMIS SIONER OF INCOME TAX (APPEALS) ERRED IN CONCLUDING THAT CREDI T FOR FOREIGN TAX PAID IN MAURITIUS SHOULD NOT BE EXCLUDE D WHILE COMPUTING INTEREST UNDER SECTION 234C OF THE ACT. 2 ITA NO.812/MDS/2013 2. IN THIS CASE, ASSESSEE FILED RETURN OF INCOME ON 01.11.2004 DECLARING INCOME OF ` 13,54,32,577/-. ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF TH E ACT ON 27.11.2006 ACCEPTING THE INCOME RETURNED. IN THE RETURN OF INCOME FILED, THE ASSESSEE CONSIDERED TAX OF ` 1,60,31,359/- PAID ON 10.9.2004 IN MAURITIUS AS ADVANCE TAX AND CALCULATED INTEREST UNDER SECTION 234C ACCORDINGLY. THE ASSESSING OFFICER PASSED ORDER UNDER SECTION 154 OF THE ACT ON 30.03.2011 TREATING SUCH PAYMENT OF ADVANCE TAX MADE ON 10.09.2004 AS SELF-ASSESSMENT TAX SINCE IT WAS P AID BEYOND THE FINANCIAL YEAR AND ACCORDINGLY CALCULATE D INTEREST UNDER SECTION 234C OF THE ACT. AGAINST THIS ORDER, THE ASSESSEE PREFERRED APPEAL BEFORE THE COMMISSIONER O F INCOME TAX (APPEALS) CONTENDING THAT ENTIRE INCOME OF THE ASSESSEE ACCRUED IN MAURITIUS FROM THE ACTIVITY OF PERMANENT ESTABLISHMENT IN MAURITIUS AND HENCE NO PART OF TH E PROFIT OF PERMANENT ESTABLISHMENT IN MAURITIUS IS TAXABLE IN INDIA. THE ASSESSEE PAID TAX IN MAURITIUS IN TIME AND THEREFOR E CANNOT BE CONSIDERED AS ASSESSEE IN DEFAULT. INSOFAR AS P AYMENT OF ADVANCE TAX IS CONCERNED, THE ASSESSEE CONTENDED TH AT ENTIRE INCOME ACCRUED IS TAXABLE UNDER MAURITIUS IN COME TAX 3 ITA NO.812/MDS/2013 ACT, THEREFORE THERE IS NO QUESTION OF ESTIMATING T HE SAME UNDER INDIAN INCOME TAX ACT FOR PAYMENT OF ADVANCE TAX. THEREFORE, IT WAS CONTENDED THAT ASSESSING OFFICER ERRED IN TREATING THE PAYMENT OF ` 1,60,31,359/- PAID IN MAURITIUS ON 10.09.2014 AS SELF-ASSESSMENT TAX WITHOUT CONSIDERI NG THAT THE SAME WAS PAID IN ACCORDANCE WITH THE PROVISIONS OF MAURITIUS INCOME TAX ACT. THE COMMISSIONER OF INCOM E TAX (APPEALS) CONSIDERING THE SUBMISSIONS AND CONTENTIO NS OF THE ASSESSING OFFICER IN THE ORDER PASSED UNDER SECTION 154 OF THE ACT DISMISSED THE APPEAL OF THE ASSESSEE AGAINS T WHICH THE ASSESSEE IS IN APPEAL BEFORE US. 3. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSI ONS MADE BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS ) AND SUBMITS THAT THERE IS NO JUSTIFICATION IN CONSIDERI NG THE PAYMENT MADE BY THE ASSESSEE ON 10.09.2004 AS SELF- ASSESSMENT TAX INSTEAD OF ADVANCE TAX FOR THE PURPO SE OF LEVY OF INTEREST UNDER SECTION 234C OF THE ACT. COU NSEL FOR THE ASSESSEE SUBMITS THAT IN ANY EVENT THE RECTIFICATIO N SAID TO BE DONE BY THE ASSESSING OFFICER IS DEBATABLE AND CANN OT BE CARRIED OUT IN AN ORDER UNDER SECTION 154 OF THE AC T. 4 ITA NO.812/MDS/2013 4. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY SUPPORTS THE ORDERS OF LOWER AUTHORITIES. 5. HEARD BOTH SIDES. PERUSED ORDERS OF LOWER AUTHOR ITIES. THE ONLY ISSUE TO BE DECIDED IN THIS CASE IS WHETHE R THE PAYMENT MADE BY THE ASSESSEE ON 10.09.2004 IN MAURI TIUS CAN BE CONSIDERED AS ADVANCE TAX AS WAS DONE BY THE ASSESSEE OR CAN IT BE A SELF-ASSESSMENT TAX AS WAS CONSIDERED BY THE ASSESSING OFFICER. 6. IN THE GROUNDS OF APPEAL, ASSESSEE THOUGH RAISED GROUNDS IN RESPECT OF SECTION 234B IN PARA 3.1 TO 3 .5, NO ARGUMENTS HAVE BEEN ADVANCED AND THEREFORE, THESE GROUNDS ARE DISMISSED AS NOT ARGUED. 7. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS CONSIDERED THE SUBMISSIONS OF THE ASSESSEE AND THE AVERMENTS OF THE ASSESSING OFFICER ELABORATELY AND HELD THAT AMOUNT PAID BY THE ASSESSEE HAS TO BE CONSIDERED AS SELF- ASSESSMENT TAX FOR THE PURPOSE OF COMPUTING INTERES T UNDER SECTION 234C OF THE ACT AND NOT AS ADVANCE TAX AND FURTHER 5 ITA NO.812/MDS/2013 HELD THAT THE ISSUE CANNOT BE CONSIDERED AS DEBATAB LE OBSERVING AS UNDER:- 5.5 I HAVE CONSIDERED THE APPELLANT'S SUBMISSIONS. IT MAY BE TRUE THAT THE INCOME EARNED IN MAURITIUS IS ASSESSABLE TO TAX IN MAURITIUS ONLY AND IN INDIA THE SAME IS LIABLE FOR DIFFERENTIAL RATE OF TAX. IT MAY ALSO BE TRUE THAT THE TAXES PAID IN MAURITIUS ARE A S PER THE EXISTING PROVISIONS OF MAURITIUS INCOME TAX ACT. HOWEVER, THE SAID PROVISIONS OF MAURITIUS INCOME TAX ACT ARE APPLICABLE AS FAR AS THE DETERMINATION OF TAX LIABILITIES IN MAURITIUS. WHEN IT COMES TO INDIA, THE TAXABILITY OF THE INCOME IN INDIA IS GOVERNED BY THE INDIAN INCOME TAX ACT R.W. THE RELEVANT DOUBLE TAXATION AVOIDANCE AGREEMENT (DTAA) WITH THE CONCERNED COUNTRY. 5.6 WHEN, THE APPELLANT'S TAX LIABILITIES ARE TO BE DETERMINED, ONLY THE DIFFERENTIAL RATE OF TAX IS TO BE CONSIDERED IN INDIA. FOR THIS PURPOSE, THE TOTAL TA X LIABILITY IN INDIA, AS REDUCED BY THE TAX-ES PAID I N MAURITIUS ARE TO BE TAKEN INTO ACCOUNT. IN OTHER WORDS, WHILE DETERMINING THE TAX LIABILITIES IN IND IA, THE TAXES PAID IN MAURITIUS ARE TO BE GIVEN CREDIT AS PER LAW. IN INDIA, THE TAX LIABILITIES ARE GOVERNED BY VARIOUS SECTIONS OF THE INDIAN INCOME TAX ACT. THEY INCLUDE I) DETERMINATION TAX INCLUDING EDUCATION CESS, SURCHARGE ETC.AS PER THE RATES IN FORCE. II) LEVY OF INTEREST U/S 234A, 2348, 234C AND 2340 OF THE ACT, UPTO THE DATE OF ASSESSMENT ETC. III) LEVY OF INTEREST U/S 220(2)OF THE ACT IN THE INSTANT CASE, THE ACTION OF AO IN TREATING THE ABOVE PAYMENT IN MAURITIUS AS 'SELF ASSESSMENT TAX' ( AS AGAINST THE APPELLANT'S CLAIM OF ADVANCE TAX) HAS LEAD TO LEVY OF INTEREST U/S 234C OF THE A CT. 5.7 THE PROVISIONS OF SEE 234C OF THE ACT PROVIDE 6 ITA NO.812/MDS/2013 FOR LEVYING