IBM UNITED KINGDOM LIMITED,BANGALORE vs. DEPUTY COMMISSIONER OF INCOME-TAX , INTERNATIONAL TAXATION-CIRCLE-1(2), BANGALORE

In the result, all the appeals of the assessees are allowed

Bench: Shri Chandra Poojari & Smt. Beena Pillai

section 197, in respect to deductibility of tax on similar receipts - The CIT(A) highlighted that section 195(2) and section 197 of the Act are in the nature of safeguard sections to make sure that taxes are rightfully deducted on payments. - The CIT(A) has thereafter contended that the Assessee has not availed any of the safeguards and basis

IBM CORPORATION,BANGALORE vs. DEPUTY COMMISSIONER OF INCOME TAX, INTERNATIONAL TAXATION, CIRCLE-1(2)(1) , BANGALORE

In the result, all the appeals of the assessees are allowed

Bench: Shri Chandra Poojari & Smt. Beena Pillai

section 197, in respect to deductibility of tax on similar receipts - The CIT(A) highlighted that section 195(2) and section 197 of the Act are in the nature of safeguard sections to make sure that taxes are rightfully deducted on payments. - The CIT(A) has thereafter contended that the Assessee has not availed any of the safeguards and basis

IBM DEUTSCHLAND GMBH,BANGALORE vs. DEPUTY COMMISSIONER OF INCOME TAX, INTERNATIONAL TAXATION, CIRCLE-1(2)(1), BANGALORE

In the result, all the appeals of the assessees are allowed

u/s 148 of the Act.\nName of the assessee\nITA No.\nAssessment\nyear\nCompagnie IBM France\n545/Bang/2024\n2013-14\nCompagnie IBM France\n546/Bang/2024\n2015-16\n\nPage 52 of 56\nIT(IT)A Nos.487 to 504/Bang/2024 &\nIT(IT)A Nos.541 to 546/Bang/2024\nIBM Canada Limited & Others\nIBM Australia\n487/Bang/2024\n2014-15\nIBM Corporation\n499/Bang/2024\n2016-17\nIBM Japan Limited\n492/Bang/2024

IBM CANADA LIMITED,BANGALORE vs. DEPUTY COMMISSIONER OF INCOME-TAX, INTERNATIONAL TAXATION, CIRCLE-1(2), BANGALORE

In the result, all the appeals of the assessees are allowed

Section 9(i)(vii) and Section 195(1) of the Act, which is reproduced below for the\nfacility of reference:\n9(i)(vii) income by way of fees for technical services13 payable by--\n(a) the Government ; or\n(b) a person who is a resident, except where the fees are payable in respect of\nservices utilised in a business

COMPAGNIE IBM FRANCE,BANGALORE vs. DEPUTY COMMISSIONER OF INCOME-TAX, INTERNATIONAL TAXATION-CIRCLE-1(2), BANGALORE

In the result, all the appeals of the assessees are allowed

u/s 148 of the Act.\nName of the assessee\nITA No.\nAssessment\nyear\nIBM Corporation\n544/Bang/2024 | 2017-18\nIBM Netherland B V\n503/Bang/2024 | 2017-18\nIBM United Kingdom Limited\n498/Bang/2024 | 2017-18\nCategory ‘E’\nLevy of penalty u/s 270A of the Act where return u/s 139(1) of\nthe Act has not been filed. However, secondment related receipts\nwere offered

IBM AUSTRALIA LIMITED,BANGALORE vs. DEPUTY COMMISSIONER OF INCOME-TAX, INTERNATIONAL TAXATION-CIRCLE-1(2), BANGALORE

In the result, all the appeals of the assessees are allowed

Section 9(i)(vii) and Section 195(1) of the Act, which is reproduced below for the\nfacility of reference:\n9(i)(vii) income by way of fees for technical services13 payable by--\n(a) the Government ; or\n(b) a person who is a resident, except where the fees are payable in respect of\nservices utilised in a business

