Jal Hotels Company Ltd., Gurgaon v. DDIT, New Delhi

ITA 975/DEL/2011 | 2006-2007
Pronouncement Date: 29-09-2011 | Result: Dismissed

Appeal Details

RSA Number 97520114 RSA 2011
Assessee PAN AABCJ4020B
Bench Delhi
Appeal Number ITA 975/DEL/2011
Duration Of Justice 7 month(s) 7 day(s)
Appellant Jal Hotels Company Ltd., Gurgaon
Respondent DDIT, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 29-09-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 29-09-2011
Date Of Final Hearing 29-09-2011
Next Hearing Date 29-09-2011
Assessment Year 2006-2007
Appeal Filed On 21-02-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `D: NEW DELHI BEFORE SHRI C.L.SETHI JUDICIAL MEMBER AND SHRI A.N. PAHUJA ACCOUNTANT MEMBER I.T. A. NOS.975/DEL/2011 & 5758/DEL/2010 ASSESSMENT YEARS : 2006-07 & 2007-08 JAL HOTELS COMPANY LTD. DY. DIRECTOR OF INCOME-T AX C/O AUTHORIZED REPRESENTATIVE VS. CIRCLE 3(1)/3(2) SR BATLIBOI & CO. INTERNATIONAL TAX GOLF VIEW CORPORATE TOWER-B NEW DELHI. SECTOR-42 SECTOR ROAD GURGAON. PAN: AABCJ4020B I.T. A. NO.864/DEL/2011 ASSESSMENT YEAR : 2006-07 DY. DIRECTOR OF INCOME-TAX JAL HOTELS COMPANY LTD . CIRCLE 3(1) VS. C/O AUTHORIZED REPRESENTATIVE INTERNATIONAL TAX SR BATLIBOI & CO. NEW DELHI. GOLF VIEW CORPORATE TOWER-B SECTOR-42 SECTOR ROAD GURGAON. PAN: AABCJ4020B (APPELLANTS) (RESPONDEN TS) ASSESSEE BY : S/SHRI ARIJIT CHAKRAVARTY CA & MANONEET DALAL ADVOCATE DEPARTMENT BY : SHRI N.K. CHAND SR. DR. O R D E R PER C.L. SETHI JUDICIAL MEMBER: ITA NO.975/DE/2011 IS FILED BY THE ASSESSEE AGAINST THE ORDER DATED 17.12.2010 PASSED BY THE LEARNED COMMISSIONER OF IN COME-TAX (APPEALS) IN 2 THE MATTER OF AN ASSESSMENT MADE BY THE ASSESSING O FFICER UNDER SEC.143(3) OF THE INCOME-TAX ACT 1961 (THE ACT) FOR THE ASSES SMENT YEAR 2006-07. 1.1 ITA NO.5758/DEL/2010 IS FILED BY THE ASSESSEE AGAINST ASSESSMENT ORDER UNDER SEC. 144C READ WITH SECTION 143(3) OF T HE ACT MADE BY THE ASSESSING OFFICER FOR THE ASSESSMENT YEAR 2007-08 A FTER FOLLOWING THE DIRECTIONS OF THE DISPUTE RESOLUTION PENAL (DRP) GI VEN UNDER SEC. 144C OF THE ACT. 1.2 ITA NO.864/DEL/2011 IS FILED BY THE REVENUE FOR THE A.Y. 2006-07. 