ADIT (IT) 2(1), MUMBAI v. SATELLITE TELEVISION ASIAN REGION LTD, MUMBAI

ITA 1125/MUM/2010 | 2007-2008
Pronouncement Date: 31-01-2011 | Result: Dismissed

Appeal Details

RSA Number 112519914 RSA 2010
Bench Mumbai
Appeal Number ITA 1125/MUM/2010
Duration Of Justice 11 month(s) 18 day(s)
Appellant ADIT (IT) 2(1), MUMBAI
Respondent SATELLITE TELEVISION ASIAN REGION LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 31-01-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted E
Tribunal Order Date 31-01-2011
Assessment Year 2007-2008
Appeal Filed On 11-02-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E MUMBAI BEFORE SHRI R.K. PANDA (AM) AND SMT ASHA VIJAYARAGH AVAN (JM) ITA NO.1125/MUM/2010 (ASSESSMENT YEAR-2007-08) THE ADIT (IT)2(1) SCINDIA HOUSE BALLARD ESTATE MUMBAI-400 038 VS. SATELLITE TELEVISION ASIAN REGION LTD. S.R. BATLIBOI 18 TH FLOOR EXPRESS TOWER NARIMAN POINT MUMBAI-400 021 PAN-AAACS 5680D (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI KUSUM INGLE RESPONDENT BY: SHRI PORUS KAKA SHRI DIVESH CHAWLA O R D E R PER ASHA VIJAYARAGHAVAN (JM) THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER OF THE LD. CIT(A)-II MUMBAI DATED 30 11 2009 FOR THE A.Y.2 007-08. 2. STAR LTD. IS A COMPANY INCORPORATED IN HONG KONG AND IS ENGAGED IN THE MEDIA INDUSTRY. DURING SUBJECT FINANCIAL YEAR STAR LTD. (HEREIN AFTER REFERRED TO AS APPELLANT) SOLD ADVERTISING AIRTIME ACQUIRED FROM NON-RESIDENT TELEVISION CONTENT AGGREGATORS FOR CERTAIN SATELLIT E TELEVISION CHANNELS. FOR THE PURPOSES OF SELLING ADVERTISING AIRTIME IN INDIA T HE APPELLANT APPOINTED STAR INDIA PRIVATE LIMITED A COMPANY INCORPORATED IN IN DIA FOR MARKETING OF ADVERTISEMENT TIME IN INDIA ON THE CHANNELS AND COL LECTION OF ADVERTISEMENT REVENUES THROUGH ITS INDIAN ADVERTISING SALES AGENT . APPELLANT ALSO DURING THE 1125/M/2010 2 YEAR GRANTED DISTRIBUTION RIGHTS IN RESPECT OF CER TAIN SATELLITE TELEVISION CHANNELS IN INDIA ACQUIRED FROM NON-RESIDENT TELEVISION CHAN NEL COMPANIES. 3. THE APPELLANT FILED ITS ORIGINAL RETURN OF INCOM E ON OCTOBER 31 2007 DECLARING AN INCOME OF RS.160 41 22 430. THE SAID R ETURN OF INCOME WAS BASED ON THE UNAUDITED FINANCIAL STATEMENTS OF THE APPELL ANT.THEREAFTER THE APPELLANT REVISED ITS RETURN OF INCOME ON SEPTEMBER 30 2008 BASED ON THE AUDITED FINANCIAL STATEMENTS. THE TAXABLE INCOME OFFERED BY THE APPELLANT IN ITS REVISED RETURN OF INCOME IS RS.172 08 45 001/-.THE APPELLAN T ALONG WITH ITS GROUP ENTITIES HAS FILED AN APPLICATION BEFORE SETTLEMENT COMMISSION (SETCOM) FOR PREVIOUS YEARS. WITHOUT PREJUDICE TO ITS PAST CONTE NTIONS AND STAND WITH A VIEW TO BUY PEACE OF MIND AND AVOID PROTRACTED LITIGATIO N INCOME FOR THE YEAR UNDER CONSIDERATION WAS OFFERED TO TAX IN LINE WITH AND O N THE BASIS ADOPTED WHILE FILING THE APPLICATIONS BEFORE THE SETCOM BY THE AP PELLANT AND ITS GROUP ENTITIES. 4. THE ASSESSING OFFICER (HEREINAFTER: THE AO) ISSU ED INTIMATION UNDER SECTION 143(1) OF THE IT ACT DATED DECEMBER 5 2008 ACCEPTING THE TAXABLE INCOME OFFERED BY THE APPELLANT IN ITS REVISED RETU RN OF INCOME. HOWEVER THE AO LEVIED INTEREST UNDER SECTIONS 234B AND 234C OF THE IT ACT AMOUNTING TO RS.6 90 93 430/- AND RS.7 19 19 825/- RESPECTIVELY . 