Bombay High Court
Commissioner Of Income Tax(It) 3 vs M/S Larsen And Toubro on 6 March, 2024
Bench: K. R. Shriram, Neela Gokhale
Digitally
signed by
2024:BHC-OS:3928-DB
MEERA
MEERA MAHESH
MAHESH JADHAV 1/4 5-itxa-534-18.doc
JADHAV Date:
2024.03.08
14:58:07
+0530
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
INCOME TAX APPEAL NO.534 OF 2018
Commissioner of Income Tax (IT) 3 ....Appellant
V/s.
M/s Larsen And Toubro ....Respondent
WITH
INCOME TAX APPEAL NO.621 OF 2018
WITH
INCOME TAX APPEAL NO.619 OF 2018
WITH
INCOME TAX APPEAL NO.747 OF 2018
WITH
INCOME TAX APPEAL NO.1171 OF 2018
WITH
INCOME TAX APPEAL NO.1172 OF 2018
WITH
INCOME TAX APPEAL NO.593 OF 2018
WITH
INCOME TAX APPEAL NO.751 OF 2018
WITH
INCOME TAX APPEAL NO.333 OF 2020
WITH
INCOME TAX APPEAL NO.515 OF 2020
WITH
INCOME TAX APPEAL NO.576 OF 2020
WITH
INCOME TAX APPEAL NO.345 OF 2020
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Mr. Subir Kumar with Ms Sruti Kalanikar for Appellant in ITXA/534/2018,
ITXA/621/2018, ITXA/619/2018, ITXA/747/2018, ITXA/1171/2018,
ITXA/1172/2018, ITXA/593/2018, ITXA/751/2018 and ITXA/345/2020.
Mr. Suresh Kumar a/w Dr. Dhanalakshmi Iyer for Appellant in
ITXA/333/2020, ITXA/515/2020 and ITXA/576/2020.
Mr. Nitesh Joshi i/b Mr. Atul K Jasani for Respondent in ITXA/534/2018,
ITXA/621/2018, ITXA/619/2018, ITXA/747/2018, ITXA/1171/2018,
ITXA/1172/2018, ITXA/593/2018 and ITXA/751/2018.
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Mr. Jeet Kamdar i/b Mr. Atul K Jasani for Respondent in ITXA/333/2020,
ITXA/515/2020, ITXA/576/2020 and ITXA/345/2020.
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CORAM : K. R. SHRIRAM &
Dr. NEELA GOKHALE, JJ.
DATED : 6th MARCH 2024 P.C. :
Common set of facts that would apply in all these appeals listed today is as under:
1 Larsen & Toubro Ltd. ( L & T), which is respondent in eight of the appeals had secured a contract for pipeline and platform modification at Bombay High from M/s Engineers India Ltd. The scope of work included design and engineering of pipelines and platform modification, pre-
engineering survey and installation of pipeline and platform modification. 2 L & T sub contracted the work of installation of pipelines and platform modification to M/s J. Ray McDermott Middle East (Indian Ocean) Ltd., Mauritius (now known as M/s J Ray McDermott Eastern Hemisphere Ltd.) (McDermott). McDermott (who is respondent in 4 of the appeals) was incorporated in Mauritius and was a resident liable to taxation in Mauritius as per Article 4 of the India Mauritius Double Tax Avoidance Agreement (DTAA).
3 The Assessing Officer held that L & T was liable to deduct tax at source while making remittance to McDermott under the provisions of Section 195(1) of the Income Tax Act 1961 (the Act). It was L & T's case Meera Jadhav ::: Uploaded on - 08/03/2024 ::: Downloaded on - 27/03/2024 02:00:01 ::: 3/4 5-itxa-534-18.doc that the sums payable to McDermott for this project were not chargeable to tax under the Act by virtue of DTAA. The matter was carried in appeal before the Income Tax Appellate Tribunal (ITAT) and ITAT, by an order dated 15th June 2016, came to a finding that L & T need not have to deduct the tax at source while making payment to McDermott. 4 In the assessment proceedings as regards McDermott was concerned, there is a final finding that McDermott was not liable to tax in India by virtue of DTAA. This has been confirmed by a Division Bench of this Court in Commissioner of Income-Tax (IT) Vs. J. Ray McDermott Eastern Hemisphere Ltd.1 In view of this finding, counsels agree that if, McDermott was not liable to be assessed to tax in India pertaining to the contract with L & T, the question of L & T deducting any TDS also will not arise. Therefore, in effect, by this judgment in J. Ray McDermott Eastern Hemisphere Ltd. (Supra), the court has held that L & T need not have deducted any TDS under Section 195(1) of the Act. 5 In view of the above, counsels state that none of the appeals will survive.
INCOME TAX APPEAL NO.576 OF 2020 6 Mr. Suresh Kumar states that the questions of law proposed have not been correctly framed in as much as, the issue in this appeal relates to penalty and the ITAT has rejected the revenue's decision to impose penalty on McDermott.
1 (2022) 141 taxmann.com 7 (Bombay)
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7 Mr. Kamdar submits that the issue has been discussed in paragraph
12 of the impugned order and rightly submits that if, McDermott has succeeded in the quantum appeal, in as much as this court has held that McDermott was not liable to be assessed to tax under its contract with L & T, the question of McDermott being imposed with penalty would not arise. We find support for this view taken by us in the order passed by this court in CIT(IT)-3 Vs. M/s J. Ray McDermott Eastern Hemisphere Ltd.2 8 Consequently, all appeals are dismissed.
(Dr. NEELA GOKHALE, J.) (K. R. SHRIRAM, J.) 2 Order dated 9th February 2023 in ITXA No.1842 of 2017 (unreported) Meera Jadhav ::: Uploaded on - 08/03/2024 ::: Downloaded on - 27/03/2024 02:00:01 :::