The ITO,Ahmedabad Ward-1(4),, Ahmedabad v. Shell Gas B V, Mumbai

ITA 982/AHD/2007 | 2003-2004
Pronouncement Date: 12-03-2010 | Result: Dismissed

Appeal Details

RSA Number 98220514 RSA 2007
Assessee PAN AAHCS9361C
Bench Ahmedabad
Appeal Number ITA 982/AHD/2007
Duration Of Justice 3 year(s) 6 day(s)
Appellant The ITO,Ahmedabad Ward-1(4),, Ahmedabad
Respondent Shell Gas B V, Mumbai
Appeal Type Income Tax Appeal
Pronouncement Date 12-03-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 12-03-2010
Date Of Final Hearing 09-03-2010
Next Hearing Date 09-03-2010
Assessment Year 2003-2004
Appeal Filed On 06-03-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL : C BENCH : A HMEDABAD (BEFORE HONBLE SHRI T.K. SHARMA J.M. & HONBLE SH RI D.C. AGRAWAL A.M.) I.T.A. NO. 982/AHD./2007 ASSESSMENT YEAR : 2003-2004 INCOME TAX OFFICER WARD-1(4) AHMEDABAD VS.- SHELL GAS B.V. C/O. S.R. BATLIBOI & CO. MUMBAI (PAN : AAHCS 9361 C) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI M.C. PANDIT SR . D.R. RESPONDENT BY : SHRI DHINAL SHAH O R D E R PER SHRI T.K. SHARMA JUDICIAL MEMBER : THIS APPEAL FILED BY THE REVENUE IS AGAINST THE OR DER DATED 08.12.2006 OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-V AHMEDABAD FO R THE ASSESSMENT YEAR 2003-04. 2. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE I S A COMPANY INCORPORATED IN THE NETHERLANDS AND IS A TAX RESIDENT OF THE NETHERLAND S. THE ASSESSEE-COMPANY HAD ENTERED INTO TECHNOLOGY LICENSE AGREEMENTS (TLAS) WITH HAZIRA PORT PRIVATE LIMITED (HPPL). UNDER THE TERMS OF THE AGREEMENT ASSESSEE-COMPANY WAS REQUIR ED TO PROVE A NON-EXCLUSIVE LICENSE OF TECHNOLOGY AND RELATED INTELLECTUAL PROPERTY TO HPP L AND HLPL FOR USE BY THEM IN THE DEVELOPMENT OF PORT AND LNG TERMINAL AT THE HAZIRA PORT (HARIZA PROJECT). DURING THE FINANCIAL YEAR ENDING MARCH 31 2003 FOLLOWING AMOUNTS WERE C OMPUTED IN ACCORDANCE WITH RULE 115 OF THE INCOME TAX RULES 1962 I.E. BY APPLYING THE TE LEGRAPHIC TRANSFER BUYING RATE ON THE DATE ON WHICH THE TAX WAS REQUIRED TO BE DEDUCTED AND WERE ACCRUED TO THE ASSESSEE UNDER THE TLAS. :- (1) RS.247 348 686 FROM HPPL; AND (2) RS.480 147 416/- FROM HLPL. 3. FOR THE ASSESSMENT YEAR UNDER APPEAL IT FILED T HE RETURN OF INCOME UNDER SECTION 139(1) ON 01.12.2003 DECLARING A TOTAL INCOME OF RS.808 32 9 000/- AND CLAIMING A TAX REFUND OF 2 ITA NO. 982/AHD/2007 RS.107 694/-. THIS WAS PROCESSED UNDER SECTION 143( 1) ON 22.06.2004 ON THE RETURNED INCOME. IN THE SAID RETURN INADVERTENTLY THE ASSESSEE DID NOT CLAIM THE BENEFIT OF EXEMPTION UNDER SECTION 10(6A) OF THE INCOME TAX ACT. THEREFORE THE ASSESS EE FILED THE REVISED RETURN UNDER SECTION 139(5) OF THE ACT ON 08.11.2004 DECLARING TOTAL INC OME OF RS.727 496 100/- AND CLAIMING A TAX REFUND OF RS.8 190 948/-. THE ASSESSING OFFICER FRA MED THE ASSESSMENT UNDER SECTION 143(3) ON 29.03.2006 WHEREIN HE HELD THAT THE ASSESSEE IS NO T ELIGIBLE FOR EXEMPTION UNDER SECTION 10(6A) OF THE INCOME TAX ACT. IN THIS ASSESSMENT ORDER TH E ASSESSING OFFICER SIMPLY STATED THAT AFTER DISCUSSION AND VERIFICATION OF THE DETAILS SUBMITTE D AND KEEPING IN VIEW OF THE REVENUE SIDE THE INCOME CLAIMED UNDER SECTION 10(6A) IS DISALLOWED. NO REASONS IN THIS REGARD HAS BEEN GIVEN BY THE ASSESSING OFFICER. 4. ON APPEAL BEFORE THE LEARNED COMMISSIONER OF INC OME TAX(APPEALS) THE LD. COUNSEL OF THE ASSESSEE CONTENDED AS UNDER :- 1. THE LD. ASSESSING OFFICER HAS ERRED ON FACTS AN D IN LAW IN DENYING THE EXEMPTION PROVIDED UNDER SECTION 10(6A) OF THE ACT TO THE APPELLANT IN PURSUANCE TO THE TLAS ENTERED BY THE APPELLANT WIT H HPPL AND HLPL WITHOUT GRANTING ANY SPECIFIC REASON IN HIS ORDER. 2. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE LD. ASSESSING OFFICER REQUESTED THE APPELLANT TO FURNISH EXPLANATION ALON GWITH RELEVANT DOCUMENTATION IN SUPPORT OF INCOME CLAIMED EXEMPT U NDER SECTION 10(6A) OF THE ACT. 3. IN RESPONSE TO THE AFOREMENTIONED QUERY THE AP PELLANT VIDE ITS SUBMISSION DATED NOVEMBER 17 2005 SUBMITTED THAT I T FULFILS ALL INN CONDITIONS SPECIFIED UNDER SECTION 10(6A) OF THE ACT AND ACCOR DINGLY IS ELIGIBLE TO THE BENEFIT PROVIDED THEREIN. HOWEVER THE LD. ASSESSIN G OFFICER HAS DISREGARDED THE REPLY FURNISHED BY THE APPELLANT AND HAS DISALL OWED THE EXEMPTION WITHOUT PROVIDING ANY SPECIFIC REASON IN THE ASSESSMENT OR DER. 4 THE APPELLANT HUMBLY SUBMIT THAT THE LD ASSESSIN G OFFICER DID NOT PROVIDE ANY INDICATION DURING THE ASSESSMENT PROCEE DINGS THAT HE DID NOT AGREE WITH THE EXEMPTION CLAIMED BY THE APPELLANT AND DID NOT PROVIDE ANY OPPORTUNITY TO THE APPELLANT LO PROVIDE ANY CLARIFI CATION/SUBMISSION IN ORDER TO SUBSTANTIATE ITS CLAIM. 5 WITHOUT PREJUDICE TO THE ABOVE AND IN ADDITION THE LD. ASSESSING OFFICER HAS NOT PROVIDED ANY REASONS IN THE ASSESSM ENT ORDER FOR DISALLOWING THE CLAIM AND HAS THEREFORE FAILED TO PASS A SPEAK ING ORDER. 6. IN THIS REGARD THE APPELLANT HAS RELIED ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS IN SUPPORT OF THE PRINCIPLE THAT A S PEAKING ORDER IS REQUIRED TO BE PASSED TO MEET THE TEST OF NATURAL JUSTICE. 3 ITA NO. 982/AHD/2007 THE ASSESSEE HAS RELIED EN THE FOLLOWING DECISIONS: - (I) GAUTAM HARILAL GOTECHA VS DCIT (2005) (200 CTR139) (GUJ) (II) CIT VS BRIGHT AUTOMOTIVE AND PLASTICS LID (2005) 2 80 ITR 157 (III) SONY (I) LTD VS CIT W P (C) NO. 5301/2005 276 ITR 276 (DEL) 7. WITHOUT PREJUDICE LO ABOVE AND IN ADDITION WE WOULD LIKE TO SUBMIT THAT THE APPELLANT IS ELIGIBLE FOR EXEMPTION UNDER SECTION 10(6A) OF THE ACT. 8. UNDER THE TERMS OF ARTICLES 3.7 OF THE TLAS AN Y INDIAN INCOME TAXES ON THE PAYMENTS MADE BY HPPL AND HLPL WERE TO BE BORNE BY HPPL AND HLPL RESPECTIVELY THE APPELLANT HAS CLAIMED EXEMPTION UN DER SECTION10(6A) OF THE ACT IN RESPECT OF INDIAN INCOME TAXES PAYABLE ON IN COME ACCRUING UNDER TLAS FROM HPPL AND HLPL. 9. SECTION 10(6A) PROVIDES EXEMPTION IN CASE OF A FOREIGN COMPANY WHICH IS DERIVING INCOME BY WAY OF ROYALTY OR FEES FOR TE CHNICAL SERVICES FROM AN INDIAN CONCERN IN PURSUANCE OF AN AGREEMENT MADE BY THE FOREIGN COMPANY WITH THE INDIAN CONCERN (PRIOR TO JUNE 1 2002) WH ICH HAS BEEN APPROVED BY THE CENTRAL GOVERNMENT. 10 SECTION 10(6A) OF THE ACT IS REPRODUCED BELOW: WHERE IN THE CASE OF A FOREIGN COMPANY DERIVING IN COME BY WAY OF ROYALTY OR FEES FOR TECHNICAL SERVICES RECEIVED FRO M GOVERNMENT OR AN INDIAN CONCERN IN PURSUANCE OF AN AGREEMENT MADE BY THE FOREIGN COMPANY WITH GOVERNMENT OR THE INDIAN CONCERN AFTER THE 31 ST DAY OF MARCH 1976 BUT BEFORE 1 ST DAY OF JUNE 2002 AND (A) WHERE THE AGREEMENT RELATES TO A MUTTER INDEED IN THE INDUSTRIAL POLICY FOR THE TIME BEING IN FORCE OF THE GOVERNMENT OF INDIA SUCH AGREEMENT IS IN ACCORDANCE WITH THAT PO LICY AND (B) IN ANY OTHER CASE THE AGREEMENT IS APP ROVED BY THE CENTRAL GOVERNMENT. THE TAX ON SUCH INCOME IS PAYABLE UNDE R TERMS OF THE AGREEMENT BY GOVERNMENT OR THE INDIAN CONCERN TO T HE CENTRAL GOVERNMENT THE TAX SO PAID' 11. IN THE PRESENT CASE ALL THE CONDITIONS APPLIC ABLE HAVE BEEN SATISFIED AND HAVE BEEN EXAMINED BELOW :- FOREIGN COMPANY DERIVING INCOME FROM AN INDIAN CONCERN. SGBV IS A FOREIGN COMPANY WHICH IS DERIVING INCOME FROM HPPL AND HLPL WHICH ARE INDIAN CONCERNS. INCOME DERIVED IS IN THE NATURE OF ROYALTY OR FTS. THE INCOME EARNED BY SGBV IS IN THE NATURE OF ROYALTY. THE PAYMENT IS IN PURSUANCE OF AN AGREEMENT MADE BY THE FOREIGN COMPANY WITH THE INDIAN SGBV HAS ENTERED INTO TLAS WITH HPPL AND HLPL. 4 ITA NO. 982/AHD/2007 CONCERN. THE AGREEMENT HAS BEEN ENTERED INTO BEFORE JUNE 1 2002. THE TLAS WERE ENTERED ON MAY 31 2002 I.E. BEFORE JUNE 1 2002. THIS FACT HAS BEEN EVIDENCED BY THE ATTESTATION OF THE TLAS BY THE NOTARY PUBLIC. THE AGREEMENT IS APPROVED BY THE CENTRAL GOVERNMENT THE TLAS HAVE BEEN APPROVED BY THE MINISTRY OF COMMERCE AND INDUSTRY DEPARTMENT OF INDUSTRIAL POLICY AND PROMOTION SECRETARIAT OF INDUSTRIAL ASSISTANCE VIDE APPROVAL LETTER NO. FC.II. 2(98)/662(97) DATED JANUARY 22 2003. THUS SGBV (A FOREIGN COMPANY) IS DERIVING INCOME I N THE NATURE OF ROYALTY FROM HPPL AND HLPL (INDIAN CONCERNS) IN PURSUANCE OF TLAS (AGREEMENT) WHICH ARE APPROVED BY THE CENTRAL GOVERNMENT. THE T LAS WERE ENTERED INTO PRIOR TO JUNE 1 2002 AND ARE THEREFORE ELIGIBLE F OR EXEMPTION UNDER SECTION 10(6A) OF THE ACT. 12. IN VIEW OF THE ABOVE INDIAN INCOME TAXES BORNE BY HPPL AND HLPL ON PAYMENTS TO SGBV UNDER THE TLAS ARE EXEMPT IN TH E HANDS OF SGBV. 5. AFTER CONSIDERING THE AFORESAID SUBMISSIONS IN THE IMPUGNED ORDER THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) DIRECTED THE AS SESSING OFFICER TO GRANT EXEMPTION UNDER SECTION 10(6A) OF THE ACT FOR THE DETAILED REASONS GIVEN IN PARA 3.2 ON PAGE 4 WHICH READS AS UNDER :- 3.2. I HAVE CAREFULLY CONSIDERED THE ISSUE. AS STA TED EARLIER ASSESSING OFFICER HAS NOT GIVEN ANY REASONS FOR DISALLOWING T HE CLAIM U/S. 10(6A) OF THE ACT. IN THE CASE OF THE ASSESSEE IT IS NOTICED THAT THE AGREEMENTS WERE ENTERED INTO BEFORE FIRST DAY OF JUNE 2002 AND THE SAME HAS ALSO BEEN APPROVED BY GOVERNMENT OF INDIA VIDE LETTER DATED J ANUARY 22/27 2003. THEREFORE ALL THE CONDITIONS LAID DOWN FOR EXEMPTI ON U/S. 10(6A) ARE FULLY SATISFIED IN THIS RESPECT AS NARRATED BY THE LD. AU THORIZED REPRESENTATIVE IN THEIR WRITTEN SUBMISSIONS. ASSESSING OFFICER IS THE REFORE DIRECTED TO GRANT EXEMPTION U/S. 10(6A) OF THE ACT TO THE ASSESSEE. 6. AGGRIEVED BY THIS ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS :- (1) THE CIT.(A) HAS ERRED N LAW AND ON FACTS IN DIRECTI NG THE ASSESSING OFFICER TO GRANT EXEMPTION U/S. 10(6A) OF THE I.T. ACT. (2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE CIT.(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSES SING OFFICER. 5 ITA NO. 982/AHD/2007 7. AT THE TIME OF HEARING ON BEHALF OF REVENUE SHR I M.C. PANDIT SR. D.R. APPEARED AND CONTENDED THAT VARIOUS DETAILS AND DOCUMENTS WHICH WERE FURNISHED BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) WERE NOT FURNIS HED BEFORE THE ASSESSING OFFICER AND FOR THIS REASON IN THE ASSESSMENT ORDER THE ASSESSING OFFICER DISALLOWED THE CLAIM UNDER SECTION 10(6A) OF THE INCOME TAX ACT 1961. HE ACCORDINGLY CONTENDED THAT THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) BE SET ASIDE AN D THE MATTER BE RESTORED TO THE FILE OF ASSESSING OFFICER WITH THE DIRECTION THAT ASSESSING OFFICER MAY RE-EXAMINE THE CLAIM AND RE- ADJUDICATE WHETHER THE ASSESSEE IS ENTITLED FOR EXE MPTION UNDER SECTION 10(6A) AS CLAIMED IN THE REVISED RETURN OF INCOME. 8. ON THE OTHER HAND SHRI DHINAL SHAH LD. COUNSEL APPEARING ON BEHALF OF ASSESSEE VEHEMENTLY OBJECTED TO THE AFORESAID SUBMISSION OF THE LD. DEPARTMENTAL REPRESENTATIVE OF THE REVENUE. HE SUBMITTED THAT ALL THE DETAILS AND DOCU MENTS WERE FURNISHED BEFORE THE ASSESSING OFFICER. NEITHER IN THE ASSESSMENT ORDER NOR IN THE GROUNDS OF APPEAL THERE IS AN ALLEGATION THAT BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEA LS) THE ASSESSEE HAS FURNISHED FRESH DETAILS OR DOCUMENTS IN VIOLATION OF RULE 46A OF TH E INCOME TAX RULES 1962. THE LD. COUNSEL OF THE ASSESSEE FURTHER SUBMITTED THAT WHATEVER DOCUME NTS WERE FURNISHED BEFORE THE ASSESSING OFFICER AND THE SAME WERE ALSO FURNISHED BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) THESE DOCUMENTS ARE ALSO FURNISHED BE FORE THE ITAT. 8.1. THE LD. COUNSEL OF THE ASSESSEE FURTHER SUBMIT TED THAT THE ASSESSEE HAS FULLY SATISFIED ALL THE CONDITIONS LAID DOWN FOR EXEMPTION UNDER SECTIO N 10(6A) OF THE INCOME TAX ACT THEREFORE THE VIEW TAKEN BY THE LEARNED COMMISSIONER OF INCOM E TAX(APPEALS) BE UPHELD. 