Subject: International Taxation, New Delhi on the following grounds of appeal:
Referred Sections:
section 234A, B, C and D of the Income Tax Act,
Section 195, interest under section 234B of the Act
Section 195(1),
Section 195(2) of the Act.
Section 201,
Referred Cases / judgments
lue Star Ltd vs. CIT reported in 217 ITR 514.
DIT, Intl.Tax.-I vs. G.E.Parts INC.,
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCHES: `D', NEW DELHI
BEFORE SHRI N.K.BILLAIYA, ACCOUNTANT MEMBER
AND SMT. BEENA A PILLAI, JUDICIAL MEMBER
ITA No. 89/Del/2016
AY: 2012-13
DCIT, Circle 3(1)(1) vs. M/s Terma A/S
New Delhi Hovmarken 4
8520, Lystrup
Denmark
(Appellant) (Respondent)
Department by : Sh. G.K.Dhall, CIT, D.R.
Assessee by : None.
Date of Hearing : 02.07.2018
Date of Pronouncement: 02.07.2018
ORDER
PER BEENA A PILLAI, JUDICIAL MEMBER
Present appeal has been filed by Revenue against order
dated 24/11/15 passed by Ld.DCIT, Circle 3 (1) International
Taxation, New Delhi on the following grounds of appeal:
"1. Whether on the facts and in the circumstances of the case
and in law, the Hon'ble DRP has erred in directing the Assessing
Officer to not levy interest u/s 234B of the Income Tax Act, 1961.
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.
Certified that the copy of the directions of DRP-2. New Delhi in the
above mentioned case was communicated to me on 19.10.2015
and final assessment order was passed on 24.11.2015. Limitation
to file appeal before the Hon'ble ITAT expires on 22.01.2016."
ITA 89/Del/2016 A.Y.: 2012-13
DCIT vs. Terma A/S
2. Brief facts of the case are as under.
Assessee is a Denmark-based foreign company engaged in the
business of manufacturing and supplying of defence and
aerospace equipment for civilian and military applications like
radar system for coastal surveillance, naval surveillance, vessel
traffic surveillance at ports, airports etc. During the year under
consideration assessee received payments in respect of offshore
supply of equipment and performance of services under certain
contracts wherein assessee took a position that income from
offshore supply of equipment is not taxable in India as it does not
have a PE in India. Ld. AO passed draft assessment order by
holding that assessee has a fixed place/installation/service PE in
India and attributed 30% of sales revenue earned by the
assessee from offshore supply to Indian operations and 10% of
revenue to PE of assessee in India. Ld. AO also charged interest
under section 234A, B, C and D of the Income Tax Act, 1961 (`the
Act' for short).
3. Aggrieved by the order, assessee preferred Objections
before DRP.
4. The DRP after considering the submissions upheld the
existence of PE and directed Ld.DCIT, to apply global net profit
rate of assessee to the revenue from India and then attribute 5%
of such net profit to PE in India. DRP also directed to recompute
interest, having regard to the decision of Hon'ble Delhi High Court
in the case of GE Capital, wherein it has been held that since
payments to non-resident subject to withholding of taxes under
Section 195, interest under section 234B of the Act is not livable.
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ITA 89/Del/2016 A.Y.: 2012-13
DCIT vs. Terma A/S
4.1. Ld. AO thereafter gave effect to the directions of DRP and
did not charge interest under section 234B of the Act.
5. Aggrieved by the order of Ld. AO, revenue is in appeal before
us now.
6. Ld. CIT,DR placed reliance upon the decision of Alcatel
Lucent USA Inc., reported in 264 CTR 240 as well as the decision
of Hon'ble Bombay High Court in case of Blue Star Ltd vs. CIT
reported in 217 ITR 514.
7. We have perused the submissions advanced by Ld. CIT,DR
on the basis of the records placed before us.
7.1. In our considered opinion, this issue has attained finality
by the decision of Hon'ble Supreme Court in case of DIT, Intl.Tax.-I
vs. G.E.Parts INC ., reported in (2016) 73 Taxman.Com 186,
wherein Hon'ble Court upheld decision of Hon'ble Delhi High
Court. Hon'ble Supreme Court had dismissed the SLP filed by the
revenue.
7.2. The observations of Hon'ble Delhi High Court upheld by
Hon'ble Supreme Court are as under:
"23. For the above reasons, this Court finds that no interest is
leviable on the respondent assessees under Section 234B, even
though they filed returns declaring NIL income at the stage of
reassessment. The payers were obliged to determine whether the
assessees were liable to tax under Section 195(1), and to what
extent, by taking recourse to the mechanism provided in Section
195(2) of the Act. The failure of the payers to do so does not leave
the Revenue without remedy; the payer may be regarded an
assessee-in-default under Section 201, and the consequences
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ITA 89/Del/2016 A.Y.: 2012-13
DCIT vs. Terma A/S
delineated in that provision will visit the payer. The appeal of the
Revenue is accordingly dismissed without any order as to costs."
7.3. Respectfully following the same, we hold that Ld.DCIT was
right in deleting interest under section 234B of the Act.
8. Accordingly we dismiss the ground raised by revenue.
9. In the result appeal filed by the revenue stands dismissed.
Order pronounced in the open court on 02.07.2018.
Sd/- Sd/-
(N.K.BILLAIYA) (BEENA A PILLAI)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dt. 02nd July, 2018
· Mv
Copy forwarded to: -
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR, ITAT
- TRUE COPY -
By Order,
ASSISTANT REGISTRAR
ITAT Delhi Benches
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