5. THE APPELLANT PREFERRED APPEAL BEFORE THE CIT(A) . ON MERITS OF THE CASE THE APPELLANT FURTHER SUBMITTED THAT THE APPELLANT RECEIVES REVENUES MAINLY FROM ADVERTISERS AND DISTRIBUTORS. AN APPLICATION WAS MADE BY THE APPELLANT TO THE AO TO ISSUE AN ORDER UNDER SECTION 197 OF THE A CT IN RESPECT OF BOTH THESE STREAMS OF INCOME. DURING THE COURSE OF THE WITHHOL DING PROCEEDINGS THE APPELLANT ALSO SUBMITTED THE PROJECTED PROFITABILIT Y STATEMENT FOR THE RELEVANT FINANCIAL YEAR. IT WAS ALSO SUBMITTED THAT THE WIT HHOLDING TAX ORDER SHOULD BE 1125/M/2010 3 ISSUED WITHOUT CONSIDERING THE BENEFITS OF THE REVE RSALS ON ACCOUNT OF SECTION 40(A)(I) OF THE ACT. HOWEVER THE AO ISSUED THE WIT HHOLDING TAX ORDER AT NIL RATE BY OBSERVING THAT THE APPELLANT WAS ELIGIBLE F OR BENEFITS OF REVERSALS ON ACCOUNT OF SECTION 40(A)(I) OF THE ACT. 6. THE APPELLANT FURTHER SUBMITTED THAT THE PROVISI ONS OF SECTIONS 234B AND 234C OF THE ACT ARE APPLICABLE IN CASES WHERE AN AS SESSEE WHO IS LIABLE TO PAY ADVANCE TAX DEFAULTS/ DEFERS PAYMENT OF SUCH ADVANC E TAX. IN ORDER TO BE LIABLE TO INTEREST UNDER SECTIONS 234B AND 234C OF THE ACT THE ASSESSEE FIRST NEEDS TO BE LIABLE TO PAY ADVANCE TAX UNDER PROVISIONS OF SE CTIONS 208 AND 209 OF THE IT ACT. FURTHER AS PER SECTION 209(1)(D) OF THE ACT THE AMOUNT OF INCOME TAX TO BE PAID BY WAY OF ADVANCE TAX SHALL BE CALCULATED BY R EDUCING FROM THE TOTAL AMOUNT OF TAX LIABILITY THE AMOUNT OF INCOME-TAX D EDUCTIBLE OR COLLECTIBLE AT SOURCE ON THE INCOME. SINCE IN THE CASE OF THE APPE LLANT ITS ENTIRE INCOME WAS LIABLE FOR DEDUCTION OF TAX AT SOURCE UNDER SECTION 195 OF THE ACT THE APPELLANT WAS NOT LIABLE TO PAY ADVANCE TAX. HENCE THE PROVI SIONS OF SECTION 234B AND 234C OF THE ACT ARE NOT APPLICABLE TO THE APPELLANT . 7. IN THIS REGARD THE APPELLANT INVITED ATTENTION OF CIT(A) TO ORDERS PASSED BY INCOME TAX APPELLATE TRIBUNAL (ITAT) FOR AYS 19 93-94 TO 1995-96 IN THE APPELLANTS OWN CASE. THE RELEVANT EXTRACT OF THE O RDER PASSED BY THE ITAT FOR AY 1994-95 (SPEAKING ORDER ) IS AS UNDER : REGARDING GROUND NO.2 ALSO AS THE ENTIRE INCOME O F THE ASSESSEE IS LIABLE TO DEDUCTION OF TAX AT SOURCE RESPECTFULLY FOLLOWING THE ABOVE ORDER OF THE TRIBUNAL WE DIRECT THAT INTEREST U/S. 234B HAS BEEN RIGHTLY DELETED BY THE CIT(A). 8. THE APPELLANT STATED THAT THE ORDER OF ITAT FOR AY 1994-95 HAS BEEN FOLLOWED IN APPEALS FOR A.Y 1993-94 AND THE ADDITIO N ON ACCOUNT OF INTEREST UNDER SECTION 234B AND 234C WAS DELETED AND ALSO TH E ABOVE ISSUE HAS BEEN 1125/M/2010 4 DECIDED IN FAVOUR OF THE APPELLANT BY THE CIT(A) WH ILE PASSING THE ORDERS FOR AY 1998-99 TO 2002-03. 9. THE ASSESSEE RELIED ON THE FOLLOWING CASE LAWS I N SUPPORT OF ITS CASE: 1. DDIT VS NGC NETWORK ASIA LLC (ITA NO. 8353/M/04) 2. DIT VS NGC ASIA NETWORK LLC 313 ITR 187 (BOMBAY HIG H COURT) 3. DDIT VS R. LINERS LTD (ITA NO. 5383/M/05) 10. THE LD. CIT(A) HELD AS FOLLOWS: WITH REGARDS TO THE MERITS OF THE CASE I HAVE GONE THROUGH THE PROVISIONS OF SEC. 208 AND 209 OF THE I.T. ACT AND THE DECISIONS CITED BY THE LD. AR IN THE CASE OF THE AP PELLANT AND THE BOMBAY HIGH