COMMISSIONER OF INCOME TAX vs. ITOCHU CORP

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ITA/857/2010HC DelhiDLHC01155229200909 September 2013Bench: HON'BLE MR. JUSTICE SANJIV KHANNA,HON'BLE MR. JUSTICE SANJEEV SACHDEVA2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the substantial questions of law had to be answered against the Revenue and in favour of the respondent-assessee. This decision was based on the Court's prior judgment dated 31st July, 2013, in Yoshio Kubo versus Commissioner of Income Tax, ITA No. 441/2003 and other connected matters. As per the cited decision, the tax component paid by the respondent-assessee was exempt under Section 10(10CC). Consequently, the respondent-assessee was not liable to deduct tax at source under Section 195, as there was no default or failure to deduct tax when the payable tax was exempt and not taxable. The appeals filed by the Revenue were dismissed.

What were the facts?

The appeals were filed by the Commissioner of Income Tax (Revenue) against the order of the Income Tax Appellate Tribunal (Tribunal). The assessment years are not explicitly stated in the provided text. The Revenue challenged the Tribunal's decision that tax paid by the employer on behalf of the assessee is exempted under Section 10(10CC) of the Income Tax Act, 1961, and therefore not taxable in the hands of the assessee. The Tribunal had also held that tax on tax paid by employers is not a prerequisite by way of monetary payment. The High Court was considering substantial questions of law framed on these issues.

What were the issues?

1. Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal erred in law in holding that tax on tax paid by the employer on behalf of the assessee is exempted under Section 10(10CC) of the Act and thus not taxable in the hands of the assessee? (Question of law) 2. Whether the Tribunal erred in law on merits by holding that the tax on tax paid by the employers on behalf of the employee is not a prerequisite by way of monetary payment? (Question of law) Assessee's Contentions: Not recorded in the provided text. Revenue's Contentions: The Revenue contended that the Tribunal erred in law on both the above substantial questions of law. The Revenue challenged the exemption granted under Section 10(10CC) and the finding regarding the nature of tax on tax payment.

Which sections of the Income-tax Act were involved?

Section 10(10CC),Section 195

AI-generated summary — verify with the full judgment below

$~31 to 36. ~ * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA Nos. 134/2010, 135/2010, 147/2010, 148/2010, 856/2010 & 857/2010 % COMMISSIONER OF INCOME TAX ITOCHUCORP CORAM: ..... Appellant Through Mr. Sanjeev Sabharwal, Sr. Standing Counsel. versus ..... Respondent Through Dr. Rakesh Gupta & Mr. Rishabh Kumar, Advocates. HON'BLE MR. JUSTICE SANJIV KHANNA HON'BLE MR. JUSTICE SANJEEV SACHDEV A ORDER 09.09.2013 By order dated lOth August, 2010, the following substantial questions of law were framed:- "a) Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal (for short 'tribunal') erred in law in holding that tax on tax paid by the employer on behalf of the assessee is exempted under Section 10 (1 OCC) of the Act and thus not taxable in the hands of the assessee? b) Whether the tribunal erred in law on merits by holding that the tax on tax paid by the employers on behalf of the employee is not a prerequisite by way of monetary payment?" -- . r ·· ., r- --·: Digitally Signed By:AMULYA Signature Not Verified

0 The said questions of law have to be answered against the Revenue and in favour of the respondent-assessee in view of decision of this Court dated 31st July, 2013 in Yoshio Kubo versus Commissioner of Income Tax, ITA No. 441/2003 and other connected matters. As per the said decision, the tax component paid by the respondent-assessee was exempt under Section 10 (10CC) and, therefore, the respondent-assessee was not liable to deduct tax at source. Thus, there was no default or failure to deduct tax under Section 195 as the tax payable was exempt and was not taxable. The appeals stand dismissed. SEPTEMBER 09,2013 VKR ~ - -[L L-_ SANJIV KHANNA, J. SANJEEV SACHDEV A, J. ', I~ I

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