ADIT, New Delhi v. M/s Raytheon Company, Gurgaon

ITA 5355/DEL/2010 | 2002-2003
Pronouncement Date: 31-03-2021 | Result: Dismissed

Appeal Details

RSA Number 535520114 RSA 2010
Assessee PAN AADCR3511P
Bench Delhi
Appeal Number ITA 5355/DEL/2010
Duration Of Justice 10 year(s) 4 month(s) 1 day(s)
Appellant ADIT, New Delhi
Respondent M/s Raytheon Company, Gurgaon
Appeal Type Income Tax Appeal
Pronouncement Date 31-03-2021
Appeal Filed By Department
Order Result Dismissed
Bench Allotted F
Tribunal Order Date 31-03-2021
Date Of Final Hearing 04-05-2017
Next Hearing Date 04-05-2017
Assessment Year 2002-2003
Appeal Filed On 29-11-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH D : NEW DELHI) BEFORE SHRI ANIL CHATURVEDI ACCOUNTANT MEMBER AND SHRI KULDIP SINGH JUDICIAL MEMBER (THROUGH VIDEO CONFERENCE) ITA NO.5857/DEL./2010 (ASSESSMENT YEAR : 1999-2000) ITA NO.5858/DEL./2010 (ASSESSMENT YEAR : 2000-01) ITA NO.4801/DEL./2010 (ASSESSMENT YEAR : 2000-01) ITA NO.5859/DEL./2010 (ASSESSMENT YEAR : 2001-02) ITA NO.4802/DEL./2010 (ASSESSMENT YEAR : 2001-02) ITA NO.4803/DEL./2010 (ASSESSMENT YEAR : 2002-03) ITA NO.5860/DEL./2010 (ASSESSMENT YEAR : 2002-03) ITA NO.4804/DEL./2010 (ASSESSMENT YEAR : 2003-04) ITA NO.5861/DEL./2010 (ASSESSMENT YEAR : 2004-05) ITA NO.4805/DEL./2010 (ASSESSMENT YEAR : 2004-05) ITA NO.1404/DEL./2012 (ASSESSMENT YEAR : 2005-06) 2 ITA NO.1405/DEL./2012 (ASSESSMENT YEAR : 2006-07) ITA NO.5222/DEL./2010 (ASSESSMENT YEAR : 2007-08) ITA NO.4629/DEL./2016 (ASSESSMENT YEAR : 2008-09) ITA NO.2138/DEL./2017 (ASSESSMENT YEAR : 2009-10) ITA NO.3293/DEL./2017 (ASSESSMENT YEAR : 2010-11) M/S. RAYTHEON COMPANY VS. ADIT C/O AUTHORISED REPRESENTATIVE INTERNATIONAL TAXA TION SR BATLIBOI & CO. CIRCLE 2 (1) GOLF VIEW CORPORATE TOWER B NEW DELHI. SECTOR 42 SECTOR ROAD GURGAON 122 002 (HARYANA). (PAN : AADCR3511P) ITA NO.5353/DEL./2010 (ASSESSMENT YEAR : 2000-01) ITA NO.5354/DEL./2010 (ASSESSMENT YEAR : 2001-02) ITA NO.5355/DEL./2010 (ASSESSMENT YEAR : 2002-03) ITA NO.5357/DEL./2010 (ASSESSMENT YEAR : 2004-05) ITA NO.1524/DEL./2012 (ASSESSMENT YEAR : 2005-06) ITA NO.1525/DEL./2012 (ASSESSMENT YEAR : 2006-07) ITA NO.4838/DEL./2016 (ASSESSMENT YEAR : 2008-09) 3 ITA NO.2708/DEL./2017 (ASSESSMENT YEAR : 2009-10) ITA NO.3481/DEL./2017 (ASSESSMENT YEAR : 2010-11) ADIT VS. M/S. RAYTHEON COMPANY INTERNATIONAL TAXATION C/O AUTHORISED REPRESENTATI VE CIRCLE 2 (1) SR BATLIBOI & CO. NEW DELHI. GOLF VIEW CORPORATE TOWER B SECTOR 42 SECTOR ROAD GURGAON 122 002 (HARYANA). (PAN : AADCR3511P) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI NAGESHWAR RAO ADVOCATE MS. DEEPIKA AGARWAL ADVOCATE MS. ANWESHA SAHA ADVOCATE REVENUE BY : DR. PRABHA KANT CIT DR DATE OF HEARING : 25.03.2021 DATE OF ORDER : 31.03.2021 O R D E R PER BENCH : FOR THE SAKE OF BREVITY AFORESAID CROSS APPEALS FI LED BY THE TAXPAYER AS WELL AS REVENUE CONTAINING IDENTICAL QU ESTION OF LAW AND FACTS ARE BEING DISPOSED OFF BY WAY OF COMPOSIT E ORDER. 2. APPELLANT M/S. RAYTHEON COMPANY (HEREINAFTER RE FERRED TO AS THE TAXPAYER) BY FILING THE PRESENT APPEALS SO UGHT TO SET ASIDE THE IMPUGNED ORDERS DATED 18.10.2010 27.12.2006 1 8.10.2010 18.10.2010 27.12.2006 27.12.2006 30.09.2010 27. 12.2006 4 30.09.2010 27.12.2006 31.12.2007 18.11.2008 28. 09.2010 03.02.2011 01.02.2012 & 07.05.2013 PASSED BY THE A SSESSING OFFICER (AO) IN CONSONANCE WITH THE ORDERS PASSED B Y THE LD. DRP UNDER SECTION 143 (3)/147 READ WITH SECTION 144C OF THE INCOME- TAX ACT 1961 (FOR SHORT THE ACT) QUA THE ASSE SSMENT YEARS 1999-00 2000-01 2000-01 2001-02 2001-02 2002-0 3 2002-03 2003-04 2004-05 2004-05 2005-06 2006-07 2007-0 8 2008-09 2009-10 & 2010-11 ON THE IDENTICAL GROUNDS EXCEPT T HE DIFFERENCE IN THE FIGURES. 3. APPELLANT ADIT INTERNATIONAL TAXATION CIRCLE 2 (1) NEW DELHI (HEREINAFTER REFERRED TO AS THE REVENUE) BY FILING THE PRESENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORD ERS DATED 27.12.2006 27.12.2006 27.12.2006 27.12.2006 31. 12.2007 18.11.2008 03.02.2011 01.02.2012 & 07.05.2013 PAS SED BY THE ASSESSING OFFICER (AO) IN CONSONANCE WITH THE ORDER S PASSED BY THE LD. DRP UNDER SECTION 143 (3)/147 READ WITH SEC TION 144C OF THE INCOME-TAX ACT 1961 (FOR SHORT THE ACT) QUA THE ASSESSMENT YEARS 2000-01 2001-02 2002-03 2004-05 2005-06 2006-07 2008-09 2009-10 & 2010-11 ON THE IDENTICAL GROUNDS EXCEPT THE DIFFERENCE IN THE FIGURES. 4. AT THE VERY OUTSET LD. AR FOR THE ASSESSEE BY M OVING AN APPLICATION DATED 17.03.2021 BROUGHT ON RECORD THE FACT THAT 5 PURSUANT TO THE APPLICATION MOVED BY THE ASSESSEE F OR MUTUAL AGREEMENT PROCEDURE (MAP) BEFORE THE COMPETENT AUTH ORITY IN UNITED STATES OF AMERICA QUA THE ISSUES INVOLVED IN THE AFORESAID APPEALS SETTLEMENT HAS BEEN REACHED. A FORMAL CON FIRMATION DATED 02.03.2021 FROM THE COMPETENT AUTHORITY IN INDIA TO THIS EFFECT IS ALSO BROUGHT