DDIT(IiNTERNATRIONAL), Pune v. M/S KONINKLIJKE DSM NV, Pune

ITA 1704/PUN/2012 | 2004-2005
Pronouncement Date: 28-10-2013 | Result: Dismissed

Appeal Details

RSA Number 170424514 RSA 2012
Assessee PAN AAACE9787H
Bench Pune
Appeal Number ITA 1704/PUN/2012
Duration Of Justice 1 year(s) 2 month(s) 11 day(s)
Appellant DDIT(IiNTERNATRIONAL), Pune
Respondent M/S KONINKLIJKE DSM NV, Pune
Appeal Type Income Tax Appeal
Pronouncement Date 28-10-2013
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 28-10-2013
Assessment Year 2004-2005
Appeal Filed On 17-08-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B PUNE BEFORE: SHRI R.S. PADVEKAR JUDICIAL MEMBER AND SHRI R. K. PANDA ACCOUNTANT MEMBER ITA NO S . 170 4 & 170 5 / P N/ 20 1 2 ASSESSMENT YEAR S : 200 4 - 05 & 2005 - 06 DY. DIRECTOR OF INCOME TAX (IT) - I GROUND FLOOR 60/61 ERANDWANE PRAPTIKAR SADAN KARVE ROAD PUNE VS. M/S. KONINKLIJKE DSM NV C/O DSM ENGINEERING PLASTICS (I) PVT. LTD. UNIT 401/402 NSG IT PARK OFF ITI ROAD AUNDH PUNE (APPELLANT) (RESPONDENT) PAN NO. AA ACE9 787H A SSESSEE BY: SHRI REJENDRA AGIWAL RE VENUE BY: SHRI D.S. KOTHARI DATE OF HEARING : 08 - 10 - 2013 DATE OF PRONOUNCEMENT : 28 - 10 - 2013 ORDER P ER R.S. PADVEKAR JM : - BOTH THESE APPEALS ARE FILED BY THE REVENUE CHALLENGING THE RE SPECTIVE IMPUGNED ORDER S OF THE LD. CIT(A) - I PUNE DATED 24 - 01 - 2012 F OR THE A.Y S . 200 4 - 05 & 2005 - 06 I N WHICH THE PENALTIES LEVIED BY THE ASSESSING OFFICER U/S. 2 71(1)(C) OF THE INCOME - TAX ACT HAVE BEEN DELETED . THE REVENUE HAS TAKEN MULTIPLE GROUNDS BUT THE SOLITARY ISSUE FOR CONSIDERATION BEFORE US IS WHETHER THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE PENALTIES OF RS.15 00 000/ - AND RS.35 00 000/ - LEVIED IN A.YS. 2004 - 05 AND 2005 - 06 BY THE ASSESSING OFFICER RESPECTIVELY U/S. 271(1)(C) OF THE ACT. 2. THE BRIEFLY STATED FACTS ARE AS UNDER. THE ASSESSEE IS A FOREIGN COMPANY I NCORPORATED AND BASED IN NETHERLANDS . DSM ENGINEERING 2 ITA NO. ITA NO S . 1704 & 1705/PN/2012 M/S. KONINKLIJIKE DSM NV PUNE PLASTICS (INDIA) PRIVATE LIMITED (DEPIPL) DSM ANTI INFECTIVES INDIA LIMITED (DAIIL) DSM NUTRITIONAL PRODUCTS INDIA PRIVATE LIMITED (DNPIPL) WHICH WAS FORMERLY KNOWN AS RSA VITAMINS PRIVATE LIMITED ARE AFFILIATED COMPANIES OF THE DSM GROUP. THE ASSESSEE COMPANY IS NON - RESIDENT AS PER THE PROVISIONS OF THE INCOME - TAX ACT AND ALSO QUALIFIES FOR THE BENEFIT OF THE TREATY BETWEEN INDIA AND NETHERLANDS. IN BOTH THESE ASSESSMENT YEARS I.E. A.YS. 2004 - 05 AND 2005 - 06 THE RE - ASSESSMENT PROCEEDINGS WERE INITIATED BY THE ASSESSING OFFICER BY ISSUING A NOTICE U/S. 148 OF THE ACT AND RE - ASSESSMENTS HAVE BEEN COMPLETED. IT WAS STATED BY THE ASSESSEE THAT THE CORPORATE SERVICE COST RECEIVED FROM DAIIL AND AMOUNT RECEIVED IN RESPECT OF C - ICT SERVICES FROM DEPIPL DAIIL AND DNPIPL HAVE BEEN CLAIMED AS NOT LIABLE TO TAX IN INDIA . IN THE RE - ASSESSMENT PROCEEDINGS THE CLAIM OF THE ASSESSEE WAS REJECTED AND RECEIPTS IN RESPECT OF C - ICT SERVICES AND CORPORATE SERVICE S WERE HELD AS TAXABLE. 