Dr. Kamal Kar, Kolkata V. ADIT (International Taxation) - 1(1), Kolkata , Kolkata

MA 181/KOL/2019

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 8776 (ITAT-KOLKATA)
• Duration Of Justice: 2 month(s) 15 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 20-11-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 05-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Services rendered outside India
• Section: 5(2); 195; 201; 254(2); 15

Judgement Text

, C , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH C KOLKATA BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER AND DR. A.L. SAINI, ACCOUNTANT MEMBER (MISC. APPLICATION) M.A NO.181/KOL/2019 (ARISING OUT ITA NO.164/KOL/2018) / ASSESSMENT YEAR:2011-12 ITA NO.164/KOL/2018 / ASSESSMENT YEAR:2011-12 DR. KAMAL KAR 109, THE RESIDENCY, SALT LAKE CITY, KOLKATA-64 [ PAN NO. AFEPK 2884 B ] / V/S . ACIT (INTERNATIONAL TAXATION)-1(1), AAYAKAR BHAWA, POORVA, 110, SHAAHANTI PALLY, KOLKATA-110 (ORIGINAL APPELLANT) (ORIGINAL R ESPONDENT) (APPLICANT) .. (RESPONDENT) / BY APPLICANT SHRI, GAUTAM BANERJEE, ADVOCATE & SHRI A.N. CHATTERJEE, AR !' / BY RESPONDENT SHRI SUPRIYO PAL,JCIT,SR-DR / DATE OF HEARING 18-10-2019 / DATE OF PRONOUNCEMENT 20-11-2019 / ORDER PER S.S.GODARA, JUDICIAL MEMBER:- THIS ASSESSEES MISCELLANEOUS APPLICATION FILED U/S . 254(2) OF THE INCOME TAX ACT, 1961, IN SHORT THE ACT SEEKS TO R ECALL / RECTIFY THE TRIBUNALS ORDER DATED 28.02.2019 DISMISSING THE MAIN APPEAL O N ACCOUNT OF NON PROSECUTION SINCE NOBODY HAD APPEARED IN THE MAIN C ASE HEARING. HEARD BOTH THE PARTIES. CASE FILE PERUSED. MA NO181/KOL/2019 & ITA NO.164/KOL/2018 A.Y. 201 1-12 DR. KAMAL KAR. VS. ACIT (IN RESPECT TO.TAXATION) -1(1), KOL PA GE 2 2. IT EMERGES AT THE OUTSET THAT THE ASSESSEE MISC ELLANEOUS APPLICATION SUFFERS FROM NINE DAYS DELAY IN FILING. LEARNED DE PARTMENTAL REPRESENTATIVE SUBMITS THAT THERE IS NO PROVISION UNDER THE ACT TO CONDONE SUCH A DELAY IN FILING OF A MISCELLANEOUS APPLICATION U/S. 254(2) O F THE ACT AND THEREFORE, SAME DESERVES TO BE DISMISSED ON THIS COUNT ALONE. WE SE E NO REASON TO ACCEPT THE REVENUES INSTANT ARGUMENTS. THIS TRIBUNALS CO-ORD INATE BENCHS DECISION IN M/S. MAA TARA AGRO INDUSTRIES VS. I.T.O. WARD-4, MU RSHIDABAD IN M.A. 179/KOL/2018 DECIDED ON 21.12.2018, AFTER TAKING INTO CONSIDERATION OF THE HONBLE DELHI HIGH COURTS DECISION OM PRAKASH SANGWAN VS ITO (2018) 94 TAXMANN.COM 394 (DELHI) HOLDS THAT TIME LIMITATION IS NOT APPLICABLE FOR APPEALS WHICH WERE DISMISSED FOR NON-PROSECUTION. W E OBSERVE IN THESE FACTS THAT THE APPLICATION OF THE ASSESSEE IS NOT