M/s. ANZ Operations and Technology Private Limited, Bangalore V. Deputy Commissioner of Income Tax, Circle-1(1), Bangalore

MA 264/BANG/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 3945 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 3 month(s) 27 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 28-11-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 01-08-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R PREMI
• Keywords: Double taxation relief; Retrospective amendment
• Section: 254(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER M.P. NO. 264/BANG/2018 (IN I T (IT) A NO S . 193/BANG/2010 & 1508/BANG/2012) ASSESSMENT YEAR : 20 08 - 09 M/S. ANZ OPERATIONS & TECHNOLOGY PVT. LTD., EMBASSY GOLF LINKS BUSINESS PARK, OFF INTERMEDIATE RING ROAD, BANGALORE 560 071. PAN: AABCA9002G VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 1 (1), BANGALORE. APPELLANT RESPONDENT ASSESSEE BY : SHRI SUMEET KHURANA, CA REVENUE BY : SMT. R. PREMI, JCIT (DR) DATE OF HEARING : 15 . 1 1 .2019 DATE OF PRONOUNCEMENT : 28 . 1 1 .2019 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER THIS M.P. IS FILED BY THE ASSESSEE AND IT IS CONTENDED IN THIS M.P. THAT THERE ARE CERTAIN APPARENT MISTAKES IN THE IMPUGNED TRIBUNAL ORDER WHICH SHOULD BE RECTIFIED. 2. IN COURSE OF HEARING, IT WAS SUBMITTED BY LD. AR OF ASSESSEE THAT IN PARA NO. 12 OF THE M.P., THE ASSESSEE HAS POINTED OUT ABOUT THE APPARENT MISTAKE IN THE IMPUGNED TRIBUNAL ORDER WHICH SHOULD BE RECTIFIED. HE ALSO SUBMITTED THAT ON PAGE NOS. 41 TO 44 OF THE M.P. IS THE ADDENDUM TO WRITTEN SUBMISSIONS FILED BY THE ASSESSEE BEFORE THE TRIBUNAL ON 18.11.2015 AND IT WAS SUBMITTED THAT ON PAGE NO. 43 OF THE M.P. IS RELEVANT PAGE WHERE IT IS SUBMITTED BY LD. AR OF ASSESSEE THAT THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF SAMSUNG ELECTRONICS CO. LTD. AS REPORTED IN 345 ITR 494 WAS RENDERED IN THE YEAR 2012 WHEREAS THE ASSESSMENT YEAR INVOLVED IN THE PRESENT YEAR IS ASSESSMENT YEAR 2008-09 AND THEREFORE, PRIOR TO THIS DECISION OF HONBLE KARNATAKA HIGH COURT, VARIOUS BENCHES OF THE TRIBUNAL HAVE BEEN HOLDING THAT TAX WAS NOT DEDUCTIBLE AT SOURCE ON PAYMENT TOWARDS REIMBURSEMENT OF SOFTWARE LICENSES AND THEREFORE, IMPOSING A WITHHOLDING TAX M.P. NO. 264/BANG/2018 (IN IT(IT)A NOS. 193/BANG/2010 & 1508/BANG/2012) PAGE 2 OF 4 OBLIGATION BASED ON SUBSEQUENT UNFAVOURABLE DECISION OF THE HONBLE KARNATAKA HIGH COURT CLEARLY RESULTS IN IMPOSSIBILITY OF PERFORMANCE. IT IS ALSO SUBMITTED THAT THE ASSESSEE HAS ALSO REFERRED TO A TRIBUNAL ORDER OF THE MUMBAI BENCH OF THE TRIBUNAL RENDERED IN THE CASE OF EDELWEISS SECURITIES LTD. VS. ADDL. CIT IN ITA NOS. 7737 & 7952/MUM/2010 AND SUCH TRIBUNAL ORDER WAS ALSO ENCLOSED ALONG WITH WRITTEN SUBMISSIONS. AT THIS JUNCTURE, THE BENCH ASKED THE LD. AR OF ASSESSEE TO POINT OUT ABOUT THE FINDING OF THE TRIBUNAL IN THE IMPUGNED ORDER AND IN REPLY, IT WAS POINTED OUT THAT THE TRIBUNAL HAS DECIDED THE ISSUE AS PER THE DECISION IN PARA NO. 7 OF THE TRIBUNAL ORDER ON PAGE NO. 6 OF THE IMPUGNED TRIBUNAL ORDER. HE ALSO SUBMITTED THAT ON PAGE NOS. 59 AND 60 OF THE PAPER BOOK FILED IN COURSE OF HEARING OF THE M.P. IS THE JUDGMENT OF HONBLE MADHYA PRADESH HIGH COURT RENDERED IN THE CASE OF CIT VS. ITAT AS REPORTED IN 172 ITR 158 (MADHYA PRADESH) AND POINTED OUT THAT IN THIS CASE, IT WAS HELD THAT IF A POINT WHICH IS MATERIAL FOR DETERMINING THE AMOUNT OF TAX IS PRESSED AND NOT CONSIDERED, IT WOULD CERTAINLY CONSTITUTE A MISTAKE APPARENT FROM THE RECORD WITHIN THE MEANING OF SECTION 254(2) OF THE IT ACT. RELIANCE WAS ALSO PLACED ON THE JUDGMENT OF HONBLE ALLAHABAD HIGH COURT RENDERED IN THE CASE OF LAXMI ELECTRONIC CORPN. LTD. VS. CIT AS REPORTED IN 188 ITR 398. RELIANCE WAS ALSO PLACED ON TRIBUNAL ORDER RENDERED IN THE CASE OF ALLEGIS SERVICES INDIA (P.) LTD. VS. DCIT AS REPORTED IN 86 TAXMANN.COM 63 (BANGALORE-TRIB.) COPY AVAILABLE ON PAGES 67 TO 75 OF THE PAPER BOOK AND IT WAS POINTED OUT THAT PARA NO. 5 OF THIS TRIBUNAL ORDER IS RELEVANT. RELIANCE WAS ALSO PLACED ON THE JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF ACIT VS. SAURASHTRA KUTCH STOCK EXCHANGE LTD. AS REPORTED IN 305 ITR 227 (SC), COPY AVAILABLE ON PAGES 50 TO 58 OF THE PAPER BOOK. AS AGAINST THIS, THE LD. DR OF REVENUE SUBMITTED THAT THERE IS NO APPARENT MISTAKE IN THE IMPUGNED TRIBUNAL ORDER. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. FIRST OF ALL, WE REPRODUCE PARA NO. 7 OF THE IMPUGNED TRIBUNAL ORDER WHICH IS AS UNDER. 7. IT WAS FURTHER SUBMITTED THAT IT IS ONLY BY THE FINANCE ACT, 2012, EXPLANATION 2 TO SECTION 9(1)(VI) INSERTED WITH RETROSPECTIVE EFFECT FROM JUNE 1, 1976 WHEREBY IT WAS CLARIFIED THAT USER OR RIGHT TO USE COMPUTER SOFTWARE INCLUDING GRANTING OF LICENSE IS TREATED AS ROYALTY UNDER THE PROVISIONS OF SECTION 9(1)(VI) OF THE ACT. THUS IT WAS CONTENDED THAT M.P. NO. 264/BANG/2018 (IN IT(IT)A NOS. 193/BANG/2010 & 1508/BANG/2012) PAGE 3 OF 4 WHEN THE REMITTANCE WAS MADE, THE SAID EXPLANATION WAS NOT IN EXISTENCE. THE ASSESSEE COULD NOT HAVE CONTEMPLATED SUCH AMENDMENT AND THE ASSESSEE CANNOT BE EXPECTED TO PERFORM AN ACT WHICH IS IMPOSSIBLE TO PERFORM BASED ON THE MAXIM LEX NON COGIT AD IMPOSSIBLIA. IT WAS FURTHER CONTENDED THAT UNDER THE DTAA WITH AUSTRALIA, THE TERM `ROYALTY' HAS BEEN DEFINED IN ARTICLE 12 OF THE TREATY TO MEAN THAT USE OF RIGHT TO MEAN PAYMENTS OF ANY KIND RECEIVED AS A CONSIDERATION FOR THE USE OF, OR RIGHT TO USE, ANY COPYRIGHT OF A LITERARY, ARTISTIC, OR SCIENTIFIC WORK, INCLUDING CINEMATOGRAPH FILMS OR WORK ON FILM, TAPE OR OTHER MEANS OF REPRODUCTION FOR USE IN CONNECTION WITH RADIO OR TELEVISION BROADCASTING, ANY PATENT, TRADE MARK, DESIGN OR MODEL, PLAN, SECRET FORMULA OR PROCESS, OR FOR INFORMATION CONCERNING INDUSTRIAL, COMMERCIAL OR SCIENTIFIC EXPERIENCE, INCLUDING GAINS DERIVED FROM THE ALIENATION OF ANY SUCH RIGHT OR PROPERTY WHICH ARE CONTINGENT ON THE PRODUCTIVITY, USE, OR DISPOSITION THEREOF. IN THE PRESENT CASE, THERE IS NO TRANSFER OF COPYRIGHT. IT IS ONLY TOWARDS COPY-RIGHTED ARTICLE AND NOT FOR USE OF COPY-RIGHT. THEREFORE, EVEN UNDER DTAA, IMPUGNED PAYMENT CANNOT BE CHARACTERIZED AS ROYALTY PAYMENT, THEREFORE, NO OBLIGATION TO DEDUCT TAX AT SOURCE. FINALLY, IT IS CONTENDED THAT WHEN THE ASSESSEE WAS UNDER BONA FIDE BELIEF THAT THERE WAS NO LIABILITY TO DEDUCT TAX AT SOURCE, ASSESSEE CANNOT BE TREATED AS AN 'ASSESSEE IN DEFAULT'. 4. AT THIS JUNCTURE, WE WOULD LIKE TO EXAMINE THE APPLICABILITY OF THE JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF ACIT VS. SAURASHTRA KUTCH STOCK EXCHANGE LTD. (SUPRA). PARA NO. 40 OF THIS JUDGMENT IS RELEVANT WHICH IS AVAILABLE ON PAGE NO. 57 OF THE PAPER BOOK. THE SAME IS REPRODUCED HEREINBELOW. 40. THE CORE ISSUE, THEREFORE, IS WHETHER NON-CONSIDERATION OF A DECISION OF JURISDICTIONAL COURT (IN THIS CASE A DECISION OF THE HIGH COURT OF GUJARAT) OR OF THE SUPREME COURT CAN BE SAID TO BE A 'MISTAKE APPARENT FROM THE RECORD'? IN OUR OPINION, BOTH - THE TRIBUNAL AND THE HIGH COURT - WERE RIGHT IN HOLDING THAT SUCH A MISTAKE CAN BE SAID TO BE A 'MISTAKE APPARENT FROM THE RECORD' WHICH COULD BE RECTIFIED UNDER SECTION 254(2). 5. AS PER THIS PARA OF THIS JUDGMENT OF HONBLE APEX COURT, IT COMES OUT THAT NON-CONSIDERATION OF A DECISION OF JURISDICTIONAL HIGH COURT OR OF HONBLE APEX COURT IS A MISTAKE APPARENT FROM THE RECORD. IN THE PRESENT CASE, THE TRIBUNAL ORDER IS IN LINE WITH THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT I.E. HONBLE JURISDICTIONAL HIGH COURT RENDERED IN THE CASE OF SAMSUNG ELECTRONICS CO. LTD. (SUPRA) AND HENCE, IT CANNOT BE SAID THAT THERE IS AN APPARENT MISTAKE IN THE TRIBUNAL ORDER WHICH IS IN LINE WITH THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT. THIS IS ALSO BY NOW A SETTLED POSITION OF LAW THAT AS PER ANY M.P. NO. 264/BANG/2018 (IN IT(IT)A NOS. 193/BANG/2010 & 1508/BANG/2012) PAGE 4 OF 4 JUDGMENT, NO NEW LAW IS MADE BY ANY COURT AND THE COURT ONLY DECLARES WHAT IS THE LAW ALL THROUGH. HENCE EVEN IF THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT IS RENDERED IN 2012, IT CANNOT BE SAID THAT ANY CHANGE IN LAW HAS TAKEN PLACE FROM THE YEAR 2012 AND IT HAS TO BE ACCEPTED THAT THE LAW WAS ALWAYS LIKE THAT AND HENCE, IT CANNOT BE SAID THAT THERE IS ANY APPARENT MISTAKE IN THE IMPUGNED TRIBUNAL ORDER WHICH IS IN LINE WITH THIS JUDGMENT OF HONBLE KARNATAKA HIGH COURT. SINCE THE TRIBUNAL ORDER IS IN LINE WITH THE JUDGMENT OF HONBLE APEX COURT AS NOTED ABOVE, OTHER JUDGMENTS CITED BY LD. AR OF ASSESSEE ARE NOT REQUIRED TO BE COMMENTED UPON. 6. IN THE RESULT, THE M.P. FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE. SD/- SD/- (PAVAN KUMAR GADALE) (ARUN KUMAR GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 28 TH NOVEMBER, 2019. /MS/ COPY TO: 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.