CLOUGH PROJECT INTERNATIONAL PRIVATE LIMITED, MUMBAI V. DEPUTY DIRECTOR OF INCOME TAX 2 ( 1) (1), MUMBAI

MA 344/MUM/2018

• Counselvise Citation: [2019] 111 COUNSELVISE.COM (IT) 5296 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 2 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 10-07-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: L
• Assessment Year: 2008-2009
• Appeal Filed On: 08-05-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: CHAITANYA ANJARIA
• Assessee Lawyers: G C SRIVASTAVA
• Keywords: Rejection of books of accounts; Permanent establishment
• Section: 254(2); 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES I , MUMBAI BEFORE S HRI G. MANJUNATHA (AM) AND SHRI RAM LAL NEGI (JM) M .A. N O. 342 / MUM /2018 ( ARISING OUT OF CO N O. 09 /MUM /201 1 ) ( ASSESSMENT YEAR : 2006 07 ) M.A. NO. 343 / MUM /2018 ( ARISING OUT OF CO N O. 6 1 /MUM /201 6 ) ( ASSESSMENT YEAR : 2007 08 ) M.A. NO. 344/ MUM /2018 ( ARISING OUT OF CO N O. 62/MUM /201 6 ) ( ASSESSMENT YEAR : 2008 09 ) M.A. NO. 345/ MUM /2018 ( ARISING OUT OF ITA N O. 2952/MUM /201 0 ) ( ASSESSMENT YEAR : 2006 07 ) M.A. NO. 346/ MUM /2018 ( ARISING OUT OF ITA N O. 4930/MUM /201 4 ) ( ASSESSMENT YEAR : 2007 08 ) M.A. NO. 347/ MUM /2018 ( ARISING OUT OF ITA N O. 4931/MUM /201 4 ) ( ASSESSMENT YEAR : 2008 09 ) M/S CLOUGH PROJECTS INTERNATIONAL P TY.LTD., G.C. SRIVASTAVA & ASSOCIATES ADV. 14D, 14 TH FLOOR, HANSALAYA BUILDING, 15, BARAKHAMBA ROAD, NEW DELHI - 110001 PAN: AACCC6057C V S. THE DDIT (IT) - 2(1)(1)/ACIT - 1(2), SCINDIA HOUSE, BALLARD PIER, N.M. ROAD, MUMBAI - 400038 (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G.C. SRIVASTAVA (A R) REVENUE BY : SHRI CHAITANYA ANJARIA (SR. D R) DATE OF HEARING: 12/04 /201 9 DATE OF PRONOUNCEMENT: 10 / 07 /201 9 O R D E R PER RAM LAL NEGI, JM THE APPELLANT/ ASSESSEE HAS FILED THE CAPTIONED MISCELLANEOUS APPLICATION S WITH THE REQUEST TO RECALL THE COMMON ORDER DATED 06.10.2017 2 M.A. NO S . 342 TO 347/MUM/2018 ASSESSMENT YEAR S : 2006 - 07, 2007 - 08 AND 2008 - 09 PASSED IN REVENUES APPEALS ITA NO . 2952/MUM/2010 , ITA NO. 4930/MUM/2014, ITA NO. 4931/MUM/2014 AND CROSS OBJECTIONS FILED BY THE ASSESSEE PERTAI NING TO THE ASSESSMENT YEARS 2006 - 07, 2007 - 08 AND 2008 - 09 RESPECTIV ELY AND RE - FIX THE HEARING OF THE ABOVE APPEALS FOR THE PURPOSE OF RECTIFYING THE MISTAKE S APPARENT IN THE SAID ORDER. 2. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE US THAT THE ITAT HAS DISPOSED OF THE AFORESAID APPEALS AND CROSS OBJECTIONS FILED BY THE REVENUE AND THE ASSESSEE VIDE COMMON ORDER DATED 06.10.2017. THE LD. COUNSEL FURTHER SUBMITTED THAT THE ITAT HAS DECIDED THE GROUND OF APPEAL OF THE REVENUE ON TAXABILITY OF REVENUE ATTRIBUTABLE TO OPERATIONS CARRIED OUTSIDE INDIA, IN FAVOUR OF THE RE VENUE OBSERVING THAT THE ASSESSEES REPRESENTATIVE AGREED WITH THE AO IN HOLDING THAT THE ENTIRE RECEIPTS I.E. PAYMENT RECEIVED FROM OPERATIONS CARRIED OUT INSIDE AS WELL AS OUTSIDE INDIA IS ASSESSABLE TO TAX. THE LD. COUNSEL FURTHER SUBMITTED THAT THE LD. AR NEVER AGREED TO THE AFORESAID ARGUMENT OF THE LD. DR OF TAXING THE OFFSHORE REVENUES TO TAX IN INDIA DURING THE HEARING ON 28.09.2017 AND THE TRIBUNAL HAS WRONGLY RECORDED THE SAID FACTS. THE LD. COUNSEL FURTHER SUBMITTED THAT DURING THE COURSE OF HEA RING THE BENCH POINTED OUT THAT THE BENCH HAS ALREADY TAKEN A VIEW THAT THE CONTRACTS OF THIS NATURE WOULD BE REGARDED AS A COMPOSITE CONTRACT AND THE DISTINCTION BETWEEN INSIDE INDIA AND OUTSIDE INDIA OPERATION IS NOT ACCEPTABLE , AT THAT POINT THE AR S UBMITTED THAT EVEN IF IT IS REGARDED AS A COMPOSITE CONTRACT, THE INCOME THAT WOULD BE TAXED IN INDIA WOULD BE ONLY SUCH INCOME AS IS ATTRIBUTABLE TO THE OPERATION CARRIED OUT BY THE PERMANENT ESTABLISHMENT IN INDIA. THE LD. COUNSEL FURTHER STATED THAT A W RITTEN SUBMISSION DATED 04.10.2017 WAS FILED BEFORE THE TRIBUNAL. 3. THE LD. COUNSEL FURTHER POINTED OUT THAT WHILE DECIDING THE GROUND OF APPEAL OF ASSESSEES CROSS OBJECTION ON REJECTION OF BOOKS OF ACCOUNT BY THE CIT (A) IN RESPECT OF OPERATIONS IN IND IA , THE REFERENCE TO ASSESSEES ACCEPTANCE OF TAXABILITY OF REVENUE ATTRIBUTABLE TO ACTIVITIES PERFORMED OUTSIDE INDIA IS 3 M.A. NO S . 342 TO 347/MUM/2018 ASSESSMENT YEAR S : 2006 - 07, 2007 - 08 AND 2008 - 09 INCORRECT. THE LD. COUNSEL SUBMITTED THAT THE VERY BASIS OF REJECTING BOOKS AUDITED BY THE CHARTERED ACCOUNTANT IS INCORRECT AND NEEDS TO BE ADJUDICATED AFRESH IN THE LIGHT OF THE AFORESAID FACTS. 4. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE OPPOSED THE APPLICATIONS THAT SINCE THE LD. AR AGREED IN THE OPEN COURT THAT THE RECEIPTS RELATING TO OPERATIONS CARRIED OUT SIDE INDIA IS AL SO CHARGEABLE TO TAX, THE TRIBUNAL HAS RIGHTLY RECORDED THE SAID FACTS IN THE ORDER. THE LD. DR FURTHER POINTED OUT THAT U/S SECTION 254(2) OF THE ACT, ONLY MISTAKE APPARENT ON RECORD CAN BE RECTIFIED AND IN CASE THE MISCELLANEOUS APPLICATIONS ARE ALLOWED AND DECIDED AFRESH, IT WOULD AMOUNT TO REVIEW OF ORDER, WHICH IS NOT PERMISSIBLE UNDER LAW. ACCORDINGLY, THE LD. DR SUBMITTED THAT SINCE THE PRESENT MAS DO NOT DISCLOSE ANY MISTAKE APPARENT, THESE ARE LIABLE TO BE DISMISSED. 5. WE HAVE HEARD THE RIVAL SUBM ISSIONS OF THE PARTIES. THE GRIEVANCE OF THE ASSESSEE IS THAT THE TRIBUNAL HAS RECORDED THE WRONG FACTS REGARDING THE STAND OF THE LD. AR ON THE ISSUE OF TAXABILITY OF THE RECEIPTS RELATING TO OPERATION CARRIED OUTSIDE INDIA AND THAT THE DIRECTION OF THE T RIBUNAL ON TAXABILITY OF OFFSHORE REVENUES AND REJECTION OF BOOKS OF ACCOUNTS ARE BASED ON INCORRECT FACTS, NOT DISCUSSED DURING THE COURSE OF HEARING. IT IS PERTINENT TO MENTION HERE THAT DURING THE COURSE OF THE ARGUMENTS, THE LD. DR RELYING ON THE DECIS ION RENDERED BY THE COORDINATE BENCH IN THE CASE OF M/S ORPAK SYSTEM LTD. ITA NO. 8863/MUM/2011 , SUBMITTED THAT THE RECEIPTS PERTAINING TO OPERATIONS CARRIED OUT OUTSIDE INDIA ARE LIABLE FOR TAXATION IN INDIA. WHEN IT WAS POINTED OUT THAT THE ASSESSEE HAS ENTERED INTO A COMPOSITE CONTRACT TO EXECUTE THE PROJECT ON TURNKEY BASIS AND FURTHER THE COORDINATE BENCH HAS ALREADY TAKEN A VIEW IN THIS MATTER, THE LD. AR SUBMITTED THAT HE IS AGREEING WITH THE ORDER OF THE AO IN HOLDING THAT THE ENTIRE RECEIPTS FOR OP ERATION CARRIED OUT INSIDE AS WELL AS OUTSIDE INDIA IS ASSESSABLE TO TAX. SINCE, THE AR AGREED THAT THE RECEIPTS RELATING TO OPERATIONS CARRIED OUTSIDE INDIA IS ALSO CHARGEABLE TO TAX, THIS FACT WAS RECORDED IN THE ORDER. BUT THE BENCH HAS TAKEN THE VIEW 4 M.A. NO S . 342 TO 347/MUM/2018 ASSESSMENT YEAR S : 2006 - 07, 2007 - 08 AND 2008 - 09 O N THIS ISSUE IN THE LIGHT OF THE DECISION OF THE COORDINATE BENCH IN THE CASE OF M/S ORPAK SYSTEM LTD. ( SUPRA ) 6. HENCE, I N OUR CONSIDERED VIEW, THE ISSUE RAISED BY THE ASSESSEE DOES NOT FALL WITHIN THE MEANING OF MISTAKE APPARENT TO RECTIFY THE SAME U/S 254 (2) OF THE ACT. THE SCOPE OF SECTION 254 (2) OF THE ACT IS LIMITED AND THE TRIBUNAL HAS NO JURISDICTION TO REVIEW ITS ORDER UNDER THE SAID SECTION. WE ACCORDINGLY DO NOT FIND ANY MERIT IN THE CONTENTION OF THE ASSESSEE. THEREFORE , WE DISMISS THE MISCEL LANEOUS APPLICATIONS FILED BY THE APPLICANT/ ASSESSEE U/S 254 (2) OF THE ACT. IN THE RESULT, M ISC. APPLICATION S FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH JU L Y , 2019 . SD/ - SD/ - ( G . MANJUNATHA ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED: 10 / 0 7 / 2019 ALINDRA, PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A ) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI