Income Tax Appellate Tribunal - Delhi
G.E. Engine Services Mcallen Lp, New ... vs Department Of Income Tax
1
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCHES : "C" NEW DELHI
BEFORE SHRI C.M. GARG, JM AND
SHRI J.SUDHAKAR REDDY, AM
ITA no. 6020/DEL-2010
Assessment Year: 2001-02
ADIT, Circle - 1(2), vs. G.E. ENGINE SERVICES MCALLEN LP
International Taxation, N.Delhi New Delhi
PAN: AAHPG 8923B
ITA no. 6021/DEL-2010
Assessment Year: 2002-03
ADIT, Circle - 1(2), vs. G.E. ENGINE SERVICES MCALLEN LP
International Taxation
ITA no. 6022/DEL-2010
Assessment Year: 2003-04
ADIT, Circle - 1(2), vs. G.E. ENGINE SERVICES MCALLEN LP
International Taxation
ITA no. 6023/DEL-2010
Assessment Year: 2004-05
ADIT, Circle - 1(2), International Taxation vs. G.E. ENGINE SERVICES MCALLEN LP
ITA no. 6024/DEL-2010
Assessment Year: 2005-06
ADIT, Circle - 1(2), International Taxation vs. G.E. ENGINE SERVICES MCALLEN LP
ITA no. 6025/DEL-2010
Assessment Year: 2006-07
ADIT, Circle - 1(2), International Taxation vs. G.E. ENGINE SERVICES MCALLEN LP
ITA no. 6026/DEL-2010
Assessment Year: 2001-02
ADIT, Circle - 1(2), International Taxation vs. G.E. ENGINE SERVICES INC.
ITA no. 6027/DEL-2010
Assessment Year: 2002-03
ADIT, Circle - 1(2), International Taxation vs. G.E. ENGINE SERVICES INC.
ITA no. 6028/DEL-2010
Assessment Year: 2003-04
ADIT, Circle - 1(2), International Taxation vs. G.E. ENGINE SERVICES INC.
2
ITA no. 6029/DEL-2010
Assessment Year: 2004-05
ADIT, Circle - 1(2), International Taxation vs. G.E. ENGINE SERVICES INC.
ITA No. 6030/DEL-2010
Assessment Year: 2005-06
ADIT, Circle - 1(2), International Taxation vs. G.E. ENGINE SERVICES INC.
ITA no. 6031/DEL-2010
Assessment Year: 2006-07
ADIT, Circle - 1(2), International Taxation vs. G.E. ENGINE SERVICES INC.
PAN: AADCG 1809 R
ITA no. 6032/DEL-2010
Assessment Year: 2005-06
ADIT, Circle - 1(2), International Taxation vs. G.E. ENERGY (USA)- LLC
PAN: AADCG 2179 A
ITA no. 6033/DEL-2010
Assessment Year: 2006-07
ADIT, Circle - 1(2), International Taxation vs. G.E. ENERGY (USA)- LLC
PAN: AACCG 4015 E
(Appellant) (Respondent)
Appellant by:- Smt. Poonam Sidhu, Sr.D.R.
Respondent by:- Mr.Sachit Jolly along with
Mr.Rashi Dhir, Adv.
Mr.Rahul Sateja, Adv.
ORDER
PER BENCH All these appeals are filed by the Revenue.
2. Facts in brief:- A survey u/s 133A was conducted at the premises of GEIOC located at AIFACS, 1, Rafi Marg, New Delhi on 2.3.2007. Thereafter 3 Reassessment proceedings were initiated on 22 entities of G.E.Group by issue of notices u/s 148 of the Income Tax Act, 1961 (hereinafter referred to as "the Act") for the AYs 2000-2001 to 2006-07. The Assessing Officer, after rejecting the objections of the assesses to the reopening of assessments, completed assessments u/s 143(3) read with S.147 of the Act.
3. The Assessing Officer held that :
(a) The assessee i.e. 22 GE Overseas entities have a Permanent Establishment in India;
(b)That they have a dependent agency Permanent Establishment in India in the form of G.E.India Industrial P.Ltd. (GEIIPL).
3.1. The Assessing Officer attributed profit to the Permanent Establishment and brought the same to tax. Interest was levied u/s 234A and S. 234B of the Act. Aggrieved the assessee carried the matter in appeal.
4. The Ld.Commissioner of Income Tax (Appelas) disposed of all the appeals by two consolidated orders dt. 30.9.2010 and 2.11.2010. He confirmed the action of the Assessing Officer on the issues of: (a) reopening of assessments;
(b) existence of Permanent Establishment; and (c) attribution of profits to the Permanent Establishment. On the issue of levy of interest u/s 234B of the Act, the Ld.Commissioner of Income Tax (Appeals) followed the binding judgement of the Jurisdictional High Court in the case of M/s Jacab Civil Inc. 330 ITR 578 (Delhi) and decided the issue in favour of the assessee. 4 4.1. All the Revenue appeals that are before us are challenging the deletion of interest levied by the Assessing Officer u/s 234B of the Act, by the Ld.Commissioner of Income Tax (Appeals).
4.2. The grounds are extracted for ready reference.
"1. On the facts and in the circumstances of the case, the Ld. CIT(A) erred in relying on the decision of the Hon'ble Delhi High Court order in the case of M/s Jacab Civil Inc. (2010) ITA No. 491/2008 and directed the AO to delete interest u/s 234B of the I.T. Act.
2. On the facts and in the circumstances of the case, the Ld. CIT(A) erred in not taking the cognizance of the ruling of the Apex Court wherein the Hon'ble Supreme Court in the case of CIT v. M.H. Ghaswala (2001) 252 ITR 1 has ruled that interest u/s 234B is mandatory in nature and the AO does not have any discretion on it."
