DDIT (IT)3(1), MUMBAI vs. HELIX ENERGY SOLUTIONS GROUP INC., MUMBAI

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ITA 4909/MUM/2014Status: DisposedITAT Mumbai15 April 2016AY 2010-114 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that interest under sections 234B and 234C is not leviable on a non-resident assessee whose income is subject to withholding tax, following the Bombay High Court's decision in NGC Network Asia LLC.

What were the facts?

The assessee, a non-resident, provided services related to mineral oil exploration in India. The Assessing Officer included service tax and VAT receipts in taxable income and levied interest under sections 234B and 234C. The assessee argued that as a non-resident with income subject to withholding tax, advance tax interest was not leviable.

What were the issues?

Whether interest under sections 234B and 234C is leviable on a non-resident assessee when its income is subject to withholding tax under Section 195.

Which sections of the Income-tax Act were involved?

Section 234B,Section 234C,Section 195,Section 44BB

AI-generated summary — verify with the full judgment below

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

Before: SHRI G.S. PANNU & SHRI AMIT SHUKLA

For Appellant: Shri Ayush J. Rajani
For Respondent: Shri Jasbir Chauhan (CIT-DR)
Hearing: 07/04/2016Pronounced: 15/04/2016

The captioned appeal by the Revenue is directed against the order of CIT(A)-10, Mumbai dated 02.01.2014, pertaining to the Assessment Year 2010-11, which in turn has arisen from the order passed by the Assessing Officer dated 10.05.2013 under section 143(3) r.w.s 144C(3) of the Income Tax Act, 1961 (in short ‘the Act’).

2.

In this appeal, Revenue has raised the following Ground of appeal:

2 M/s. Helix Energy Solutions Group INC

1. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) was correct in holding that interest u/s 234B is not leviable in the case of non resident despite a specific finding by the Hon'ble Delhi High Court in the case of DIT vs. Alcatel Lucent USA Inc. dated 14.11.2013 in and 329/2012 wherein it has been specifically stated that a non resident assessee which does not admit income chargeable to tax must be inferred to have induced the Indian payer not to deduct TDS, thus, rendering itself liable for advance tax interest.

3.

The brief facts of the case are that the respondent-assessee is a non-resident engaged in the business of providing services and facilities in connection with exploration, exploiting and production of mineral oil in India. For the assessment year under consideration, it filed a return of income declaring a taxable income of Rs.55,42,57,061/- whereas the Assessing Officer finalized the assessment vide order dated 10.5.2013 u/s. 144C(3) r.w.s. 143(3) of the Act at an income of Rs.58,71,87,165/-. In the return of income, receipts of Rs.32,09,92,291/- on account of service tax and Rs.83,78,750/- on account of VAT were claimed as not includible in revenue chargeable to tax in terms of Sec. 44BB of the Act, whereas in the assessment order, the Assessing Officer held the aforesaid receipts to be includible in the total revenue taxable in terms of Sec. 44BB of the Act. As a consequence of such assessment, the Assessing Officer also levied interest u/s. 234B and 234C of the Act. Such charging of interest u/s. 234B and 234C of the Act was challenged by the assessee before the CIT(A) on the ground that since assessee was a non-resident and its entire revenue/receipts were subject to withholding tax in India u/s. 195 of the Act and assessee was not liable to pay any “advance tax” in terms of Sec. 209(1)(d) of the Act, levy of 3 M/s. Helix Energy Solutions Group INC interest u/s. 234B and 234C of the Act was not justified. The CIT(A) has accepted the aforesaid plea of the assessee following the judgment of the Hon'ble Bombay High Court in the case of NGC Network Asia LLC, 313 ITR 187 (Bom). Against such a decision of the CIT(A), Revenue is in appeal before us.

4.

Before us, it was a common point between the parties that having regard to the facts and circumstances of the case, the ratio of the judgment of the Hon'ble Bombay High Court in the case of NGC Network Asia LLC (supra) is clearly attracted to the present case and the CIT(A) made no mistake in setting aside the levy of interest u/s. 234B and 234C of the Act. As a consequence, we hereby affirm the order of CIT(A) and accordingly, the appeal of the Revenue fails.

5.

In the result, appeal of the Revenue is dismissed.

Order pronounced in the open court on 15th April, 2016.

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