BARRED BY LIMITATION SINCE THE ABOVE DELAY PROVISION DOES NOT APPLY IN CASE OF AN EX PARTE ORDER DISMISSING THE MAIN APPEAL IN ABSENCE OF EITHER OF THE PARTIES. WE THUS DECLINE THE LEARNED AUTHORIZED REPRESENTATIVES TECHNICAL ARGUMENTS AND ADMIT THE ASSESSEES MISCELLANEOUS APPLICATION FOR ADJUDICATION ON MERIT S. 3. COMING TO ASSESSEES AVERMENTS IN HIS MISCELLANE OUS APPLICATION THAT THERE WAS NO ACTUAL SERVICE OF NOTICE OF HEARING IN HIS APPEAL, THERE IS NO REBUTTAL COMING FROM THE REVENUE SIDE AS PER RECORD S. WE THEREFORE ACCEPT THE ASSESSEES MISCELLANEOUS APPLICATION NO.181/KOL/2019 AND RE-CALL OUR ORDER DATED.28.02.2019 DISMISSING HIS MAIN APPEAL F OR NON-PROSECUTION. THE MISCELLANEOUS APPLICATION IS ALLOWED. 4. WITH THE CONSENT OF BOTH THE PARTIES, WE NOW PRO CEED TO DEAL WITH THE ASSESSEES MAIN APPEAL ITA 164/KOL/2018 RAISING SOLE SUBSTANTIVE GRIEVANCE THAT BOTH THE LOWER AUTHORITIES HAVE ERRED IN LAW AND ON FACTS IN ASSESSING HIS CONSULTANCY FEE RECEIVED OF 34,23,776.95 IN CONSULTANCY SERVICES IN VARIOUS COUNTRIES NAMELY BELGIUM, BANGLADESH, UNITED KINGDO M, NETHERLAND & UN INVOLVING VARYING SUMS UNDER UN ASSIGNMENTS. BOTH T HE LOWER AUTHORITIES INVOKE SECTION 5(2)(A) OF THE ACT IN HOLDING THE S AME AS TAXABLE IN INDIA MA NO181/KOL/2019 & ITA NO.164/KOL/2018 A.Y. 201 1-12 DR. KAMAL KAR. VS. ACIT (IN RESPECT TO.TAXATION) -1(1), KOL PA GE 3 MAINLY ON THE GROUND THAT SINCE THE ASSESSEES GROS S RECEIPTS HAD BEEN TRANSFERRED TO HIS INDIAN BANK ACCOUNT, THE FOREGOI NG SUMS ARE IN THE NATURE OF INCOME RECEIVED IN INDIA. THIS LEVEAS ASSESSEE AGGR IEVED. 5. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO RI VAL CONTENTIONS. THE REVENUE VEHEMENTLY SUBMITS DURING THE COURSE OF HEA RING THAT THE ASSESSING OFFICER AS WELL AS THE CIT(A) HAVE RIGHTLY ASESSED THIS TAXPAYERS U/S.5(2)(A) OF THE ACT REGARDING HIS CONSULTANCY SERVICES INCOME. WE FIND NO MERIT IN THE REVENUES STAND. THE FACT REMAINS THAT THIS ASSESSE E IS A NON-RESIDENT WHO HAS RENDERED HIS CONSULTANCY SERVICES OUTSIDE INDIA . WE PROCEED IN THIS BACKDROP TO NOTICE THAT THE TRIBUNALS CO-ORDINATE BENCHS DECISION IN ITA NO.238/KOL/2012 IN A.D.I.T(IT)-1(1), KOLKATA VS. MR. BISWAJIT GHOSH DECIDED ON 23.08.2017 HAS DECIDED THE VERY ISSUE IN ASSESSE ES FAVOUR AS UNDER:- 2.BRIEF FACTS OF THE CASE: THE ASSESSEE IS AN INDIVIDUAL AND A NON-RESIDENT. H E FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008-09 ON 2 ND SEPTEMBER 2008, CLAIMING THAT HE HAS RECEIVED CONSULTANCY CHARGES FROM M/S F RONTERA EASTERN GEORGIA LTD., NIGERIA. AS THE ASSESSEE WAS NOT AN E MPLOYEE OF THAT COMPANY AND HAD RECEIVED THE INCOME AS A CONSULTANT FOR PROFESSIONAL ADVICES PROVIDED FROM TIME TO TIME, HE CLAIMED THAT THE INCOME WAS CHARGEABLE UNDER THE HEAD PROFIT AND GAINS FROM BU SINESS. THE ASSESSING OFFICER REJECTED THIS CLAIM OF THE ASSESS EE AND TREATED THIS AMOUNT AS SALARY ON A FINDING THAT THE ASSESSEE AS AN EMPLOYEE, RECEIVED SALARY. 3. THE ASSESSEE AS AN EMPLOYEE OF M/S. HOBARK INTER NATIONAL LIMITED, FEDERAL REPUBLIC OF NIGERIA, RECEIVED AN AGGREGATE AMOUNT OF SALARY AMOUNTING TO NGN 536395, EQUIVALENT TO RS.1,12,19,3 71/-. THIS AMOUNT WAS REMITTED TO INDIA AND WAS CREDITED TO THE ASSES SEES BANK ACCOUNT WITH AXIS BANK. THE ASSESSEE CLAIMED THAT THE EARNI NGS WERE FROM A SOURCE OUTSIDE INDIA AND HENCE NOT CHARGEABLE IN INDIA. THE ASSES SING OFFICER HELD THAT THE AMOUNT IS CHARGEABLE IN INDIA WITHIN THE MEANING OF SECTION 5 (2) (A) OF THE INCOME TAX ACT, 1961. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEA L. 4. THE LD. FIRST APPELLATE AUTHORITY, AT PARA 20 OF ITS ORDER HELD AS FOLLOWS: 20.I HAVE CAREFULLY CONSIDERED THE OBSERVATIONS OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER AND THE SUBMISSIONS OF THE ASSESSEE. THE ASSESSEE IS A NON-RESIDENT INDIAN AND HAS M/S HOBARK INTERNATIONAL LIMITED, NIGERIA FOR THE PERIO D FROM APRIL, 2007 MA NO181/KOL/2019 & ITA NO.164/KOL/2018 A.Y. 201 1-12 DR. KAMAL KAR. VS. ACIT (IN RESPECT TO.TAXATION) -1(1), KOL PA GE 4 TO MARCH, 2008 AND RECEIVED RS. 1,12,19,371/- AS SA LARY. THE AMOUNT WAS RECEIVED IN AXIS BANK, KOLKATA. DURING T HE SAID PERIOD THE ASSESSEE IS ALSO RECEIVED A SALARY FROM M/S FRO NTERA EASTERN GEORGIA LTD. THE ASSESSEE HAS CLAIMED THAT SINCE HE HAS WORKED OUTSIDE INDIA, THEREFORE, SAID IT IS NOT TAXABLE IN INDIA. THE APPELLANT DURING THE APPELLATE PROCEEDING SUBMITTED THAT SINC E THE INCOME WAS EARNED FOR SERVICES RENDERED OUTSIDE INDIA, THE SAME CANNOT BE DEEMED TO BE ACCRUED OR ARISING IN INDIA AND CAN NOT BE TAXED EVEN IN THE ASSESSEE HAS AGREED FOR THE SAME FOR TH E ASSESSING OFFICER SINCE IT WAS MISCONCEPTION OF LAW. THERE IS NO PROMISSORY ESTOPPEL IN THE CASE OF A WRONG INTERPRETATION OF L AW AND IT MAY BE TAKEN AS A GROUND OF APPEAL AT ANY TIME BEFORE THE APPELLATE AUTHORITIES AS DISCUSSED SUPRA RELYING ON THE VARIO US JUDGEMENTS OF THE APPELLATE AUTHORITIES. THE APPELLANT IS RELIED UPON A NUMBER OF CASE LAW IS AN CIRCULAR OF THE DEPARTMENT ON THIS I SSUE OF OFFERING OF INCOME BY MISTAKE OF NOT CHARGEABLE INCOME TAX IN W HICH THE COURTS HAVE HELD THAT THE DEPARTMENT CANNOT TAX ON TAXABLE INCOME. THE HONOURABLE INCOME TAX APPELLATE TRIBUNAL, KOLKATA B ENCH A IN THE CASE OF SUSHIL KUMAR DAS VS ITO REPORTED IN (20 11) 48 SOT 102 (KOL) (URO) /15 TAXMANN.COM 52 (KOL-TRIB.) IN P ARAS 9 & 10 AS DISCUSSED SUPRA HAS HELD THAT THE SALARY RECEIVED IN INDIA IN THIS CASE WAS NOT CHARGEABLE TO INCOME TAX UNDER TH E HEAD WITH AN SALARIES IS UNDER SECTION 15 (A). FOLLOWING THE JUDGEMENT OF THE JURISDICTIONAL ITAT AND OTHER APPE LLATE AUTHORITIES AND IN VIEW OF THE CIRCULAR OF THE DEPARTMENT AS DI SCUSSED SUPRA, IT IS HELD THAT THE AMOUNT OF RS.1,12,19,371/-, RECEIV ED FROM M/S HOBARK INTERNATIONAL LTD., NIGERIA FOR THE PERIOD F ROM APRIL, 2007 TO MARCH, 2008 CANNOT BE TAXED IN INDIA. THESE GROUNDS OF APPEAL ARE ALLOWED AND THE ADDITION MADE BY THE ASSESSING OFFI CER IS HEREBY DELETED. 5. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 6. THE LEARNED DR, SUBMITTED THAT THE CBDT CIRCULAR NUMBER 13 OF 2017 DATED 11 TH APRIL, 2017 WAS REGARDING SEAFARERS AND HENCE NOT APPLICABLE TO THE ASSESSEE. HE SUBMITTED THAT THE ASSESSEE HAS IN ITIALLY CLAIMED THAT HE RECEIVED INCOME FROM BUSINESS AND THEREAFTER CHANGE D HIS VERSION. HE RELIED ON THE ORDER OF THE ASSESSING OFFICER AND PL AYED FOR THE SAME TO BE UPHELD AND THAT OF THE LEARNED CIT(A), BE REVERSED. 7. THE LEARNED COUNSEL FOR THE ASSESSEE, SUBMITTED THAT THE ISSUE IS NO MORE RES INTEGRA AS IT IS COVERED BY THE DECISION OF THE JURISDICTI ONAL HIGH COURT IN THE CASE OF SMT. SUMANA BANDYOPADHYAY& ANR. VERSUS THE DEPUTY DIRECTOR OF INCOME TAX, (INTERNATIONAL TAXAT ION) 3(1) IN GA 3745 OF 2016 WITH ITAT 374 OF 2016 . HE RELIED ON A NUMBER OF CASE LAW IS IN SUPPORT OF HIS CONTENTIONS. 8. AFTER HEARING RIVAL SUBMISSIONS, WE FIND THAT TH E HONOURABLE JURISDICTIONAL HIGH COURT IN THE CASE OF SMT. SUMANA BANDYOPADHYAY (SUPRA), HAD AT PARA 6 HELD AS FOLLOWS: MA NO181/KOL/2019 & ITA NO.164/KOL/2018 A.Y. 201 1-12 DR. KAMAL KAR. VS. ACIT (IN RESPECT TO.TAXATION) -1(1), KOL PA GE 5 6. WE CONCUR WITH THE RATIO OF THE DECISION OF THE KARNATAKA HIGH COURTAND IN OUR OPINION THE INTERPRETATION BE GIVEN TO SUB SECTION (B) OF SECTION 5(2) OF THE ACT WOULD AL SO APPLY TO SECTION 5(2)(A) OF THE ACT. THE CIRCULAR IS CLARIFI CATORY IN NATURE AND IS APPLICABLE FOR CONSTRUING THE AFORESA ID PROVISION FOR THE RELEVANT ASSESSMENT YEAR. IN OUR OPINION THE AUTHORITIES UNDER THE INCOME TAX ACT DID NOT PROPER LY APPLY THE PROVISIONS OF LAW TO THE CASE OF THE ASSESSEE. WE ARE OF THE VIEW THAT THE ASSESSING OFFICER WAS WRONG IN AD DING THE AFORESAID SUM TO THE INCOME CHARGEABLE TO TAX OF TH E ASSESSEE FOR THE RELEVANT ASSESSMENT YEAR. WE ACCOR DINGLY ALLOW THE APPEAL AND ANSWER THE QUESTION FRAMED BY US IN FAVOUR OF THE ASSESSEE. 