IBM CANADA LIMITED,BANGALORE vs. DEPUTY COMMISSIONER OF INCOME-TAX, INTERNATIONAL TAXATION, CIRCLE-1(2) , BANGALORE

The appeals of the assessees are allowed

penalty u/s 270A of the Act where return u/s 139(1) of\nthe Act has been filed. However, secondment related receipts were\noffered to tax only in the return filed u/s 148 of the Act.\nName of the assessee\nITA No.\nAssessment\nyear\nIBM Corporation\n544/Bang/2024 | 2017-18\nIBM Netherland B V\n503/Bang/2024 | 2017-18\nIBM United Kingdom Limited\n498/Bang/2024

IBM AUSTRALIA LIMITED ,BANGALORE vs. DEPUTY COMMISSIONER OF INCOME-TAX, INTERNATIONAL TAXATION-CIRCLE-1(2) , BANGALORE

In the result, all the appeals of the assessees are allowed

penalty u/s 270A of the Act where return u/s 139(1) of\nthe Act has been filed. However, secondment related receipts were\noffered to tax only in the return filed u/s 148 of the Act.\nName of the assessee\nITA No.\nAssessment\nyear\nIBM Corporation\n544/Bang/2024 | 2017-18\nIBM Netherland B V\n503/Bang/2024 | 2017-18\nIBM United Kingdom Limited\n498/Bang/2024

IBM CANADA LIMITED,BANGALORE vs. DEPUTY COMMISSIONER OF INCOME-TAX, INTERNATIONAL TAXATION-CIRCLE-1(2), BANGALORE

In the result, all the appeals of the assessees are allowed

penalty notice\nmentions under-reporting in consequence\nof misreporting.\nIt is settled position of law that levy of\npenalty must be specific and discernible.\nCIT(A) has distinguished the facts of\nIBM with those of Abbey solely on the\nbasis that IBM has voluntarily offered\nreceipts to tax. However, the CIT(A) has\nfailed to look into the similarity

IBM CANADA LIMITED,BANGALORE vs. DEPUTY COMMISSIONER OF INCOME-TAX, INTERNATIONAL TAXATION, CIRCLE-1(2), BANGALORE

In the result, all the appeals of the assessees are allowed

penalty levied in the case\nof the Assessee deserves to be quashed.\n5. On the other hand, 1d. D.R. submitted that assessee has not\noffered the reimbursement of salary cost of the secondment of\nemployees to tax. The same has been applied by assessee while filing\nrevised return u/s 148 of the Act or applying the same for taxation\nwhile

IBM CHINA HONG KONG LIMITED,BANGALORE vs. DEPUTY COMMISSIONER OF INCOME TAX, INTERNATIONAL TAXATION, CIRCLE-1(2)(1), BANGALORE

In the result, all the appeals of the assessees are allowed

section\n195(2) and section 197 of the Act are\nin the nature of safeguard sections to\nmake sure that taxes are rightfully\ndeducted on payments.\nRebuttal to the CIT(A)'s observations\nProvisions of section 195(2)/ 197 of the\nAct are not mandatory and therefore the\nAO cannot be expected to seek recourse\nto the same.\nTherefore

IBM JAPAN LIMITED,BANGALORE vs. DEPUTY COMMISSIONER OF INCOME-TAX , INTERNATIONAL TAXATION-CIRCLE-1(2) , BANGALORE

In the result, all the appeals of the assessees are allowed

penalty u/s 271(1)(c) of the Act where original return\nu/s 139(1) of the Act was not filed and receipts were offered to tax\nduring re-assessment proceedings.\n\nName of the assessee\nITA No.\nAssessment\nyear\nIBM Deutschland GMBH (“IBM | 501/Bang/2024 2012-13\nGermany\")\nIBM Canada Limited\n489/Bang/2024 | 2012-13\nIBM Osterreich Internale 504/Bang/2024 2012-13\nBuromaschinen

