TENOVA SPA,MUMBAI vs. DCIT (IT) - 4(1)(2), MUMBAI

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ITA 709/MUM/2017Status: DisposedITAT Mumbai12 September 2018AY 2012-134 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the matter needed to be re-adjudicated by the Assessing Officer in light of the assessee's submissions and the Special Bench decision in Motorola Inc. The Assessing Officer was directed to provide a fresh adjudication.

What were the facts?

The assessee, a non-resident, earned income from supervision services in India, which was offered to tax. The Assessing Officer charged interest under Section 234B, which the assessee contested, arguing that TDS was to be deducted by the payers and that interest should not be levied in cases covered by a Section 197 certificate for lower TDS.

What were the issues?

Whether interest under Section 234B is leviable on a non-resident when TDS obligations rest with the payer, and how Section 197 certificates affect this liability.

Which sections of the Income-tax Act were involved?

Section 234B,Section 197,Section 195,Section 115A

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, MUMBAI BENCH “E”, MUMBAI

Before: SHRI C.N. PRASAD, HONBLE & SHRI RAJESH KUMAR, HONBLE

For Appellant: Shri Apurva R. Shah
For Respondent: Shri M. Rajguru
Hearing: 26.06.2018Pronounced: 12.09.2018

Date of Hearing : 26.06.2018 Date of Pronouncement : 12.09.2018 O R D E R PER C.N. PRASAD (JM) 1. This appeal is filed by the assessee against the order of the Learned Commissioner of Income Tax (Appeals) – 58, Mumbai dated 14.10.2016 Assessment Year 2012-13.

2.

The assessee raised the following grounds in its appeal: - “1. In holding that the appellant was liable to pay advance tax and accordingly computing interest u/s 234B. This was notwithstanding that the appellant was a Non Resident and the payers of income were obliged to do TDS on the income so paid.

2. In not appreciating correctly that in cases where the appellant had a certificate u/s 197 for deduction of TDS at a lower rate, but the tax liability was 2 ITA.NO. 709/MUM/2017 (A.Y: 2012-13) M/s. Tenova SPA higher, the appellant had already computed interest u/s 234B. He erred in assuming that all the income earned was covered by the certificate issued under Section 197.”

3.

The Assessing Officer while completing the assessment noticed that assessee is a tax resident of Italy, it has income from supervision services rendered for installation for furnaces for various company’s in India and the assessee has offered the income from supervisory services, being attributable to deemed Permanent Establishment (PE) in India for taxation @40% of the Act. He also noticed that assessee earned exempt income from other sources not attributable to supervisory PE and offered tax @10% u/s. 115A of the Act. He computed the total income of the assessee accordingly. While computing the total income and tax liability the Assessing Officer charged interest u/s. 234B of the Act. The assessee before the Ld.CIT(A) contended that in respect of remittances where the TDS was done against the order u/s. 197 of the Act interest u/s. 234B was computed. However, in remaining cases assessee is not liable to charge interest u/s. 234B of the Act as the onus was on the deductors to deduct TDS u/s. 195 of the Act and hence the assessee could not be charged interest u/s. 234B of the Act on these amounts. The assessee also placed reliance on the decision of the Special Bench in the case of Motorola Inc. reported in 95 ITD 269 in support of its contention. However, the Ld.CIT(A) not appreciating the submissions of the assessee sustained the interest levied u/s. 234B of the Act.

3 ITA.NO. 709/MUM/2017 (A.Y: 2012-13) M/s. Tenova SPA 4. Ld. Counsel for the assessee reiterated the submissions made before the lower authorities.

5.

Ld. DR vehemently supported the orders of the authorities below.

6.

We have heard the rival submissions, perused the orders of the authorities below. On hearing both the sides, we are of the considered view that this matter has to go back to the Assessing Officer for fresh adjudication in the light of the submissions of the assessee and the decision of the Special Bench in the case of Motorola Inc. (supra). Hence, we restore this matter to the file of the Assessing Officer for denovo adjudication, keeping in view the decision of the Special Bench. Needless to say that the Assessing Officer shall provide adequate opportunity of being heard to the assessee.

7.

In the result, appeal of the assessee is allowed for statistical purpose.

Order pronounced in the open court on the 12th September, 2018.

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