3. THE ASSESSING OFFICER ALSO INITIATED THE PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT AND VIDE ORDERS DATED 30 - 06 - 2010 LEVIED THE PENALTIES U/S. 271(1 )(C) TO THE EXTENT OF RS. RS.15 00 000/ - AND RS.35 00 000/ - IN THE A.YS. 2004 - 05 AND 2005 - 06 RESPECTIVELY. THE ASSESSEE CHALLENGED THE PENALTY ORDER S BEFORE THE LD. CIT(A) AND LD. CIT(A) FOLLOWING HIS ORDER FOR THE A.Y. 2006 - 07 DELETED THE PENALTIES IN BO TH THESE ASSESSMENT YEARS BY NOTING THAT THE FACTS AND LAW ARE SAME IN BOTH THESE ASSESSMENT YEARS. N OW THE REVENUE IS IN APPEAL BEFORE US. 4 . WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD. THE LEARNED COUNSEL SUBMITS THAT ON THE IDENTICAL SET OF F ACTS THE ASSESSING OFFICER HA D LEVIED THE PENALTY IN THE A.Y. 2006 - 07 . THE NOTICES U/S. 148 OF THE ACT WERE ISSUED BY THE ASSESSING OFFICER IN THE A.YS. 2004 - 05 AND 2005 - 06 AND ASSESSMENTS HAVE BEEN COMPLETED REJECTING THE CLAIM OF THE ASSESSEE IN RESPECT OF THE NON - TAXABILITY OF THE AMOUNT RECEIVED FROM ITS 3 ITA NO. ITA NO S . 1704 & 1705/PN/2012 M/S. KONINKLIJIKE DSM NV PUNE INDIAN AFFILIATES. HE SUBMITS THAT THE ASSESSING OFFICER HAS LEVIED THE PENALTY IN THE A.Y. 2006 - 07 U/S. 271(1)(C) OF THE ACT ON THE IDENTICAL ADDITION WHICH WAS CANCELLED BY THE LD. CIT(A) AND THE RE VENUE HAS PREFERRED APPEAL TO THE TRIBUNAL IN THE A.Y. 2006 - 07 AGAINST THE ORDER OF THE LD. CIT(A) AND THE TRIBUNAL HAS CONFIRMED THE SAID ORDER AND DISMISSED THE REVENUE S APPEAL. THE LD. DR FAIRLY CON CEDED THAT THE FACTS AND ISSUES ARE IDENTICAL IN S O F AR AS ADDITIONS ARE MADE IN THE A.YS. 2004 - 05 AND 2005 - 06 . M OREOVER THE REASONS FOR LEVY OF THE PENALTY BY THE ASSESSING OFFICER ARE SIMILAR TO THE A.Y. 2006 - 07. 5. WE FIND THAT THE IDENTICAL ISSUE HAS BEEN CONSIDERED AND DECIDED BY THE TRIBUNAL IN ASS ESSEES OWN CASE IN THE A.Y. 2006 - 07 BEING ITA NO. 978/PN/2011 AND CO NO. 61/PN/2011 ORDER DATED 15 - 07 - 2013. THE OPERATIVE PART OF THE REASON AND FINDING OF THE TRIBUNAL IS AS UNDER: 7. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE RE CORD. WE HAVE ALSO CONSIDERED THE PRECEDENTS ON WHICH RELIANCE IS PLACED BY THE ASSESSEE. THE ASSESSEE IS INCORPORATED IN NETHERLANDS AND HIS TAX RESIDENT OF NETHERLAND AS PER THE DTAA BETWEEN INDIA AND NETHERLANDS. THE ASSESSEE HAS NO OFFICE IN INDIA B UT ARE HAVING VARIOUS AFFILIATES ENTITIES. THE ASSESSEE RECEIVED CERTAIN PAYMENTS FROM INDIAN AFFILIATES FOR RENDERING C - ICT AND CORPORATE SERVICES. THE ASSESSEE INTERPRETED THE PROVISIONS OF DTAA AND IT WAS UNDER THE BONAFIDE BELIEF THAT THE PAYMENTS RE CEIVED FOR PROVIDING THE ABOVE SERVICES TO THE INDIAN AFFILIATES ARE NOT TAXABLE IN INDIA. THE LEARNED COUNSEL SUBMITS THAT THE ASSESSEE HAS FILED E - RETURN FOR THE A.Y. 2006 - 07 AS IT WAS MADE COMPULSORY. THE SOFTWARES IN WHICH THE E - RETURNS WERE FILED T HERE WAS NO PROVISION FOR ATTACHING ANY NOTES WHICH WAS OTHERWISE AVAILABLE WHILE FILING THE RETURN IN THE PHYSICAL FORM. THE CBDT CIRCULAR NO. 9/2006 DATED 10 - 10 - 2006 STATED THAT NO ENCLOSURES INCLUDING COMPUTATION OF INCOME/NOTES FINANCIAL STATEMENT E TC. SHOULD BE FILED WITH E - RETURN AND THE SAID DOCUMENTS AND NOTES WERE TO BE FILED AT THE TIME OF ASSESSMENT. HE FURTHER SUBMITS THAT E - RETURN WAS FILED AS PER THE INSTRUCTION OF THE CBDT AND HENCE IT CANNOT BE PRESUMED THAT THE ASSESSEE HAS FURNISHED I NACCURATE INCOME OF HIS INCOME OR CONCEAL THE PARTICULARS OF INCOME. HE 4 ITA NO. ITA NO S . 