×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
These are the latest case laws decided by various Income Tax Appellate Tribunals (ITAT) of India on Income Tax which have been published recently. The case laws are open for discussion and we invite expert comments from our members on its applicability and effect on relevant issues.
09-01-2020, Cummins Inc, Section 234B, 139(1), Tribunal Pune
Appeal No. - ITA Nos.524/PUN/2016, 889/PUN/2017, 2978/PUN/2017
Asstt. Year - 2011-12 to 2015-16
PER : R.S. SYAL VP
These five appeals by the assessee relating to the assessment years 2011-12 to 2015-16 involve some common issues. We are, therefore, proceeding to dispose them off by this consolidated order for the sake of convenience.
A.Y. 2011-12 :
2. The first two grounds of the appeal are against the treatment of amount received by the assessee from providing users a right in off-the-shelf software and use of standard facilities and support services as ‘Royalty’.
3. We have heard both the sides and gone through the relevant material on record. Both the sides are in agreement that the facts and circumstances of these two grounds are mutatis mutandis similar to those of the preceding years including the immediately p eceding year, namely, the assessment year 2010 11 which has been recently disposed of by the Tribunal vide its order dated 07-01-2019 (ITA No.331/PUN/2015). Both such grounds have been allowed by the Tribunal following the orders of the earlier years. In view of the above, we allow these two grounds.
4. Ground No. 3 is against the rate of tax at which software and standard facility income should be charged to tax. The Assessing Officer charged the tax @ 40%.
5. In view of our decision on grounds nos. 1 & 2 about nontaxability of these amounts, this ground has been rendered infructuous. Since the income itself is not chargeable to tax, there can be no question of rate of tax at which such income should be charged.
6. The last ground is against the inclusion of Surcharge and Education Cess in the amount of tax charged by the AO under the Double Taxation Avoidance Agreement (DTAA).
7. The Assessing Officer included Surcharge and Education Cess in the amount of tax determined by him under the DTAA, against which the assessee has come up in appeal before the Tribunal.
8. We have heard the rival submissions and perused the relevant material on record. From the computation of income, it can be seen that the income of the assessee which has been charged to tax under the regular provisions has also been subjected to Surcharge and Education Cess. In so far as the taxability of income under the DTAA is concerned, there are specific rates on which such incomes are chargeable to tax. Such rates cannot be further enhanced by Surcharge and Education Cess as has been held in the several decisions including the one dated 30-11-2015 relied by the ld. AR in DDIT (IT) Vs. The BOC Group Limited (ITA No.571/Kol/2013). We, therefore, overturn the impugned order and direct not to charge Surcharge and Education Cess on the rates of tax under
the DTAA. This ground is allowed.
9. The last ground about the levy of interest u/s 234B is consequential.
10. In the result, the appeal is allowed.
A.Y. 2012-13 :
11. The first two grounds are against the treatment of amount received by the assessee from providing users a right in off-theshelf software and use of standard facilities and support services as ‘Royalty’.
12. We have heard both the sides and gone through the relevant material on record. These two grounds are admitted to be mutatis mutandis similar to ground nos. 1 & 2 for the assessment year 2011-12 dealt with supra. Following the view taken hereinabove, we allow these two grounds on the taxability of off-the-shelf software and Fees for standard facilities.
13. Ground No.3 is against the addition on account of Expat cross charges by treating the same as Royalty.
14. The ld. AR fairly submitted that similar issue came up for consideration before the Tribunal in its order for the assessment year 2010-11 and the matter has been restored to the file of AO with certain directions.
15. We have gone through the order passed by the Tribunal for the assessment year 2010-11. Relevant discussion has been made in para 7 through which the matter has been restored to the AO with certain directions. Following the precedent, we set-aside the impugned order on this score and remit the matter to the file of the AO for deciding it afresh in the light of the directions given by the Tribunal in the aforenoted order.
16. Ground No.4 is against the levy of Surcharge and Education Cess on the amount of income charged under the DTAA.
17. Both the sides are in agreement that the facts and circumstances of this ground are similar to those of ground no.4 of the assessee’s appeal for the assessment year 2011-12. Following the view taken hereinabove, we direct not to load surcharge and education cess on the amount of tax as determined under the DTAA.
18. Ground No.5 is against levy of interest u/s.234D. The ld. AR submitted that the assessee was not granted any intimation of refund u/s. 143(1) of the Income-tax Act, 1961 (hereinafter also called `the Act’), which ultimately turned out to be not refundable. The Assessing Officer is directed to verify the factual scenario in this regard and decide the issue afresh as per law.
19. Ground No. 6 is against allowing lesser credit of TDS.
The Assessing Officer is directed to examine the correct