ON RECORD WHICH IS EXTRACTED FOR READ Y PERUSAL AS UNDER :- F.NO.480/04/2007-FTD.1/54 GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE CENTRAL BOARD OF DIRECT TAXES FOREIGN TAX & TAX RESEARCH DIVISION-I 905 9TH FLOOR C WING HUDCO VISHALA BUILDING 14 BHIKAJI CAMA PLACE NEW DELHI-LL0066 DATED : 02.MARCH 2021 M/S RAYTHEON COMPANY . C/O SRBC & ASSOCIATES LLP GOLF VIEW CORPORATE TOWER-B SECTOR 42 SECTOR ROAD GURGAON-122002 MADAM/SIR SUBJECT: COMMUNICATION OF RESOLUTION OF DISPUTE UND ER MAP WITH THE U.S.A. IN THE CASE OF RAYTHEON COMPANY FOR AYS 1999-2000 TO 2016-17 IN ACCORDANCE WITH RULE 44G(6) OF INCOME TAX RULES 1962-REG. PLEASE REFER TO THE SUBJECT CITED ABOVE. 2. IN ACCORDANCE WITH RULE 44G(6) OF THE INCOME TA X RULES 1962 ('RULES') I AM DIRECTED TO STATE THAT THE INDIAN AND USA COMPETENT AUTHORITIES (CAS) HAVE AGREED TO RESO LVE THE MAP IN THE CASE OF RAYTHEON COMPANY FOR AYS 1999-20 00 TO 2016-17. AS PER THE PRINCIPLES ADOPTED FOR THE PURP OSES OF SETTLING THIS MAP CASE RAYTHEON WILL BE ASSUMED TO HAVE 6 ESTABLISHED A PERMANENT ESTABLISHMENT ('PE') IN IND IA AS A RESULT OF ITS ACTIVITIES PURSUANT TO THE CONTRACTS THAT WERE THE SUBJECT OF THIS CASE. THE BUSINESS PROFITS EARNED F ROM THOSE CONTRACTS WILL BE DEEMED TO BE ATTRIBUTED TO THE AS SUMED PE AND TAXED IN INDIA (AT 30 PERCENT OF PROFITS ARRIVE D AT AFTER APPLYING THE GLOBAL PROFIT MARGIN TO THE CONTRACT R ECEIPTS). FOR PURPOSE OF SETTLING THIS CASE CERTAIN CONTRACT REVE NUE FROM SOFTWARE WILL BE CHARACTERIZED AS ROYALTIES THAT AR E NOT ATTRIBUTABLE TO THE PE. MORE SPECIFICALLY: IN THE CASE OF THE CONTRACTS THAT WERE SUBJECT TO AUTHORITY FOR ADVANCE RULINGS ('AAR') RULINGS THE ALLOCATION WILL FOLLOW THE AAR ORDER. ACCORDING TO THE AAR RULING THE REVENUE FROM SOFTWARE SOFTWARE MAINTENANCE AND SUPPORT AND SOFTWARE DOCUMENTATION WILL BE TAXABLE AS ROYALTIES. THE REVENUE FROM HARD WARE AND 'COMMERCIAL OFF-THE-SHELF' SOFTWARE ('COTS') HOWEVER WILL NOT BE TAXABLE IN INDIA. IN THE CASE OF CONTRACTS NOT SUBJECT TO THE AAR R ULINGS WHERE SEPARATE CONSIDERATION WAS PAID FOR SOFTWARE AND ITS RELATED ELEMENTS (E.G. SOFTWARE MAINTENANCE AND SUPPORT AND THE PROVISION OF SOFTWARE DOCUMENTATIO N) THE REVENUE WILL BE CHARACTERIZED AS ROYALTIES AND TAXED ACCORDINGLY. THIS ROYALTY INCOME WILL NOT BE ATTRIBUTABLE TO THE ASSUMED PE WHILE THE REVENUE FR OM COTS AND HARDWARE WILL BE TREATED AS BUSINESS INCOM E ATTRIBUTABLE TO THE ASSUMED PE. IN THE CASE OF CONTRACTS OTHER THAN THOSE COVERED UNDER THE AAR RULINGS (I.E. SOFTWARE HARDWARE AND OTHER ITEMS) WHERE THERE IS A CONSOLIDATED CONSIDERATION FOR SOFTWARE HARDWARE AND OTHER ITEMS ALL OF THE REVE NUE WILL BE CONSIDERED BUSINESS INCOME ATTRIBUTABLE TO THE ASSUMED PE . 