ACIT (IT) 4(1)(1), Mumbai V. M/S REALIANCE JIO INFOCOMM. LTD., Mumbai

MA 190/MUM/2021

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 4847 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 21 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 05-04-2022
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2018-2019
• Appeal Filed On: 15-09-2021
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Double taxation relief; Tax effect; Tax effect; TDS
• Section: 195; 191

Judgement Text

MA Nos. 190 to 192/Mum/2021 Assessment Year: 2018-19 Page 1 of 6 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI “I” BENCH, MUMBAI [Coram: Pramod Kumar (Vice President) and Vikas Awasthy (Judicial Member)] MA Nos. 190, 191 & 192/Mum/2021 (in ITA Nos. 2214, 2215 & 2217/Mum/2019) Assessment Year: 2018-19 Dy. Commissioner of Income Tax (International Taxation) ................Appellant Circle-4(1)(1), Mumbai Vs Reliance Jio Infocomm Ltd. 3 rd Floor, Maker Chamber-IV, 222, Nariman Point, Mumbai-400 021 [PAN: AABC 16363 G] ............................Respondent Appearances by Milind Chavan for the appellant Nimesh Vora for the respondent Date of concluding the hearing : January 07, 2022 Date of pronouncement : April 06, 2022 ORDER Per Pramod Kumar, VP: 1. By way of these miscellaneous applications, the Assessing Officer seeks recall of the consolidated order dated 09.11.2020 summarily dismissing the appeals filed by the Assessing Officer on the ground that tax effect involved is less than Rs.50 lakhs. 2. The mistake pointed out by the Assessing Officer is, as evident from the present rectification applications, as follows: 1. In this case, the department filed appeals against the orders of Ld CIT(A)-57 Mumbai all dated 25/0172019 in the matter of appeals filed u/s 248 of the Act. MA Nos. 190 to 192/Mum/2021 Assessment Year: 2018-19 Page 2 of 6 2. The Hon'ble ITAT vide its order in ITA No. 2214,2215 & 2217/Mum/2019 dated 09.11.2020 dismissed the appeals filed by the Revenue, holding that the tax effect of the each appeal is below monetary threshold of Rs 50 lakhs as prescribed by CBDT In Circular No. 3 of 2018 dated 11.07.2018 and amended on 20/08/2018. 3. In this regard it is stated that the cumulative tax effect for this ITAT order of AY 2018-19 is Rs 75,23,664/- (ITA No. 2214/Mum/2019 – Rs.33,81,915/-, ITA No. 2215/Mum/2019 Rs 24,96,792/- & ITA No. 2217/Mum/2019 - Rs.16,44,957/-). “As per para 5 of Circular 3/2018, "The Assessing Officer shall calculate the tax effect separately for every assessment year in respect of the disputed issues in the case of every assessee. If, in the case of an assessee, the disputed issues arise in more than one assessment year, appeal can be filed in respect of such assessment year or years in which the tax effect in respect of the disputed issues exceeds the monetary limit specified in para 3. No appeal shall be filed in respect of an assessment year or years in which the tax effect is less than the monetary limit specified in para 3. In other words, henceforth, appeals can be filed only with reference to the tax effect in the relevant assessment year." Hence, the monetary effect is to be calculated for each assessment year. As all three appeals were filed in ITAT for the same assessee, for AY 2018-19 cumulatively exceeding the prescribed monetary limit. Hence, filing of Miscellaneous application (M.A) before ITAT is recommended in this case. 4. Further regarding monetary tax effect, reference may be made to para 4 of Circular No. 3/2018 dated 11.07.2018 which reads as under: "4. For this purpose, ' tax effect' means the difference between the tax on total income assessed and the tax that would have been chargeable had such total income been reduced by the amount of income in respect of the issues against which appeal is intended to be filed ...." 