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Income Tax Appellate Tribunal, “I ”, BENCH MUMBAI
Before: SHRI R.C.SHARMA, AM & SHRI AMARJIT SINGH, JM
Assessee by Shri M.P. Lohia / Shri Pranay Gandhi Revenue by Shri Himanshu Sharma Date of Hearing 08/10/2018 Date of Pronouncement 10/10/2018 आदेश / O R D E R PER R.C.SHARMA (A.M):
These are the appeals filed by the assessee against the order of CIT(A)-56, Mumbai dated 30/11/2016 for A.Y.2010-11 & 2011-12 in the matter of order passed u/s.143(3) of the IT Act. 2. Grievance of assessee in both the years pertains to taxing the Royalty income earned by the assessee @15% in place of @10% u/s.115A of the IT Act.
1740/Mum/2017 M/s. Mondelez UK Congectionery Production Ltd., Rival contentions have been heard and record perused. Facts in 3. brief are that assessee CUK is a non-resident entity registered in the United Kingdom ('UK'). It is engaged in the business of manufacturing and selling various chocolate confectioneries and is the proprietor of Cadbury trademarks. The assessee filed its Return of Income ('ROI')for the AY 2010-11 on 15 October 2010 declaring total income of Rs.36,98,54,523/- in the nature of Royalty earned from Cadbury India Limited. From the record we found that in the A.Y.2010-11, assessee has offered tax @15% in respect of its Royalty income. Before the CIT(A) the assessee has raised additional ground to the effect that Royalty income of the assessee is liable to tax @10% as per Section 115A, whereas inadvertently, assessee had offered the same at the tax rate of 15%. The CIT(A) rejected assessee’s claim by relying on the decision of Hon’ble Supreme Court in the case of Goetze (India) Ltd., 157 Taxmann.com 1. Assessee is in further appeal before us.
It was contended by learned AR that assessee was having Royalty income which is liable to be taxed @10% as per provisions of Section 115A. Learned AR also placed on record the order passed by the AO for the A.Y.2009-10 wherein AO himself has charged Royalty income @ 10%. Undisputedly, assessee was having Royalty income and in terms of provisions of Section 115A it was liable to be taxed @10%. As per learned AR, the CIT(A) has declined assessee’s claim by relying on the decision of Goetze (India) Ltd., (supra) and stated that revised claim can be filed only 1740/Mum/2017 M/s. Mondelez UK Congectionery Production Ltd., before the AO by way of revised return and not otherwise. In this respect we observe that principle laid down in Goetze (India) Ltd.,(supra) is not applicable to the appellate authority and if any legal claim has been raised, the same is liable to be adjudicated as held by Bombay High Court in case of Prithvi Brokers and Shareholders Pvt. Ltd., 6. On the other hand, it was contended by learned DR that tax rate of 10% as per provisions of Section 115A is applicable only where agreement is approved by the Central Government.
We have considered rival contentions and carefully gone through the orders of the authorities below. During the year under consideration the assessee earned Royalty income from CIL amounting to Rs.36,98,54,523 on the basis of agreement entered. As per the provisions of the Income-Tax Act, 1961 (‘Act’), taxability of such income would be governed under the provisions of Section 115A of the Act. Section 115A of the Act governs the taxability of income from Royalty in the case of foreign companies. Before AO inadvertently the assessee offered royalty income at the tax rate of 15%. Additional ground was raised before CIT(A) for applying correct rate of tax as per provisions of Section 115A, but CIT(A) declined the same by relying on Goetz India Ltd.,(supra) In terms of decision of Hon’ble Supreme Court in the case of National Thermal Power 157 CTR 249, a legal claim raised before the CIT(A) should have been accepted by him and the decision of Hon’ble Supreme Court in the case of Goetze (India) Ltd.,(supra) will not come in the way before the appellate authority. In the substantial interest of justice, we 1740/Mum/2017 M/s. Mondelez UK Congectionery Production Ltd., restore this issue back to the file of the AO for considering the applicability of rate of tax @10% as per the provisions of Section 115A. It is pertinent to mention here that AO himself has levied tax @10% in respect of Royalty income in the A.Y.2009-10. We direct the AO to decide the issue as per law after giving due opportunity to the assessee.
Facts and circumstances in the A.Y.2011-12 are same, following the same reasoning we direct AO to decide the issue afresh. We direct accordingly.
In the result, both the appeals are allowed for statistical purposes. Order pronounced in the open court on this 10/10/2018 Sd/- Sd/- (AMARJIT SINGH) (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated 10/10/2018 Karuna Sr.PS Copy of the Order forwarded to : The Appellant 1. The Respondent.
The CIT(A), Mumbai.
CIT 4. DR, ITAT, Mumbai 5. BY ORDER, 6. Guard file. सत्यापित प्रतत //True Copy// (Asstt. Registrar) ITAT, Mumbai
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