SARAVAM DIGITAL PRIVATE LTD V. UNION OF INDIA

WP(C)/11140/2012

AI Insights

The case involves Sarvam Digital Private Limited, which filed a writ petition against the Union of India and income tax authorities concerning the rejection of their revision petition under Section 264 of the Income Tax Act. The petitioner had initially filed IT returns showing a net loss and was questioned about certain expenses. The assessing authority disallowed these expenses due to non-compliance with TDS requirements. The revision petition was rejected on the grounds of maintainability due to the absence of a mandatory fee, which the petitioner contended had been paid. The court found that the petitioner was not given a fair opportunity to address the technical defect and thus set aside the order, directing a re-evaluation on merits.

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 742170 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 23-05-2012
• Assessment Year: misc
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: JOSE JOSEPH
• Assessee Lawyers: A KUMAR
• Keywords: Curable Defect; Maintainability; Overseas agents; Revision petition; Service charges; TDS
• Section: 40(a)(ia); 264; 9(1)(vii)(b); 10A(2)

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE P.R.RAMACHANDRA MENON WEDNESDAY, THE 23RD DAY OF MAY 2012/2ND JYAISHTA 1934 WP(C).No. 11140 of 2012 (N) ---------------------------------------- PETITIONER(S): ------------------------ SARVAM DIGITAL PRIVATE LIMITED VII/186 A BUND ROAD KANNADIKADU, MARADU P.O, ERNAKULAM 682304 , REPRESENTED BY JACOB JACOB MANAGING DIRECTOR BY ADV. SRI.A.KUMAR RESPONDENT(S): -------------------------- 1. UNION OF INDIA REPRESENTED BY SECRETARY, MINISTRY OF FINANCE NEW DELHI -111001 2. COMMISSIONER OF INCOME TAX-111 C.R BUILDING I.S PRESS ROAD, KOCHI- 682 031 3. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 4(1) C.R BUILDING, I.S PRESS ROAD, KOCHI -682 031 BY SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 23-05-2012, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: tss W.P.(C) NO.11140/2012 APPENDIX PETITIONER(S) EXHIBITS EXT.P1:- COPY OF THE REGISTRATION CERTIFICATE NO.STPT/IMSC/570/P/2006-07/014 DATED 19-06-2008. EXT.P1(A):- COPY THE AGREEMENT FOR SOFTWARE TECHNOLOGY PARK DATED 23-02-2007 EXT.P2:- COPY THE ASSESSMENT ORDER PASSED BY 3RD RESPONDENT DATED 7-12-2010 EXT.P3:- COPY OF THE MEMORANDUM OF REVISION DATED 20-01-2011 FILED ON 24-01-2011 EXT.P4:- COPY OF THE COUNTER FOIL DATED 7-02-2011 EXT.P5:- COPY OF ORDERE IN REVISION DATED 29-03-2012 EXT.P6:- COPY OF REVISION PETITION ALONG WITH THE COVERING LETTER FILED BEFORE THE 2ND RESPONDENT FILED ON 10-04-2012. RESPONDENTS' EXHIBITS NIL //TRUE COPY// P.A. TO JUDGE tss P.R.RAMACHANDRA MENON, J. - - - - - - - - - - - - - - - - - - - - - W.P.(c) No. 11140 OF 2012 - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 23rd day of May, 2012 JUDGMENT Petitioner is aggrieved of Ext.P5 order passed by the second respondent whereby the revision petition filed by the petitioner under Section 264 of the Income Tax Act has been rejected primarily on the question of maintainability and at the same time dealing with the merits of the case as well. 2. The case of the petitioner as projected in the writ petition is that, the petitioner filed IT returns for the assessment year 2008-09 showing a net loss of Rs. 10, 48,048/- . In the course of scrutiny, the petitioner was asked to explain, why the debit of a sum of Rs.23,48,979/- towards the alleged expenses under a particular head shall not be disallowed. Since the explanation was not satisfactory, the assessing authority, placing reliance on Section 40(a)(ia), sought to disallow the expenses in respect of the service charges stated to have paid by the petitioner to overseas agents without effecting any TDS and WPC.No.11140/12 2 accordingly fixed the liability upon the petitioner as per Ext.P2 assessment order. Being aggrieved of the same, the petitioner preferred Ext.P3 revision petition before the second respondent as mentioned herein before. 3. True, it is stated in Ext.P5 that the representative of the petitioner was heard on 29/03/2012. But in paragraph 2 of the impugned order, it is stated that the revisional authority informed the representative of the petitioner that the revision petition itself was not maintainable, because it was not accompanied by the requisite fee of Rs.500/- which is a mandatory requirement to have the revision entertained. The case of the petitioner is that, the requisite fee had already been effected on 07/02/2011, but since the petitioner did not want to contest the defect which was rather technical, Ext.P6 revision petition was submitted afresh, producing copies of all the relevant testimonials in support of the contentions on the same day i.e. on 29/03/2012. The grievance of the petitioner is that, the second respondent did not give an opportunity to cure the defect earlier and that, after holding that the revision petition itself was not maintainable WPC.No.11140/12 3 for not satisfying the requisite fee of Rs.500/-, the second respondent proceeded further to decide the merit of the case as well, without giving an opportunity of hearing on merits. As per the impugned order, the Commissioner has arrived at a specific finding that the case put forth by the petitioner in the revision petition is also not liable to be entertained in view of the reasons mentioned therein. 4. Heard the learned standing counsel for the respondents as well. The learned counsel for the petitioner submits that, if at all the revision petition was technically not maintainable, the defect should have been pointed out and the petitioner ought to have been given an opportunity to cure the defect then and there. Instead of letting known the representative of the petitioner as to the course being pursued, the merit of the case was considered by the second respondent unilaterally, arriving at some inferences of his own which is not correct. It is stated therein (Ext.P5), that the petitioner is not entitled to have the benefit, for the fact that the petitioner company is not working from any of the places as contemplated under Section 10A(2) of the Act. There is a further observation as given in paragraph 7, that by virtue of Section 9 WPC.No.11140/12 4 (1)(vii)(b) of the IT Act, technical services were utilised by the petitioner in India and as such, petitioner is liable to effect TDS as well. Learned counsel for the petitioner submits that the above observations are not correct and the finding happened to be rendered only for the reason that the petitioner could not explain the correct factual and legal position, as the petitioner was given to understand that interference would be declined for non-satisfaction of the requisite fee, which made the petitioner to file Ext.P6 Revision afresh,, on the same day. 5. After hearing both sides, this Court finds that the non-satisfaction of the requisite fee along with the application was only a 'curable defect' and that the petitioner was not given an opportunity to cure the same. Under these circumstances, this Court finds that the decision taken by the second respondent 'on merits' without giving an opportunity of hearing to the petitioner as to the merits involved, is not correct or sustainable. The impugned order (Ext.P5) passed by the second respondent is set aside and the second respondent is directed to reconsider the matter on merits and pass appropriate orders on Ext.P6 in accordance with law, after affording an opportunity of hearing to the WPC.No.11140/12 5 petitioner as expeditiously as possible, at any rate within 'three months' from the date of receipt of a copy of this judgment. Writ petition is disposed of. P.R.RAMACHANDRA MENON JUDGE sv. WPC.No.11140/12 6 "