5. Smt. Punam Sidhu, the Ld.CIT, D.R. submitted that the Revenue has not accepted the judgement of the Jurisdictional High Court on the issue and that an SLP has been filed before the Hon'ble Supreme Court which has been admitted.
6. The ld.Counsel for the assessee Mr.Sachit Jolly submits that the issue is no longer res integra in view of the decision of the Jurisdictional High Court in the case of M/s Jacob Civil Inc.(supra).
7. We have heard rival contentions. On a careful consideration of the facts and circumstances of the case and on perusal of the papers on record and orders of the authorities below, as well as case laws cited, we hold as follows.
8. Interest u/s 234B is levied for the failure to pay advance tax as per the provisions of S.208 and 209 of the Act. All the assesses in these cases, are non-resident companies. The assessees's case is that, if the Assessing 5 Officer's stand that the Revenues received by these G.E.Overseas Entities are held as liable to tax in India, then, as per S.195 of the Act, the payers of such income were under an obligation to deduct tax at source and consequently, in terms of pre-amended S.209(I)(d) of the Act, the assessee was not required to pay advance tax, as the advance tax payable by the tax payer is to be calculated, by reducing the tax on current income, by the amount of tax which would be "deductible or collectable" at source under the Act, during the said F.Y. Consequently, it is argued that interest u/s 234B of the Act was not leviable on the facts of the present case. Reliance is placed on the following decisions.
a) Director of Income Tax v. M/s. Jacabs Civil Incorporated &Ors:
330 ITR 578 (Del)
b) CIT v. Madras Fertilizers Ltd.: 149 ITR 703 (Mad.)
c) DIT (Intl. Taxation) v. NGC Network Asia LLC: 313 ITR 187 (Bom)
d) SedcoForex International Drilling Inc. v. DCIT: 264 ITR 320 (Utt)
e) Motorola Inc v. DIT: 95 ITD 269 (Delhi SB)
f) Qualcomm Incorporated v. ADIT: 153 TTJ 513 (Del)
9. On consideration of the submissions, we find that the issue is covered in favour of the assessees by the judgement of the Jurisdictional High Court. The Hon'ble Delhi High Court in the case of Director of Income Tax vs. Jacabs Civil Inc. 330 ITR 578 held as follows.
"Section 2(1) of the Act defines "advance tax" to mean the advance tax payable in accordance with the provisions of Chapter XVII-C of the Act. These provisions are contained from Section 207 onwards. Section 209 falls under this Chapter. Sub-section (1) thereof deals with four situations under which the advance tax payable by the assessee is to be computed. Admittedly, these cases do not concern with clauses (a) to (c). Clause (d) of sub-Section (1) of Section 209, which is relevant reads as under:-
"(d) The income-tax calculated under clause (a) or clause (b) or clause
(c) shall, in each case, be reduced by the amount of income-tax 6 which would be deductible or collectible at source during the said financial year under any provision of this Act from any income (as computed before allowing any deductions admissible under this Act) which has been taken into account in computing the current income or, as the case may be, the total income aforesaid; and the amount of income-tax as so reduced shall be the advance tax payable."
8. This clause categorically uses the expression "deductable or collectable at source" and it is this clause which is incorporated by the Uttaranchal High Court in the said judgment (supra) in the manner already pointed above. The scheme of the Act in respect of non-residents is clear. Section 195 of the Act puts an obligation on the payer, i.e. any person responsible for paying to a non-resident, to deduct income tax at source at the rates in force from such payments excluding those incomes which are chargeable under the head 'Salaries'. Therefore, the entire tax is to be deducted at source which is payable on such payments made by the payee to the non- resident. Section 201 of the Act lays down the consequences of failure to deduct or pay. These consequences include not only the liability to pay the amount which such a person was required to deduct at source from the payments made to a non-resident but also penalties etc. Once it is found that the liability was that of the payer and the said payer has defaulted in deducting the tax at source, the Department is not remedy-less and therefore can take action against the payer under the provisions of Section 201 of the Income Tax Act and compute the amount accordingly. No doubt, if the person (payer) who had to make payments to the non-resident had defaulted in deducting the tax at source from such payments, the non- resident is not absolved from payment of taxes thereupon. However, in such a case, the non-resident is liable to pay tax and the question of payment of advance tax would not arise. This would be clear from the reading of Section 191 of the Act along with Section 209 (1) (d) of the Act. For this reason, it would not be permissible for the Revenue to charge any interest under Section 234B of the Act.
9. We thus, answer the aforesaid question in favour of the assessee as we are of the opinion that the Tribunal has rightly held that the assessee was not liable to pay any interest under Section 234B of the Act following the judgments of the Uttaranchal and Bombay High Courts." 9.1. The Ld.CIT(A) followed this binding decision of the Jurisdictional High Court. The jdugement of Hon'ble Supreme Court in the case of CIT vs. Anjum 252 ITR 1 relied upon by the Ld.D.R. has been considered by the Jurisdictional High Court in the case of Jacabs Civil Inc. (supra). Thus we 7 find no infirmity in the order of the First Appellate Authority. Hence we uphold the same.
10. In the result the appeals of the Revenue are dismissed.
Order pronounced in the Open Court on 16th July, 2013.
Sd/- Sd/-
(C.M. GARG) (J.SUDHAKAR REDDY)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: the 16th July, 2013
*manga
Copy of the Order forwarded to:
1. Appellant; 2.Respondent; 3.CIT; 4.CIT(A); 5.DR; 6.Guard File By Order Asst. Registrar 8
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