ADIT (IT)-2(1), MUMBAI v. M/s. RELIANCE INFOCOMM LTD ( NOW MERGED WITH RELIANCE COMMUNICATIONS LTD), NAVI MUMBAI

ITA 5585/MUM/2008 | misc
Pronouncement Date: 20-10-2010 | Result: Dismissed

Appeal Details

RSA Number 558519914 RSA 2008
Assessee PAN AAACR4472J
Bench Mumbai
Appeal Number ITA 5585/MUM/2008
Duration Of Justice 2 year(s) 1 month(s) 18 day(s)
Appellant ADIT (IT)-2(1), MUMBAI
Respondent M/s. RELIANCE INFOCOMM LTD ( NOW MERGED WITH RELIANCE COMMUNICATIONS LTD), NAVI MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 20-10-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted L1
Tribunal Order Date 20-10-2010
Date Of Final Hearing 18-05-2010
Next Hearing Date 18-05-2010
Assessment Year misc
Appeal Filed On 02-09-2008
Judgment Text
I.T.A NOS.5562 TO 5581/ MUM/2008 & I.T.A NO.5585/ MUM/2008 1 IN THE INCOME TAX APPELLATE TRIBUNAL L BENCH MUMBAI. BEFORE S/SHRI N.V.VASUDEVAN (JUDICIAL MEMBER) AND PRAMOD KUMAR(ACCOUNTANT MEMBER) I.T.A NOS.5562 TO 5581/ MUM/2008 & I.T.A NO.5585/ MUM/2008 THE ADIT (IT)-2(1) APPELLANT R.NO.120 1 ST FLOOR SCINDIA HOUSE BALLARD ESTTAE N.M. ROAD MUMBAI-400 038 VS. M/S. RELIANCE INFOCOMM LTD .. RESPONDENT (NOW MERGED WITH RELIANCE COMMUNICATION LTD.) H BLOCK 1 ST FLOOR DHIRUBHAI AMBANI KNOWLEDGE CITY NAVI MUMBAI-400 710 PA NO.AAACR 4472J APPELLANT BY: SHRI KESHAV SAXENA RESPONDENT BY : SHRI ARVIND DALAL O R D E R PER BENCH 1. THE SHORT ISSUE THAT WE ARE REQUIRED TO ADJUDICATE IN ALL THESE APPEALS IS WHETHER OR NOT THE CIT (A) WAS JUSTIFIED IN GRANTING INTEREST UNDER SECTION 244A OF THE INCOME TAX ACT 1961 IN RESPECT OF TAXES DEPOSITED IN COMPLIANCE TO ORDE RS UNDER SECTION 195(2) PASSED BY THE ASSESSING OFFICER. 2. THE ISSUE IN APPEAL IS SET OUT IN A NARROW COMPASS OF FACTS. THE ASSESSE HAS MADE CERTAIN PAYMENTS TO ITS VENDORS ABROAD. THE ASSESS EE MOVED APPLICATIONS TO THE ASSESSING OFFICER FOR DECLARING THAT THE ASSESSEE IS NOT REQU IRED TO DEDUCT TAX AT SOURCE IN RESPECT OF THESE PAYMENTS. HOWEVER THE ASSESSING OFFICER HELD THAT THE ASSESSEE IS REQUIRED TO DEDUCT TAXES AT SOURCE FROM THESE PAYMENTS. IN DEFERENCE TO THE OR DERS SO PASSED UNDER SECTION 195(2) THE ASSESSEE DEPOSITED TAX SO DEMANDED BY THE ASSESSING OFFICER. HOWEVER THE ASSESSEE CARRIED THE I.T.A NOS.5562 TO 5581/ MUM/2008 & I.T.A NO.5585/ MUM/2008 2 MATTER IN APPEAL AND IT WAS FINALLY HELD THAT THE A SSESSEE IS INDEED NOT REQUIRED TO DEDUCT TAX AT SOURCE FROM THOSE PAYMENTS. ACCORDINGLY THE ASSES SEE WAS GRANTED REFUND BY THE ASSESSING OFFICER BUT ASSESSEES PRAYER FOR INTEREST ON THE R EFUND WAS DECLINED BY THE ASSESSING OFFICER ON THE GROUND THAT REFUND HAS NOT ARISEN UNDER THE INC OME TAX ACT. AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT (A). TH E GRIEVANCE OF THE ASSESSEE WAS UPHELD BY THE CIT (A) AND THE ASSESSING OFFICER WAS DIRECTED TO GRANT REFUND UNDER SECTION 244A(1)(B). THE ASSESSING OFFICER IS AGGRIEVED BY THE RELIEF SO GIVEN BY THE CIT (A) AND IS IN APPEAL BEFORE US. 3. THE REPRESENTATIVES FAIRLY AGREE THAT THE AFORESA ID ISSUE IS NOW COVERED BY THE HONBLE SUPREME COURTS JUDGEMENT IN THE CASE OF SANDVIK AS IA LTD. 280 ITR 643(SC) AND ALSO THE DECISION DATED 9 TH SEPTEMBER 2009 OF A CO-ORDINATE BENCH IN ASSESSEE S OWN CASE IN ITA NOS. 6100 TO 6110/M/2008 EVEN AS LEARNED DEPARTMENTAL R EPRESENTATIVE RELIED UPON THE STAND OF THE ASSESSING OFFICER. 4. WE SEE NO REASON TO TAKE ANY CONTRARY VIEW THAN THE VIEW SO TAKEN BY A CO- ORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN C ASE VIDE ORDER DATED 9.9.2009 (SUPRA) WHEREIN IT HAS BEEN OBSERVED AS UNDER:- 6.WE HAVE HEARD THE LEARNED REPRESENTATIVES OF TH E PARTIES AND PERUSED THE RECORD. WE FIND THAT THE ISSUE IS COVERED AGAIN ST THE REVENUE BY VARIOUS DECISIONS INCLUDING THE DECISION OF ITAT IN CASE OF TATA CHEMICALS LTD. 16 SOT 418 AND IN THE CASE OF STAR CRUISES INDIA TRAVE L SERVICES PVT. LTD. IN ITA NO. 6498 & 6500/MUM/06 ORDER DATED 24 TH MARCH 2009. THE CIT(A) FOLLOWED THOSE DECISIONS AND REPRODUCED THE FINDING OF THE ITAT FROM TATA CHEMICALS LTD. CITED SUPRA. FOR THE SAKE OF REFEREN CE WE REPRODUCE THE HEAD NOTE FROM THE ORDER OF TATA CHEMICALS LTD. AS UNDE R:- UNDER THE PROVISIONS OF SECTION 195(2) THE ASSESSE E IS EMPOWERED TO MAKE AN APPLICATION TO THE ASSESSING OFFICER FOR NON-DEDUCTION OF TAX ON S UCH SUMS REMITTED TO A NON-RESIDENT WHICH ACCORDING TO THE ASSESSEE ARE NOT SUBJECT TO TAX AT SOURCE. IN VIEW OF THE PROVISIONS OF DTAA BETWEEN THE TWO COUNTRIES UNDER THE SAID SUB- SECTION (2) OF SECTION 195 THE ASSESSING OFFICER IS EMPOWERED TO DETERMINE SUCH SU MS WHICH ARE DEDUCTIBLE OUT OF REMITTANCE TO BE SENT TO THE RECIPIENT AND ONLY AFT ER DEDUCTION AND PAYMENT OF SUCH SUMS THE BALANCE AMOUNT IS TO BE REMITTED TO THE NON-RESIDEN T. IN THE INSTANT CASE IN COMPLIANCE OF THE ORDER OF THE ASSESSING OFFICER THE ASSESSEE HA D DEDUCTED THE