DCIT, New Delhi V. M/s Terma A/S,

ITA 89/DEL/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6885 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-07-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2012-2013
• Appeal Filed On: 06-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G K DHALL
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: D , NEW DELHI BEFORE SHRI N.K.BILLAIYA , ACCOUNTANT MEMBER AND SMT. BEENA A PILLAI, JUDICIAL MEMBER ITA NO. 8 9 /DEL/201 6 AY: 2012 - 13 DCIT, CIRCLE 3(1) (1) NEW DELHI VS . M/S TERMA A/S HOVMARKEN 4 8520, LYSTRUP DENMARK (APPELLANT) (RESPONDENT) DEPARTMENT BY : SH. G.K.DHALL, CIT, D.R. ASSESSEE BY : NONE. DATE OF HEARI NG : 02.07. 2018 DATE OF PRONOUNCEMENT : 02.07. 2018 ORDER PER BEENA A PILLAI, JUDICIAL MEMBER P RESENT APPEAL HAS BEEN FILED BY R EVENUE AGAINST ORDER DATED 24/11/15 PASSED BY LD. DCIT, C IRCLE 3 (1) I NTERNATIONAL T AXATION, NEW DELH I ON THE FOLLOWING GROUNDS OF APPEAL: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW , THE HON'BLE DRP HAS ERRED IN DIRECTING THE ASSESSING OFFICER TO NOT LEVY INTEREST U/S 234B OF THE INCOME TAX ACT, 1961. 2 . THE APPELLANT PRAY S FOR LEAVE TO ADD, AMEND, MODIFY OR ALTER ANY GROUNDS OF APPEAL AT THE TIME OR BEFORE THE HEARING OF THE APPEAL. CERTIFIED THAT THE COPY OF THE DIRECTIONS OF DRP - 2. NEW DELHI IN THE ABOVE MENTIONED CASE WAS COMMUNICATED TO ME ON 19.10.2015 AND FINAL ASSES SMENT ORDER WAS PASSED ON 24.11.2015. LIMITATION TO FILE APPEAL BEFORE THE HON'BLE ITAT EXPIRES ON 22.01.2016. ITA 89/DEL/2016 A .Y.: 2012 - 13 DCIT VS. TERMA A/S 2 2. BRIEF FACTS OF THE CASE ARE AS UNDER . A SSESSEE IS A DENMARK - BASED FOREIGN COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING AND SUPPLYING OF D EFENCE AND AEROSPACE EQUIPMENT FOR CIVILIAN AND MILITARY APPLICATIONS LIKE RADAR SYSTEM FOR COASTAL SURVEILLANCE, NAVAL SURVEILLANCE, VESSEL TRAFFIC SURVEILLANCE AT PORTS, AIRPORTS ETC. DURING THE YEAR UNDER CONSIDERATION ASSESSEE RECEIVED PAYMENTS IN RESP ECT OF OFFSHORE SUPPLY OF EQUIPMENT AND PERFORMANCE OF SERVICES UNDER CERTAIN CONTRACTS WHEREIN ASSESSEE TOOK A POSITION THAT INCOME FROM OFFSHORE SUPPLY OF EQUIPMENT IS NOT TAXABLE IN INDIA AS IT DOES NOT HAVE A PE IN INDIA. LD. AO PASSED DRAFT ASSESSMENT ORDER BY HOLDING THAT ASSESSEE HAS A FIXED PLACE/INSTALLATION/SERVICE PE IN INDIA AND ATTRIBUTED 30% OF SALES REVENUE EARNED BY THE ASSESSEE FROM OFFSHORE SUPPLY TO INDIAN OPERATIONS AND 10% OF REVENUE TO PE OF ASSESSEE IN INDIA. LD. AO ALSO CHARGED INTE REST UNDER SECTION 234A, B, C AND D OF THE INCOME TAX ACT, 1961 ( THE ACT FOR SHORT). 3. AGGRIEVED BY THE ORDER , ASSESSEE PREFERRED O BJECTIONS BEFORE DRP. 4. THE DRP AFTER CONSIDERING THE SUBMISSIONS UPHELD THE EXISTENCE OF PE AND DIRECTED LD.DCIT, TO APPLY GLOBAL NET PROFIT RATE OF ASSESSEE TO THE REVENUE FROM INDIA AND THEN ATTRIBUTE 5% OF SUCH NET PROFIT TO PE IN INDIA. DRP ALSO DIRECTED TO RECOMPUTE INTEREST, HAVING REGARD TO THE DECISION OF HON BLE DELHI HIGH COURT IN THE CASE OF GE C APITAL , WHEREIN IT HAS BEEN HELD THAT SINCE PAYMENTS TO NON - RESIDENT SUBJECT TO WITHHOLDING OF TAXES UNDER S ECTION 195, INTEREST UNDER SECTION 234B OF THE ACT IS NOT LIVABLE. ITA 89/DEL/2016 A .Y.: 2012 - 13 DCIT VS. TERMA A/S 3 4.1. LD. AO THEREAFTER GAVE EFFECT TO THE DIRECTIONS OF DRP AND DID NOT CHARGE INTEREST UNDER SECTION 234B OF THE ACT. 5. AGGRIEVED BY T HE ORDER OF LD. AO, REVENUE IS IN APPEAL BEFORE US NOW . 6. LD. CIT , DR PLACE D RELIANCE UPON THE DECISION OF ALCATEL LUCENT USA INC., REPORTED IN 264 CTR 240 AS WELL AS THE DECISION OF HON BLE BOMBAY HIGH COURT IN CASE OF BLUE STAR LTD VS. CIT REPORTED IN 2 17 ITR 514 . 7. WE HAVE PERUSED THE SUBMISSIONS ADVANCED BY LD. CIT , DR ON THE BASIS OF THE RECORDS PLACED BEFORE US. 7.1. IN OUR CONSIDERED OPINION, THIS ISSUE HAS ATTAINED FINALITY BY THE DECISION OF HON BLE SUPREME COURT IN CASE OF DIT, INTL.TAX. - I VS . G.E.PARTS INC ., REPORTED IN ( 2016) 73 TAXMAN.COM 186, WHEREIN HON BLE COURT UPHELD DECISION OF HON BLE DELHI HIGH COURT . HON BLE SUPREME COURT HAD DISMISSED THE SLP FILED BY THE REVENUE. 7.2. THE OBSERVATIONS OF HON BLE DELHI H IGH COURT UPHELD BY HO N BLE SUPREME COURT ARE AS UNDER: 23. FOR THE ABOVE REASONS, THIS COURT FINDS THAT NO INTEREST IS LEVIABLE ON THE RESPONDENT ASSESSEES UNDER SECTION 234B, EVEN THOUGH THEY FILED RETURNS DECLARING NIL INCOME AT THE STAGE OF REASSESSMENT. THE PAYERS WERE OB LIGED TO DETERMINE WHETHER THE ASSESSEES WERE LIABLE TO TAX UNDER SECTION 195(1), AND TO WHAT EXTENT, BY TAKING RECOURSE TO THE MECHANISM PROVIDED IN SECTION 195(2) OF THE ACT. THE FAILURE OF THE PAYERS TO DO SO DOES NOT LEAVE THE REVENUE WITHOUT REMEDY; T HE PAYER MAY BE REGARDED AN ASSESSEE - IN - DEFAULT UNDER SECTION 201, AND THE CONSEQUENCES ITA 89/DEL/2016 A .Y.: 2012 - 13 DCIT VS. TERMA A/S 4 DELINEATED IN THAT PROVISION WILL VISIT THE PAYER. THE APPEAL OF THE REVENUE IS ACCORDINGLY DISMISSED WITHOUT ANY ORDER AS TO COSTS. 7.3. RESPECTFULLY FOLLOWING THE SAME, WE HOLD THAT LD.DCIT WAS RIGHT IN DELETING INTEREST UNDER SECTION 234B OF THE ACT. 8. ACCORDINGLY WE DISMISS THE GROUND RAISED BY REVENUE. 9. IN THE RESULT APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 02.07.2018. SD/ - SD/ - (N.K. BILLAIYA ) (BEENA A PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 02 ND JULY, 2018 MV COPY FORWARDED TO: - 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR, ITAT - TRUE COPY - BY ORDER, ASSISTANT REGISTRAR ITAT DELHI BENCHES