Income Tax Appellate Tribunal - Delhi
Hcl Technologies Denmark Aps, New Delhi vs Acit Circle- 2(1)(1) International ... on 2 July, 2021
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "A" NEW DELHI
BEFORE SHRI G.S. PANNU, VICE PRESIDENT
AND
SHRI AMIT SHUKLA, JUDICIAL MEMBER
S.A. No.102/DEL/2021
Arising out of I.T.A. No.528/DEL/2021
Assessment Year: 2012-13
HCL Technologies Denmark Vs. ACIT, Circle-2(1)(1),
Aps, International Taxation,
New Delhi. New Delhi.
C/O HCL Technologies Ltd.,
806, Siddharth, 96, Nehru
Place,
New Delhi.
TAN/PAN:
(Appellant) (Respondent)
S.A. No.104/DEL/2021
Arising out of I.T.A. No.544/DEL/2021
Assessment Year: 2012-13
HCL Technologies France, Vs. ACIT, Circle-2(1)(1),
New Delhi. International Taxation,
C/O HCL Technologies Ltd., New Delhi.
806, Siddharth, 96, Nehru
Place,
New Delhi.
TAN/PAN: AAECH9154K
(Appellant) (Respondent)
S.A. No.105/DEL/2021
Arising out of I.T.A. No.543/DEL/2021
Assessment Year: 2012-13
HCL Technologies Philippines Vs. ACIT, Circle-2(1)(1),
Inc., International Taxation,
New Delhi. New Delhi.
C/O HCL Technologies Ltd.,
806, Siddharth, 96, Nehru
Place,
New Delhi.
TAN/PAN: AAFCH1422H
(Appellant) (Respondent)
S.As. No.102, 104 to 119/DEL/2021 2
S.A. No.106/DEL/2021
Arising out of I.T.A. No.537/DEL/2021
Assessment Year: 2012-13
HCL Singapore PTE Ltd., Vs. ACIT, Circle-2(1)(1),
New Delhi. International Taxation,
C/O HCL Technologies Ltd., New Delhi.
806, Siddharth, 96, Nehru
Place,
New Delhi.
TAN/PAN: AADCH6267Q
(Appellant) (Respondent)
S.A. No.107/DEL/2021
Arising out of I.T.A. No.559/DEL/2021
Assessment Year: 2012-13
HCL Technologies Germany Vs. ACIT, Circle-2(1)(1),
GMBH, Germany. International Taxation,
C/O HCL Technologies Ltd., New Delhi.
806, Siddharth, 96, Nehru
Place,
New Delhi.
TAN/PAN: AADCH4642P
(Appellant) (Respondent)
S.A. No.108/DEL/2021
Arising out of I.T.A. No.560/DEL/2021
Assessment Year: 2012-13
HCL Poland SP Zoo, Vs. ACIT, Circle-2(1)(1),
Poland. International Taxation,
C/O HCL Technologies Ltd., New Delhi.
806, Siddharth, 96, Nehru
Place,
New Delhi.
TAN/PAN: AAECH9671D
(Appellant) (Respondent)
S.As. No.102, 104 to 119/DEL/2021 3
S.A. No.109/DEL/2021
Arising out of I.T.A. No.561/DEL/2021
Assessment Year: 2012-13
HCL Canada Inc., Vs. ACIT, Circle-2(1)(1),
Canada. International Taxation,
C/O HCL Technologies Ltd., New Delhi.
806, Siddharth, 96, Nehru
Place,
New Delhi.
TAN/PAN: AAECH9151N
(Appellant) (Respondent)
S.A. No.110/DEL/2021
Arising out of I.T.A. No.562/DEL/2021
Assessment Year: 2012-13
HCL (Brazil) Technologies DA Vs. ACIT, Circle-2(1)(1),
Informacao Eireli, International Taxation,
New Delhi. New Delhi.
C/O HCL Technologies Ltd.,
806, Siddharth, 96, Nehru
Place,
New Delhi.