4.1 It has also been provided that the tax effect has to be calculated for every assessment year. In the present case, the appeal is emanating from the action of the deductor who having paid the tax, had gone in appeal u/s. 248 of the I.T. Act before the CIT(A) a the AO filed the appeal before the ITAT a this order is under scrutiny for filing further appeal. Section 248 of the Act provides that where under an agreement or other arrangement, the tax deductible on any income(other than interest) u/s. 195 is to be borne by the payer, and such person after paying the tax to the credit of the Central Government, claims that tax was not required to be deducted on such income, he may file appeal to the CIT(A). 4.2 This appeal u/s. 248 of the Act is not with reference to the total income of a person rather it is w.r.t. the transaction. Therefore, the two cannot be seen as interchangeable. As the tax effect is not being calculated with respect to the total income of a person for a particulars A.Y., rather the disputed tax amount is w.r.t. a transaction, therefore para 4 of Circular no. 3/2018 is not applicable in the present case. In view of the above, it is clear that monetary limits do not apply in TDS cases. Therefore filing of M.A. before the ITAT is [ recommended. 5. In view of the above mentioned facts, dismissing the appeal of the revenue by applying CBDT Circular No. 17/2019 dated 08.08.2019 on ground of low tax effect involved in the appeal by the Hon'ble ITAT, is not correct as the cumulative tax effect for this ITAT order of MA Nos. 190 to 192/Mum/2021 Assessment Year: 2018-19 Page 3 of 6 AY 2018-19 is Rs.75,23,664/- (ITA No.2214/Mum/2019-Rs.33,81,915/-, ITA No. 2215/Mum/2019- Rs.24,96,7927- & ITA No. 2217/Mum/2019- Rs.16,44,957/-). As this mistake apparent from record and hence the order passed on 09.11.2020 is liable to be recalled. It is, therefore, humbly prayed that; (a) the Hon'ble Tribunal be pleased to recall the order dated 09.11.2020 passed in the Revenue's appeal being ITA No. 2214/Mum/2019; and (b) the Hon'ble Tribunal be pleased to reinstitute the appeal ITA No. 2214/Mum/2019 for adjudication on merit; and (c) that the delay, if any, in filing the present may kindly be condoned. 3. When these applications came up for hearing before us, learned counsel for the assessee representatives fairly agreed that the impugned orders dismissing the appeals summarily were not in order, but the issue in appeals are nevertheless covered, on merits and in favour of the assessee, by a series of orders of the co-ordinate benches in assessee’s own cases. 4. In view of the above position, we deem it fit and proper to substitute paragraph 2, 3 & 4 of the impugned orders by the following observations : 2. Grievances raised by the Assessing Officer in all the three appeals are as follows: 1. Whether on the facts and circumstances of the case and in law, Ld. has erred in holding that tax was not required to be deducted at source e payment made by the assessee to SDL Multi-Lingual Solutions (Singapore) Pte. Ltd. as it did not amount to income of the payee by way of royalty u/s 9(1)(vi) of the IT Act, 1961? 2. Whether on the facts and circumstances of the case and in law, Ld. CIT(A) has erred in holding that the Act has expanded the meaning of the term royalty by adding Explanations to section 9(1)(vi) thereby meaning that Explanation 4 thereto constitutes new law and does not explain the existing law? 3. Whether on the facts and circumstances of the case and in law, Ld. CIT(A) has erred in not considering Explanation 4 to section 9(1)(vi) of the Act as being declaratory and clarificatory amendment explaining the existing law and that it satisfy the conditions laid down by a Constitution Bench of Hon'ble Supreme Court in the case of Commissioner of Income Tax (Central)-l, New Delhi vs Vatika Township Pvt Ltd (Civil Appeal No. 8750 of 2014) arising out of SLP (C) No. 540 of 2009 for being as such? 4. Whether on the facts and circumstances of the case and in law, Ld. CIT(A) has erred in holding that the payment by the assessee is not royalty in the hands of the MA Nos. 190 to 192/Mum/2021 Assessment Year: 2018-19 Page 4 of 6 recipient on the ground that while making amendments to the Act, Parliament has not amended the DTAA with Singapore? 