Income Tax Appellate Tribunal - Delhi
Nhk-Japan Broadcasting Corporation vs Dy. Cit on 10 March, 2006
Equivalent citations: (2006)101TTJ(DELHI)292
ORDER
By the Bench:
These cross-appeals are directed against the combined order of the learned Commissioner (Appeals) dated 30-3-2001 for financial/assessment year 1988-89 to 1998-99. As the issues are inter-connected, we find it convenient to dispose of all the twenty two appeals (11 each by the assessee and by the department) together by this combined order. The assessee's appeals are taken up first for consideration.
2. In the first three grounds, the assessee has expressed its grievance against treating it to be an assessee in default under section 201(1) of the Income Tax Act, 1961 (the Act). In the next two grounds, the assessee is aggrieved against holding "housing norm" to be a part of salary subject to deduction of tax at source. In addition to this, this assessee has raised an additional ground only in respect of financial years 1988-89 to 1994-95. By way of this additional ground, the assessee has challenged the validity of the order dated 16-12-1999 passed under sections 201(1) and 201(1A) of the Act on grounds of limitation. After hearing the parties on the admissibility of the ground, we admit the same as it challenges the very jurisdiction of the assessing officer to pass the said order. Thus, in the fitness of things, it would be proper to deal with this ground first, which, to repeat, pertains to financial years 1988-89 to 1994-95.
3. In this regard, the learned counsel for the assessee made a general proposition that wherever no time limit has been prescribed by a statute to do a particular act, such act must be done within a reasonable period of time. According to the learned counsel, this proposition was based on the dictum that power must be exercised bona fide, without negligence and for the purpose for which it is conferred. For this proposition, he referred to several decisions of the Tribunal wherein a reasonable period of four years was read in to the law by the Tribunal for passing orders under sections 201(1) and 201(1A). However, he also brought to our notice a solitary contrary decision of the Tribunal on the issue in the case of Thai Airways International Public Co. Ltd. 2 SOT 389. In this connection, the learned counsel highlighted the anguish of the Supreme Court in the case of Sub-Inspector Rooplal (2000) 1 SCC 644 (SC) wherein the court expressed its displeasure over the fact that a subsequent Bench of a Tribunal had knowingly not followed the view taken by a Co-ordinate Bench of the same Tribunal. On the other hand, the learned departmental Representative placed sole reliance on the decision in Thai Airways (supra) and contended that all the decisions relied upon by the learned counsel had been, considered in Thai Airways. The learned departmental Representative also contended that a different view could be taken if there was new material or where it was necessary to do so on a closer and more analytical approach. For this proposition, the learned Departmental Representative relied on the following judgments (1) CIT v. Kalpetta Estatas Ltd. (1995) 211 ITR 635 (Ker) (2) J. Bheemananda Gupta v. Asstt. CIT (2001) 250 ITR 537 (Kar) (3) Jt. Family of Udayan Chinubhai v. CIT (1967) 63 ITR 416 (SC) To the above arguments of the learned Departmental Representative, the reply of the learned counsel was that on facts more analysis can be made but not on a question of law.
4. We have heard the rival contentions. Let us first consider the fact that the learned counsel has placed on record as many as six decisions of the Tribunal in support of the proposition propagated by him. They are :
(1) Raymond Woollen Mills Ltd. v. ITO (1996) 57 ITD 536 (Bom) (2) Sahara Airlines Ltd. v. Dy. CIT (2002) 83 ITD 11 (Del) (3) Mitsubishi Corpn. v. Dy. CIT (2003) 85 ITD 414 (Del) (4) Asstt. CIT v. Pepsi Foods Ltd. (2003) 129 Taxman 73 (Del)(Mag) (5) Sheraton International Inc. v. Dy. CIT (2003) 85 ITD 110 (Del) (6) Motorola Inc. v. Dy. CIT (2005) 95 ITD 269 (Del)(SB).
Out of the above six, of course, the last two pertain to the issue of notice under section 142(1) requiring the assessee to file the return of income, whereas the first four pertain to the passing of the order under section 201. Nonetheless, all the six decisions are unequivocal in stating that where no statutory time limit has been prescribed, the act required to be done should be done within a reasonable period of time. In the present appeals, we are concerned with the order passed under section 201 of the Act. In the four decisions which pertain to order under section 201, it has been held that four years is a reasonable period of time to pass such an order. In those cases, the orders were passed beyond a period of four years and hence, were held to be invalid.