COURT DECISION IN THE CASE OF N GC NETWORK ASIA LLC (SUPRA). THE PROPOSITION THAT EME RGES AFTER THE ORDER OF BOMBAY HIGH COURT IN THE CASE OF NGC NETWORK ASIA LLC (SUPRA) IS THAT IN A CASE WHERE TH E ENTIRE INCOME OF THE ASSESSEE PAYEE IS LIABLE FOR D EDUCTION OF TAX AT SOURCE THEN INTEREST U/S. 234B AND 234C OF THE I.T. ACT IS NOT LEVIABLE EVEN THOUGH THE PAYER HAS NOT DEDUCTED THE ADVANCE TAX THEREON. IN THE SAID DECISION THE HONBLE HIGH COURT HAD DISMISSED THE PLEA OF REVENUE THAT O N FAILURE OF THE PAYER TO DEDUCT TAX IT IS THE LIABI LITY OF THE ASSESSEE TO PAY THE ADVANCE TAX EVEN ON THE AMOUNT WHICH HAD NOT BEEN DEDUCTED UNDER SEC. 195 OF THE I.T. AC T. THEREFORE RESPECTFULLY FOLLOWING THE DECISION OF TH E JURISDICTIONAL HIGH COURT IN THE CASE OF NGC NETWOR K ASIA LLC (SUPRA) AND THE DECISION OF THE ITAT IN THE APP ELLANTS OWN CASE AS STATED ABOVE I HOLD THAT THE APPELLANT WAS NOT LIABLE TO PAY ADVANCE TAX AS ITS ENTIRE INCOME WAS LIABLE FOR DEDUCTION OF TAX AT SOURCE. ACCORDINGLY IN VIEW O F THE ABOVE THE INTEREST U/S. 234B AND 234C OF THE I.T. ACT IS NOT LEVIABLE ON THE APPELLANT. 11. AGGRIEVED BY THE ORDER OF THE LD. CIT(A) REVEN UE IS IN APPEAL BEFORE US. 1125/M/2010 5 12. WE HEARD BOTH THE PARTIES. WE FIND THAT THIS I SSUE IS COVERED BY THE DECISION IN THE CASE OF DDIT VS NGC NETWORK ASIA LLC WHEREIN IT HAS BEEN HELD AS FOLLOWS: THUS IN THE GIVEN CASE THOUGH ASSESSEE IS ASSESSAB LE IN RESPECT OF THE INCOME (THOUGH OF COURSE AND IT WOULD NOT BE IF ITS QUANTUM APPEAL IS SUCCESSFUL IT IS NOT LIABLE TO PAY ADVANCE TAX SINCE TAX IS DEDUCTIBLE BY THE PAYER M/S. NTIL THOUGH NOT ACTUALLY DEDUCTED B Y IT. WHEN THE ASSESSEE IS NOT LIABLE TO PAY ADVANCE TAX THERE IS NO QUESTION OF CHARGING INTEREST U/S. 234B. IN THE CASE OF MOTOROLA INC VS . DY. CIT CITED SUPRA IT WAS HELD IN SIMILAR CIRCUMSTANCES THAT WHERE AL L INCOME RECEIVED BY ASSESSEE WERE SUCH FROM WHICH TAX WAS DEDUCTIBLE AT SOURCE ASSESSEE COULD NOT BE HELD TO HAVE COMMITTED DEFAULT IN PAYM ENT OF ADVANCE TAX AND CONSEQUENTLY NOT LIABLE TO PAY INTEREST U/S. 23 4B. HENCE WE HAVE NOT HESITATION TO HOLD THAT ASSESSEE IN THIS CASE IS NO T LIABLE TO PAY INTEREST U/S. 234B. RESPECTFULLY FOLLOWING THE ABOVE DECISION WE DISM ISS REVENUES APPEAL. 12. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON THIS 31 ST DAY OF JANUARY 2011 SD/- SD/- (R.K. PANDA) ( ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL M EMBER MUMBAI DATED 31 ST JANUARY 2011. RJ 1125/M/2010 6 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CENTRAL - I CONCERNED 5. THE DR I BENCH TRUE COPY BY ORDER ASST. REGISTRAR I.T.A.T MUMBAI DATE INITIALS 1 DRAFT DICTATED ON: 17.01.2011 SR. PS/PS 2. DRAFT PLACED BEFORE AUTHOR: 17.01.2011 ______ SR . PS/PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER: ______ JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER: ______ JM/AM 5. APPROVED DRAFT COMES TO THE SR. PS/PS: SR. PS/ PS 6. KEPT FOR PRONO UNCEMENT ON: ______ SR. PS/PS 7. FILE SENT TO THE BENCH CLERK: ______ SR. PS/PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK: ______ 9 DATE ON WHICH FILE GOES TO THE AR 10. DATE OF DISPATCH OF ORDER: ______