STANDARD CHARTERED BANK, MUMBAI v. DCIT (TDS) 3(2), MUMBAI

ITA 6052/MUM/2014 | 2011-2012
Pronouncement Date: 08-11-2017 | Result: Allowed

Appeal Details

RSA Number 605219914 RSA 2014
Assessee PAN AABCS4681D
Bench Mumbai
Appeal Number ITA 6052/MUM/2014
Duration Of Justice 3 year(s) 1 month(s) 9 day(s)
Appellant STANDARD CHARTERED BANK, MUMBAI
Respondent DCIT (TDS) 3(2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 08-11-2017
Appeal Filed By Assessee
Tags No record found
Order Result Allowed
Bench Allotted E
Tribunal Order Date 08-11-2017
Assessment Year 2011-2012
Appeal Filed On 29-09-2014
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH MUM BAI BEFORE S/SHRI RAJENDRA A.M. AND SANDEEP GOSAIN J.M . ./ ././ ./ ITA NO. 3339-40/MUM/2014 / ASSESSMENT YEAR: 2010-11 ./ ././ ./ ITA NO. 6052/MUM/2014 / ASSESSMENT YEAR: 2011-12 STANDARD CHARTERED BANK (TAXN. DEPTT) C-38/39 G-BLOCK BEHIND MCA CLUB 7 TH FLOOR FINANCE DIVN BKC BANDRA EAST MUMBAI-400 051. PAN: AABCS 4681 D VS. ACIT-(TDS)-3(2) MUMBAI-400 002. ( / // / APPELLANT ) ( / RESPONDENT ) REVENUE BY: SHRI MANJUNATHSWAMY-CIT ASSESSEE BY: NONE / // / DATE OF HEARING: 28/09/2017 !' / DATE OF PRONOUNCEMENT: 08.11.2017 1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT 1961(ACT) / // / -PER RAJENDRA AM:- CHALLENGING THE ORDERS DATED 14/03/2014 AND 14/07/2 014 OF THE CIT(A)-14 MUMBAI THE ASSESSEE HAS FILED THE PRESENT APPEALS FOR THE ABOV E MENTIONED ASSESSMENT YEARS(AY.S). ASSESSEE IS A FOREIGN BANK AND IS PROVIDING BANKING SERVICES. BRIEF FACTS: 2 .EFFECTIVE GROUND OF APPEAL IS ABOUT TREATING THE P AYMENT MADE TO VENDORS AS PROFESSIONAL / TECHNICAL FEES U/S.194 J OF THE ACT.A SURVEY ACTION U/S. 133A OF THE ACT WAS CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSEE ON 01.02.2011 AN D STATEMENT OF SR. MANAGER (TAXATION) WERE RECORDED ON OATH.THE ASSESSEE WAS ASKED TO EXP LAIN TDS COMPLIANCE IN RESPECT OF CERTAIN EXPENSES. VIDE ITS LETTER DATED 21/02/2011 THE ASSESSEE FILED DETAILS AS REQUIRED BY THE AO.AFTER CONSIDERING THE SAME THE AO OBSERVED THAT THE ASSESSEE HAD MADE PAYMENTS TO M/S. BLOOMBERG DATA SERVICES PVT. LTD. (RS.4.02 CRORES) M/S. REUTER INDIA PVT. LTD.(RS.13.50 CRORES) AND M/S. CRISIL LTD. (RS. 1.26 CRORES)DURIN G THE YEAR UNDER CONSIDERATION THAT THE ASSESSEE HAD DEDUCTED TAX AT SOURCE AS PER THE PROV ISIONS OF SECTION 194C OF THE ACT.THE AO WAS OF THE OPINION THAT SERVICES RENDERED BY THE AB OVE REFERRED THREE ENTITIES WERE OF MANAGERIAL AND TECHNICAL IN NATURE AND THAT THE ASS ESSEE SHOULD HAVE DEDUCTED TAX U/S.119J OF THE ACT.HE ISSUED A NOTICE U/S. 201(1) TO THE ASSES SEE TO EXPLAIN AS TO WHY IT SHOULD NOT BE TREATED AS ASSESSEE IN DEFAULT FOR NON DEDUCTION OF TAX AS PER THE PROVISIONS OF SECTION 3339-3340/M/14;6052/M/14- STANDARD CHARTERED BANK 2 194J.THE ASSESSEE FILED ITS REPLY ON 16/03/2011 ST ATING THAT PAYMENT MADE BY IT WAS NOT ROYALTY/FEE FOR TECHNICAL SERVICES. HOWEVER THE AO WAS NOT CONVINCED WITH THE EXPLANATION FILED AND HELD THAT REUTER INDIA PVT. LTD. AND BLOO MBERG DATA SERVICES PVT. LTD.WERE PROVIDING ONLINE INFORMATION AND DATABASE MANAGEMEN T SERVICES INTELLECTUAL PROPERTY SERVICES BUSINESS AUXILLIARY SERVICES THAT CRISIL LTD. WAS INDIAS LEADING RATING RESEARCH RISK AND POLICY ADVISORY COMPANY THAT THEY WOULD P ROVIDE HIGH END RESEARCH THAT SERVICES PROVIDED BY THEM ARE COPYRIGHT PROTECTED THAT THEY HAD PROVIDED SERVICES SOLELY FOR THE ASSESSEES INTERNAL BUSINESS THAT THE DATA /INFOR MATION PROVIDED WOULD BE SIMILAR TO THAT OF PROVIDING TECHNICAL OR CONSULTANCY SERVICES