TAN/PAN: AAFCH1401A
(Appellant) (Respondent)
S.A. No.111/DEL/2021
Arising out of I.T.A. No.563/DEL/2021
Assessment Year: 2012-13
HCL Technologies Malaysia Vs. ACIT, Circle-2(1)(1),
SDN BHD, International Taxation,
Malaysia., New Delhi.
C/O HCL Technologies Ltd.,
806, Siddharth, 96, Nehru
Place,
New Delhi.
TAN/PAN: AAFCH0074H
(Appellant) (Respondent)
S.As. No.102, 104 to 119/DEL/2021 4
S.A. No.112/DEL/2021
Arising out of I.T.A. No.564/DEL/2021
Assessment Year: 2012-13
HCL Australia Services Pte Ltd., Vs. ACIT, Circle-2(1)(1),
Australia., International Taxation,
C/O HCL Technologies Ltd., New Delhi.
806, Siddharth, 96, Nehru
Place,
New Delhi.
TAN/PAN: AAFCH0704C
(Appellant) (Respondent)
S.A. No.113/DEL/2021
Arising out of I.T.A. No.566/DEL/2021
Assessment Year: 2012-13
HCL Technologies (Shanghai) Vs. ACIT, Circle-2(1)(1),
Ltd., International Taxation,
Shanghai., New Delhi.
C/O HCL Technologies Ltd.,
806, Siddharth, 96, Nehru
Place,
New Delhi.
TAN/PAN: AAFCH 0076F
(Appellant) (Respondent)
S.A. No.114/DEL/2021
Arising out of I.T.A. No.565/DEL/2021
Assessment Year: 2012-13
HCL Technologies BV Vs. ACIT, Circle-2(1)(1),
Netherlands, International Taxation,
C/O HCL Technologies Ltd., New Delhi.
806, Siddharth, 96, Nehru
Place,
New Delhi.
TAN/PAN: AAECH9092E
(Appellant) (Respondent)
S.As. No.102, 104 to 119/DEL/2021 5
S.A. No.115/DEL/2021
Arising out of I.T.A. No.567/DEL/2021
Assessment Year: 2012-13
HCL Technologies (Proprietary) Vs. ACIT, Circle-2(1)(1),
Ltd., International Taxation,
New Delhi. New Delhi.
C/O HCL Technologies Ltd.,
806, Siddharth, 96, Nehru
Place,
New Delhi.
TAN/PAN: AAECH9153Q
(Appellant) (Respondent)
S.A. No.116/DEL/2021
Arising out of I.T.A. No.543/DEL/2021
Assessment Year: 2012-13
ACIT, Circle-2(1)(1), Vs. HCL HongKong SAR
International Taxation, Limited,
New Delhi. New Delhi.
C/O HCL Technologies
Ltd., 806, Siddharth, 96,
Nehru Place,
New Delhi.
TAN/PAN: AAECH9152R
(Appellant) (Respondent)
S.A. No.117/DEL/2021
Arising out of I.T.A. No.594/DEL/2021
Assessment Year: 2012-13
HCL Mexico S. De R L, Vs. ACIT, Circle-2(1)(1),
Mexico International Taxation,
C/O HCL Technologies Ltd., New Delhi.
806, Siddharth, 96, Nehru
Place,
New Delhi.
TAN/PAN: AAFCH7530N
(Appellant) (Respondent)
S.As. No.102, 104 to 119/DEL/2021 6
S.A. No.118/DEL/2021
Arising out of I.T.A. No.595/DEL/2021
Assessment Year: 2012-13
HCL Technologies Belgium Vs. ACIT, Circle-2(1)(1),
BVBA, International Taxation,
New Delhi. New Delhi.
C/O HCL Technologies Ltd.,
806, Siddharth, 96, Nehru
Place,
New Delhi.
TAN/PAN: AAECH8945A
(Appellant) (Respondent)
S.A. No.119/DEL/2021
Arising out of I.T.A. No.596/DEL/2021
Assessment Year: 2012-13
HCL Technologies Italy SPA, Vs. ACIT, Circle-2(1)(1),
Italy, International Taxation,
C/O HCL Technologies Ltd., New Delhi.