3. THE DETAILS OF THE REVENUE TAXABLE AS PER THE MA P SETTLEMENT IS AS UNDER: TABLE 1 PARTICULARS AMOUNT IN (INR CRORES) AMOUNT IN (USD MN) BUSINESS INCOME ROYALTY BUSINESS INCOME ROYALTY GROSS REVENUE 821 97 243.04 117.42 34.72 TAXABLE REVENUES; A) AS PER AAR - 128.65 - 18.38 7 RULING (PLEASE REFER TABLE 2) B) CONTRACTS WITH SPLIT CONSIDERATION (PLEASE REFER TABLE 3) 3.18 114.39 0.45 16.34 C) CONSOLIDATED CONTRACTS AND BALANCE CONTRACTS (PLEASE REFER TABLE 4) 21.87 - 3.12 - TOTAL TAXABLE REVENUE (A+B+C) 25.05 243.04 3.57 34.72 TABLE 2 : AAR RULINGS NAME OF THE CONTRACTS ROYALTY BUSINESS INCOME TAXABLE INCOME TAX- ABILITY TAXABLE INCOME TAX- ABILITY SOFTWARE MAINTENANCE SUPPORT CONTRACT AND AMENDMENT TO SOFTWARE MAINTENANCE 34.92 5.06 0 0 HARDWARE REPAIR SUPPORT CONTRACT AND AMENDMENT TO HARDWARE REPAIR 0 0 0 0 REPLACEMENT OF DG SERVERS AND RELATED SOFTWARE 70.85 9.87 0 0 S-SDD 0 0 0 0 D3R 22.88 2.56 0 0 TOTAL 128.65 17.49 0 0 AMOUNT IN INR CRORES 128.65 17.49 0 0 AMOUNT IN USD MILLIONS 18.38 2.50 0 0 8 TABLE 3 : SPLIT CONSIDERATION NAME OF THE CONTRACTS ROYALTY BUSINESS INCOME TAXABLE INCOME TAX- ABILITY TAXABLE INCOME TAX- ABILITY SUPPLY OF FUTURE AIR NAVIGATION SYSTEM (FANS) 0 0 0.37 0.16 MAFI SOFTWARE 0 0 1.58 0.67 RVSM 8.40 1.26 0 0 AODB CONTRACT* 1.53 0.16 0 0 ASMS 28.71 3.03 0 0 BEL CONTRACT* 0.36 0.04 0.53 0.23 MAAT 7.61 0.80 0.22 0.09 MDER CONTRACT 8.28 0.87 0.43 0.18 BEL ATHENA CONTRACT* 50.76 6.74 0.04 0.02 M&D SOFTWARE/ECP* 3.84 0.41 0 0 RASAM 4.90 0.52 0.01 0.004 TOTAL 114.39 13.84 3.18 1.35 AMOUNT IN INR CRORES 114.39 13.84 3.18 1.35 AMOUNT IN USD MILLION 16.34 1.98 0.45 0.19 *THESE PROJECTS ARE ONGOING. TABLE 4 : CONSOLIDATED AND BALANCE CONTRACTS NAME OF THE CONTRACTS TAXABLE BUSINESS INCOME TAXABILITY GAGAN TDS 1.18 0.50 ATS AUTOMATION CHENNAI 0.76 0.32 GAGAN FOP 10.50 4.43 CHENNAI CONTRACT* 0.54 0.23 SUPPLY OF ILS 0.06 0.03 GAGAN FSAT* 1.40 0.60 FIELD ENGINEERING SERVICES 0.04 0.02 9 MATS BD SERVICES 0.05 0.03 SUPPLY OF SPARES 2000 0.86 0.41 ROTARY JOINT SPARES 0.01 0.00 SUPPLY OF SPARES 2003 0.68 0.28 CONTRACT FOR AUTOMATION OF SPARES 0.13 