M/S CYBERSTAR INFOCOM PVT LTD,BANGALORE vs. THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-1(2), BANGALORE

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ITA 157/BANG/2018Status: DisposedITAT Bangalore10 January 2019AY 2013-144 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal admitted the additional grounds as they were pure questions of law and did not require fresh fact-finding. However, since the CIT(Appeals) had not considered these grounds, the matter was remitted back to the CIT(Appeals) for fresh adjudication.

What were the facts?

The assessee appealed against orders confirming interest levied under Section 201(1A) for non-deduction of TDS. The assessee also raised additional grounds concerning the non-discrimination clause of the India-USA DTAA.

What were the issues?

Whether interest under Section 201(1A) is leviable when no tax was payable by the recipient, and whether the levy violates the non-discrimination clause of the India-USA DTAA.

Which sections of the Income-tax Act were involved?

Section 201(1A)

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Cases cited in this judgment(2)Show list

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Income Tax Appellate Tribunal, “C” BENCH : BANGALORE

Before: SHRI CHANDRA POOJARI & SHRI PAVAN KUMAR GADALE

For Appellant: Shri Prashanth G.S., CA
For Respondent: Dr. P.V. Pradeep Kumar, Addl.CIT(DR)(ITAT), Bengaluru
Hearing: 09.01.2019Pronounced: 10.01.2019

Per Chandra Poojari, Accountant Member

1.

These appeals are directed against the different orders of CIT(Appeals), all dated 30.11.2017 relating to the assessment years 2011-12 & 2013-14 to 2015-16.

2.

In all these appeals, the assessee has raised the common grounds of appeal as follows:-

“1 The learned Income-tax Officer has erred in passing the order in the manner passed and the learned CIT (A) -12 has erred in confirming the same. The impugned order being bad in law and is liable to be quashed. 2.1 The authorities below have erred in not appreciating that ; a) Interest u/s. 201(1A) is compensatory in nature. b) The recipient of income having filed loss returns no taxes were payable to the Government. c) No taxes being payable to the Government, the question of delay in recovery of taxes and interest for delay does not arise. And erred in levying /confirming the interest u/s 201(1A) of the Act. The action of the authorities below being contrary to facts and circumstances of the case and the law applicable is to be negated. 2.2 The levy of interest u/s. 201(1A) being without proper appreciation of laws and contrary to various judicial pronouncements is to be deleted.

3. In any case and without prejudice the calculation of interest as done is erroneous and excessive.”

3.

The assessee has also raised additional grounds of appeal as follows:-

“1. The authorities below ought to have provided relief under the Non-Discrimination clause of Article 26 of the Double Taxation Avoidance Agreement between India and the United Stated of America in accordance with law. 2. The interest under section 201(1A) of the Act on account of non-deduction of tax at source for payment made towards purchases is in violation of Article 26 of the Double Taxation Avoidance Agreement between India and the United Stated of America.”

4.

In the petition for admission of additional grounds, it is stated that the above additional grounds of appeal

were not urged specifically in the original grounds of appeal filed at the time of institution of appeal. These grounds do not involve investigation of any facts otherwise on the record of the department and are also pure questions of law, which goes into the very root of the matter and therefore, it is prayed that the additional grounds may be admitted for adjudication and disposed of on merits for the advancement of substantial cause of justice. Reliance is placed on the decision of the Hon'ble Apex Court in the case of National Thermal Power Co. Ltd. vs. CIT, reported in 229 ITR 383 and on the decision of the Karnataka High Court in the case of Gundathur Thimmappa & Sons vs. CIT, reported in 70. ITR 70.

5.

The ld. DR has not put any serious objection for admission of the additional grounds. However, he has submitted that since the assessee has raised these additional grounds for the first time before the Tribunal, it may be remitted to the CIT(Appeals) for his consideration.

6.

We have heard both the parties and perused the material on record. In our opinion, the additional grounds raised

by the assessee do not involve any investigation of facts, which are already available on record and also these are pure questions of law which goes into the very root of the matter. Therefore, by placing reliance on the judgment of Hon’ble Supreme Court in the case of National Thermal Power Co. Ltd. vs. CIT (supra) and the Hon’ble High Court of Karnataka judgment in the case of Gundathur Thimmappa & Sons vs. CIT, reported in 70. ITR 70, we are inclined to admit the additional grounds as the prayer of the assessee is bona fide. Accordingly, we admit the additional grounds. However, the CIT(Appeals) had no occasion to consider these additional grounds, therefore in the interest of justice, we remit this issue to the file of CIT(Appeals) for deciding the issue after consideration of the same and thereafter decide the issue on merits, if required.

7.

In the result, the appeals of the assessee are allowed for statistical purposes.

Pronounced in the open court on this 10th day of January, 2019.

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