806, Siddharth, 96, Nehru
Place,
New Delhi.
TAN/PAN: AAECH9672A
(Appellant) (Respondent)
Appellant by: S/Shri Ajay Vohra, Sr.Adv., Neeraj
Jain, Adv., Aditya Vohra, Adv., Arpit
Goyal, Adv.
Respondent by: Shri Mahesh Thakur, Sr.D.R.
Date of hearing: 02 07 2021
Date of pronouncement: 02 07 2021
ORDER
PER AMIT SHUKLA, JM:-
In the aforesaid Stay Applications filed by various applicant-entities of HCL Technologies Ltd. located at different countries, have filed separate stay application seeking stay of S.As. No.102, 104 to 119/DEL/2021 7 outstanding demand u/s 201(1) and 201(1A) on account of non deduction of TDS on the payment made by HCL Technologies Ltd. The aggregate demand raised on various associate enterprises of HCL in all the assessment order aggregates to Rs.116,65,70,627/-. Out of which amount of Rs.20 crores have been deposited which is almost 17.14% of the total demand. The total aggregate demand including of interest in the case of all the 21 entities are as under:
Particulars Amount (in Rs.)
Aggregate demands raised on the AEs in Final Assessment Orders 1,16,65,70,627
Less Incorrect levy of Interest under section 234B 40,74,42,189
Nd Outstanding demand 75,91,28,438
Demand already paid by HCL Technologies Ltd pursuant to order 20,00,00,000 under section 201 in respect of transactions in question % of'Net Outstanding Demand' already deposited under protest 26.35% Surc Total Sl. Name of Cou Tax harg Cess Tax Interest Interest Interest Total Total Demand No. Company ntry e (A) 234A 234B 234C Interest (A+B) 44.1 23,17 HCL America 22,05,8 1,67 67,49, ,45,2 23,86,97 25,26,02 - 49,12,99 1 Inc USA 3,713 4 862 49 ,607 ,321 ,928 72,30,45,177 11,4 6,02, HCL Great 5,73,55, 7,11 17,55, 57,90 6,20,65, 6,56,8 Li - 12,77,46 2 Britain Limited UK 710 4 085 9 646 2! ,767 18,80,04,676 Sing 2,75, HCL Singapore apo 2,61,76. 5,23 8,01.0 01,24 2,83,26. 2,99,76, - 5,83,02, 3 Pte. Ltd. re 700 ,534 07 1 278 353 631 8,58,03,872 HCL Technologies Germany GmbH Ger 1,98, -
(successor of man 1,88.81, 3,77 5,77,7 37,25 2,04,32, 2,16.22, 4,20,54, 4 HCL GmbH) y 835 ,637 84 6 373 609 982 6,18,92,238 HCL Poland Sp. Pola 52.04,0 1,04 1,59,2 54,67 56,31,40 59.59,44 1,15,90, 5 -
Z oo. nd 57 ,081 44 ,382 3 6 849 1,70,58,231 Axon Solutions 49,41,4 98.8 1.51,2 51,91 53,99,19 56,58,76 1,13,20, 6 Limited UK 91 30 10 ,531 2 8 2.62.172 132 1,65,11,663 HCL Canada Inc. (formerly known as HCL
-
Axon Technologies Can 41,21,2 82.4 1,26,1 43,29 44,59,63 47.19,41 91,79,05 7 Inc.) ada 09 24 09 ,742 4 9 3 1,35,08,795 HCL Technologies Fra 37,57,3 75,1 1,14.9 39,47 40,65,84 43,02,69 - 83,68,53 8 France nce 03 46 73 ,422 5 0 5 1,23,15,957 HCL Technologies B V (successor of Net
-
HCL. herl
(Netherlands) and 30,53.3 61,0 93,43 32,07 33,04,11 34,96.59 68,00,70
9
B.V ) s 80 68 3 ,881 8 0 8 1,00,08,589
10 HCL Australia Aust 27,43,3 54,8 83,94 28,82 29,68.63 31,41,56 - 61,10,20 89,92,380
S.As. No.102, 104 to 119/DEL/2021 8
Services Pty. rali 59 67 7 ,173 8 9 7
Ltd a
HCL
Technologies
-
(Shanghai) Chi 17,13,2 34,2 52.42 17,99 18,53,89 19,61,88 38,15,77
11 Limited na 07 64 4 ,895 2 6 8 56,15,673
HCL (Brazil)
12 Technologia Da Bra 13,15,8 26,3 40,26 13,82 14,23,90 15,06,84 29,30,75
- 43,13,183
mformacao zil 48 17 5 ,430 4 9 3
I.tda.