OF INTEREST IF THE APPELLANT FAILS TO P AY THE TAX WITHIN THE SPECIFIC PERIODS CONTAINED IN THE FINANCIAL YEAR. THE PROVISIONS CLEARLY RECOGNIZED T HE NATURE OF PAYMENTS OF VARIOUS TAXES BEFORE DETERMINING THE INTEREST U/S 234C OF THE ACT. AS PE R THE PROVISIONS OF SEC. 234C, ADVANCE TAX MEANS, TAXES PAID OR DEEMED TO HAVE BEEN PAID ON OR BEFORE 31 ST MARCH OF THE FINANCIAL YEAR. ANY PAYMENT MADE BY THE APPELLANT AFTER 31 ST MARCH OF THE FINANCIAL YEAR, IRRESPECTIVE OF ITS NATURE, CAN NOT BE CONSIDERED AS AN ADVANCE TAX. SUCH PAYMENTS CLEARLY FORM SELF ASSESSMENT TAXES. THESE ISSUES ARE CLEARLY AND UNAMBIGUOUSLY PROVIDED IN THE STATUTE ITSELF. 5.8 UNDER THESE CIRCUMSTANCES, THE PAYMENT OF TAXES IN MAURITIUS (RS. 1,60,31,359/-) ON 10.9.2004 I.E. AFTER THE END OF THE FINANCIAL YEAR 2003-04 CANNOT BE CONSIDERED AS ADVANCE TAX. IT MAKES 'NO DIFFERENCE, UNDER WHAT CIRCUMSTANCES THE TAXES WERE PAID. SINCE THE TAXES WERE PAID AFTER 31 ST MARCH OF THE RELEVANT FINANCIAL YEAR (F.Y. 2003-04) THE SAID PAYMENT CAN ONLY CONSTITUTE THE SELF ASSESSMENT TAXES. WHEN THE STATUTE CLEARLY PROVIDES THAT ALL THE PAYMENTS MADE AFTER THE 31 ST MARCH OF THE FINANCIAL YEAR ARE SELF ASSESSMENT TAXES, AND THEREFORE THE ISSUE CANNOT BE CONSIDERED AS DEBATABLE. MERE ARGUMENT FOR THE SAKE OF ARGUMENT CANNOT MAKE THE CLEAR AND UNAMBIGUOUS PROVISIONS INTO DEBATABLE ONES. 5.9 IN THE ORIGINAL ASSESSMENT PASSED U/S 143(3) ON 27.11.2006 WHEREIN THE AO HAS MISTAKENLY HAS NOT TAKEN THE SAID PAYMENT OF TAX ON 10.9.2004 AS SELF ASSESSMENT TAX. SINCE THIS IS A MISTAKE APPARENT FROM RECORD, AND ACCORDINGLY, FALLS WITHIN THE JURISDICTION OF SEC. 154 OF THE ACT. THEREFORE, THE AO RIGHTLY TREATED THE TAX PAYMENTS MADE AFTER THE END OF THE FINANCIAL YEAR (PAID ON 10.9.2004) AS SE LF ASSESSMENT TAXES AND RE DETERMINED THE LEVY OF INTEREST U/S 234C OF THE ACT. THE ACTION OF THE AO BY RECTIFYING THE ASSESSMENT U/S 154 OF THE ACT IS VERY WELL JUSTIFIED AND THEREFORE THE APPELLANT'S CONTENTIONS ARE HEREBY REJECTED. 7 ITA NO.812/MDS/2013 8. ON GOING THROUGH THE OBSERVATIONS OF THE COMMISSIONER OF INCOME TAX (APPEALS), WE DO NOT FIN D ANY VALID REASON TO INTERFERE WITH THE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS). THUS, WE SUST AIN THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) A ND REJECT THE GROUNDS RAISED BY THE ASSESSEE. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH AUGUST, 2015. SD/- SD/- ( # ) ( & (# ) ( CHANDRA POOJARI ) ( CHALLA NAGENDRA PRASAD ) * / ACCOUNTANT MEMBER ( * / JUDICIAL MEMBER ( /CHENNAI, , /DATED 19 TH AUGUST, 2015 SOMU ./ 0/ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. 1 () /CIT(A) 4. 1 /CIT 5. / 5 /DR 6. /GF .