AS PER PROVISIONS OF SECTION 194J OF THE ACT. HE ALSO REFERRED TO THE EXPLANATION-2 OF SECTION -9(1) (VI) OF THE ACT AND STATED THAT PAYMENT MADE BY THE ASSESSEE TO THE ABOVE MENTIONED THREE COMPANIES WOULD ATTRACT PROVISIONS OF SECTION 194J OF THE ACT THAT REUTER INDIA LTD. HAD TREATED THE RECEIPT FROM THE ASSESSEE AS RECEIPT CHARGEABLE U/S. 194J OF THE ACT.FINALLY HE HELD THAT THE ASSESSEE WAS IN DEFAULT U/S. 201(1) OF THE ACT FOR NON DEDUCTION OF TAX U/S. 194 J TO THE TUNE OF RS.1.52CRORES. THE ASSESSEE HAS ALSO INFORMED THE AO THAT BLOOMBER G REUTER AND CRISIL HAD FILED THEIR RESPECTIVE RETURNS OF INCOME FOR THE YEAR UNDER APP EAL THAT THE RETURNS INCLUDED THE INCOME EARNED FROM THE ASSESSEE THAT AS PER THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF HINDUSTAN COCA COLA BEVERAGES PVT.(293ITR226)DEMAND FOR SHORT/NON DEDUCTION OF TAX COULD NOT BE ENFORCED THAT DUE TAXES WERE PAID BY RECIPIENT.THE AO REFERRING TO CBDT CIRCULAR NO.275/201/95-IT(B) DATED 29/01/1997 HELD THAT DEMAND RAISED BY HIM U/S. 201(1) COULD NOT BE ENFORCED. 3. AGGRIEVED BY THE ORDER OF AO THE ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY(FAA)AND MADE DETAILED SUBMISSIONS. IT ALS O RELIED UPON CERTAIN CASE LAWS.AFTER CONSIDERING THE ORDER OF THE AO DATED 30/03/2011 PA SSED U/S. 201 OF THE ACT AND SUBMISSION OF THE ASSESSEE THE FAA HELD THAT THE ASSESSEE HAD PAID SUBSCRIPTION CHARGES TO THREE PARTIES FOR LICENSE TO USE THEIR DATA BASE THAT THE PAYMENT FOR SUBSCRIPTION CHARGES WERE IN THE NATURE OF ROYALTY.HE REFERRED TO ORDER OF THE TRIBUNAL IN CASE OF GARTNER IRELAND LTD.(ITA/7101/ MUM/2010)AND HELD THAT THE AO WAS JUSTIFIED IN HOLD ING ASSESSEE IN DEFAULT FOR NOT DEDUCTING TAX U/S.194J OF THE ACT. 4. NONE APPEARED BEFORE US AS STATED EARLIER.THE DEPARTMENT AL REPRESENTATIVE (DR) SUPPORTED THE ORDER OF THE FAA. 5. WE HAVE THE PERUSED THE MATERIAL ON RECORD.WE FIND THAT ASSESSEE HAD MADE PAYMENT TO THREE PARTIES UNDER THE HEAD SUBSCRIPTION CHARGES T HAT IT HAD DEDUCTED TAX AT SOURCE AS PER THE 3339-3340/M/14;6052/M/14- STANDARD CHARTERED BANK 3 PROVISIONS OF SECTION 194C OF THE ACT THAT THE AO A ND THE FAA HAD HELD THAT TAX SHOULD HAVE BEEN DEDUCTED AS PER PROVISIONS OF SECTION 194J THA T BLOOMBERG REUTER AND CRISIL HAD SHOWN THE INCOME RECEIVED FROM THE ASSESSEE IN THEI R RETURNS OF INCOME FILED FOR THE YEAR UNDER APPEAL.WE FIND THAT BASICALLY IT IS A CASE OF SHORT DEDUCTION OF TAX AND NOT A MATTER OF NON DEDUCTION OF TAX AT SOURCE.SECONLDY THE AO HAS ALSO TAKEN A NOTICE OF FILING OF RETURNS BY THE RECIPIENTS OF THE AMOUNTS IN QUESTION.RESPECTFU LLY FOLLOWING THE JUDGMENT OF HINDUSTAN COCA COLA BEVERAGES PVT.(SUPRA)OF THE HONBLE SUPRE ME COURT WE HOLD THAT THERE WAS NO JUSTIFICATION TO HOLD THE ASSESSEE AN ASSESSEE-IN - DEFAULT.SO REVERSING THE ORDER OF THE FAA WE DECIDE THE EFFECTIVE GROUND OF APPEAL IN FAVOUR OF THE ASSESSEE. ITA.S/3340 & 6052/MUM/2014 -AY.S.2010-11 & 2011-12: 6. FOLLOWING OUR EARLIER ORDER WE ALLOW BOTH THE APPEA LS OF THE ASSESSEE AS THE FACTS AND CIRCUMSTANCES OF BOTH THE APPEALS ARE SIMILAR TO TH E FACTS OF EARLIER APPEAL. AS A RESULT ALL THE APPEALS FILED BY THE ASSESSEE S TAND ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 08 TH NOVEMBER 2017. 08 2017 SD/- SD/- ( /SANDEEP GOSAIN) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; /DATED : 08.11.2017. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ 4. THE CONCERNED CIT / 5. DR E BENCH ITAT MUMBAI / . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER / DY./ASST. REGISTRAR /ITAT MUMBAI.