HCL
Technologies
Italy S.p. A.
- -
(Successor of
HCL Italy Ital 12,27,0 36,81 12,63 13,01,75 13,77,58 26,79,34
13 S.R.L.) y 31 0 ,841 6 7 3 39,43,184
HCL
Technologies
Malaysia SDN Mal
14 10,65,6 21,3 32.60 11,19 11,53.13 12,20,30 23,73,43
BHD (formerly aysi - 34,92,977
24 12 8 ,544 0 3 3
known as HCL a
Axon Malaysia
SDN BHD)
I
long
-
HCL Hong Kong Kon 10,52,9 21,0 32,21 11,06 11,39,36 i 23,45,09
15
SAR Limited g 02 58 9 ,179 4 2,05,735 9 34,51,278
HCL Mexico S. Mex 8,04,56 24,13 8,28, 17,56,85
16 - 8,53.566 9,03,288 - 25,85,559
de R.L. ico 8 7 705 4
HCL
Technologies
Sweden AB
- -
(successor of
HCL Sweden Swe 7,42,73 22,28 7,65, 16,21,84
17
AB) den 9 2 021 7,87.971 8,33.873 4 23,86,865
HCL
Technologies
Belgium BVBA
- -
(Successor of
HCL Belgium Belg 5,57,48 16,72 5,74, 12,17,32
18
N.V ) ium 3 4 207 5,91,434 6,25,886 0 17,91,527
HCL Den
Technologies mar 4,19,26 - 12,57 4,31, 4,70.71 -
19
Denmark Aps k 7 8 845 4,44,800 1 9,15,511 13,47,356
iiCL Phil
Technologies ippi 1,14,94 - 1,18, -
20 Philippines Inc. nes 8 3,448 396 1,21,948 1,29,052 2,51,000 3,69,396
HCL
Technologies
(Proprietary)
Sou
Limited
21 th 42,32
(formerly 41,091 - 1.233 43,594 46,133 - 89,727 1,32,051
Afri 4
known as HCL
ca
Axon
Proprietarv
Limited)
70,3 37,38
35,58,7 1,08,8 38,50,66 40,74,42 79,27,70 1,16,65,70,62
Total 9,32 ,00,1 2,62,172
3,465 7,382 ,093 ,189 ,454 7
6 73
2. The main issue involved in all the appeals is that the payment received by various applicants from HCL Technologies Ltd., an Indian resident has been held to be chargeable to tax in India under the Act. The payment has S.As. No.102, 104 to 119/DEL/2021 9 been made by the HCL Technologies on account of services rendered by these entities mostly relating to development and export of software and rendering of information technology enabled services, like, software services, infrastructure services and business processing outsourcing. The survey proceeding u/s 133A of the Act was conducted in the case of HCL Technologies, pursuant to which HCL was treated as assessee in default, and order was passed u/s.201A/201(1A) for Assessment Year 2012-03 on account of alleged failure to deduct tax on payments in case of all the applicants.
3. Before us, ld. Senior Counsel, Mr. Ajay Vohra in so far as quantum and composition of demand is concerned submitted that prior to Assessment Year 2013-14 the entity were not liable to advance tax, and therefore, there was no question of levy of interest u/s.234B. This is squarely covered by the decision of Hon'ble Jurisdictional High Court in the case of GE Packed Power Inc., as reported in 373 ITR 65 (Del). If interest levied u/s. 234B aggregating to Rs.40,74,42,189 is removed, then the net outstanding demand would be Rs.75,91,28,438/-. In that case, the assessee has already paid almost 26.35% of the demand.
4. He further pointed out that MAP proceedings have also been initiated in the case of 4 AEs, namely, i) HCL America Inc. (USA); ii) HCL Great Britain Ltd., (UK); iii) Axon Solution Ltd. (UK); and iv) HCL Technologies Sweden AV (Sweden). In view of this MAP proceeding, the demand cannot be enforced S.As. No.102, 104 to 119/DEL/2021 10 and is liable to be stayed in view of CBDT Instruction No.10/27 dated 23.10.2007. The major demand relating to these four entities aggregates to Rs.92,99,48,381. Thus, if the amount of demand pertaining to these 4 entities gets stayed by the CBDT Circular then the net effect of the demand would be as under:
Particulars Amount (in Rs.)
Aggregate demands raised on the AEs in Final Assessment Orders 1,16,65,70,627
Less: Demand liable to be stayed on account of invocation of MAP proceedings and applicable CBDT Instructions HCL. America Inc (USA) - Rs.72,30.45.177 HCL Great Britain Ltd (UK) - Rs. 18,80.04,676 Axon Solutions Ltd (UK) - Rs. 1.65.11.663 HCL Technologies Sweden AB (Sweden) - Rs.23.86,865 -92.99,48,381 Net outstanding demand 23,66,22,246 Demand already paid by HCLT pursuant to order under section 201 in 20,00,00,000 respect of transactions in question % of'Net Outstanding Demand' already deposited under protest 84.52% S. Surc Total Interes Interes Total Total Ces t t Interest Demand No Name of Cou harg s Tax Interest . Company ntry Tax e (A) 234A 234B 234C (B) (A+B) Sing 2,75, HCL Singapore apor 2.61.76, 5.23 8,01,0 01,24 2.83.2 2.99,7 - 5,83,02, 1 Pte. Ltd. e 700 ,534 07 ! 6.278 6,353 631 8,58,03,872 11C1. -
Technologies
Germany GmbH Ger 1,98.
(successor of man 1.88.81, 3.77 5.77.7 37,25 2.04.32, 2.16.22. 4.20.54. 2 HCL Gmbl 1) y 835 .637 84 6 373 609 982 6.18,92,238 HCL Poland Sp. Pola 52,04.05 1,04 1.59,2 54,67 56.31,40 59,59.44 - 1.15,90. 3 Z.o.o. nd 7 ,081 44 ,382 3 6 849 1,70,58,231 HCL Canada inc.
(formerly known
as HCL Axon
Technologies Can 41.21.20 82.4 1.26.1 43,29 44.59.63 47,19.41 91.79.05
4 Inc.) ada 9 24 09 ,742 4 9 - 3 1.35.08,795
HCL -
Technologies Fran 37.57.30 75,1 1.14.9 39,47 40,65.84 43,02.69 83,68.53
5 France ce 3 46 73 ,422 5 0 5 1,23,15,957
HCL
Technologies
B.V.(successor
-
of HCL Neth
(Netherlands) erla 30,53.38 61.0 93.43 32,07 33.04,11 34,96.59 68,00.70
6 B.V.) nds 0 68 3 .881 8 0 8 1.00.08.589
HCL Australia Aust 27,43,35 54.8 83,94 28,82 29.68,63 31,41,56 - 61,10,20
7 Services Pty. Ltd ralia 9 67 7 ,173 8 9 7 89,92,380
HCL -
Technologies
(Shanghai) Chin 17,13.20 34,2 52,42 17,99 18.53,89 19,61.88 38,15,77
8 Limited a 7 64 4 .895 2 6 8 56,15.673
HCL (Brazil) -
Technologia Da
informacao Braz 13,15.84 26,3 40.26 13,82 14.23.90 15,06.84 29,30,75
9 Ltda. il 8 17 5 ,430 4 9 3 43.13,183
S.As. No.102, 104 to 119/DEL/2021 11
HCL
Technologies
Italy S.p.A.
- -
(Successor of
HCL Italy 12,27.03 36.81 12,63 13,01,75 13,77,58 26,79,34
10 S.R.L.) Italv 1 0 ,84! 6 7 3 39,43,184
HCL
Technologies
Malaysia SDN
Mala 10,65.62 21,3 32.60 11,19 11.53.13 12,20.30 23,73,43
11 BHD (formerly - 34,92,977
ysia 4 12 8 ,544 0 3 3
known as HCL
Axon Malaysia
SDN BHD)
Hon -
g
HCL Hong Kong Kon 10,52,90 21,0 32,21 11,06 11,39,36 12,05,73 23,45,09
12 SAR Limited g 2 58 9 ,179 4 5 9 34.51,278
HCL Mexico S. Mexi 24,13 8,28, 17,56.85
- -
13 de R.L. co 8.04.568 7 705 8.53,566 9,03,288 4 25,85,559
HCL
Technologies
Belgium BVBA
- -
(Successor of
HCL Belgium Belg 16.72 5,74, 12,17.32
14 N.V.) ium 5.57.483 4 207 5.91.434 6.25,886 0 17.91.527
HCL Den
Technologies mar - 12,57 4,31, -
15 Denmark Aps k 4.19.267 8 845 4.44,800 4,70,711 9,15.511 13.47,356
HCL Phili
Technologies ppin - 1.18, -
16 Philippines Inc. es 1,14.948 3.448 396 1,21.948 1,29.052 2,51,000 3,69,396
HCL
Technologies
(Proprietary) Sout
Limited h 42.32
17 41.091 - 1.233 43.594 46.133 - 89.727 1,32,051
(formerly known Afric 4
as HCL Axon a
Proprietary
Limited)
13,8 7,58,
7,22,49, 22,08, 7,81,1 8,26,66,10 16,07,81
Total 1,70 40,46 0 23,66,22,246
812 943 5,677 6 ,783
8 3
5. Thus, he submitted that in view of the aforesaid position, out of the total demand which if at all can be said to be enforceable, is Rs.23,66,22,246/-. Then in this scenario, already sum of Rs.20 crore have been paid which is almost 84.52%. Thus, according to him substantial demand stands paid, and therefore, it is a fit case for staying entirebalance demand. On merits also, he has given his detailed submissions and pointed out that prima facie it has a very good case on merits.
6. On the other hand, ld. DR submitted that 20% of the S.As. No.102, 104 to 119/DEL/2021 12 entire demand should be paid.
7. After considering the prima facie case, we find that the balance of convenience is in favour of the assessee for staying the outstanding demand for the reason that;
Firstly, out of total aggregate demand of Rs.116,65,70,627/-, the demand out of levy of interest u/s.234B accounts for Rs.40,74,42,189/- which could not have been levied in view of the decision of Hon'ble Jurisdictional High Court in the case of GE Power Package Inc. (supra), because non residents was not liable to advance tax.
Secondly, in the case of four applicant-entities, already MAP proceedings are going on and the total demand in the case of these four entities alone is almost Rs. 93 crore, which as per the CBDT Circular No.10/27 dated 23.10.2007 any demand in such proceedings is to be stayed and cannot be enforced. If this demand is removed, then demand enforceable is only Rs. 23.66 crores.
Lastly, per the assertion of the Ld. Counsel, since assessee has already paid Rs.20 crores out of demand Rs. 23.66 crores, which can be said to be enforceable, therefore, under these facts and circumstances, we find it is a fit case for stay of outstanding demand.
8. Accordingly, we are granting stay of outstanding demand for the period of six months or till the passing of the order S.As. No.102, 104 to 119/DEL/2021 13 whichever is earlier. All the appeals of the above applicant assessees are also directed to be fixed on 11.08.2021. Ld. Counsel is directed to file paper book if any in advance with the copy to the department. Accordingly, the Stay Applications filed by the aforesaid applicants are allowed.
9. In the result, the Stay Applications of the assessee are allowed.
Order pronounced in the open Court on 2nd July, 2021.
Sd/- Sd/-
[G.S. PANNU] [AMIT SHUKLA]
VICE PRESIDENT JUDICIAL MEMBER
DATED: 2nd July, 2021
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