5. Whether on the facts and circumstances of the case and in law, Ld. CIT(A) has erred in not taking into account that in absence of a definition of the terms included in the phraseology 'use of or right to use any copyright of a literary, artistic, or scientific work' in relation to royalty in the India-Singapore DTAA, Article 3(2) of the said DTAA allows for taking recourse to the meaning contained in the domestic law of the State applying the Treaty? 6. Whether on the facts and circumstances of the case and in law, Ld. CIT(A) has erred in not taking recourse to the meaning contained in ..Explanations 2, 3, 4 and 5 to section 9(1)(vi) of the IT Act, 1961 and the Indian Act, 1957 for deriving the meaning of the terms included in the phraseology 'use of or right to use any copyright of a literary, artistic, or scientific work' in relation to royalty in the India-Singapore DTAA, while the is mandated by Article 3(2) of the said DTAA? 7. Whether on the facts and circumstances of the case and in law, Ld. have wronalv placed reliance on the decision of Hon'ble Supreme Court in the case of Tata Consultancy Services (271 ITR 401), whereas, in that case, the question posed before Hon'ble Apex Court was 'Whether an intellectual property contained in floppies, disks or CD-ROMs would be 'goods' within the meaning of Andhra Pradesh General Sales Tax Act, 1957' and it had no relation to section 9(1 )(vi) of the IT Act? 8. Whether on the facts and circumstances of the case and in law, Ld. CIT(A) has wrongly placed reliance on the decision of Hon'ble Supreme Court in the case of Tata Consultancy Services (271 ITR 401), whereas, in that case, Hon'ble Apex Court have, while deciding on the meaning of the word 'goods' in relation to software under the Andhra Pradesh General Sales Tax Act, 1957, have clearly stated that "it is trite that it is not permissible to interpret a word in accordance with its definition in other statute and more so when the same is not dealing with any cognate subject"? 9. Whether on the facts and circumstances of the case and in law, Ld. CIT(A) has wrongly placed reliance on the distinction between the terms 'copyright in an article' and 'copyrighted article' based on the decision of Hon'ble Supreme Court in the case of Tata Consultancy Services (271 ITR 401) in a matter relating to Andhra Pradesh General Sales Tax Act, 1957, whereas these distinctions have no relevance for the purposes of Explanations 2, 3, 4 and 5 to section 9(1)(vi) of the IT Act which deal with software royalty in a direct manner? 10. Whether on the facts and circumstances of the case and in law, Ld. CIT(A) was correct in seeking answers to the questions as to whether the copyrights in the software were transferred to the customers and whether access to "source codes" in the software was granted to the assessee while there being no requirement under the IT Act to answer these questions within the meaning of Explanation 2(v) to section 9(1)(vi) read with Explanations 3, 4 and 5 to the same clause? 3. Learned Representatives agree that the issues so raised by the Assessing Officer are covered, in favour of the assessee in assessee’s own cases, including in the case of ACIT vs. Reliance Jio Infocomm Ltd. [(2019) 111 taxmann.com 371 (Mum)]. MA Nos. 190 to 192/Mum/2021 Assessment Year: 2018-19 Page 5 of 6 3. We see no reasons to take any other view of the matter than the view so taken by the co-ordinate benches. Respectfully following the same, we approve the conclusions arrived at by the learned counsel for the assessee CIT(A) and decline to interfere in the matter. 4. In the result, the appeals are dismissed. 5. In the result, the miscellaneous applications are allowed in the terms indicated above. Pronounced in the open court today on the 06 th day of April, 2022. Sd/- Sd/- Vikas Awasthy Pramod Kumar (Judicial Member) (Vice President) Mumbai, dated the 6 th day of April, 2022 Roshani, Sr. PS Copies to: (1) The Appellant (2) The respondent (3) CIT (4) CIT(A) (5) DR (6) Guard File By order True Copy Assistant Registrar/Sr. PS Income Tax Appellate Tribunal Mumbai benches, Mumbai