2017 (6) TMI 1336 - AT - Income Tax

Tax Tribunal Affirms Interest Taxability u/s 244A, Orders Verification of TDS, Advance Tax, and Self-Assessment Credits.

MSM Satellite (Singapore) Pte. Ltd. C/o. SRBC & Associates LLP Versus Deputy Commissioner of Income Tax (International Taxation), Range 3 (2) (2), Mumbai.

The ITAT ruled in favor of the assessee on the taxability of interest under Section 244A, aligning with precedent from the Special Bench. The Tribunal ... Taxability of interest received u/s 244A - HELD THAT:- So far as taxability of interest Under Section 244 is concerned, under Article 11(4) of India Singapore Treaty, the same is now covered by the decision of the Hon'ble Special Bench in the case of ACIT vs Clough Engineering Ltd[2011 (5) TMI 562 - ITAT, DELHI] -Accordingly, we hold that so far as the issue of taxability of interest u/s 244A in the hands of the assessee, we decide the same in favour of the assessee. Not granting Credit for TDS, Advance Tax and Self-Assessment Tax - HELD THAT:- We direct the Assessing Officer to grant credit for TDS, Advance Tax and Self-Assessment Tax after due verification. Income accrued in India - whether the Ld. DRP was correct in holding that the entire liability was extinguished if the payment in question was made at Arm’s Length? - HELD THAT:- This issue has been decided in favor of the assessee in the case of M/s. Set Satellite (Singapore) Pte. Ltd v. Dy.DIT (International Taxation) [2008 (8) TMI 96 - BOMBAY HIGH COURT] wherein it was held that advertisement revenue received by resident of Singapore is not taxable in India. It was held that sales were made on principle to principle basis. Distribution revenue earned - HELD THAT:- As decided in own case[2015 (9) TMI 793 - ITAT MUMBAI] so far as the issue relating to addition on account of ‘advertisement revenue’ and ‘distribution revenue’ the same stands decided in favor of the assessee by the Tribunal, which has been affirmed by the Hon’ble High Court in Assessment Year 1999-2000 and also in subsequent years. As regards the issue of ‘distribution receipts’ treated as ‘royalty income’, we find that this has been treated as business income and such a finding or conclusion now have attained finality, as pointed out by the Ld. Senior Counsel. Thus, finding of the CIT(A) on both the issues are affirmed and ground no. 1 & 2 are dismissed Issues:1. Taxability of interest received under Section 244A of the Act.2. Not granting credit for TDS, Advance Tax, and Self-Assessment Tax.Issue 1: Taxability of interest received under Section 244A of the Act:The appeal involved the question of the taxability of interest received under Section 244A of the Act. The assessee contended that the issue had been decided in its favor previously, citing relevant case law and tribunal orders. The Coordinate Bench had previously held in favor of the assessee for the Assessment Years 2005-06 and 2007-08. The Tribunal, following the precedent set by the Hon'ble Special Bench in the case of ACIT vs Clough Engineering Ltd, decided in favor of the assessee regarding the taxability of interest received under Section 244A. The Tribunal held that the issue of taxability of interest under Section 244A in the hands of the assessee was decided in favor of the assessee, in accordance with the Special Bench decision. Consequently, grounds raised by the assessee regarding the taxability of interest under Section 244A were treated as infructuous, and the appeal on this issue was allowed.Issue 2: Not granting credit for TDS, Advance Tax, and Self-Assessment Tax:The next issue in the appeal of the assessee concerned the non-granting of credit for TDS, Advance Tax, and Self-Assessment Tax. After hearing both sides, the Tribunal directed the Assessing Officer to grant credit for TDS, Advance Tax, and Self-Assessment Tax after due verification. On the Revenue's appeal, the first ground questioned the decision of the DRP regarding the extinguishment of liability if the payment was made at Arm's Length. Both parties acknowledged that this issue had been decided in favor of the assessee by the Hon'ble Bombay High Court in a previous case. Following the High Court's decision, the Tribunal dismissed the ground raised by the Revenue. In the second ground of the Revenue's appeal, the challenge was against the DRP's decision regarding the taxation of distribution revenue. Both parties agreed that this issue had been previously decided by the Coordinate Bench of the Tribunal for the Assessment Years 2005-06 and 2006-07. The Tribunal, following the precedent set by the Coordinate Bench, dismissed the ground of the Revenue. Consequently, the appeal of the assessee was partly allowed for statistical purposes, while the appeal of the Revenue was dismissed.In conclusion, the Tribunal's judgment addressed the issues of taxability of interest received under Section 244A of the Act and the non-granting of credit for TDS, Advance Tax, and Self-Assessment Tax. The decision was based on previous case law, tribunal orders, and the interpretation of relevant provisions. The Tribunal's rulings were in line with established legal principles and precedents, resulting in the allowance of the assessee's appeal on certain grounds and the dismissal of the Revenue's appeal.