0.06 HARDWARE REPAIR SUPPORT CONTRACT 2009 1.23 0.52 AMENDMENT NO.3 HARDWARE REPAIR 2.52 1.08 RADAR SPARES 2011 0.19 0.08 MAFI HARDWARE * 1.71 0.74 MAFI SERVICES* 0.01 0.00 TOTAL 21.87 9.33 AMOUNT IN INR CRORES 21.87 9.33 AMOUNT IN USD MILLIONS 3.12 1.33 *THESE PROJECTS ARE ONGOING 4. AS PER RULE 44G(7) OF THE RULES YOU ARE REQUES TED TO COMMUNICATE YOUR ACCEPTANCE OR NON-ACCEPTANCE OF TH E ABOVE RESOLUTION IN WRITING TO THE COMPETENT AUTHORITY IN INDIA. FURTHER THE SAID ACCEPTANCE SHALL BE COMMUNICATED WITHIN THIRTY DAYS OF RECEIPT OF THIS COMMUNICATION UNDER SUB-RULE(6) OF RULE 44G. 5. IN THE CASE OF ACCEPTANCE OF THE ABOVE RESOLUTI ON YOU ARE ALSO REQUESTED TO ENCLOSE WITH IT THE PROOF OF WITHDRAWAL OF APPEAL IF ANY PENDING ON THE ISSUES THAT ARE THE SUBJECT MATTER OF THIS RESOLUTION IN ACCORDANCE WITH SUB-RULE (8) OR RULE 44G. YOU MAY ALSO EMAIL YOUR RESPONSE ON THE FOLLOWING E MAIL ID: USFTTR1-2@GOV.IN. YOURS FAITHFULLY SD/- UNDER SECRETARY (FT&TR-I) CBDT EMAIL: USFTTRL-2@GOV.IN 5. LD. AR FOR THE ASSESSEE SOUGHT WITHDRAWAL OF ALL THE APPEALS FILED BY THE TAXPAYER AND ALSO SOUGHT DISMISSAL OF THE APPEALS FILED BY THE REVENUE HAVING BEEN BECOME INFRUCTUOUS IN VI EW OF THE SETTLEMENT REACHED AS PER MAP PROCEEDINGS EXCEPT GR OUND NO.22 IN 10 TAXPAYERS APPEAL BEARING ITA NO.5222/DEL/2010 FOR ASSESSMENT YEAR 2007-08 WHICH NEEDS ADJUDICATION BY THE TRIBUN AL. 6. LD. DR HOWEVER ON THE OTHER HAND CONTENDED THA T HE HAS NO AUTHORITY TO GIVE CONSENT FOR WITHDRAWAL OF THE DEPARTMENTS APPEALS AS EVEN AFTER THE DECISION OF THE COMPETENT AUTHORITY CERTAIN PROCEDURES NEED TO BE FOLLOWED BY THE DEPAR TMENT. SUBMISSIONS MADE BY THE LD. DR ARE MADE PART OF THE JUDICIAL RECORD. 7. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS DATED DECEMBER 21 2020 PASSED BY THE UNITED STATES COMPETENT AUTHORITY DEPARTMENT OF TREASURY INTERN AL REVENUE SERVICE WASHINGTON DC 20224 AND THE ORDER DATED 0 2.03.2021 OF THE COMPETENT AUTHORITY I.E. GOVERNMENT OF INDIA M INISTRY OF FINANCE DEPARTMENT OF REVENUE CENTRAL BOARD OF DI RECT TAXES FOREIGN TAX & TAX RESEARCH DIVISION-I IN THE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 8. BARE PERUSAL OF THE LETTER DATED 02.03.2021 WRIT TEN BY THE MINISTRY OF FINANCE DEPARTMENT OF REVENUE CENTRAL BOARD OF DIRECT TAXES FOREIGN TAX AND TAX RESEARCH DIVISION -1 TO M/S. RATHEON COMPANY THE TAXPAYER IN THIS CASE APPAREN TLY GOES TO PROVE THAT ALL THE ISSUES RAISED BY THE TAXPAYER AS WELL AS THE 11 REVENUE BY WAY OF FILING AFORESAID CROSS APPEALS HA VE BEEN SETTLED UNDER MAP BUT SUBJECT TO THE ACCEPTANCE TO BE CONV EYED BY THE TAXPAYER TO THE COMPETENT AUTHORITY IN INDIA WITHIN 30 DAYS OF THE RECEIPT OF THE COMMUNICATION UNDER RULE 44G (7) OF THE INCOME- TAX RULES 1962. 