8.1. THE DECISION, AS CLAIMED BY THE LEARNED DR, IS NOT BASED ON THE CIRCULAR BUT ON THE INTERPRETATION OF SECTION 5 (2) (A) AND SECTION 5 (2) (B) OF THE ACT. THE ASSESSEE HAS RENDERED SERVICES OUTSIDE INDIA AND THE INCOME EARNED THERE FROM WAS CREDITED INTO THE BANK ACCOUNTS LOCATED IN INDIA. 9. RESPECTFULLY FOLLOWING THE BINDING DECISION OF T HE JURISDICTIONAL HIGH COURT, WE UPHOLD THE ORDER OF THE LEARNED CIT (A), AND DISMISS THE APPEAL OF THE REVENUE. 5. WE ALSO NOTICE THAT THE TRIBUNALS YET ANOTHER D ECISION IN ITA NO.319 AND 320/AGR/2013 ARVIND SINGH CHAUHAN VS. INCOME TAX OFFICER WARD-1( 2), GWALIOR DECIDED ON 14.02.2014 HELD THAT THE AMOUNT IN ISSU E; WHICH HAS BEEN DERIVED OUTSIDE INDIA AND ONLY CREDITED IN A BANK A CCOUNT IN INDIA; DOES NOT ATTRACT SEC. 5(2)(A) IN CASE OF A NON-RESIDENT. LEA RNED CO-ORDINATE BENCH WENT BY HON'BLE MADRAS HIGH COURTS DECISION TO THIS EFF ECT IN COMMISSIONER OF INCOME-TAX VS. A.P KALYANKRISHNAN (1992) 195 ITR 534 (MAD) THAT THE PENSION PAYABLE TO THE ASSESSEE HAD ACCRUED IN MALA YSIA AND ONLY THEREAFTER, BY AN ARRANGEMENT EMBODIED IN THE LETTER FOUND IN A NNEXURE-D TO THE STATED OF THE CASE THE PENSION HAD BEEN REMITTED TO THE ASSES SEES IN INDIA AND MADE AVAILABLE TO HIM. THE ASSESSEE HAD, THEREFORE, TO B E REGARDED AS HAVING RECEIVED THE INCOME OUTSIDE INDIA AND THE PENSION H AD BE REMITTED OR TRANSMITTED TO THE PLACE WHERE THE ASSESSEE WAS LIV ING, AS A MATTER OF CONVENIENCE AND THAT WOULD NOT, IN OUR VIEW CONSTIT UTE RECEIPT PENSION IN INDIA . WE ADOPT THE FOREGOING DETAILED DISCUSSION MUTAT IS MUTANDIS TO DELETE MA NO181/KOL/2019 & ITA NO.164/KOL/2018 A.Y. 201 1-12 DR. KAMAL KAR. VS. ACIT (IN RESPECT TO.TAXATION) -1(1), KOL PA GE 6 THE IMPUGNED ADDITION OF CONSULTANCY SERVICES INCOM E DERIVED OUTSIDE INDIA AS TAXABLE IN INDIA. THE ASSESSEE SUCCEEDS IN HIS S OLE SUBSTANTIVE GRIEVANCE AS WELL AS IN MAIN APPEAL. 6. THIS ASSESSEE MISCELLANEOUS APPLICATION IN MA NO.181/KOL/2019 AND HIS MAIN APPEAL ITA NO.164/KOL/2018 ARE ALLOWED ACCORDINGLY. ORDER PRONOUNCED IN THE OPEN COURT ON 20/11/2019 SD/- SD/- ( () ( () (DR. A.L. SAINI) (S.S. GODARA) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) KOLKATA, *DKP *- 20/11 /201 9 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-DR. KAMAL KAR, 109, THE RESIDENCY, SALT LAKE CITY, KOLKATA-64 2. !' /RESPONDENT-ACIT (INT. TAXATION)-1(1), AAYAKAR BHAW AN, POORVA, 110, SHANTI PALLY K OLKATA-110 3. 5 6 / CONCERNED CIT 4. 6- / CIT (A) 5. !5, 5, KOLKATA / DR, ITAT, KOLKATA 6. / GUARD FILE. BY ORDER/ , /TRUE COPY/ 5,