2. IN THE APPEAL FILED BY THE ASSESSEE FOR THE ASSE SSMENT YEAR 2006-07 THE VARIOUS GROUNDS OF APPEAL RAISED BY THE ASSESSE E REVOLVED AROUND THE FOLLOWING ISSUES:- (I) WHETHER THE ASSESSEE HAS FIXED PLACE PE IN INDIA UN DER ARTICLE 5 OF INDIA JAPAN DTAA WITH REFERENCE TO THE ASSESSEES HOTEL BUSINESS IN INDIA THROUGH PREMISES OF SUNAIR HOTELS LTD.? (II) WHETHER THE ASSESSEES ENTIRE REVENUE FROM SERVICES RENDERED TO SUNAIR HOTELS LTD. IS TAXABLE UNDER ART ICLE 7 OF INDIA JAPAN DTAA AND WHETHER IT CAN BE TAXED UNDER ARTICLE 12(5) READ WITH ARTICLE 7 OF THE DTAA? (III) WHETHER THE ASSESSEES ENTIRE REVENUE FROM SERVICES RENDERED TO SUNAIR HOTELS IS TO BE TAXED IN INDIA O R WHETHER SERVICES RENDERED FROM OUTSIDE INDIA CAN BE SAID T O BE ATTRIBUTED TO BE IN INDIA? (IV) WHETHER DIRECT EXPENSES INCURRED BY THE ASSESSEE IN RENDERING SERVICES TO SUNAIR HOTELS LTD. ARE DEDUCT IBLE WHILE DETERMINING ASSESSEES INCOME TAXABLE IN INDIA? 3 (V) WHETHER ENTIRE REVENUE FROM SUNAIR HOTELS IS TAXABL E UNDER SEC. 44D READ WITH SEC. 115A OF THE ACT ON GROSS BA SIS? (VI) WHETHER REIMBURSEMENT OF EXPENSES INCURRED BY THE ASSESSEE ON BEHALF OF SUNAIR HOTELS LTD. IS INCOME OF THE ASSESSEE? 3. IN THE ASSESSMENT YEAR 2007-08 THE IDENTICAL ISS UES HAVE BEEN RAISED BY THE ASSESSEE. 4. IN THE COURSE OF HEARING OF THESE APPEALS THE L EARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE WISHES TO WITHDRAW THE AFORESAID TWO APPEALS FILED BY THE ASSESSEE FOR THE ASSESSMEN T YEARS 2006-07 AND 2007-08 TO BUY PEACE AND AVOID LITIGATION. IN THIS RESPECT A LETTER DATED 12 TH MAY 2011 HAS BEEN FILED BY THE ASSESSEES AUTHORI ZED REPRESENTATIVE NAMELY SR BATLIBOI & CO. THE ASSESSEE HAS FURTHER SUBMITTED THAT THE ASSESSEE HAS WITHDRAWN THE APPEALS FOR THE ASSESSME NT YEARS 2006-07 AND 2007-08 WITHOUT PREJUDICE TO THEIR RIGHT TO CONTEST THE ISSUE INVOLVED IN THE DEPARTMENTAL APPEAL PERTAINING TO THE ASSESSMENT YE AR 2006-07 WHERE THE ISSUE WITH REGARD TO THE CHARGING OF INTEREST UNDER SC. 234B IS ONLY INVOLVED. IN THE LIGHT OF THE ASSESSEES CATEGORICAL SUBMISSI ON THAT THE ASSESSEE WISHES TO WITHDRAW THE APPEALS TO BUY PEACE AND AVOID LITI GATION WE DISMISS THE AFORESAID TWO APPEALS FILED BY THE ASSESSEE ON WITH DRAWAL. 4 5. NOW WE COME TO THE APPEAL FILED BY THE REVENUE F OR THE ASSESSMENT YEAR 2006-07. 6. THE ONLY GROUND RAISED BY THE REVENUE IN THIS AP PEAL IS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN RELYING UPON THE DECISION OF TH E HONBLE DELHI HIGH COURT ORDER IN THE CASE OF JACOB CIVIL INC./MITSUBISHI CORPORATION DIRECTING THE AO TO DE LETE THE INTEREST U/S 234B OF THE IT ACT. 7. THE LEVY OF INTEREST UNDER SEC. 234B OF THE ACT BY THE ASSESSING OFFICER HAS BEEN CANCELLED BY THE LEARNED CIT(A) AF TER FOLLOWING THE DECISION OF JURISDICTIONAL HIGH COURT OF DELHI IN T HE CASE OF DIRECTOR OF INCOME-TAX VS. JACOBS CIVIL INCORPORATED/MITSUBISHI CORPORATION (2010) 194 TAXMAN 495 (DELHI) WHERE IT HAS BEEN HELD THAT ONC E IT IS FOUND THAT THE LIABILITY TO PAY THE TAX WAS THAT OF THE PAYER AND THE PAYER HAD DEFAULTED IN DEDUCTING THE TAX AT SOURCE THE DEPARTMENT IS NOT REMEDILESS AND CAN TAKE ACTION AGAINST THE PAYER UNDER THE PROVISIONS OF SE C. 201 AND COMPUTE THE AMOUNT ACCORDINGLY. NO DOUBT IF THE PAYER WHO HA S TO MAKE THE PAYMENT TO THE NON-RESIDENT HAD DEFAULTED IN DEDUCTING THE TAX AT SOURCE FROM SUCH PAYMENTS THE NON-RESIDENT WOULD NOT BE ABSOLVED FR OM PAYMENT OF TAXES THEREUPON; HOWEVER IN SUCH A CASE THE NON-RESIDEN T WOULD BE LIABLE TO PAY TAX AND THE QUESTION OF PAYMENT OF ADVANCE TAX WOUL D NOT ARISE. THIS WOULD BE CLEAR FROM READING OF SEC. 191 ALONG WITH SEC. 2 09(1)(D) OF THE ACT. FOR 5 THIS REASON IT WOULD NOT BE PERMISSIBLE FOR THE RE VENUE TO CHARGE ANY INTEREST UNDER SEC. 234B OF THE ACT. 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. 9. IN THE COURSE OF HEARING OF THIS APPEAL THE LEA RNED DR HAS FAIRLY CONCEDED THAT AS POSITION EXISTS TODAY THE CASE IS COVERED BY THE DECISION OF JURISDICTIONAL HIGH COURT OF DELHI IN THE ABOVE REF ERRED CASE AGAINST WHICH THE DEPARTMENT IS IN APPEAL BEFORE THE HONBLE SUPR EME COURT. 10. SINCE THE ISSUE IS PRESENTLY COVERED BY THE DEC ISION OF THE JURISDICTIONAL HIGH COURT OF DELHI IN THE ABOVE REF ERRED CASE AND SINCE IN THE PRESENT CASE THE PAYER HAD DEFAULTED IN DEDUCTING THE TAX AT SOURCE FROM THE PAYMENT MADE TO THE PRESENT ASSESSEE THE ASSESSEE CANNOT BE HELD RESPONSIBLE FOR NON-PAYMENT OF ADVANCE TAX AND AS S UCH IT WOULD NOT BE PERMISSIBLE FOR THE REVENUE TO CHARGE INTEREST UNDE R SEC. 234B OF THE ACT. RESPECTFULLY FOLLOWING THE DECISION OF THE JURISDIC TIONAL HIGH COURT OF DELHI IN THE ABOVE REFERRED CASE OF JACOBS CIVIL INCORPOR ATED/MITSUBISHI CORPORATION (SUPRA) WE ARE INCLINED TO UPHOLD THE ORDER OF THE LEARNED CIT(A) IN CANCELLING THE INTEREST CHARGED UNDER SEC . 234B OF THE ACT BY THE AO. 6 ITA NOS.864 & 975/DEL/2011 & 5758/DEL/2010 11. IN THE RESULT THE APPEALS FILED BY THE ASSESSE E FOR THE ASSESSMENT YEARS 2006-07 AND 2007-08 ARE DISMISSED ON WITHDRAW AL AND APPEAL FILED BY THE REVENUE FOR THE ASSESSMENT YEAR 2006-07 IS D ISMISSED. 12. THIS DECISION WAS PRONOUNCED IN THE OPEN COURT IMMEDIATELY AFTER THE HEARING WAS OVER ON 29 TH SEPTEMBER 2011. SD/- SD/- (A.N. PAHUJA) (C.L. SETHI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 29 TH SEPTEMBER 2011. COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER *MG DEPUTY REGISTRAR ITAT.