THE JET AIR PVT. LTD, MUMBAI v. M/S. CIT-XXXIII, MUMBAI

ITA 2517/MUM/2008 | 2006-2007
Pronouncement Date: 29-07-2011 | Result: Allowed

Appeal Details

RSA Number 251719914 RSA 2008
Bench Mumbai
Appeal Number ITA 2517/MUM/2008
Duration Of Justice 3 year(s) 3 month(s) 18 day(s)
Appellant THE JET AIR PVT. LTD, MUMBAI
Respondent M/S. CIT-XXXIII, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 29-07-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted L
Tribunal Order Date 29-07-2011
Date Of Final Hearing 29-12-2010
Next Hearing Date 29-12-2010
Assessment Year 2006-2007
Appeal Filed On 10-04-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH L MUMBAI BEFORE SHRI J. SUDHAKAR REDDY A.M. AND SHRI V. DUR GA RAO J.M. ITA NOS. 2512 2513 2514 2515 2516 2517 & 2518 /MUM/08 JET AIR PVT. LTD. APPELLANT 41-42 MAKER CHAMBERS-III NARIMAN POINT MUMBAI 400 021 (PAN AAACJO 121C) VS. COMMISSIONER OF INCOME-TAX(A)-XXXIII RESPOND ENT MUMBAI. APPELLANT BY : MR. ARVIND SONDE RESPONDENT BY : MR. JITENDRA YADAV DATE OF HEARING : 25/07/2011 . DATE OF PRONOUNCEMENT: 29/07/2011 ORDER PER BENCH.: ALL THESE APPEALS FILED BY ONE ASSESSEE ARE DIRECT ED AGAINST SEPARATE ORDERS OF LEARNED CIT(A)-XXXIII MUMBAI P ASSED ON 22/01/2008. SINCE ONE COMMON ISSUE IS INVOLVED IN T HESE APPEALS THEY WERE HEARD TOGETHER AND THEREFORE A COMMON O RDER IS PASSED FOR THE SAKE OF CONVENIENCE. 2. THE GROUNDS ARE COMMON IN ALL THESE APPEALS THE REFORE THE GROUNDS ARE REPRODUCED FROM THE ITA NO. 2513/M/08 A S UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LEARNED CIT(A) ERRED IN NOT ADMITTING APPEALS U /S 248 OF THE INCOME TAX ACT 1961 FOR PAYMENTS MADE TO NON-RESID ENT FOR IMPORT OF SOFTWARE U/S 195 AFTER DEDUCTING TAX THER EON. 2. WITHOUT PREJUDICE TO GROUND NO.1 ON THE FACTS A ND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED C IT(A) ERRED IN NOT GOING TO INTO THE CASE WHETHER THE IMPORT OF SO FTWARE AMOUNTS TO PURCHASE AND SALE OF GOODS AND CONSEQUENTLY THE PAYMENT MADE FOR THE IMPORT OF GOODS ARE RECEIPTS IN THE HA NDS OF NON- RESIDENT AS THEIR BUSINESS INCOME AND NOT ROYALTIES .. ITA NOS. 2512 TO 2518/M/08 M/S JET AIR PVT. LTD. 2 3. TO DISPOSE OF THESE APPEALS WE REFER TO THE FAC TS IN ITA NO. 2513/M/08. 4. THE ASSESSEE COMPANY ENTERED INTO A LICENCE AGRE EMENT FOR THE USE OF SOFTWARE KNOWN AS RAPID PASSENGER FROM A C OMPANY BASED IN DUBAI NAMELY DNATA TRADING AS MERCARATOR. MERCARA TOR HAD DEVELOPED AND OWNS THIS SOFTWARE KNOWN AS RAPID PAS SENGER MAINLY FOR PASSENGER REVENUE ACCOUNTING SYSTEM AND HAS THE ABSOLUTE AUTHORITY TO GRANT THE LICENCE TO THE CLIENT. THE A SSESSEE HAD MADE PAYMENT OF US$ 37500 ON 24/03/2006 TOWARDS LICENCE FEE. THE ASSESSEE DENIED ITS LIABILITY TOWARDS DEDUCTION OF TAX AND HAD FILED THE APPEAL IN THIS OFFICE ON 28/04/2006 AND RAISED THE FOLLOWING GROUNDS OF APPEAL. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE REMITTANCE MADE ON IMPORT OF SOFTWARE IS NOT RO YALTY AS PER PROVISIONS OF SECTION 9(1)(VI) OF THE INCOME TAX AC T R.W. ARTICLE 12(2) OF THE DTAA BETWEEN INDIA AND UAE. THE APPELLANT PRAYS THAT THE SAME MAY PLEASE BE HEL D AS SALES PROCEEDS IN THE HANDS OF THE NON RESIDENT RECEIPT A ND NOT ROYALTIES. 5. THE CIT(A) HELD THAT THE APPEALS IN QUESTION A RE NOT MAINTAINABLE FOR THE REASON THAT THE ASSESSEE HAS N EVER APPROACHED THE AO FOR CERTIFICATE U/S 195(2) FOR REMITTANCE OF THE AMOUNT WITHOUT DEDUCTION OF TAX. THE LEARNED CIT(A) RELIED UPON TH E DECISION OF THE JURISDICTIONAL TRIBUNAL IN THE CASE OF MAHINDRA & M AHINDRA LTD. VS. DCIT 106 ITD 521 (MUM.). AGGRIEVED BY THE ORDER O F THE CIT(A) THE ASSESSEE IS IN APPEALS BEFORE THE TRIBUNAL. 6. THE LEARNED COUNSEL FOR THE ASSESSEE MR. ARVIND SONDE SUBMITTED THAT THE CIT(A) WAS IN ERROR IN APPLYING THE DECISION OF JURISDICTIONAL TRIBUNAL IN THE CASE MAHINDRA & MAHI NDRA LTD. (SUPRA) AS IN THAT CASE APPEAL WAS FILED BY THE ASSESSEE A GAINST THE CERTIFICATE ISSUED BY A CHARTERED ACCOUNTANT FIRM THAT TOO WITHOUT DEDUCTING THE TAX AND THEREAFTER REMITTING THE TAX DEDUCTED AT SOURCE. ITA NOS. 2512 TO 2518/M/08 M/S JET AIR PVT. LTD. 3 HE POINTED OUT THAT IN THE CASE OF THE ASSESSEE THE TAX HAS BEEN DEDUCTED AT SOURCE AND REMITTED TO THE CENTRAL GOVE RNMENT ACCOUNT AND THEREAFTER APPEALS HAVE BEEN FILED BEFORE THE C IT(A). HE RELIED UPON THE FOLLOWING CASE LAWS TO THE PROPOSITION THA T AN APPEAL CAN BE FILED DIRECTLY U/S 248 OF THE ACT BEFORE THE CIT(A ):- 1. WESMAN ENGINEERING CO. P. LTD. 188 ITR 327 2. TATA IRON & STEEL LTD.[2001] 116 TAXMAN 186 3. M/S HINDUSTAN CONSTRUCTIONS CO. LTD. ITA NOS 5595/BOM/95 AND 51 TO 54/MUM/2000. 4. M/S SONATA INFORMATION TECHNOLOGY LTD. ITA NOS. 931 TO 941/BAG/06 & 672 TO 702/BANG/07 5. KOTAK MAHINDRA BANK LTD. 106 ITD 521. 7. THE LEARNED COUNSEL FOR THE ASSESSEE SPECIFIC ALLY RELIED UPON THE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF KOTAK MAHINDRA BANK LTD. VS. ITO IN ITA NO. 345/MUM/2008 FOR AY 2007- 08 ORDER DATED 30 TH JUNE 2010 AND ARGUED THAT THE TRIBUNAL CONSIDERED THE DECISION IN THE CASE OF MAHINDRA & M AHINDRA LTD.