9. HAVING HEARD BOTH THE SIDES WE HAVE CAREFULLY G ONE THROUGH THE ORDERS OF AUTHORITIES BELOW. AT THE RELEVANT TIME SECTION 10(6A) READS A S UNDER :- SECTION 10(6A) : WHERE IN THE CASE OF A FOREIGN CO MPANY DERIVING INCOME BY WAY OF ROYALTY OR FEES FOR TECHNICAL SERVICES RECEI VED FROM GOVERNMENT OR AN INDIAN CONCERN IN PURSUANCE OF AN AGREEMENT MADE BY THE FOREIGN COMPANY WITH GOVERNMENT OR THE INDIAN CONCERN AFTER THE 31 ST DAY OF MARCH 1976 [BUT BEFORE THE 1 ST DAY OF JUNE 2002] AND (A) WHERE THE AGREEMENT RELATES TO A MATTER INCLUDED IN THE INDUSTRIAL POLICY FOR THE TIME BEING IN FORCE OF THE GOVERNMENT OF I NDIA SUCH AGREEMENT IS IN ACCORDANCE WITH THAT POLICY; AND (B) IN ANY OTHER CASE THE AGREEMENT IS APPROVED BY THE CENTRAL GOVERNMENT 6 ITA NO. 982/AHD/2007 THE TAX ON SUCH INCOME IS PAYABLE UNDER THE TERMS OF THE AGREEMENT BY GOVERNMENT OR THE INDIAN CONCERN TO THE CENTRAL GOV ERNMENT THE TAX SO PAID. EXPLANATION : - FOR THE PURPOSE OF THIS CLAUSE 10 A ND CLAUSE 6B (A) FEES FOR TECHNICAL SERVICES SHALL HAVE THE SAME M EANING AS IN EXPLANATION 2 TO CLAUSE (VII) OF SUB-SECTION (1) OF SECTION 9; (B) FOREIGN COMPANY SHALL HAVE THE SAME MEANING AS IN SECTION 80B; (C) ROYALTY SHALL HAVE THE SAME MEANING AS IN EXPLANA TION 2 TO CLAUSE (VI) OF SUB-SECTION (1) OF SECTION 9. 9.1. IT IS PERTINENT TO NOTE THAT AGREEMENT MADE BY THE ASSESSEE-COMPANY WITH THE INDIAN CONCERN NAMELY M/S. ESSAR GROUP IS BEFORE 1 ST DAY OF JUNE 2002. THE SAID AGREEMENT HAS BEEN APPROVED BY CENTRAL GOVT. PRIOR TO THAT DATE. IN TH ESE CIRCUMSTANCES ALL THE CONDITIONS LAID DOWN FOR EXEMPTION UNDER SECTION 10(6A) ARE FULLY S ATISFIED. ALL THE DOCUMENTS WERE FURNISHED BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER IN A CASUAL MANNER REFUSED TO ALLOW THE EXEMPTION UNDER SECTION 10(6A). IN THE IMPUGNED ORD ER THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) AFTER EXAMINING ALL THE CONDITIONS HE LD THAT THE ASSESSEE-COMPANY HAS SATISFIED ALL THE CONDITIONS LAID DOWN FOR EXEMPTION UNDER SE CTION 10(6A). IN THESE CIRCUMSTANCES WE INCLINE TO UPHOLD THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) AND REJECT THE GROUNDS OF APPEAL OF REVENUE. 10. IN THE RESULT THE APPEAL OF THE REVENUE IS DIS MISSED. THE ORDER WAS PRONOUNCED IN THE COURT ON 12.03.201 0 SD/- SD/- (D.C. AGRAWAL) (T.K. SHARMA ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 12 / 03 / 2010 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE DEPARTMENT. 3) CIT(A) CONCERNED (4) CIT CONCERNED (5) D.R. ITAT AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGISTRAR ITAT AHMEDABAD LAHA/SR.P.S.