| 2018-TII-INSTANT-ALL-563 | 19 April 2018 |
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CASE LAWS ORIENT GREEN POWER COMPANY LTD Vs DCIT: MADRAS HIGH COURT (Dated: April 11, 2018) Income Tax - Writ - Sections 92CA, 143(3), 144C(1) & Constitution of India - Article 226. Keywords: Discretionary jurisdiction - Renewable energy power - Statutory remedy. The assessee company, engaged in producing renewable energy power, had filed its return for the relevant AY. The assessee has preferred the Writ petition challenging the order passed by the respondent u/s 143(3) r/w Sec. 92CA r/w Sec. 144C(1). The assessee pointed out that in the draft assessment order, there was a miscalculation in the Sec. 14A workings. At the time of filing returns, the assessee had calculated a detailed working for disallowance u/s 14A as Rs.8 lakhs however, the same was not considered in the draft assessment order. In Writ, the High Court held that, Whether the discretionary jurisdiction available with the High Court under Article 226 is an absolute one - NO: HC Whether when factual issues are involved for which there is an alternate statutory remedy available with the assessee, the High Court can still entertain the Writ petition by exercising its jurisdiction under Article 226 of the Constitution of India - NO: HC + as against the disputed assessment order, the assessee has an effective alternate remedy of appeal before the CIT(A). On the grounds raised by the assessee, should they be permitted to by-pass the remedy. In the recent decision in the case of Authorized Officer, State Bank of Travancore Vs. Mathew K.C., the Apex Court considered the issue as to under what circumstances, the discretionary jurisdiction under Article 226 of the Constitution of India could be exercised when there are alternate statutory remedies. It was pointed out that the discretionary jurisdiction under Article 226 is not absolute, but has to be exercised judiciously in the given facts of the case and in accordance with law and the normal rule is that a writ petition under Article 226 ought not to be entertained if alternate statutory remedies are available except in cases falling within the well defined exceptions; + there appears to be no allegation of the violation of principles of natural justice, as the assessee has been given an opportunity to file their objections to the draft assessment order. What is now agitated before this Court is with regard to the manner, in which, the objections were considered and it is alleged that the finding rendered by the Revenue in the disputed assessment order is purely based on surmises and conjectures. However, this challenge is only in respect of two issues, which have been mentioned in the assessment order under challenge, as, in respect of other issues, the assessee itself is in the process of filing an appeal before the CIT(A); + thus, in my considered view, a piecemeal challenge to the disputed order should not be encouraged, more particularly when factual issues are involved and it is but proper for the assessee to avail the statutory appeal remedy and not to by-pass the same. This Court finds that this is not a fit case where the discretionary jurisdiction under Article 226 of the Constitution of India should be exercised. In the result, the writ petition is held to be not maintainable and the assessee is granted liberty to avail the alternate remedy of appeal before the Appellate Authority, if so advised. Assessee's Writ petition dismissed LLOYDS REGISTER QUALITY ASSURANCE LTD Vs DDIT: MUMBAI ITAT (Dated: April 10, 2018) Income Tax - Section 40(a)(ia). Keywords: Die payment - FTS - Management charges & TDS. The assessee, an Indian subsidiary of Lloyds Register UK, had filed its return for the relevant AY. During the assessment proceeding, the AO noted that the assessee had made payment towards management charges to Lloyds Register UK. However, the AO believed that the management charges paid were technical services and hence, the assessee should have deducted TDS and such non-payment rendered the same payment not allowable u/s 40(a)(ia). On appeal, the CIT(A) granted partial relief to the assessee by following the order passed by him for the AY 2006-07. On appeal, the Tribunal held that, Whether the payment of management charges made by a company to its foreign AE is an allowable deduction u/s 40(a)(ia) even if, no TDS is deducted from such payment - NO: ITAT + the Tribunal had decided the issue in favour of the assessee by following the judgment of the Delhi High Court in the case of Herbalife International India P.Ltd. wherein, it was held that "... The consequence of non-deduction of TDS when die payment to a non-resident has an adverse