COMMISSIONER OOF INCOME TAX vs. THE MALAYALA MANORAMA COLLTD.

ITA/345/2009HC KeralaKLHC01025106200908 October 2013Author: HONOURABLE MR.JUSTICE A.M.SHAFFIQUE,HONOURABLE THE CHIEF JUSTICE DR. MANJULA CHELLUR6 pages
AI SummaryDismissed

What were the facts?

The Revenue (Commissioner of Income-tax, Kottayam) filed an appeal against an order of the Income Tax Appellate Tribunal (ITAT), Cochin Bench, dated April 6, 2004. The appeal pertained to Assessment Year 1999-2000. The assessee, The Malayala Manorama Co. Ltd., claimed exemption from deducting tax at source (TDS) on a membership fee contribution of US $10,000 (Rs. 3,95,855) to the International Press Institute (IPI). The Assessing Officer directed the assessee to deduct TDS under Section 195(1) of the Income Tax Act, 1961. The CIT (Appeals) allowed the assessee's appeal, holding that Section 9(1)(i) of the Act did not apply. The ITAT dismissed the Revenue's appeal, finding that IPI had no permanent establishment in India and the assessee was not its agent.

What did the High Court hold?

The High Court held that the questions of law raised by the Revenue did not arise for consideration. The Court noted that the first appellate authority and the Tribunal had correctly considered the scope of deducting tax at source. The CIT(Appeals) had found that since IPI was a non-resident body with no permanent establishment in India, Section 9(1)(i) did not apply. This provision requires a property, asset, or source of income in India belonging to IPI and used for earning income in India. The Court agreed that Section 195(1) applies only if the payment is made to an income tax assessee in India. The Tribunal's finding that IPI had no permanent establishment in India and the assessee was not its agent was a finding of fact. The assessee's membership in IPI did not result in any monetary advantage, but only the right to participate in achieving IPI's objects. Therefore, based on these findings of fact, the assessee was not liable to comply with Section 195 of the Income Tax Act. The appeal was dismissed.

What were the issues?

The Tribunal had to decide the following questions of law: 1. Whether, on the facts and circumstances, the Tribunal was right in holding that (i) the assessee cannot be taxed in India as it is not an agent of IPI, and (ii) Section 195(1) has no impact because the assessee is not responsible for paying any sum chargeable under the Act. 2. Whether, on the facts and circumstances, the assessee has an obligation under Section 195(1) to deduct tax at source from the amount paid to IPI. 3. Whether the Tribunal's findings were extraneous to the issue of the assessee's obligation to deduct tax at source, and if its conclusion based on irrelevant findings was wrong. Contentions: Assessee: The ITAT's finding that IPI had no permanent establishment in India and the assessee was not its agent was a finding of fact. The assessee was merely a member and did not derive monetary advantage from payments to IPI. Therefore, Section 195(1) was not applicable. Revenue: The Revenue contended that the assessee had an obligation under Section 195(1) to deduct tax at source from the amount paid to IPI. They also argued that the Tribunal's findings were extraneous and its conclusion was based on irrelevant findings.

Which sections of the Income-tax Act were involved?

Section 195,Section 195(1),Section 9,Section 9(1)(i),Section 2(24)(ii)(a)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HON'BLE THE CHIEF JUSTICE DR. MANJULA CHELLUR & THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE TUE AY, THE 8TH DAY OF OCTOBER 2013/16TH ASWINA, 1935 ITA.No. 345 of 2009 --------------------------- [AGAINST THE ORDER IN I.T.A.NO.327//COCH/2001 OF THE INCOME TAX- APPELLATE TRIBUNAL, COCHIN BENCH, DATED 06-04-2004] .............. APPELLANT/APPELLANT: ------------------------------------- THE COMMISSIONER OF INCOME-TAX, KOTTAYAM. BY ADV. SRI.JOSE JOSEPH, S.C. RESPONDENT/RESPONDENT: ------------------------------------------- THE MALAYALA MANORAMA CO. LTD., KOTTAYAM. THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON 08-10-2013, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: Prv.

I.T.A. NO.345/2009: APPENDIX PETITIONER'S ANNEXURES: ANNEXURE A:OF THE NO OBJECTION CERTIFICATE OF THE ASSESSING OFFICER DTD. 09/08/1999. ANNEXURE B:OF THE ORDER OF THE CIT (APPEALS) DTD. 15/06/2001. ANNEXURE C:OF ORDER OF THE I.T.A.T. IN I.T.A. NO.327/COCH/01, DTD. 06/04/2004. RESPONDENT'S ANNEXURES: NIL. //// P.A. TO JUDGE. Prv.

MANJULA CHELLUR, C.J.

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