9. IN VIEW OF THE MATTER WE ARE OF THE CONSIDERED VIEW THAT WHEN ALL THE ISSUES RAISED BY THE TAXPAYER AND THE REVENUE HAVE BEEN SETTLED UNDER MAP NO PURPOSE WOULD BE SERVED BY KEEPING THE APPEALS FILED BY THE TAXPAYER AND REVENUE ALIVE JUST FOR THE SAKE OF SOME PROCEDURAL FORMALITIES AS CONTENDED BY THE LD. DR BECAUSE PROCEDURAL TECHNICALITIES IS HANDMAID OF JU STICE. WE WISH TO BRING ON RECORD THAT WHEN LD. CIT DR HAS FAILED TO CONTROVERT THE ASSERTIONS MADE BY THE LD. AR FOR THE TAXPAYER MADE IN THE LIGHT OF THE LETTER DATED 02.03.2021 (SUPRA) THAT ALL THE ISSUES PERTAINING TO THE APPEALS FILED BY THE TAXPAYER AS WELL AS REV ENUE HAVING BEEN SETTLED ONCE FOR ALL UNDER MAP HE SHOULD NOT STICK TO HIS CEREMONIAL CONTENTION THAT HE HAS NOT RECEIVED ANY INTIMATION FROM THE AO CONCERNED TO WITHDRAW THE APPEALS FILED BY T HE REVENUE. EVEN OTHERWISE HE WOULD HAVE GOT THE MATTER EXPEDI TED AT THE LEVEL OF AO BEING A SENIOR OFFICER OF THE DEPARTME NT. 10. SO WE ARE OF THE CONSIDERED VIEW THAT LD. CIT DR IS NOT MERELY A POST OFFICE TO PUT FORWARD THE DECISION MA DE BY THE AO 12 RATHER BEING AN OFFICER OF THE COURT HE IS REQUIRE D TO ASSIST THE BENCH ON THE FACTUAL AND LEGAL ASPECTS INVOLVED IN THE AFORESAID APPEALS IN THE INTEREST OF SPEEDY DISPOSAL OF LITIG ATION FOR THE EASE OF BUSINESS TO WHICH GOVERNMENT OF INDIA IS COMMIT TED TO. 11. IN THESE CIRCUMSTANCES WE ARE OF THE CONSIDERE D VIEW THAT THE LETTER DATED 02.03.2021 WRITTEN BY THE CBDT TO THE TAXPAYER STATING THEREIN THAT SINCE ALL THE ISSUES RAISED BY VIRTUE OF THE TAXPAYERS APPEALS AS WELL AS REVENUES APPEALS HAV E BEEN SETTLED ONCE FOR ALL UNDER MAP PROCEEDINGS NOTHING SURVIVE S AND AS SUCH THE CONTENTIONS RAISED BY THE LD. DR TO KEEP THE AP PEALS FILED BY THE REVENUE ALIVE TILL COMPLETION OF SOME FORMALITIES A RE NOT SUSTAINABLE. HENCE THE AFORESAID APPEALS FILED BY THE TAXPAYER ARE LIABLE TO BE DISMISSED AS WITHDRAWN FORTHWITH AND A FORESAID CROSS APPEALS FILED BY THE REVENUE ARE REQUIRED TO BE ORD ERED TO BE DISMISSED HAVING BEEN BECOME INFRUCTUOUS EXCEPT GR OUND NO.22 OF