1704 & 1705/PN/2012 M/S. KONINKLIJIKE DSM NV PUNE ARGUES THAT TO AVOID THE COST INVOLVED IN THE PROTRACTOR LITIGATION ASSESSMENT ORDER WAS ACCEPTED AND THE ASSESSEE DID NOT CONTEST IT. HE FURTHER SUBMITS THAT ACCEPTANCE OF THE ASSE SSMENT ORDER DOES NOT SUO MOTO MAKE ANY PRESUMPTION AGAINST THE ASSESSEE BECAUSE THERE WERE MANY REASONS FOR SETTLING THE ISSUE AT THE ASSESSMENT STAGE. HE SUBMITS THAT AS PER THE FACTS ON RECORD IT IS INTERPRETATION OF THE TREATY BETWEEN INDIA AND NETHER LANDS WHICH HAS BEEN ACCEPTED BY THE ASSESSEE AND ALL THE RECEIPTS ARE DULY REFLECTED IN ITS BALANCE SHEET AND BOOKS OF ACCOUNT AND HE PLEADED FOR CONFIRMING THE ORDER OF THE LD. CIT(A). WE HAVE ALSO HEAD THE LD. CIT DR. 8. THE ONE ADMITTED FACT IN THIS CASE IS THAT THE ASSESSEE IS NON - RESIDENT AND RECEIVED CERTAIN PAYMENTS FROM ITS INDIAN AFFILIATES TOWARDS PROVIDING CERTAIN SERVICES. THE CLAIM OF THE ASSESSEE IS THAT THE NATURE OF THOSE SERVICES CANNOT BE TREATED AS RENDERING THE TECHNICAL SERVICES AN D HENCE THE PAYMENT RECEIVED CANNOT BE TREATED AS FEES FOR RENDERING TECHNICAL SERVICES. THE ASSESSING OFFICER HAS GONE FURTHER BY HOLDING THAT IN VIEW OF THE ARTICLE 12 OF THE DTAA BETWEEN THE INDIA AND NETHERLANDS THE FEES FOR TECHNICAL SERVICES AND RO YALTY ARE TAXABLE IN THE COUNTRY OF SOURCE. IN OUR OPINION THE PENALTY ORDER ITSELF DEMONSTRATE THAT IT IS ONLY THE INTERPRETATION OF LAW AND TREATY WHICH RESULTED INTO TAXATION OF THOSE INCOME/RECEIPTS. THE LD. CIT(A) PLACED HIS RELIANCE FOR ALLOWING T HE RELIEF TO THE ASSESSEE ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS PVT. LTD. 322 ITR 158 (SC). IN OUR OPINION HE HAS RIGHTLY APPLIED THE PRINCIPLES LAID DOWN IN THE SAID CASE. IN THE PRESENT CASE ALSO THE ASSESS ING OFFICER REJECTED THE CLAIM OF THE ASSESSEE WHICH APPEARS TO BE BONAFIDE CASE. HENCE IN OUR OPINION NO INTERFERENCE IS REQUIRED IN THE ORDER OF THE LD. CIT(A) DELETING THE PENALTY LEVIED BY THE ASSESSING OFFICER. IT IS PERTINENT TO NOTE THAT THERE W AS A TDS IN THIS CASE ON THE PAYMENTS MADE TO THE ASSESSEE. WE THEREFORE DISMISS ALL THE GROUNDS TAKEN BY THE REVENUE. AS THE FACTS ARE IDENTICAL IN THIS YEAR AND THE TRIBUNAL HAS CONFIRMED THE ORDER OF THE LD. CIT(A) IN THE A.Y. 2006 - 07 W E FIND NO RE ASON TO TAKE A DIFFERENT VIEW BUT TO CONFIRM THE ORDER OF THE LD. CIT(A) IN BOTH THESE ASSESSMENT YEARS FOLLOWING OUR REASONING IN THE A.Y. 2006 - 07. WE 5 ITA NO. ITA NO S . 1704 & 1705/PN/2012 M/S. KONINKLIJIKE DSM NV PUNE ACCORDINGLY DISMISS THE GROUNDS TAKEN BY THE REVENUE IN BOTH THESE APPEALS. 6 . IN THE RESULT BOTH T HE APPEAL S ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 28 - 10 - 2013 SD/ - SD/ - ( R.K . PAN DA ) (R.S. P ADVEKAR) ACCOUNTANT M EMBER JUDICIAL MEMBER RK/PS PUNE DATED : 28 TH O CTOBER 2013 COP Y TO 1 DEPARTMENT 2 ASSESSEE 3 THE CIT(A) - I PUNE 4 THE CIT - I PUNE 5 THE DR ITAT B BENCH PUNE. 6 GUARD FILE. //TRUE COPY// BY ORDER PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE