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Income Tax Appellate Tribunal, MUMBAI BENCHES “L”, MUMBAI
Before: Shri C.N. Prasad, & Shri Ashwani Taneja
20/05/2016 सुनवाई क� तार�ख /Date of Hearing : 15/06/2016 आदेश क� तार�ख /Date of Order: आदेश / O R D E R Per Bench: These appeals are filed by the assessee and revenue pertaining to same assessee and filed against separate orders of Ld. order of Ld. Commissioner of Income Tax (Appeals), {(in short ‘CIT(A)’}, passed against assessment order u/s 195(2) of the Act by the AO.
During the course of hearing, arguments were made by Shri Parag A. Vyas, Authorised Representative (AR) on behalf of the Assessee and by Shri Jasbir Chauhan, Departmental Representative (CIT-DR) on behalf of the Revenue
In all these appeals, the solitary issue involved is with regard to holding the assessee as ‘assessee-in-default’ on account of non-deduction of tax at source, on the amount of payments made by the assessee to M/s. J. Ray Mc Dermott Eastern Hemisphere Ltd. The stand of the assessee in all these years before us was that it was not required to deduct tax at Larsen & Toubro Ltd. 3 source on the payments made to aforesaid payee company for the reason that income of the said payee company was not taxable in India as it did not have any Permanent Establishment (PE) in India. But the claim of the assessee was not accepted and order was passed u/s 195(2) wherein assessee was held to be liable for deduction of tax at source mainly on the ground that the said payee had a Permanent Establishment in India and therefore, assessee was liable to deduct tax at source on the payments made by it to the said payee.
3.1. Being aggrieved, the assessee filed an appeal before the Ld. CIT(A) and raised various grounds in the appeal before the Ld. CIT(A). It was observed by the Ld. CIT(A) in his appeal order that since it has been held in the orders passed by the AO of the payee company that it (i.e. Payee company) had a Permanent Establishment in India, therefore, the assessee’s belief was erroneous and therefore its claim was rejected and the assessee was held to be liable for deduction of tax at source. On the aspect of computation of quantum of profits and quantification of amount of TDS relating to granting up of tax liability etc. part relief was given by the Ld. CIT(A).
3.2. Being aggrieved, the assessee filed an appeal before the Ld. CIT(A).
3.3. During the course of hearing before us, Ld. Counsel of the assessee, submitted a copy of order passed by the Tribunal
Larsen & Toubro Ltd. 4 dated 06.05.2016 in the case of the said payee company. On the basis of this order, it was contended by him that the Tribunal has held that PE of the said company was to be ascertained on the basis of project of the said company and not on the basis of its office and since the project of the said company did not have work duration of more than 9 months, it did not have a PE in India. It was submitted that under these circumstances this case should be decided in favour of the assessee. It was also submitted that for the purpose of limited verification of facts these cases may be sent back to the file of the AO to enable him to apply the appeal orders as may be passed in consequence to the order of the Tribunal of the payee company.
3.4. Ld. DR relied upon the orders of the AO but did not have any serious objection to the submissions made by the Ld. Counsel of the assessee.
3.5. We have gone through the submission made before us as well as of orders of the lower authorities. The issues involved in the appeals before us pertain to determination of the liability of assessee for deduction of tax at source on the payments made by it to the aforesaid payee company in pursuance to a contract entered with the said company. The bone of contention and point of determination of these issues has been that whether the income of the payee company was taxable in India or not, which depended in turn upon the fact that whether the said payee company had its Permanent
Larsen & Toubro Ltd. 5 Establishment in India or not. The orders by the lower authorities were passed under the premise that the said payee company had a PE in India, but, now the Tribunal has in principle held that the said payee company did not have PE in India and for the limited purpose of verification of some facts, the appeals were sent back to the file of the AO. Now, the AO has to pass fresh orders in the hands of payee company to give effect to the order of the Tribunal. Under these circumstances, we are inclined to send the issues raised before us in all these appeals back to the file of the AO. The AO shall pass the order after fresh orders are passed by the concerned assessing officer in the hands of the payee company. In case it is held by the said officer that the said payee company did not have PE in India, then the assessee cannot be held liable for deduction of deduct tax at source and therefore, the orders in the case of assessee company shall be passed accordingly. In case it is held by the AO in hands of payee that it had a PE in India during the relevant period, then the AO of the assessee shall be free to pass fresh order and shall also decide other connected issues afresh which have been raised before us. The AO shall give adequate opportunity of hearing to the assessee to enable it to file requisite details and documentary evidences. The assessee is free to take all legal and factual issues as may be deemed appropriate under the law. Thus, with these directions all the issues raised before us are sent back to the file of the AO with the aforesaid directions.
Larsen & Toubro Ltd. 6 4. In the result, all these appeals are treated as partly allowed for statistical purposes.
Order pronounced in the open court on 15th June, 2016.