APPEAL BEARING ITA NO.5222/DEL/2010 FOR ASSESSMENT YEAR 2007- 08 FILED BY THE TAXPAYER WHICH IS EXTRACTED AS UND ER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED ASSISTANT DIRECTOR OF INCOME TAX CIRCLE 2 (1) INT ERNATIONAL TAXATION NEW DELHI :- 22. ERRED IN LEVY OF INTEREST UNDER SECTION 234B OF THE ACT WITHOUT APPRECIATING THAT THE APPELLANT DOESNT HAV E ANY ADVANCE TAX LIABILITY IN TERMS OF SECTIONS 207-209 OF THE ACT. 13 12. THE TAXPAYER CHALLENGED LEVY OF INTERESTS U/S 2 34B OF THE ACT MADE BY THE AO ON THE GROUND THAT AO WITHOUT AP PRECIATING THE FACT THAT THE TAXPAYER DOES NOT HAVE ANY ADVANC E TAX LIABILITY IN TERMS OF SECTIONS 207 209 OF THE ACT LEVY OF INT EREST U/S 234B IS NOT SUSTAINABLE AND RELIED UPON THE DECISION RENDER ED BY HONBLE DELHI HIGH COURT JUDGEMENT IN CASE OF DIRECTOR OF I NCOME-TAX INTERNATIONAL TAXATION VS. GE PACKAGED POWER INC. ( 2015) 373 ITR 65 (DELHI) . 13. UNDISPUTEDLY THE TAXPAYER IS A NON-RESIDENT CO MPANY HAVING ESTABLISH PERMANENT ESTABLISHMENT (PE) IN IN DIA AND ITS ENTIRE TAX WAS TO BE DEDUCTED AT SOURCE BY THE PAYE E ON PAYMENT AND AS SUCH THE TAXPAYER WAS NOT UNDER ANY OBLIGAT ION TO MAKE PAYMENT OF ADVANCE TAX. IN THESE CIRCUMSTANCES LE VY OF INTEREST U/S 234B FROM THE TAXPAYER IS NOT SUSTAINABLE IN TH E EYES OF LAW. OPERATIVE PART OF THE JUDGMENT PASSED BY THE HONBLE DELHI HIGH COURT IN GE PACKAGED POWER INC. (SUPRA) IS EXTRACTED FOR READY PERUSAL AS UNDER :- SECTION 234B READ WITH SECTIONS 195 AND 209 OF T HE INCOME- TAX ACT 1961 - INTEREST CHARGEABLE AS (FOREIGN AS SESSEE) - ASSESSEE HAD A PE IN INDIA - ASSESSING OFFICER COMP UTED TAXABLE INCOME OF ASSESSEES BY ATTRIBUTING SOME PERCENTAGE OF SALE PRICE/CONSIDERATION RECEIVED AS PROFITS TO PE AND I NTEREST UNDER SECTION 2348 FOR FAILURE TO PAY ADVANCE TAX WAS LEV IED - WHETHER SINCE ASSESSEES WERE NON-RESIDENT COMPANIES ENTIRE TAX WAS TO BE DEDUCTED AT SOURCE ON PAYMENTS MADE BY PAYEE TO IT AND THERE WAS NO QUESTION OF PAYMENT OF ADVANCE TAX BY ASSESS EES - HELD 14 YES - WHETHER THEREFORE IT WOULD NOT BE PERMISSIB LE FOR REVENUE TO CHARGE ANY INTEREST UNDER SECTION 2348 FROM ASSE SSEES - HELD YES [PARA 23] [IN FAVOUR OF ASSESSEE] 22. THIS COURT THEREFORE HOLDS THAT JACABS CIVIL INCORPORATED/MITSUBISHI CORPORATION (SUPRA) APPLIES IN SUCH SITUATIONS; ALCATEL LUCENT USA INC. (SUPRA) CAN BE EXPLAINED AS A DECISION TURNING UPON ITS FACTS; ITS SEEMINGLY WI DE