(SUPRA) AND HELD THAT SECTION 248 DOES NOT REFER TO ANY ORDER BEING PASSED BY THE ASSESSING OFFICER AS A CONDITIO N PRECEDENT FOR FILING AN APPEAL BY A PERSON WHO DENIES THE LIA BILITY TO DEDUCT TAX. THE TRIBUNAL ALSO FOUND THAT IN THE CASE OF MAHINDRA & MAHINDRA LTD.(SUPRA) ON WHICH RELIANCE PLACED BY THE CIT(A) THE CONTROVERSY WAS WHETHER IT WAS OPEN TO THE CIT(A) TO ENTERTAIN AN APPEAL U/S 248 AGAINST CAS CERTIFI CATE HOLDING THAT TAX AT A PARTICULAR RATE IS REQUIRED TO BE DED UCTED BY AN ASSESSEE FROM A REMITTANCE TO A NON-RESIDENT WHERE THE ASSESSEE IS OF THE VIEW THAT NO SUCH TAX WAS REQUIRED TO BE DEDUCTED BY HIM. 8. IN VIEW OF THE RATIO LAID DOWN BY THE CO-ORDINA TE BENCH(SUPRA) THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THA T ALL THESE APPEALS ITA NOS. 2512 TO 2518/M/08 M/S JET AIR PVT. LTD. 4 MAY BE REMITTED TO THE FILE OF THE CIT(A) FOR DISPO SING OFF THE SAME ON MERITS. 9. ON THE OTHER HAND THE LEARNED DR MR. JITENDRA Y ADAV OPPOSED THE CONTENTIONS OF THE LEARNED COUNSEL FOR THE ASSE SSEE AND POINTED OUT THAT THE ORDER OF THE TRIBUNAL IN THE CASE OF KOTAK MAHINDRA BANK LTD (SUPRA) DEALS WITH POSITION OF LAW AS IT S TOOD PRIOR TO THE AMENDMENT BY THE FINANCE ACT 2007 WITH EFFECT FROM 01/06/2007. HE INVITED OUR ATTENTION TO THE SECTION 248 AS APPL ICABLE WITH EFFECT FROM 01/06/2007 AND SUBMITTED THAT THE SECTION CONT EMPLATES AN AGREEMENT OR ARRANGEMENT AND A SITUATION WHERE THE TAX IS TO BE BORNE BY THE PERSON BY WHOM THE INCOME IS PAYABLE. HE SUBMITTED THAT ALL THE ASSESSMENT YEARS IN QUESTION ARE SUB SEQUENT TO THE AMENDMENT MADE BY THE FINANCE ACT 2007 TO THE SECT ION 248. THE LEARNED DR FURTHER TOOK THE BENCH THROUGH THE EXPLA NATORY MEMORANDUM OF FINANCE ACT 2007 TO CLAUSE (62) TO E XPLAIN THE RATIONALE FOR THE PRINCIPLE AND SUBMITTED THAT THO UGH THE CIT(A) BASED HIS DECISION ON THE LAW AS EXISTED PRIOR TO T HE AMENDMENT ALL THE APPEALS UNDER CONSIDERATION ARE TO BE DISMISSED FOR THE REASON THAT THE ASSESSEE HAS NOT SATISFIED THE CONDITIONS PRESCRIBED IN THE POST AMENDED SECTION 248 WITH EFFECT FROM 01/06/200 7. THE LEARNED DR POINTED OUT THAT CAS OF THE ASSESSEE COMPANY IN HIS CERTIFICATE DATED 15/04/05 WHICH IS AT PAGES 47 & 48 OF THE PA PER BOOK EXPRESSED AN OPINION THAT TAX IS REQUIRED TO BE DED UCTED UNDER THE DTAA. THUS HE SUBMITTED THAT ON MERITS THE ASSESS SEE HAS NO CASE. 10. IN THE REJOINDER THE LEARNED COUNSEL MR. ARVIN D SONDE INVITED OUR ATTENTION TO A CHART WHICH HAS BEEN FILED IN T HE PAPER BOOK OF THE ASSESSEE WHEREIN REMITTANCES IN QUESTION WERE BETW EEN 15 TH APRIL 2005 TO 24/03/06 AND SUBMITTED THAT SECTION 248 AS IT STOOD PRIOR TO 01/06/2007 IS APPLICABLE. ITA NOS. 2512 TO 