SOLAR TURBINES INTERNATIONAL COMPANY,BANGALORE vs. DCIT, CIRCLE- 2, INTERNATIONAL TAXATION, DEHRADUN

143(3)/144C(3)(b) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’). Case called twice. None appears at the assessee’s behest. It is accordingly proceeded ex-parte.

This assessee’s appeal raises the following substantive grounds: 1. Non-rectification of mistake apparent on record a) The learned Commissioner of Income-tax (Appeals) ['CIT(A)'] erred in holding that when an issue is decided by passing a speaking order, such order cannot be modified. b) The learned CIT(A) erred in holding that the Appellant had not indicated any mistake apparent from record in the order dated 14 June 2017 despite the fact that the learned CIT(A) was apprised of the erroneous levy of surcharge and education cess on rates considered as per Double Taxation Avoidance Agreement ('DTAA') vide the rectification application. c) The learned CIT(A) erred in not appreciating that when a specific provision of the Income-tax Act, 1961 ('the Act') is not applied while passing an order, it constitutes a mistake apparent on record. d) The learned CIT(A) therefore erred in concluding that the Appellant is seeking modification of the order in the garb of rectification without appreciating that provisions of section 90(2) of the Act providing for application of beneficial rate of tax as per DTAA had not been applied and hence constituted mistake apparent on record. c) The learned CIT(A) erred in not upholding justice by adjudicating on merits of the rectification application. 2 Erroneous levy of surcharge and education cess a) The learned CIT(A) erred in upholding the levy of surcharge and education cess on income from troubleshooting services which is chargeable to tax at special rate of 15% as per India-USA Double Taxation Avoidance Agreement ('DTAA'). b) The learned CIT(A) erred in not appreciating that as per para 1(b)(i) of Article 2 of India-USA DTAA, tax has been defined to cover income tax including any surcharge thereon.

We deem it appropriate at this stage to clarify here that the assessee’s Form 36 filed in the instant appeal in column (2) categorically states that the relevant proceedings herein are under section 154 r.w.s. 250(6) of the Act. There is further no denial to the fact that the learned CIT(A)’s detailed discussion; whilst dealing with its second substantive ground; in para 5.13 at page 9 onwards, in the former order dated 14.06.2017, had duly rejected its contention that India – USA DTAA in Article 2(b)(i) & (ii) stipulated non-exemption from claiming surcharge and education cess in question. We thus find merit in the Revenue’s vehement contentions that the CIT(A)’s impugned rectification order has rightly rejected the assessee’s application to the very effect going by T. S. Balaram, ITO v Volkart Bros (1971) 82 ITR 40 (SC). And that the 4 | P a g e hon’ble jurisdictional high court in (2008) 216 CTR 86 (Uttaranchal) CIT Vs. Arthusa Offshore Co. has decided the very issue of surcharge and education cess “applicability” under the India -USA DTAA against the assessee and in the department’s favour as well. We thus see no merit in the assessee’s sole substantive grounds raised which fails in very terms with a rider that it shall indeed be at liberty to institute afresh appeal against the CIT(A)’s above former order; as per law, if so advised.