consequence to the payer. Since it is mandatory in terms of section 40(a)(i) for the payer to deduct TDS from the payment to the non-resident, the latter receives the payment net of TDS. The object of article 26(3) of the DTAA was to ensure non-discrimination in the condition of deductibility of the payment in the hands of the payer where the payee is either a resident or a non-resident. That object would get defeated as a result of the discrimination brought about qua non-resident by requiring the tax to be deducted at source while making payment of FTS in terms of section 40(a)(i) ..." Since the facts are identical and on similar issue, the Tribunal had decided the case in favour of the assessee, we follow the precedent and decide the issue in favour of the assessee. Assessee's appeal allowed VODAFONE INDIA LTD Vs ACIT: MUMBAI ITAT (Dated: April 6, 2018) Income Tax - Sections 143(1)(a), 147, 154, 220(2), 234B, 234D & 244A. Keywords: Adjustment of refund - Advance tax - Bonus liability - Inadvertent mistake - Rectification order & TDS. The assessee company, engaged in the business of providing cellular service to its customers. It filed the return for the relevant AY declaring the total income. The assessee's original assessment was completed by the AO. Later, the AO believed that taxable income had escaped assessment and accordingly, a notice u/s 148 was issued to the assessee. The AO passed the reassessment order u/s 143(3) r/w sec. 147 determining the assessee's income. However, the assessee filed applications u/s 154 and stated that there were mistakes in the order passed by the AO. While dealing with the rectification applications, the AO noticed that the assessee had claimed Rs. 32.65 crores as allowable deduction u/s 43B which was allowed and an amount of Rs.26.78 crores was attributable to bonus liability. However, it was found by the AO that the said deduction was allowable in the subsequent AY and not in the relevant AY. A notice u/s 154 was issued to the assessee wherein, in reponse, the assessee stated that the claim made by it was an inadvertent mistake. Further, the AO also found that while passing an order u/s 143(3) r/w Sec. 147, an addition was made and interest u/s 234B was charged then. Later, after considering the payment /refund adjustments of the assessee, interest u/s 220(2) for the default of payment had to be charged on the outstanding amount. However, the AO denied to accept the assessee's objections. Accordingly, the AO passed the rectification order determining the assessee's total income. On appeal, the Tribunal held that, Whether it is open for the Revenue to levy interest u/s 220(2) even though interest u/s 244A was not granted to the assessee company - NO: ITAT Whether the assessee company can be charged interest u/s 220(2) when the delay in giving effect to the appellate order and consequent adjustment against refund was on the Revenue's part - NO: ITAT ++ out of total demand of Rs.268.12 crores an amount of Rs.133.01 crores was adjusted on 29/11/2012, that balance demand together with the interest u/s 220, amounting to Rs. 13.15 crores(computed for the period 1/12/2012 to 25/9/2013) was adjusted against refund proceeds for AY 2012-13 on 25/8/2013. As per the provisions of sec. 220(1) interest at the rate of 1% can be levied if the demand is raised, pursuant to the notice of demand u/s 156, is not paid within the time provided in such notice. The service of notice of demand is a precondition for levy of interest. In the case under consideration, after receipt of notice of demand, the assessee had requested the AO for adjustment of refund against the demand. But, the AO did not pass the necessary orders in that regard. We find that the assessee approached the Tribunal, on 17/12/12, for staying the demand, before the Counsel for the Tribunal stated that refunds could not be adjusted due to certain procedural problems, that the Tribunal stayed the demand vide its order dated 1/3/2013; ++ in our opinion, the delay in adjustment of refunds was not attributable to assessee at all. We find that there is some confusion about payment of interest u/s 244A to the assessee. The Counsel had claimed that assessee was not granted any interest, whereas the Counsel for the Revenue stated that the assessee was getting interest as per the provisions of Sec. 244A. Therefore, we are of the opinion that issue needs further verification of facts. If the assessee was not granted any interest u/s 244A, there is no justification of levying interest u/s 220(2). But if, interest has been granted then levy of interest should be restricted to that extent only. Assessee's appeal aprtly allowed |
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