LINKLATERS LLP, MUMBAI V. DEPUTY COMMISSIONER OF INCOME TAX (IT) 3(1)(2), MUMBAI

MA 238/MUM/2017

• Counselvise Citation: [2018] 124 COUNSELVISE.COM (IT) 6313 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 12-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: L
• Assessment Year: 2011-2012
• Appeal Filed On: 12-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V JENARDHANAN
• Assessee Lawyers: SE DASTUR NEERAJ SHETH
• Keywords: Rectification of order

Judgement Text

1 MA 238/MUM/2017 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH L, MUMBAI BEFORE SHRI MAHAVIR SINGH (JUDICIAL MEMBER) AND SHRI G MANJUNATHA (ACCOUNTANT MEMBER) M.A. 238/MUM/2017 (ARISING OUT OF I.T.A NO.1690/MUM/2015) (ASSESSMENT YEAR: 2011-12) LINKLATERS LLP C/OI DELOITTE HASKINS & SELLS LLP, TOWER-3, 27-32 FLOOR, INDIABULLS FINANCE CENTRE, ELPHINSTONE MILL COMPOUND, SENAPATI BAPAT MARG, ELPHINSTONE (WEST), MUMBAI- 13 PAN : AABCL5182G VS THE DY.CIT (INTERNATIONAL TAXATION) 3(1)(2), MUMBAI APPLICANT RESPONDENT APPLICANT BY SHRI SE DASTUR / NEERAJ SHETH RESPONDENT BY SHRI V JENARDHANAN DATE OF HEARING 19-01-2018 DATE OF PRONOUNCEMENT 12-03-2018 O R D E R PER G MANJUNATHA, AM : THE ASSESSEE HAS FILED THIS MISCELLANEOUS APPLICA TION SEEKING RECTIFICATION OF ORDER PASSED BY THE ITAT, L-BENCH, MUMBAI VIDE ITS ORDER DATED 31-01-2017 IN ITA NO.1690/MUM/2015 FOR AY 201 1-12 U/S 254(2) OF THE ACT. 2. THE LD.AR FOR THE ASSESSEE SUBMITTED THAT THE AS SESSEES APPEAL WAS DECIDED BY L-BENCH VIDE ORDER DATED 31-01-2017. IN THE SAID ORDER, 2 MA 238/MUM/2017 THE BENCH BY RELYING UPON THE DECISION OF THE CO-OR DINATE BENCH IN ASSESSEES OWN CASE FOR AY 1998-99 HAS HELD THAT ON LY INCOME EARNED FROM SERVICES RENDERED IN INDIA IS TAXABLE IN INDIA . HOWEVER, HAVING HELD SO, THE TRIBUNAL HAS SET ASIDE THE MATTER TO THE FI LE OF THE AO FOR EXAMINATION OF FACTS WITH REGARD TO THE RENDERING O F SERVICES IN INDIA ON THE GROUND THAT THE LOWER AUTHORITIES HAVE NOT EXAM INED PROPER FACTS. THE LD.AR FURTHER SUBMITTED THAT THE OBSERVATIONS O F THE BENCH WHILE RESTORING THE MATTER TO THE AO IS BASED ON OVERLOOK ING CERTAIN VERY RELEVANT CIRCUMSTANCES AVAILABLE ON THE RECORD THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO HAD CALLED FOR DETAI LS AND EVIDENCES REGARDING SERVICES RENDERED IN INDIA AND OUTSIDE IN DIA. AT THE TIME OF HEARING ON 15-01-2014, THE AO HAD REQUIRED THE ASSE SSEE TO SUBMIT THE BASIS OF INVOICING OF INCOME UNDER THE TWO CATEGORI ES, I.E. SERVICE RENDERED IN INDIA AND OUTSIDE INDIA AND THE ASSESSE E VIDE LETTER DATED 25-02-2014 SUBMITTED ALL THE DETAILS. THE TRIBUNAL AT PARAGRAPH 4 HAS ALSO FOUND THAT THE DETAILS OF INCOME ATTRIBUTABLE TO SERVICES RENDERED IN INDIA AND OUTSIDE INDIA WERE FURNISHED BEFORE THE A O AND THAT THE AO HAD FOUND THEM TO BE IN ORDER. THE LD.AR FURTHER S UBMITTED THAT DURING THE PROCEEDINGS BEFORE THE DRP, THE DRP SPECIFICALL Y CALLED UPON THE ASSESSEE TO PROVIDE THE BREAK UP OF THE ASSESSEES INCOME AS PER THE ACTIVITIES RENDERED TO VARIOUS CLIENTS. THE ASSESS EE VIDE LETTER DATED 04- 12-2014 SUBMITTED DETAILS OF INCOME RECEIVED FROM V ARIOUS CLIENTS AND IN 3 MA 238/MUM/2017 RESPECT OF SERVICES RENDERED IN INDIA AND OUTSIDE I NDIA. THE SAID LETTER WAS FILED BEFORE THE TRIBUNAL IN THE PAPER BOOK AT PAGES 36 TO 40. IN THESE CIRCUMSTANCES, THE ASSESSEE SUBMITTED THAT TH E AFORESAID DECISION OF THE TRIBUNAL AT PARA 48 OF THE ORDER TO SET ASID E THE MATTER TO THE FILE OF THE AO ON THE PREMISES THAT THE RELEVANT DETAILS WE RE NOT ON RECORD IS A MISTAKE APPARENT FROM THE RECORD WHICH REQUIRES REC TIFICATION U/S 254(2) OF THE INCOME-TAX ACT, 1961. 