OBSERVATIONS LIMITED TO THE CIRCUMSTANCES OF THE CASE. THIS COUR T THEREFORE HOLDS THAT THE VIEW TAKEN BY ITAT WAS CORRECT; THE PRIMARY LIABILITY OF DEDUCTING TAX (FOR THE PERIOD CONCERNE D SINCE THE LAW HAS UNDERGONE A CHANGE AFTER THE FINANCE ACT 2012) IS THAT OF THE PAYER. THE PAYER WILL BE AN ASSESSEE IN DEFAULT ON FAILURE TO DISCHARGE THE OBLIGATION TO DEDUCT TAX UNDER SECTI ON 201 OF THE ACT. 23. FOR THE ABOVE REASONS THIS COURT FINDS THAT N O INTEREST IS LEVIABLE ON THE RESPONDENT ASSESSEES UNDER SECTION 234B EVEN THOUGH THEY FILED RETURNS DECLARING NIL INCOME AT T HE STAGE OF REASSESSMENT. THE PAYERS WERE OBLIGED TO DETERMINE WHETHER THE ASSESSEES WERE LIABLE TO TAX UNDER SECTION 195(1) AND TO WHAT EXTENT BY TAKING RECOURSE TO THE MECHANISM PROVIDE D IN SECTION 195(2) OF THE ACT. THE FAILURE OF THE PAYERS TO DO SO DOES NOT LEAVE THE REVENUE WITHOUT REMEDY; THE PAYER MAY BE REGARDED AN ASSESSEE-IN-DEFAULT UNDER SECTION 201 AND THE CONS EQUENCES DELINEATED IN THAT PROVISION WILL VISIT THE PAYER. THE APPEAL OF THE REVENUE IS ACCORDINGLY DISMISSED WITHOUT ANY ORDER AS TO COSTS. 14. SO FOLLOWING THE DECISION RENDERED BY HONBLE DELHI HIGH COURT IN GE PACKAGED POWER INC. (SUPRA) WE ARE OF THE CONSIDERED VIEW THAT WHEN UNDISPUTEDLY THE TA XPAYER IS A NON-RESIDENT COMPANY AND TAX HAS BEEN DEDUCTED AT S OURCE ON THE ENTIRE PAYMENT MADE TO IT BY THE PAYEE AND IT IS UN DER NO OBLIGATION TO MAKE PAYMENT OF ADVANCE TAX AND IN THESE CIRCUMS TANCES LEVY OF TAX U/S 234B IS NOT SUSTAINABLE HENCE ORDERED T O BE DELETED. SO GROUND NO.22 IS DECIDED IN FAVOUR OF THE TAXPAYER. 15 15. CONSEQUENTLY ALL THE AFORESAID APPEALS FILED B Y THE TAXPAYER ARE DISMISSED AS WITHDRAWN HOWEVER APPEAL BEARING ITA NO.5222/DEL/2010 FOR AY 2007-08 IS PARTLY DISMISSED AS WITHDRAWN AND PARTLY ALLOWED QUA GROUND NO.22 RAISE D BY THE TAXPAYER AND AT THE SAME TIME ALL THE CROSS APPEAL S FILED BY THE REVENUE ARE DISMISSED HAVING BEEN BECOME INFRUCTUOU S. HOWEVER AS AN ABUNDANT CAUTION IT IS MADE CLEAR T HAT REVENUE WOULD BE AT LIBERTY TO GET THE AFORESAID CROSS APPE ALS FILED BY THE REVENUE RESTORED IF SO REQUIRED AT ANY POINT OF TI ME. ORDER PRONOUNCED IN OPEN COURT ON THIS 31 ST DAY OF MARCH 2021. SD/- SD/- (ANIL CHATURVEDI) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 31 ST DAY OF MARCH 2021 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.DRP 5.CIT(ITAT) NEW DELHI. AR ITAT NEW DELHI.