IBM JAPAN LIMITED,BANGALORE vs. DEPUTY COMMISSIONER OF INCOME-TAX , INTERNATIONAL TAXATION-CIRCLE-1(2), BANGALORE

In the result, all the appeals of the assessees are allowed

section 263 nor has been\nreassessed under section 147 of the Act.\nHence, in light of the above factual position and judicial\nprecedence, it is submitted that the entire penalty levied in the case\nof the Assessee deserves to be quashed.\n5. On the other hand, 1d. D.R. submitted that assessee has not\noffered the reimbursement of salary cost

IBM JAPAN LIMITED,BANGALORE vs. DEPUTY COMMISSIONER OF INCOME-TAX, INTERNATIONAL TAXATION, CIRCLE-1(2) , BANGALORE

In the result, all the appeals of the assessees are allowed

section 195(2)/ 197 of the\nAct are not mandatory and therefore the\nAO cannot be expected to seek recourse\nto the same.\n\nPage 47 of 56\nIT(IT)A Nos.487 to 504/Bang/2024 &\nIT(IT)A Nos.541 to 546/Bang/2024\nIBM Canada Limited & Others\nObservation of the CIT(A)\n- The CIT(A) also highlighted that in\nAbbey's case

IBM UNITED KINGDOM LIMITED,BANGALORE vs. DEPUTY COMMISSIONER OF INCOME-TAX, INTERNATIONAL TAXATION-CIRCLE-1(2), BANGALORE

In the result, all the appeals of the assessees are allowed

penalty is to be sustained.\n\nPage 50 of 56\n\nIT(IT)A Nos.487 to 504/Bang/2024 &\nIT(IT)A Nos.541 to 546/Bang/2024\nIBM Canada Limited & Others\n\n6.\nWe have heard the rival submissions and perused the\nmaterials available on record. In these cases the penalty is levied\neither u/s 271C of the Act or u/s 270A

IBM OSTERREICH INTIONATIONALE BUROMASCHINEN GESELLSCHAFT MBH,BANGALORE vs. DEPUTY COMMISSIONER OF INCOME TAX, INTERNATIONAL TAXATION-CIRCLE-1(2), BANGALORE

In the result, all the appeals of the assessees are allowed

section 139 basis the IBM\nCorporation's order and judicial\nprecedents.\n\nPage 50 of 56\n\nIT(IT)A Nos.487 to 504/Bang/2024 &\nIT(IT)A Nos.541 to 546/Bang/2024\nIBM Canada Limited & Others\n\nObservation of the CIT(A)\nRebuttal to the CIT(A)'s observations\n\n- The CIT(A) has highlighted that in the\ncase of Assessee

IBM UNITED KINGDOM LIMITED,BANGALORE vs. DEPUTY COMMISSIONER OF INCOME-TAX , INTERNATIONAL TAXATION-CIRCLE-1(2), BANGALORE

In the result, all the appeals of the assessees are allowed

section 195(2)/ 197 of the\nAct are not mandatory and therefore the\nAO cannot be expected to seek recourse\nto the same.\n==End of OCR for page 46== IT(IT)A Nos.487 to 504/Bang/2024 &\nIT(IT)A Nos.541 to 546/Bang/2024\nIBM Canada Limited & Others\nPage 47 of 56\nObservation of the CIT(A)\n- The CIT(A) also

COMPAGNIE IBM FRANCE,BANGALORE vs. DEPUTY COMMISSIONER OF INCOME-TAX, INTERNATIONAL TAXATION-CIRCLE-1(2), BANGALORE

In the result, all the appeals of the assessees are allowed

section\n195 while IBM has not exercised this\noption.\n(Page 21-22 of the CIT(A) order)\nThe CIT(A) has contended that the\nexplanations offered by the Assessee are\nnot bonafide since no application under\nsection 197 was presented by the\nAssessee. The CIT(A) observed that:\nThe option to present an application\nunder section