THE PRINCIPAL COMMISSIONER O vs. HOSPIRA HEALTH CARE INDIA PR

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TCA/75/2022HC Madras28 February 2022Bench: Hon`ble Mr Justice S. VAIDYANATHAN5 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court of Judicature at Madras dismissed the appeals as withdrawn. The Revenue's counsel brought to the court's notice Circular No. 17/2019 dated 08.08.2019 issued by the Central Board of Direct Taxes (CBDT), which stipulates that appeals shall not be filed or pursued by the Department before the High Court if the tax effect does not exceed Rs. 1,00,00,000/- (Rupees One Crore). The counsel submitted that the tax effect in these appeals was less than this threshold limit. Consequently, the court dismissed the present appeals, stating that the substantial questions of law were kept open for determination in appropriate cases. No costs were awarded.

What were the facts?

The Revenue, represented by the Principal Commissioner of Income Tax, International Taxation - 2(2), Chennai, filed an appeal before the High Court of Judicature at Madras against an order dated 15.03.2018 passed by the Income Tax Appellate Tribunal (ITAT), 'D' Bench, Chennai. The appeal pertains to assessment year 2014-2015 and concerns the assessee, Hospira Healthcare India Private Limited. The core of the dispute revolves around the assessee's liability to deduct tax at source under Section 195 of the Income Tax Act, 1961, on certain payments. The ITAT had ruled against the Revenue on this issue. The appeal was filed under Section 260A of the Income Tax Act, 1961.

What were the issues?

1. Whether on the facts and circumstances of the case and in law, the Hon'ble ITAT was right in taking a view that the assessee company will not be liable to deduct tax u/s 195 of the Act, when expenditure in question was part and parcel in the process of advice of technical character/technical know-how and payment of such expenses is nothing but payment of fee for Technical Service, which attracts the provisions of Sec.9(1)(vii) of the Act relevant DTAA? Assessee's contentions: Not recorded in the judgment. Revenue's contentions: The ITAT erred in holding that the assessee was not liable to deduct tax under Section 195. The Revenue argued that the expenditure was for technical services, attracting Section 9(1)(vii) of the Act and the relevant Double Taxation Avoidance Agreement (DTAA). The Revenue also contended that the ITAT failed to apply the jurisdictional ITAT's decision in the case of M/s. Sutherland Global Services P.Ltd. v. ITO, Intl.taxation-II, Chennai (ITA No:917 to 920/Mds/2014 dt:15.02.2016), which dealt with identical issues and was decided in favour of the Revenue.

Which sections of the Income-tax Act were involved?

Section 195,Section 9(1)(vii),Section 260A

AI-generated summary — verify with the full judgment below

1 Tax Case Appeal No.75 of 2022 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 28.02.2022 Coram THE HONOURABLE MR.JUSTICE S.VAIDYANATHAN AND THE HONOURABLE MR.JUSTICE MOHAMMED SHAFFIQ Tax Case Appeal.No.75 of 2022 Principal Commissioner of Income Tax, International Taxation -2(2), Chennai 600 006. ... Appellant

-vs- Hospira Healthcare India Private Limited Sri-Nivas, New No.86 (Old No.89) GN Chetty Road, T.Nagar, Chennai 600 017 PAN: AABCO 2190F

...Respondent

Tax Case Appeals filed under Section 260A of the Income Tax Act, 1961 against the order dated 15.03.2018 passed by the Income Tax Appellate Tribunal, 'D' Bench, Chennai, in I.T.A.No.1916/CHNY/2017. For Appellant : Mr.Karthik Ranganathan JUDGMENT This tax case appeal has been filed by the appellant / Revenue, https://www.mhc.tn.gov.in/judis 2 Tax Case Appeal No.75 of 2022 challenging the order dated 15.03.2018 passed by the Income Tax Appellate Tribunal, 'D' Bench, Chennai in I.T.A.No.1916/CHNY/2017, relating to the assessment years 2014-2015, by raising the following substantial questions of law:- (i) Whether on the facts and circumstances of the case and in law, the Hon'ble ITAT was right in taking a view that the assessee company will not be liable to deduct tax u/s 195 of the Act, when expenditure in question was part and parcel in the process of advice of technical character/technical know- how and payment of such expenses is nothing but payment of fee for Technical Service, which attracts the provisions of Sec.9(1)(vii) of the Act relevant DTAA? 2. Whether on the facts and circumstances of the case and in law, the Hon'ble ITAT was right in not applying the ratio of jurisdictional ITAT decision in the case of M/s.Sutherland Global Services P.Ltd., V ITO, Intl.taxation-II, Chennai (ITA No:917 to 920/Mds/2014 dt:15.02.2016) wherein identical issues were involved and decided in favour of the Revenue? https://www.mhc.tn.gov.in/judis 3 Tax Case Appeal No.75 of 2022 2. When the matters were taken up for consideration, the learned counsel for the appellant / Revenue brought to the notice of this court the Circular No.17/2019 dated 08.08.2019 issued by the Central Board Direct Taxes, wherein, it is stipulated that appeals shall not be filed/pursued by the Department before the High Court in cases where the tax effect does not exceed Rs.1,00,00,000/- (Rupees One Crore). It is also submitted that the tax effect in these appeals is less than the threshold limit.

3.

In the light of the aforesaid submissions made by the learned counsel for the appellant / Revenue, the present appeals, wherein, the tax effect is said to be less than the monetary limit imposed, are dismissed as withdrawn, keeping open the substantial questions of law for determination in appropriate cases. No costs. [S.V.N,J.] [M.S.Q, J.] 28.02.2022

Internet : Yes

Index : Yes / No dpq https://www.mhc.tn.gov.in/judis 4 Tax Case Appeal No.75 of 2022 To 1. The Income Tax Appellate Tribunal, Chennai 'D' Bench. 2. Principal Commissioner of Income Tax, International Taxation - 2(2), Chennai 600 006. https://www.mhc.tn.gov.in/judis 5 Tax Case Appeal No.75 of 2022 S. VAIDYANATHAN, J. AND MOHAMMED SHAFFIQ, J. dpq Tax Case Appeal No.75 of 2022 28.02.2022 https://www.mhc.tn.gov.in/judis

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