ADIT, DEHRADUN vs. M/S. SAMSUNG HEAVY INDUSTRIES CO. LTD., GURGAON

ORDER

Per N. K. Saini, AM:

1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (Appeals) has erred in allowing the appeal filed by the assessee against the assessment order dated 30.03.2013 passed by the Assessing Officer (AO) u/s 143(3)/254 of the Income Tax Act, 1961 ('the Act"), without going into the merits of the issues as agitated in the grounds of appeal filed by the assessee.

2 Samsung Heavy Industries Co. Ltd. 1.1 The Ld. CIT (Appeals) has erred in allowing the appeal of the assessee without admitting any additional grounds relating to effect of the judgment dated 27.12.2013 of the Hon'ble High Court in the simultaneously continuing first round of the appellate proceedings in the case which have not yet attained finality. 1.2 The Ld. CIT (Appeals) has erred in not appreciating the fact that the scope of the assessment u/s 143(3)/254, and by extension the scope of the appeal emanating from the said assessment order, was necessarily limited to the directions issued by the Hon'ble ITAT vide its order dated 30.08.2011 wherein the Hon'ble ITAT had, while upholding that a portion of the revenues from the so called outside India activities were taxable in India, directed the AO to ascertain the facts necessary for proper quantification/attribution of such revenues to the Permanent Establishment (‘PE’) in India. 1.3 The Ld. CIT (Appeals) appears to have implicitly invoked the doctrine of merger in allowing the appeal of the assessee without taking it to logical conclusion, not appreciating the fact that in case the order dated 13.08.2011 of the Hon'ble ITAT and the consequential order u/s 143(3)/254 are deemed as merged in the judgment dated 27.12.2013 of the Hon'ble High Court, then the appeal of the assessee against the assessment order u/s 143(3)/254, which was confined to the issue of attribution emanating from the said order, should necessarily and properly have been held as in fructuous and dismissed as such.

3 Samsung Heavy Industries Co. Ltd. 1.4 The Ld. CIT (Appeals) has erred in allowing the appeal in Toto and deleting the additions made by the AO in the assessment order u/s 143(3)/254 of the Act on the sole ground that subsequent to the said order dated 30.08.2011, the Hon'ble High Court had vide its order dated 27.12.2013 held that the income of the assessee from the out-side India activities was not taxable, without appreciating the fact that the said judgment of the Hon'ble High Court has not become final as the Department is in the process of filing Special Leave Petition ('SLP') against the same. 1.5 The Ld. CIT (Appeals) has erred in not appreciating the fact that his action in allowing the appeal of the assessee, instead of dismissing the same as rendered in fructuous, may be interpreted as foreclosing the option of Revenue to appeal for restoration of the assessment order u/s 143(3)/254 at a later stage if and when the Departmental SLP against the judgment dated 27.12.2013 of the Hon'ble High Court is decided in favour of Revenue.

2. The appellant prays for leave to add, amend, modify or alter any grounds of appeal

at the time or before the hearing of the appeal.”

3. During the course of hearing the ld. Counsel for the assessee at the very outset stated that this appeal of the department becomes infructuous since the AO vide order dated 12.03.2014 on the direction of the Hon’ble Uttarakhand High Court given in order dated 27.12.2013 had allowed the claim of the assessee and revised the original assessment order dated 25.10.2010. The ld. CIT DR although supported the order of 4 Samsung Heavy Industries Co. Ltd. the AO but could not controvert the aforesaid contention of the ld. Counsel for the assessee.

4. We have considered the submissions of both the parties and perused the material available on the record. In the present case, it is noticed that the original assessment was completed by the AO u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act) at an income of Rs.28,35,94,740/- and the loss of Rs.23,33,939/- was deducted from the said income to arrive at a taxable income of Rs.28,12,60,801/-. The said income was computed after holding that outside India revenues amounting to Rs.113,43,78,960/- to be taxable on income determined at 25% of gross receipts on the basis of estimate. Final order was passed by the AO after receiving the directions from the DRP u/s 144C(5) of the Act. Against the said order, the assessee filed an appeal before the ITAT in wherein vide order dated 30.08.2011, the issue was set aside to the file of the AO. Thereafter, in compliance of the directions of the ITAT, the AO revised the assessment u/s 143(3)/254 of the Act vide order dated 30.03.2013. Against the said order the assessee preferred an appeal to the ld. CIT(A)- II, Dehradun. Meanwhile, the assessee filed an appeal before the Hon’ble Uttarakhand High Court against the aforesaid referred to order of the ITAT in ITA No. 01/2012 wherein vide order dated 27.12.2013, the issued was decided in favour of the assessee. Thereafter, the ld. CIT(A) passed the impugned order deciding the appeal of the assessee in 5 Samsung Heavy Industries Co. Ltd. its favour and the AO vide order dated 12.03.2014 passed u/s 143(3)/251/254/260(1A) of the Act revised the original assessment.