DDIT (IT)-4(2), MUMBAI v. NOVELL INC., MUMBAI

ITA 4777/MUM/2010 | 2007-2008
Pronouncement Date: 29-07-2011 | Result: Dismissed

Appeal Details

RSA Number 477719914 RSA 2010
Assessee PAN AABCN5034F
Bench Mumbai
Appeal Number ITA 4777/MUM/2010
Duration Of Justice 1 year(s) 1 month(s) 19 day(s)
Appellant DDIT (IT)-4(2), MUMBAI
Respondent NOVELL INC., MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 29-07-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted J
Tribunal Order Date 29-07-2011
Assessment Year 2007-2008
Appeal Filed On 09-06-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH: MUMBAI BEFORE SHRI R.S. PADVEKAR JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH ACCOUNTANT MEMBER ITA NO.4777/MUM /2010 (ASSESSMENT YEAR: 2007-08) DEPUTY DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION) -4(2) 011 SCINDIA HOUSE BALLARD PIER MUMBAI -400 013 ....... APPELLANT VS NOVELL INC. C/O. BSR & CO. KPMG HOUSE KAMALA MILLS COMPOUND 448 S.B. MARG LOWER PAREL FORT MUMBAI -400 013 ..... RESPONDENT PAN: AABCN 5034 F APPELLANT BY: SHRI S.K. SINGH RESPONDENT BY: SHRI DEVANG SHAH & SHEETAL JAIN O R D E R PER R.S. PADVEKAR JM IN THIS APPEAL THE REVENUE HAS CHALLENGED THE IMPUG NED ORDER OF THE LD. CIT (A)-11 MUMBAI DATED 23RD MARCH 2010 FO R THE A.Y. 2007- 08. THE REVENUE HAS TAKEN THE FOLLOWING EFFECTIVE GROUND:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE LD. CIT (A) WAS CORRECT IN HOLDING THAT WHEN DU TY IS CAST ON THE PAYER TO PAY TAX AT SOURCE NO INTEREST U/S. 234B CAN BE IMPOSED ON THE PAYEE ASSESSEE IGNORING THE FACT THAT IT IS THE LIABILITY OF THE PAYEE TO PAY ADVANCE TAX EVEN ON THE ITA 4777/MUM/2010 NOVELL INC. 2 AMOUNT WHICH HAD NOT BEEN DEDUCTED AT SOURCE UNDER SECTION 195 OF THE INCOME TAX ACT 1961. 2. THE SHORT CONTROVERSY IS IN RESPECT OF WHETHER O N THE FACTS AND CIRCUMSTANCES OF THE CASE CAN INTEREST BE LEVIED U/ S.234B OF THE ACT. THE ASSESSEE-COMPANY IS A FOREIGN COMPANY INCORPORA TED IN UNITES STATES AND IS ALSO RESIDENCE OF THE USA FOR THE TAX ATION PURPOSE. THE ASSESSEE IS LEADING PROVIDER OF INFORMATION SOLUTIO NS. DURING THE COURSE OF THE PROCEEDINGS IT WAS CLAIMED BY THE AS SESSEE THAT THE SALE OF SOFTWARE OF ` 58 29 858/- TO VARIOUS INDIAN COMPANIES FOR RESELL ING IT TO THE OTHER PARTIES IS TREATED AS A BUSINESS I NCOME AND SINCE THERE IS NO PERMANENT ESTABLISHMENT (PE) AS PER ARTICLE 5 OF US TREATY AND HENCE THE INCOME ARISING FROM THE SALE OF THE SOFT WARE IS NOT CHARGEABLE TO TAX IN INDIA. THE ASSESSEES CLAIM W AS REJECTED BY THE A.O. BY TREATING THE SAME AS INCOME FROM ROYALTY AND BROUGHT IT TO TAX. THE A.O. ALSO LEVIED THE INTEREST U/S.234B. T HE ASSESSE CARRIED THE ISSUE BEFORE THE LD. CIT (A) WHO DELETED THE IN TEREST U/S.234B. NOW THE REVENUE IS IN APPEAL BEFORE US. 3. WE HAVE HEARD THE PARTIES. THERE IS NO DISPUTE THAT ENTIRE INCOME OF THE ASSESSEE COMPANY IS SUBJECTED TO DEDU CTION OF TAXAT- SOURCE (TDS) U/S.195 OF THE ACT. THE LD. CIT (A) F OLLOWING THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CAS E OF DCIT (IT) MUMBAI VS. M/S. NGC NETWORK ASIA LCC 313 ITR 187 AL LOWED THE GROUND TAKEN BY THE ASSESSEE. THE LD. CIT (A) ALSO FOLLOWED THE DECISION IN THE CASE OF DDIT VS. THORESEN CHERTERIN G SINGAPORE INC. VS. DCIT 95 ITD 269 (DEL)(SB). NOW THE ISSUE STAN DS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION O F JURISDICTIONAL HIGH COURT IN THE CASE OF NGC NETWORK ASIA LCC (SUPRA). WE FIND NO REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT (A) ON THIS ISSUE ACCORDINGLY THE SAME IS CONFIRMED. 4. IN THE RESULT REVENUES APPEAL STANDS DISMISSED . ITA 4777/MUM/2010 NOVELL INC. 3 ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 2 9TH JULY 2011. SD/- SD/- ( B. RAMAKOTAIAH ) ACCOUNTANT MEMBER ( R.S. PADVEKAR ) JUDICIAL MEMBER MUMBAI DATE : 29TH JULY 2011 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A)11 MUMBAI. 4) THE DIT-(INTL. TAXN.) MUMBAI. 5) THE D.R. J BENCH MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T. MUMBAI *CHAVAN ITA 4777/MUM/2010 NOVELL INC. 4 SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 20.07.2011 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 25.07.2011 SR.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 PRONOUNCEMENT 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 OF DISPATCH OF ORDER