5. Pitted against the above is the solitary order in the case of Thai Airways (supra). In view of the conflicting views expressed by the Co-ordinate Benches of the same Tribunal, one of the courses open to us is to refer the matter to a Special Bench. However, we are not inclined to do so on account of several reasons which we now proceed to record.
6. First and foremost, the Tribunal has questioned the authority of the Tribunal to read a time limit where none is prescribed in the statute. In the case of Motorola (supra), a larger Bench of the Tribunal considered the issue whether notice issued under section 142(1) was barred by limitation though no limitation period was prescribed under the Act. Thus, when a larger Bench of the Tribunal had assumed upon itself to determine a similar issue, we see no reason to refer this matter to the Special Bench.
7. Secondly, a similar issue was considered by the Supreme Court in the case of Government of India v. Citadel Fine Pharmaceuticals (1900) 184 ITR 467 (SC). In this case also a similar plea to raise the demand within 6 reasonable period was raised. The court held that the affected person had a right to raise such a plea and that the relevant officer could decide the issue. Thus, when the relevant officer in that case could decide the issue, we fail to understand as to how an appellate authority like the Tribunal cannot take upon itself to decide it. Hence, for this reason also we are not inclined to refer the matter to the Special Bench.
8. Coming to the issue proper, as mentioned above, we have two views before us. The question is which of the two views commend itself for adoption. We have six views in faVour of the assessee, four of them directly on the passing of the order under section 201. There is only one decision taking a contrary view against the assessee. A somewhat similar situation was there before the Supreme Court in the case of CIT v. P.J. Chemicals Ltd. (1994) 210 ITR 830 (SC). The court observed as follows :
"It is, of course, not the numerical strength that prevails though the fact that a particular view has commended itself to a majority of the High Courts in the country is a matter for consideration."
9. In the prevent case also, besides the numerical strength, otherwise also, the case of the assessee is not on a weak footing inasmuc;h as that the plea of reasonable cause for not deducting the tax at source on the foreign component of salary stands accepted by the Tribunal for these very years in penalty proceedings. This was in ITA Nos. 3019 to 3029/Del/2001, dated 17-9-2004 whereby the penalty levied under Section 271C was cancelled. In this order, the Tribunal has relied on its orders in case of similarly placed other companies, viz. Marubeni Corporation (Liaison Office) v. Jt. CIT (ITA Nos. 3581 to 3587/Del/2000, dated 11-12-2001) (reported at (2003) 78 TTJ (Del) 297-ED), Fuji Bank Ltd. (ITA Nos. 2744 to 2750/Del/2000, dated 20-12-2001) and Mitsui & Co. Ltd. (ITA No. 87/Del/1999, dated 6-5-2004).
10. Further, in the assessee's case, the Tribunal also found that even before the survey, the assessee was trying to resolve the dispute and they had prepared a letter which was handed over to the survey officials on the date of survey itself and had paid the tax and interest, before the order under sections -201(1) and, 201(1A) was passed. It is not in dispute that the period under consideration was a particular period during which most of the foreign companies were in doubt about the taxability of the foreign component of the salary. It cannot be disputed that under section 192, what the deductor is expected to do is to make a bona fide estimate of the salary and deduct tax therefrom. In the present case, the assessee has proved its bona fides to the hilt and thus, cannot be regarded as an assessee in default. The assessee's case is fully covered in its favour by several decisions of the Tribunal and hence we need not detain ourselves for long to discuss at length the issues before us. In the light of the foregoing discussion, we hold the orders for financial years 1988-89 to 1994-95 to be invalid on grounds of limitation and for financial years 1995-96 to 1998-99, we hold the assessee not to be in default.
11. Since orders for seven years are held to be invalid and since the assessee is held to be not in default for the remaining years generally, we need riot go into the issue of taxability of "housing norms".
12. Coming to t he appeals by the department, the only issue relates to the taxability of citizen tax. In this connection, it is found that it is a statutory levy in Japan which is required to be with held by the employers from the salaries of their employees. Thus, following the decision of the, -Mumbai Bench of the Tribunal in the case of Gallotti Raoul v. Asstt. CIT (1997) 61 ITD 453 (Bom), it is held that the income is diverted at source by way of an overriding title and hence, not liable to be included in the total income of the assessee. We see no infirmity in the order of the Commissioner (Appeals) who has relied on the aforementioried order of the Tribunal. Therefore, the ground raised by the department, stands rejected. -
13. In the result, all the appeals by the assessee are allowed and those of the department are dismissed.