TAX AT SOURCE BEFORE REMITTING THE AMOUNTS TO GERMANY AND DENMARK. [PARA 8] THE ORDER UNDER SECTION 195(2) IS APPEALABLE UNDER THE PROVISIONS OF SECTION 248. SECTION 248 CLEARLY PROVIDES THAT AFTER DEDUCTION AND PAYMENT O F TAX IN ACCORDANCE WITH THE PROVISIONS OF SECTIONS 195 AND 200 IF THE ASSESSEE DENIES HIS LI ABILITY TO MAKE SUCH DEDUCTION HE IS EMPOWERED TO FILE AN APPEAL BEFORE THE COMMISSIONER (APPEALS) IN ORDER TO GET A DECLARATION THAT HE/IS NOT LIABLE TO MAKE SUCH DEDUCTION. IN TH E INSTANT CASE THE COMMISSIONER (APPEALS) GRANTED RELIEF TO THE ASSESSEE HOLDING THAT NO TAX WAS DEDUCTIBLE OUT OF THE REMITTANCES MADE TO I.T.A NOS.5562 TO 5581/ MUM/2008 & I.T.A NO.5585/ MUM/2008 3 DENMARK AND GERMANY AND DIRECTED THE ASSESSING OFFI CER TO REFUND THE AMOUNT OF TAX SO DEPOSITED BY IT. [PARAS 9 10 11] FURTHER THE PROVISIONS OF SECTION 240 VERY CATEGORI CALLY PROVIDE THAT WHERE AN ORDER IS PASSED IN APPEAL OR OTHER PROCEEDINGS UNDER THE ACT THE ASSESSING OFFICER IS DUTY-BOUND TO REFUND AMOUNT DUE TO THE ASSESSEE EVEN WITHOUT THE ASSESSE E MAKING ANY CLAIM IN THAT BEHALF. IN ADDITION TO THE REFUND OF AMOUNT DUE THE ASSESSEE IS ALSO ENTITLED TO INTEREST ON SUCH REFUND UNDER THE PROVISIONS OF SECTION 244A. ONCE THE PROV ISIONS OF SECTION 240 ARE APPLICABLE TO THE AMOUNT PAID BY THE ASSESSEE AS TAX THEN THE PROVIS IONS OF SECTION 244A WILL APPLY THEREAFTER. [PARA 13] IN THE INSTANT CASE THE REFUND BECAME DUE TO THE A SSESSEE PURSUANT TO THE ORDER OF THE COMMISSIONER (APPEALS) WHEREIN IT WAS HELD THAT AS SESSEE WAS NOT TO DEDUCT TAX AT SOURCE ON THE AMOUNTS REMITTED TO THE RECIPIENT OUTSIDE INDIA . THE REFUND OF MONEY PAID BY THE ASSESSEE BECAME DUE TO IT ON THE PASSING OF THE APPELLATE OR DER IN APPEAL AS PER THE PROVISIONS OF SECTION 240. THE ASSESSEE WAS NOT TO MAKE ANY CLAIM IN THIS REGARD FOR THE ISSUE OF REFUND AS PER THE PROVISIONS OF SECTION 240 WHICH PROVIDES THAT REFU ND IS AUTOMATICALLY DUE TO THE ASSESSEE AFTER THE ORDER IS PASSED IN APPEAL OR ANY OTHER PROCEEDI NGS UNDER THE ACT. SECTION 244A(1) FURTHER PROVIDES THAT IN ADDITION TO REFUND OF ANY AMOUNT B ECOMING DUE TO THE ASSESSEE UNDER THE ACT THE ASSESSEE IS ALSO ENTITLED TO RECEIVE INTEREST O N SUCH REFUNDS WHICH HAVE BECOME DUE TO THE ASSESSEE UNDER THE ACT. THE REFUND IN THE INSTANT C ASE WAS DETERMINED ON ACCOUNT OF THE ORDER GIVING EFFECT TO THE ORDER IN APPEAL PASSED BY THE COMMISSIONER (APPEALS). [PARA 20] CLAUSE ( A ) OF SECTION 244A(1) COVERS THE INSTANCES OF PAYMEN T OF SUMS OF MONEY BY WAY OF ADVANCE TAX OR TDS. CLAUSE ( B ) OF SECTION 244A(1) COVERS ALL OTHER CASES WHEREIN REFUND HAS BECOME DUE TO THE ASSESSEE. THE PHRASE USED IN CLAU SE ( B ) OF SECTION 244A(1) IS IN ANY OTHER CASE. THE EXPLANATION TO CLAUSE ( B ) OF SECTION 244A(1) FURTHER PROVIDES THAT DATE OF PAYMENT OF TAX OR PENALTY MEANS THE DATE ON WHICH THE AMOU NT OF TAX OR PENALTY SPECIFIED IN THE NOTICE OF DEMAND ISSUED UNDER SECTION 156 IS PAID. THE EXPLANATION ATTACHED TO THE MAIN SECTION DOES NOT IN ANY WAY OBLITERATE THE MEANING OF THE S ECTION. [PARA 21] SECTION 156 TALKS OF SERVICE OF A NOTICE OF DEMAND IN THE PRESCRIBED FORM WHERE ANY TAX INTEREST PENALTY FINE OR ANY OTHER SUM IS PAYABLE IN CONSEQ UENCE OF ANY ORDER PASSED UNDER THIS ACT. THE ORDER UNDER SECTION 195(2) HAD BEEN PASSED UNDER TH E PROVISIONS OF THE ACT AND ANY NOTICE OF DEMAND FOR THE SAID AMOUNT DUE PURSUANT TO ORDER PA SSED UNDER SECTION 195(2) WAS BOUND TO BE ISSUED UNDER SECTION 156. [PARA 22] THE PROVISIONS OF CLAUSE ( B ) OF SECTION 244A(1) VERY CATEGORICALLY PROVIDE INT EREST ON ANY REFUND ARISING BECAUSE OF PAYMENT OF TAX IN ANY OTHER CAS E WHICH SHALL INCLUDE THE PAYMENT MADE BY THE ASSESSEE PURSUANT TO ORDER UNDER SECTION 195(2) BY WHICH THE ASSESSING OFFICER REQUISITIONED THE ASSESSEE TO DEDUCT THE TAX AND DEPOSIT THE SAME IN TREASURY BEFORE REMITTING THE AMOUNTS DUE TO THE RECIPIENTS OUTSIDE INDIA. ACCORDINGLY THE ASSESSEE WAS ENTITLED TO RECEIVE INTEREST UNDER SECTION 244A(1)( B ) ON AMOUNTS DEPOSITED PURSUANT TO ORDER PASSED UND ER SECTION 195(2) WHICH IN-TURN HAD BECOME DUE TO THE ASSESSEE BECAUSE OF THE ORDER PASSED IN APPEAL AGAINST THE SAID ORDER UNDER SECTION 195(2). [PARA 23] THE BOARD BY WAY OF CIRCULAR NO. 769 DATED 6-8-199 8 AND CIRCULAR NO. 790 DATED 20-4- 2000 PROVIDED THAT THE ASSESSEE SHALL BE ENTITLED T O REFUND OF SUCH PAYMENTS MADE UNDER SECTION 195 BUT THE AMOUNT PAID INTO THE GOVERNMENT ACCOUN T IN SUCH CASES IS NO LONGER TAX. IN VIEW OF THIS NO INTEREST UNDER SECTION 244A IS ADMISSIBLE ON REFUNDS TO BE GRANTED IN ACCORDANCE WITH THESE CIRCULARS. [PARA 25] THE CIRCUMSTANCES MENTIONED IN THE AFORESAID CIRCUL ARS WERE DIFFERENT FROM THE FACTS AND CIRCUMSTANCES OF THE INSTANT CASE. IN THE CIRCUMSTA NCES REFERRED TO IN THE CIRCULARS THE TAX WAS DEPOSITED BY THE PERSONS ON THEIR OWN AND VOLUNTARI LY WITHOUT ANY DEMAND BEING MADE BY THE I.T.A NOS.5562 TO 5581/ MUM/2008 & I.T.A NO.5585/ MUM/2008 4 ASSESSING OFFICER OR ANY OTHER AUTHORITY UNDER THE ACT. BUT IN THE INSTANT CASE THE AMOUNT WAS PAID PURSUANT TO AN ORDER PASSED BY ASSESSING OFFIC ER UNDER THE PROVISIONS OF SECTION 195(2) AGAINST WHICH THE ASSESSEE FILED AN APPEAL BEFORE T HE COMMISSIONER (APPEALS). IN THE ORDER GIVING APPEAL EFFECT TO THE ORDER OF THE COMMISSIONER (APP EALS) REFUND BECAME DUE TO THE ASSESSEE WHICH IN FACT AROSE BECAUSE OF THE PROVISIONS OF SECTION 240. THE PROVISIONS OF THE ACT PREVAIL OVER THE INSTRUCTIONS ISSUED BY THE BOARD BY WAY OF CBDT CIR CULARS. THE SUPREME COURT IN SANDVIK ASIA LTD. V. CIT [2006] 280 ITR 643/150 TAXMAN 591 HAS HELD THAT WHERE EXCESS AMOUNT OF TAX IS COLLECTED FROM ASSESSEE THE REVENUE MUST COMPENSATE ASSESSEE AND THE COMPENSATION IN THE INSTANT CASE WAS BY WAY OF INTEREST UNDER SECTION 2 44A FOR THE PERIOD WHEN THE AMOUNT WAS WITHHELD. ACCORDINGLY THE ASSESSING OFFICER WAS TO BE DIRECTED TO ALLOW THE INTEREST UNDER SECTION 244A(1)( B ) ON THE AMOUNT DUE TO THE ASSESSEE PURSUANT TO THE ORDER PASSED GIVING EFFECT TO COMMISSIONER (APPEALS)S ORDER IN APPEAL. [PARA 26] 6.1 SINCE THE FACTS ARE IDENTICAL WE RESPECTFULLY FOLLOW THE ABOVE DECISION OF ITAT AND IN THE LIGHT OF THAT WE FIND T HAT THE ORDER OF CIT(A) IS IN CONFIRMITY WITH THE ORDER OF ITAT IN THE CASE OF TATA CHEMICALS LTD. (SUPRA) WHERE JM WAS ONE OF THE PARTY. THUS WE CON FIRM THE ORDERS OF THE CIT(A) AND DISMISS THE GROUND RAISED BY THE REVENU E IN ALL THE APPEALS UNDER CONSIDERATION. RESPECTFULLY FOLLOWING THE DECISION OF THE CO-ORDIN ATE BENCH WHICH IN TURN HAS FOLLOWED THE JUDICIAL PRECEDENT OF THE HONBLE SUPR EME COURT IN THE CASE OF SANDVIK ASIA LTD(SUPRA) WE UPHOLD THE ORDER OF THE CIT (A) A ND DECLINE TO INTERFERE. 5. IN THE RESULT APPEALS FILED BY THE REVENUE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 20 TH OCTOBER 2010 SD/- (N.V.VASUDEVAN) (JUDICIAL MEMBER) SD/- (PRAMOD KUMAR) (ACCOUNTANT MEMBER) MUMBAI DATED 20 TH OCTOBER 2010 PARIDA COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS)-XXXI MUMBA I 4. DIT (INTERNATIONAL TAXATION) MUMBAI 5. DEPARTMENTAL REPRESENTATIVE BENCH L MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR ITAT MUMBAI I.T.A NOS.5562 TO 5581/ MUM/2008 & I.T.A NO.5585/ MUM/2008 5 I.T.A NOS.5562 TO 5581/ MUM/2008 & I.T.A NO.5585/ MUM/2008 6