2518/M/08 M/S JET AIR PVT. LTD. 5 11. WITHOUT PREJUDICE TO THE ABOVE THE LEARNED COU NSEL FOR THE ASSESSEE SUBMITTED THAT THE TAX IN QUESTION IS TO B E BORNE BY THE ASSESSEE AS EVIDENT FROM THE AGREEMENT BETWEEN DNAT A AND JET AIR PVT. LTD. A COPY OF WHICH HAS BEEN PLACED AT PAGES 1 TO 46 OF THE PAPER BOOK OF THE ASSESSEE. HE TOOK THE BENCH THROU GH A PROVISION AND SUBMITTED THAT EVEN UNDER THE POST AMENDMENT CO NDITIONS TO SECTION 248 THE ASSESSEE IS ENTITLED TO FILE AN AP PEAL WITH THE CIT(A) DIRECTLY. 12. ON CAREFUL CONSIDERATION OF RIVAL SUBMISSIONS FACTS AND CIRCUMSTANCES OF THE CASE AND PERUSAL OF CASE LAWS CITED AS WELL AS THE ORDERS OF CIT(A) WE HOLD THAT WHETHER THE LAW AS AMENDED WITH EFFECT FROM 01/06/2007 TO SECTION 248 IS APPLICABLE OR NOT HAS NOT BEEN ADJUDICATED BY THE LEARNED CIT(A) AND THE FACT S HAVE NOT BEEN VERIFIED. IF IT IS CONCLUDED THAT ON THE FACTS AN D CIRCUMSTANCES OF THE CASE THE LAW AS EXISTED PRIOR TO THE AMENDMENT BRO UGHT ON THE STATUTE BY THE FINANCE ACT 2007 IS APPLICABLE THE N THE LEARNED CIT(A) WAS IN ERROR AS HIS DECISION IS CONTRARY TO THE DECISION OF THE H BENCH OF THE TRIBUNAL IN ITA NO. 345/M/08 IN TH E CASE OF KOTAK MAHINDRA BANK LTD(SUPRA). IN SUCH A SITUATION THE C IT(A) IS DUTY BOUND TO ADMIT THE APPEALS AND ADJUDICATE THE SAME ON MERITS WHICH HE HAS NOT DONE. 13. IF THE POST AMENDMENT PROVISION IN SECTION 248 APPLIES TO THE FACTS OF THE CASE THEN THE CIT(A) HAS NOT EXAMINE D AS TO WHETHER UNDER THE AGREEMENT OR ARRANGEMENT TAX DEDUCTIBLE IS TO BE BORNE BY THE PAYER. AS ALL THESE ASPECTS ARE REQUIRED TO BE LOOKED INTO WE ARE OF THE CONSIDERED OPINION THAT THE ISSUE UNDER CONS IDERATION SHOULD BE SET ASIDE TO THE FILE OF THE CIT(A) FOR FRESH AD JUDICATION IN ACCORDANCE WITH LAW AND AFTER PROVIDING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE IN THE MATTER. WE ORDER ACC ORDINGLY. ITA NOS. 2512 TO 2518/M/08 M/S JET AIR PVT. LTD. 6 14. IN THE RESULT ALL THE APPEALS FILED BY THE ASS ESSEE ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 29 TH DAY OF JULY 2011. SD/- SD/- (J. SUDHAKAR REDDY) (V. DURGA RAO) ACCOUNTANT MEMBER JUDI CIAL MEMBER MUMBAI DATED: 29 TH JULY 2011 KV COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE L BENCH I.T .A.T. MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR I.T.A.T. MUMBAI. S.NO. DESCRIPTION DATE INTLS 1. DRAFT DICTATED ON 27/07/11 SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR 28/07/11 SR.P.S/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.P.S./PS SR.P.S./P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER