Louis Berger International Inc., Hyderabad V. Asst. DIT-I, (Internatinal Taxn), Hyderabad

ITA 939/HYD/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66397 (ITAT-HYDERABAD)
• Duration Of Justice: 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-11-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 12-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K GNANAPRAKASH
• Assessee Lawyers: S RAMA RAO
• Keywords: Double taxation relief; Condonation of delay
• Section: 143(3); 260A; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER I.T.A. NO. 937/HYD/2012 A.Y. 2007-08 I.T.A. NO. 938/HYD/2012 A.Y. 2008-09 I.T.A. NO. 939/HYD/2012 A.Y. 2009-10 M/S. LOUIS BERGER INTERNATIONAL INC., HYDERABAD PAN: AAACL4067F VS. ASS. DIRECTOR OF INCOME-TAX (INTERNATIONAL TAXATION)-I HYDERABAD APPELLANT RESPONDENT APPELLANT BY: SRI S. RAMA RAO RESPONDENT BY: SRI K. GNANA PRAKASH DATE OF HEARING: 13.09.2012 DATE OF PRONOUNCEMENT: 02.11.2012 O R D E R PER CHANDRA POOJARI, AM: THE ABOVE THREE APPEALS BY THE ASSESSEE ARE DIRECT ED AGAINST DIFFERENT OF THE ASSESSING OFFICER DATED 14 .10.2011 FOR ASSESSMENT YEARS 2007-08, 2008-09 AND 2009-10 CONSE QUENT TO THE COMMON ORDER PASSED BY THE DISPUTE RESOLUTION P ANEL (DRP), HYDERABAD IN DRP/HYD/104, 105 AND 106/2011 D ATED 15.9.2011 U/S. 144C OF THE INCOME-TAX ACT, 1961. SI NCE ALL THE THREE APPEALS BELONG TO ONE ASSESSEE AND THE ISSUES RAISED BEING COMMON, THESE APPEALS ARE CLUBBED AND HEARD TOGETHE R AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE COMMON EFFECTIVE GROUNDS RAISED IN THESE APPEAL S ARE AS UNDER: 2. THE ASSESSING OFFICER ERRED IN TREATING THE EXPE NDITURE REIMBURSED AS THE INCOME OF THE APPELLANT WITHOUT CONSIDERING THE FACT THAT FOR THE EARLIER YEARS, TH E HONBLE INCOME-TAX APPELLATE TRIBUNAL HELD THAT THE SAID I.T.A. NOS. 937-939/HYD/2012 M/S. LOUIS BERGER INTERNATIONAL INC. ========================== 2 REIMBURSABLE EXPENDITURE DOES NOT REPRESENT INCOME OF THE APPELLANT. 3. THE ASSESSING OFFICER ERRED IN TAXING THE ASSESS EE IN RESPECT OF THE INCOME DERIVED FROM THE PROJECTS STA RTED BEFORE 1.4.2003 AT 20% AS AGAINST THE RATE APPLICAB LE OF 15%. 3. AT THE OUTSET, WE NOTE THAT THESE APPEALS WERE FILE D ON 12.6.2012 BY THE ASSESSEE WITH A DELAY OF 175 DAYS. THE ASSESSEE HAS FILED A PETITION SEEKING CONDONATION O F DELAY WHICH IS ALSO ACCOMPANIED BY A SWORN AFFIDAVIT BY THE AUT HORISED PERSON. THE PETITION SUBMITTED BY THE ASSESSEE REA DS AS UNDER: 'PETITION REQUESTING FOR CONDONATION OF DELAY THE PETITIONER HEREIN IS A FOREIGN COMPANY INCORPOR ATED UNDER THE LAWS OF THE UNITED STATES OF AMERICA. IT RENDERS CONSULTANCY SERVICES IN INDIA IN RESPECT OF VARIOUS ROAD PROJECTS AND OTHER PUBLIC INFRASTRUCTU RE PROJECTS. FOR THE ASSESSMENT YEAR UNDER CONSIDERATI ON, THE RETURN OF INCOME WAS PROCESSED U/S 143(1) OF TH E IT ACT ON 24.3.2009. LATER, THE ASSESSING OFFICER ISSU ED A NOTICE U/S 148 OF THE IT ACT ON 6.8.2009 ON THE GRO UND THAT THE REIMBURSEMENT OF EXPENDITURE BY THE PRINCI PALS REPRESENT THE INCOME OF THE PETITIONER AND ALSO THA T THE RATE OF TAX APPLICABLE TO THE PROJECTS UNDERTAKEN P RIOR TO 1.4.2003 IS 20% AS AGAINST 15% CLAIMED BY THE APPEL LANT. THE PETITIONER FILED DETAILS REQUIRED BY THE ASSESS ING OFFICER. HOWEVER, THE ASSESSING OFFICER PASSED DRAF T ASSESSMENT ORDER U/S 143(3) R.W.S. 144C OF THE IT A CT ON 30.12.2010. THE PETITIONER FILED OBJECTIONS BEFORE THE HON'BLE DISPUTE RESOLUTION PANEL AGAINST SAID DRAFT ASSESSMENT ORDER. THE HON'BLE DISPUTE RESOLUTION PAN EL VIDE ITS CONSOLIDATED ORDER IN DRP/HYDERABAD/104,10 5 AND 106/2011 DATED 16.9.2011 ISSUED DIRECTIONS U /S 144C OF THE IT ACT TO THE ASSESSING OFFICER TO FINALISE THE DRAFT ASSESSMENT ORDER. THE DIRECTIONS OF THE HON'BLE DR P ARE REPRODUCED HEREUNDER: 'WE, THE UNDERSIGNED CAREFULLY CONSIDERED THE CONTENTIONS OF THE AO IN THE DRAFT ORDER AND THE ARGUMENTS OF THE LD. COUNSEL. WE HAVE ALSO CALLED F OR THE SCRUTINY REPORT BASED ON WHICH THE DEPARTMENT HAS PREFERRED PETITION 260A BEFORE THE HON'BLE HIGH COU RT ON THE ORDERS OF THE ITA T. IT IS NOT CLEAR WHETHER T HE 260A PETITION OF THE DEPARTMENT HAS BEEN ADMITTED OR NOT . THE I.T.A. NOS. 937-939/HYD/2012 M/S. LOUIS BERGER INTERNATIONAL INC. ========================== 3 AO/ADDL.DIT STATED THAT THEY HAVE NOT RECEIVED ANY COMMUNICATION FROM THE SR. STANDING COUNSEL REGARDI NG THE ADMISSION OF THE PETITION. IN CASE THE SAME HAS BEEN ADMITTED THE DEPARTMENT MAY HAVE TO PASS THE ORDER SINCE THE MATTER HAS NOT REACHED FINALITY. IN CASE THE H ON'BLE HIGH COURT HAS REJECTED THE 260A PETITION A FINALIT Y IS REACHED AND HENCE, THE ORDERS OF THE HON'BLE ITA T ARE TO BE IMPLEMENTED. THIS IS THE POSITION AS SUCH. HENC E THE FOLLOWING DIRECTIONS ARE ISSUED. FOR THE PRESENT, PENDING RECEIPT OF INFORMATION FRO M THE STANDING COUNSEL THE AO MAY FINALISE THE DRAFT ORDE R BUT, HOWEVER, IT IS SUGGESTED THAT COLLECTION MAY NOT BE ENFORCED SINCE THE DECISION OF THE HON'BLE TRIBUNAL IS IN FAVOUR OF THE ASSESSEE. IN CASE THE HON'BLE HIGH C OURT REJECTS THE 260A APPLICATION IT MAY BE CONSIDERED T O FILE A MISCELLANEOUS PETITION BEFORE THIS PANEL ALSO.' IN ACCORDANCE WITH THE DIRECTIONS OF THE DRP, THE ASSESSING OFFICER PASSED THE ASSESSMENT ORDER U/S 1 43(3) R.W.S. 147 R.W.S. 144C OF THE I.T. ACT ON 14.10.201 1. THE SAID ORDER OF ASSESSMENT WAS SERVED ON 21.10.2011. THE HON'BLE DRP IN THEIR DIRECTIONS EXPRESSED THAT IN CA SE THE PETITION U/S 260A IS ADMITTED BY THE HON'BLE HIGH COURT, THE DEPARTMENT HAS TO PASS THE ORDER AND IN CASE TH E HON'BLE HIGH COURT HAS REJECTED THE 260A PETITION, IT MAY BE CONSIDERED TO FILE A MISCELLANEOUS PETITION BEFORE THE DRP. THE ASSESSING OFFICER IN THE ASSESSMENT OR DER PASSED U/S 143(3) R.W.S. 144C, HAS NOT MADE ANY MEN TION ABOUT THE STATUS OF THE APPEAL FILED BY THE DEPARTM ENT BEFORE THE HON'BLE HIGH COURT. THE PETITIONER WAS U NDER THE BONA-FIDE IMPRESSION THAT NO APPEAL NEED BE FIL ED BEFORE THE HON'BLE ITAT AGAINST THE ORDER U/S 143(3 ) R.W.S. 144C OF THE I.T. ACT PENDING THE DECISION OF THE HON'BLE HIGH COURT ON THE ADMISSION OF THE APPEAL F ILED BY THE DEPARTMENT. FURTHER, THE PROVISIONS U/S 144C BEFORE THE DISPUTE RESOLUTION PANEL ARE NEW TO THE PETITIONER. IT IS ONLY WHEN THE PETITIONER APPROACHED THE ADVOCATE IN CONNECTION WITH THE POSTING OF THE CASE BY DRP FOR T HE ASSESSMENT YEAR 2010-2011, THE PETITIONER WAS INFOR MED THAT AN APPEAL LIES AGAINST THE ASSESSMENT ORDER PA SSED BY THE ASSESSING OFFICER U/S 143(3) R.W.S. 144C OF THE I.T. ACT. THE PETITIONER IMMEDIATELY THEREAFTER GOT THE APPEAL PREPARED FOR THE ASSESSMENT YEAR UNDER CONSIDERATION AND THE SAME IS BEING FILED BEFORE TH E HON'BLE ITAT ON 12.6.2012. AS THE ORDER U/S 143(3) R.W.S. 144C WAS SERVED ON 21.10.2011, THERE IS A DE LAY OF 175 DAYS. THE PETITIONER HUMBLY SUBMITS THAT THE DE LAY IS I.T.A. NOS. 937-939/HYD/2012 M/S. LOUIS BERGER INTERNATIONAL INC. ========================== 4 FOR THE REASONS SUBMITTED ABOVE AND IS NEITHER WILF UL NOR INTENTIONAL. THE PETITIONER THEREFORE, PRAYS THE HO N'BLE ITAT TO KINDLY CONDONE THE DELAY AND PASS APPROPRIA TE ORDERS.' 4. ACCORDINGLY, THE LEARNED AR PRAYED TO CONDONE THE D ELAY OF 175 DAYS IN FILING THESE APPEALS. 5. THE LEARNED DR OPPOSED THE ARGUMENT OF THE AR. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL ON RECORD. WITH REFERENCE TO THE ISSUE OF DELAY IN FILING THE APPEALS, THE COURTS AND QUASI JUDICIAL BODIES ARE M OVED TO CONDONE THE DELAY IF A LITIGANT SATISFIES THE COURT THAT THERE WERE SUFFICIENT REASONS FOR DELAY. SUCH REASONING SHOUL D BE TO THE SATISFACTION OF THE COURT. THE EXPRESSION 'SUFFICI ENT CAUSE OR REASONS' AS PROVIDED IN SUBSECTION (3) OF SECTION 2 49 OF THE IT ACT IS USED IN IDENTICAL POSITION AS IN THE LIMITAT ION ACT AND CPC. SUCH EXPRESSION HAS ALSO BEEN USED IN OTHER S ECTIONS OF IT ACT SUCH AS SECTIONS 273, 274 ETC. THE EXPRESSION 'SUFFICIENT CAUSE' WITHIN THE MEANING OF SECTION 5 OF THE LIMIT ATION ACT AS WELL AS SIMILAR OTHER PROVISIONS, THE AMBIT OF EXER CISE OF POWERS THEREUNDER HAVE BEEN SUBJECT MATTER OF CONSIDERATIO N BEFORE THE SUPREME COURT ON VARIOUS OCCASIONS. (I) IN COLLECTOR, LAND ACQUISITION, ANANTNAG V. MST. KA TIJI [1987] 2 SCC 107 (167 ITR 471), WHILE CONSIDERING 'SUFFICIENT CAUSE' IN THE LIGHT OF SECTION 5 OF THE LIMITATION ACT, 1963, THE SUPREME COURT POINTED OUT VARIOUS PRINCIPLES FOR ADOPTING LIBERAL APPROACH IN CONDONING THE DELAY IN MATTERS INSTITUTED BEFORE TH E APEX COURT. THE LEARNED ASG HEAVILY RELIED ON THE FOLLOWING PRINCIPLES: 1. ORDINARILY A LITIGANT DOES NOT STAND TO BENEFIT BY LODGING AN APPEAL LATE. 2. REFUSING TO CONDONE DELAY CAN RESULT IN A MERITORIOUS MATTER BEING THROWN OUT AT THE VERY THRESHOLD AND CAUSE OF JUSTICE BEING DEFEATED. AS AGAINST THIS WHEN DELAY IS CONDONED, THE HIGHEST THAT CAN HAPPEN IS THAT A CAUSE WOULD BE DECIDED ON THE MERITS AFTER HEARING THE PARTIES. I.T.A. NOS. 937-939/HYD/2012 M/S. LOUIS BERGER INTERNATIONAL INC. ========================== 5 3. 'EVERY DAY'S DELAY MUST BE EXPLAINED' DOES NOT MEAN THAT A PEDANTIC APPROACH SHOULD BE MADE. WHY NOT EVERY HOUR'S DELAY, EVERY SECOND'S DELAY? THE DOCTRINE MUST BE APPLIED IN A RATIONAL COMMON SENSE PRAGMATIC MANNER. 4. WHEN SUBSTANTIAL JUSTICE AND TECHNICAL CONSIDERATIONS ARE PITTED AGAINST EACH OTHER, CAUSE OF SUBSTANTIAL JUSTICE DESERVES TO BE PREFERRED, FOR THE OTHER SIDE CANNOT CLAIM TO HAVE VESTED RIGHT IN INJUSTICE BEING DONE BECAUSE OF A NON-DELIBERATE DELAY. 5. THERE IS NO PRESUMPTION THAT DELAY IS OCCASIONE D DELIBERATELY, OR ON ACCOUNT OF CULPABLE NEGLIGENCE, OR ON ACCOUNT OF MALA FIDES. A LITIGANT DOES NOT STAND TO BENEFIT BY RESORTING TO DELAY. IN FACT HE RUNS A SERIOUS RISK. 6. IT MUST BE GRASPED THAT JUDICIARY IS RESPECTED NOT ON ACCOUNT OF ITS POWER TO LEGALIZE INJUSTICE ON TECHNICAL GROUNDS BUT BECAUSE IT IS CAPABLE OF REMOVING INJUSTICE AND IS EXPECTED TO DO SO.' BY SHOWING THE ABOVE PRINCIPLES, THE LEARNED ASG SUBMITTED THAT THERE IS NO WARRANT FOR ACCORDING ST EP MOTHERLY TREATMENT WHEN THE 'STATE' IS THE APPLICAN T. IT IS RELEVANT TO MENTION THAT IN THIS CASE, THE DELAY WAS ONLY FOR FOUR DAYS. (II) IN G. RAMEGOWDA V. SPECIAL LAND ACQUISITION OFFICER (2 SCC 142) THE PRINCIPLES ENUNCIATED IN PARAS. 15 AND 17 ARE HEAVILY RELIED ON BY THE LEARNED ASG. THEY ARE: '15. IN LITIGATIONS TO WHICH GOVERNMENT IS A PARTY THERE IS YET ANOTHER ASPECT WHICH, PERHAPS, CANNOT BE IGN ORED. IF APPEALS BROUGHT BY GOVERNMENT ARE LOST FOR SUCH DEFAULTS, NO PERSON IS INDIVIDUALLY AFFECTED; BUT W HAT, IN THE ULTIMATE ANALYSIS, SUFFERS IS PUBLIC INTEREST. THE DECISIONS OF THE GOVERNMENT ARE COLLECTIVE AND INSTITUTIONAL DECISIONS AND DO NOT SHARE THE CHARACTERISTICS OF DECISIONS OF PRIVATE INDIVIDUALS . 17. THEREFORE, IN ASSESSING WHAT, IN A PARTICULAR C ASE, CONSTITUTES 'SUFFICIENT CAUSE' FOR PURPOSES OF SECT ION 5, IT MIGHT, PERHAPS, BE SOMEWHAT UNREALISTIC TO EXCLUDE FROM THE CONSIDERATIONS THAT GO INTO THE JUDICIAL VERDIC T, THESE FACTORS WHICH ARE PECULIAR TO AND CHARACTERISTIC OF THE FUNCTIONING OF THE GOVERNMENT. GOVERNMENTAL DECISIO NS I.T.A. NOS. 937-939/HYD/2012 M/S. LOUIS BERGER INTERNATIONAL INC. ========================== 6 ARE PROVERBIALLY SLOW ENCUMBERED, AS THEY ARE, BY A CONSIDERABLE DEGREE OF PROCEDURAL RED TAPE IN THE P ROCESS OF THEIR MAKING.' CONSIDERING THE PECULIAR FACTS, NAMELY, THE CHANGE OF GOVERNMENT PLEADER WHO HAD TAKEN AWAY THE CERTIFIED COPY AFTER HE CEASED TO BE IN OFFICE, THE HIGH COUR T CONDONED THE DELAY WHICH WAS AFFIRMED BY THIS COURT . (III) IN STATE OF HARYANA V. CHANDRA MANI [1996] 3 SCC 132, WHILE CONDONING THE DELAY OF 109 DAYS IN FILING THE LETTERS PATENT APPEAL BEFORE THE HIGH COURT, THI S COURT HAS OBSERVED THAT CERTAIN AMOUNT OF LATITUDE WITHIN REASONABLE LIMITS IS PERMISSIBLE HAVING REGA RD TO IMPERSONAL BUREAUCRATIC SETUP INVOLVING REDTAPISM. IN THE SAME DECISION, THIS COURT DIRECTE D THE STATE TO CONSTITUTE LEGAL CELLS TO EXAMINE WHET HER ANY LEGAL PRINCIPLES ARE INVOLVED FOR DECISION BY T HE COURTS OR WHETHER CASES REQUIRED ADJUSTMENT AT GOVERNMENTAL LEVEL. (IV) IN STATE OF U. P. V. HARISH CHANDRA [1996] 9 SCC 30 9, BY GIVING SIMILAR REASONS, AS MENTIONED IN CHANDRA MANI'S CASE (SUPRA) THIS COURT, CONDONED THE DELAY OF 480 DAYS IN FILING THE SPECIAL LEAVE PETITION. (V) IN NATIONAL INSURANCE CO. LTD. V. GIGA RAM [2002] 1 0 SCC 176 , THIS COURT, AFTER FINDING THAT THE HIGH COURT WAS NOT JUSTIFIED IN TAKING TOO TECHNICAL A VIEW OF THE FACTS AND REFUSING TO CONDONE THE DELAY, ACCEPTED T HE CASE OF THE APPELLANT-INSURANCE COMPANY BY PROTECTING THE INTEREST OF THE CONDONED THE DELAY. IT IS RELEVANT TO POINT OUT THAT WHILE ACCEPTING THE STAN D OF THE INSURANCE COMPANY FOR THE DELAY, THIS COURT HAS SAFEGUARDED THE INTEREST OF THE CLAIMING ALSO. 7. ADVERTING TO THE FACTS OF THE PRESENT CASE, IT IS S EEN THAT ON ACCOUNT OF BONA-FIDE IMPRESSION THAT NO APPEAL N EED TO BE FILED BEFORE THE HONBLE TRIBUNAL AGAINST THE ORDER OF THE ASSESSING OFFICER PASSED U/S. 143(3) R.W.S. 144C OF THE ACT AS DRP GAVE DIRECTION IN THEIR ORDER DATED 16.9.2011 T HAT IN CASE THE PETITION U/S. 260A IS ADMITTED BY THE HONBLE H IGH COURT, THE DEPARTMENT HAS TO PASS AN ORDER AND IN CASE THE HONBLE HIGH COURT HAS REJECTED THE PETITION PREFERRED U/S. 260A OF THE ACT, IT MAY BE CONSIDERED TO FILE AN MA BEFORE THE DRP. THE I.T.A. NOS. 937-939/HYD/2012 M/S. LOUIS BERGER INTERNATIONAL INC. ========================== 7 ASSESSING OFFICER HAS NOT MADE ANY MENTION ABOUT TH E STATUS OF THE APPEAL FILED BY THE DEPARTMENT BEFORE THE HONB LE HIGH COURT IN THE ASSESSMENT ORDER PASSED U/S. 143(3) R. W.S. 144C OF THE ACT. THE ASSESSEE CAME TO KNOW ABOUT THE NEED OF FILING APPEAL BEFORE THE TRIBUNAL ONLY ON THE ADVICE OF AD VOCATE AND ACCORDINGLY THE ASSESSEE FILED THE APPEALS BEFORE T HE TRIBUNAL ON 12.6.2012 A DELAY OF 175 DAYS WAS CAUSED. WE FIND THAT THE ASSESSEE WOULD NOT GAIN ANYTHING BY FILING APPEALS BELATEDLY. THERE IS NO MALA-FIDE IMPUTABLE TO THE ASSESSEE. T HE DELAY, IN OUR CONSIDERED OPINION, IS A RESULT OF BONA-FIDE BE LIEF GATHERED BY THE ASSESSEE OUT OF THE ORDER OF THE DRP. HAD T HE DRP NOT GIVEN A FINDING IN PARA 3 THAT IN CASE A PETITION U /S. 260A IS ADMITTED BY THE HONBLE HIGH COURT, THE DEPARTMENT HAS TO PASS AN ORDER AND IN CASE THE HONBLE HIGH COURT HAS REJ ECTED THE PETITION PREFERRED U/S. 260A OF THE ACT, IT MAY BE CONSIDERED TO FILE AN MA BEFORE THE DRP, THE ASSESSEE WOULD HAVE TAKEN SUFFICIENT CARE TO FILE THE APPEAL IN TIME. THE EX PLANATION OFFERED BY THE ASSESSEE FOR FILING THE APPEALS WITH A DELAY OF 175 DAYS IS BONA-FIDE AND FOUND TO BE ACCEPTABLE EXPLAN ATION. CONSIDERING THE OVERALL FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE INCLINED TO CONDONE THE DELAY OF 175 DAYS AND A DMIT THE APPEALS OF THE ASSESSEE. 8. NOW, WE WILL TAKE UP THE APPEAL TO BE DECIDED ON ME RIT. THE FIRST GROUND IS THAT THE ASSESSING OFFICER ERR ED IN TREATING THE EXPENDITURE REIMBURSED AS THE INCOME OF THE ASS ESSEE WITHOUT CONSIDERING THE FACT THAT EARLIER YEAR THE TRIBUNAL HELD THAT THE SAID REIMBURSABLE EXPENDITURE DOES NOT REP RESENT INCOME OF THE ASSESSEE. AFTER HEARING BOTH THE PAR TIES, WE ARE OF THE OPINION THAT THIS ISSUE CAME FOR CONSIDERATION BEFORE THIS TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO. 1073 & 1 074/HYD/04 FOR A.YS. 2000-01 AND 2001-02 AND ITA NOS. 720 & 72 5/HYD/08 I.T.A. NOS. 937-939/HYD/2012 M/S. LOUIS BERGER INTERNATIONAL INC. ========================== 8 DATED 30 TH JANUARY, 2010 FOR A.YS. 2002-03 WHEREIN HELD AS FOLLOWS: '7. WE FIND THAT IN ASSESSEES OWN CASE THE HONBL E ITAT VIDE ITS ORDER DATED 30.6.2010 IN ITA NOS. 1073 & 1074/HYD/2004 FOR THE ASSESSMENT YEARS 2000-01, 2001-02 AND IN ITA NOS. 720 & 721/HYD/2005 DATED 30.6.2010 FOR THE ASSESSMENT YEARS 2002-03 AND 2003 - 04 HAS HELD AS FOLLOWS: WE HAVE ALSO CAREFULLY GONE THROUGH THE JUDGEMENT OF THE BOMBAY HIGH COURT IN CIT VS. TANUBAI D. DESAI (1972) 84 ITR 713. IN THE CASE BEFORE THE BOMBAY H IGH COURT, THE ASSESSEE WAS A PRACTISING SOLICITOR. IN THE COURSE OF CARRYING ON HIS PROFESSION THE ASSESSEE U SED TO RECEIVE MONEY FROM OR ON BEHALF OF HIS CLIENTS. TH E MONEY RECEIVED WAS DEPOSITED BY HIM IN SEPARATE CUR RENT ACCOUNT WITH IMPERIAL BANK OF INDIA. SUBSEQUENTLY THE ASSESSEE WITHDREW A SUM OF RS. 3.25 LAKHS AND PLACE D THE SAME IN FIXED DEPOSIT WITH CHARTERED BANK. THE ASSE SSEE RENEWED THE ACCOUNT FROM TIME TO TIME TOGETHER WITH INTEREST EARNED THEREON. THE ASSESSEE EARNED INTER EST ON THE FIXED DEPOSIT. THE INTEREST EARNED ON THE FIXE D DEPOSIT WAS NOT ADJUSTED BY APPORTIONING IT TO DIFFERENT CL IENTS WHOSE MONEYS WERE DEPOSITED IN THE BANK ACCOUNT. T HE ASSESSEE DID NOT SHOW THE INTEREST IN THE RETURN OF INCOME. THE QUESTION AROSE BEFORE THE BOMBAY HIGH COURT WAS WHETHER THE INTEREST ACCRUED IN THE FIXED DEPOSIT W ITH CHARTERED BANK WAS THE INCOME OF THE ASSESSEE OR NO T. THE BOMBAY HIGH COURT AFTER ELABORATELY EXAMINING T HE ISSUE FOUND THAT THE MONEYS RECEIVED BY THE SOLICIT OR FROM HIS CLIENTS ARE HELD BY HIM IN FIDUCIARY CAPACITY. EVEN THE INCOME RECEIVED FROM SUCH MONEY MUST EQUALLY BE HE LD BY THE SOLICITOR IN THE FIDUCIARY CAPACITY. WHAT T HE SOLICITOR ACTUALLY DOES WITH THE INCOME, I.E., WHET HER HE APPROPRIATES IT TO HIMSELF OR NOT IS A MATTER OF NO CONSEQUENCE. IF THE SOLICITOR APPROPRIATES THE INT EREST ACCRUED ON SUCH DEPOSIT TO HIMSELF THAT WOULD AMOUN T TO A BREACH OF HIS FIDUCIARY RELATIONSHIP AND WHATEVER MAY BE THE CONSEQUENCES IN LAW WOULD FOLLOW. BUT HIS UNAUTHORISED ACT OF CONVERTING ANY PART OF THE CORP US OR EVEN THE INCOME DERIVED THERE FROM WOULD NOT CONVER T THOSE MONEYS HELD BY HIM FOR HIS BENEFIT. ACCORDIN GLY, IT WAS HELD THAT THE INTEREST INCOME WHICH WAS NEITHER DISCLOSED IN THE RETURN OF INCOME NOR ADJUSTED TO T HE CLIENTS WAS HELD TO BE NOT TAXABLE. IN THE CASE BE FORE US THE FACTS ARE ALMOST SIMILAR. THE ASSESSEE RECEIVE D THE MONEY AS A REIMBURSEMENT AFTER INCURRING THE EXPENDITURE. IN THE CASE BEFORE THE BOMBAY HIGH CO URT, I.T.A. NOS. 937-939/HYD/2012 M/S. LOUIS BERGER INTERNATIONAL INC. ========================== 9 THE MONEY WAS RECEIVED BY THE SOLICITOR IN ADVANCE. IN THE CASE BEFORE US THE MONEY WAS RECEIVED AFTER INCURRI NG THE EXPENDITURE BY WAY OF REIMBURSEMENT. THEREFORE, TH E REIMBURSABLE EXPENDITURE RECEIVED BY THE ASSESSEE C ANNOT FORM PART OF THE TOTAL INCOME. IN VIEW OF THE ABOV E DISCUSSION, IN OUR OPINION, THE REIMBURSABLE EXPEND ITURE RECEIVED BY THE ASSESSEE CANNOT FORM PART OF THE TO TAL INCOME. THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LOWER AUTHORITY. ACCORDINGLY THE SAME IS CONFIRMED.' 9. RESPECTFULLY FOLLOWING THE ABOVE ORDER OF THE TRIBU NAL FOR EARLIER YEAR (CITED SUPRA) WE ARE INCLINED TO ALLOW THE GROUND TAKEN BY THE ASSESSEE FOR THESE ASSESSMENT YEARS AL SO AS THE FACTS AND CIRCUMSTANCES OF THE PRESENT ASSESSMENT Y EARS BEFORE US ARE SIMILAR TO THAT WAS CONSIDERED BY THIS TRIBU NAL IN EARLIER ASSESSMENT YEARS. THIS GROUND OF THE ASSESSEE IS ALLOWED IN ALL THE THREE APPEALS I.E., ITA NOS. 937 TO 939/HYD/201 2, 10. NOW COMING TO THE SECOND GROUND THAT THE ASSESSING OFFICER ERRED IN TAXING THE ASSESSEE IN RESPECT OF INCOME DERIVED FROM THE PROJECT STARTED BEFORE 1.4.2003 AT 20% AS AGAINST THE RATE APPLICABLE AT 15%, THIS GROUND IS ALSO ADJUDI CATED IN THE EARLIER ORDER OF THE TRIBUNAL IN ASSESSEES OWN CAS E IN ITA NO. 1250/HYD/2011 DATED 25 TH OCTOBER, 2011 FOR ASSESSMENT YEAR 2006-07 WHEREIN IT WAS HELD THAT THE FEE FOR TECHNI CAL SERVICES FALLS UNDER ARTICLE 12 OF DTAA AND NOT UNDER ARTICL E 7 OF DTAA AND TAX HAS TO BE LEVIED AT 15%. RESPECTFULLY FOLL OWING THE ABOVE ORDER OF THE TRIBUNAL FOR A.Y. 2006-07, WE AR E INCLINED TO ALLOW THE GROUND TAKEN BY THE ASSESSEE. 11. IN THE RESULT, APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 ND NOVEMBER, 2012. SD/- (SAKTIJIT DEY) JUDICIAL MEMBER SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED 2 ND NOVEMBER, 2012 TPRAO I.T.A. NOS. 937-939/HYD/2012 M/S. LOUIS BERGER INTERNATIONAL INC. ========================== 10 COPY FORWARDED TO: 1. M/S. LOUIS BERGER INTERNATIONAL INC., C/O. SRI S . RAMA RAO, ADVOCATE, FLAT NO. 102, SHRIYA'S ELEGANCE, D. NO. 3 -6-643, ST. NO. 9, HIMAYATHNAGAR, HYDERABAD-500 029. 2. THE ASST. DIRECTOR OF INCOME-TAX (INTERNATIONAL TAXATION)-I, HYDERABAD. 3. THE DIRECTOR OF INCOME-TAX (INTERNATIONAL TAXATI ON)-I, HYDERABAD. 4. THE DISPUTE RESOLUTION PANEL, HYDERABAD. 5. THE DR B BENCH, ITAT, HYDERABAD