3. THE LD.DR, ON THE OTHER HAND, SUPPORTING THE ORD ER OF THE ITAT, SUBMITTED THAT THE FACTS AVAILABLE ON THE RECORD CL EARLY SHOWS THAT THE ASSESSEE HAS NOT FILED ANY DETAILS ABOUT BIFURCATIO N OF INCOME EARNED FROM SERVICES RENDERED IN INDIA AND OUTSIDE INDIA A ND ACCORDINGLY, THE TRIBUNAL HAS RIGHTLY SET ASIDE THE ISSUE TO THE FIL E OF THE AO FOR VERIFICATION OF FACTS. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIALS AVAILABLE ON RECORD. THE ISSUE BEFORE THE TRIBUNAL WAS THAT WHETHER THE INCOME FROM SERVICES RENDERED TO CLIENTS OUTSIDE INDIA IS TAXABLE IN INDIA OR NOT? THE ITAT, IN ITA NO.1690/UM/2015 FOR AY 2011-12 VID E ITS ORDER DATED 31-01-2017, BY FOLLOWING THE ORDER OF THE TRIBUNAL FOR AY 1998-99 HAS HELD THAT ONLY INCOME EARNED FROM SERVICES RENDERED IN INDIA IS TAXABLE IN INDIA; HOWEVER, SET ASIDE THE MATTER TO THE FILE OF THE AO FOR EXAMINATION OF FACTS WITH REGARD TO THE RENDERING O F SERVICES IN INDIA BY OBSERVING THAT THE LOWER AUTHORITIES HAVE NOT EXAMI NED THE FACTS PROPERLY 4 MA 238/MUM/2017 IN THE LIGHT OF THE CLAIM OF THE ASSESSEE THAT IT H AS SUBMITTED ALL DETAILS ABOUT SERVICES RENDERED IN INDIA AND OUTSIDE INDIA. THE GRIEVANCE OF THE ASSESSEE IS THAT THE TRIBUNAL HAVING HELD THAT ONLY INCOME EARNED FROM SERVICES RENDERED IN INDIA IS TAXABLE IN INDIA AND ALSO FOUND THAT THE DETAILS OF INCOME ATTRIBUTABLE TO SERVICES RENDERED IN INDIA AND OUTSIDE INDIA WERE FURNISHED BEFORE THE AO AND THAT THE AO HAD FOUND THEM TO BE IN ORDER, ERRED IN SETTING ASIDE THE MATTER TO T HE FILE OF THE AO FOR VERIFICATION OF FACTS. 5. HAVING HEARD BOTH THE SIDES, WE FIND MERIT IN TH E ARGUMENTS OF THE LD.AR FOR THE ASSESSEE, FOR THE REASON THAT THE TRI BUNAL HAVING HELD THAT ONLY INCOME EARNED FROM SERVICES IN INDIA IS TAXABL E IN INDIA AND ALSO OBSERVED AT PARA 4 OF ITS ORDER THAT THE DETAILS OF INCOME ATTRIBUTABLE TO SERVICES IN INDIA AND OUTSIDE INDIA WERE FURNISHED BEFORE THE AO, ERRED IN SETTING ASIDE THE ISSUE TO THE FILE OF THE AO FO R VERIFICATION OF FACTS. THEREFORE, WE ARE OF THE VIEW THAT THERE IS A MISTA KE APPARENT IN THE ORDER OF THE TRIBUNAL INSOFAR AS SETTING ASIDE THE ISSUE TO THE FILE OF THE AO AND HENCE, WE ARE OF THE CONSIDERED VIEW THAT IT REQUIRES RECTIFICATION U/S 254(2) OF THE ACT. ACCORDINGLY, WE MODIFY THE ORDER PASSED BY THE TRIBUNAL IN ITA 1690/MUM/2015 DATED 31-01-2017 AND DIRECT THE AO TO DELETE ADDITION MADE TOWARDS INCOME RECEIVED FROM S ERVICES RENDERED OUTSIDE INDIA. 6. IN THE RESULT, THE MISCELLANEOUS APPLICATION FIL ED BY THE ASSESSEE IS 5 MA 238/MUM/2017 ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH MARCH, 2018. SD/- SD/- (MAHAVIR SINGH) (G MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 12 TH MARCH, 2018 PK/- COPY TO : 1. APPLICANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER SR.PS, ITAT, MUMBAI