2021 (11) TMI 99 - AT - Income Tax

Tribunal rules in favor of assessee, rejects Revenue's appeal

Dy. Commissioner of Income-tax, (International Taxation), Hyderabad. Versus Madhucon Sino Hydro JV, Hyderabad.

Dy. Commissioner of Income-tax, (International Taxation), Hyderabad. Versus Madhucon Sino Hydro JV, Hyderabad. - TMI Issues Involved:1. Whether the CIT(A) erred in entertaining and deciding the appeals when another appeal had earlier been instituted against the same order.2. Whether the CIT(A) erred in adjudicating an appeal instituted beyond the prescribed time limit without condoning the delay.3. Whether M/s. Madhucon Sino Hydro JV could be treated as the agent of Sino Hydro Corporation, China under section 163 of the Income-tax Act.4. Whether the Assessing Officer erred in invoking section 163 proceedings without providing an opportunity to the appellant.Issue-wise Detailed Analysis:1. Entertaining and Deciding Appeals:The Revenue contended that the CIT(A) erred in law by entertaining and deciding appeals (No.36/2014-15 and No.156/2013-14) against the same order of the AO by passing two separate orders on the same date, i.e., 19-06-2015. However, the Tribunal found no merit in this argument, noting that the CIT(A)'s decision to hear the appeals separately did not affect the substantive outcome of the case.2. Adjudicating Appeals Beyond Prescribed Time Limit:The Revenue argued that the CIT(A) entertained and adjudicated an appeal instituted beyond the prescribed time limit without condoning the delay. The Tribunal observed that the assessee’s cross objections suffered from delays of 553 and 554 days, respectively. However, the Tribunal condoned the delay, citing case law (Collector Land Acquisition Vs. Mst. Katiji & Ors, and University of Delhi Vs. Union of India) and noting that the delay was neither intentional nor deliberate but due to circumstances beyond the assessee's control.3. Treating M/s. Madhucon Sino Hydro JV as Agent:The Revenue contended that M/s. Madhucon Sino Hydro JV should be treated as the agent of Sino Hydro Corporation, China under section 163 of the Income-tax Act. The CIT(A) found that Sino Hydro Corporation had a permanent establishment in India, supported by various documents, including PAN, RBI permissions, and registration under the Companies Act. The CIT(A) concluded that there was no requirement to treat the JV as an agent since the foreign company was assessable to tax on its income in India. The Tribunal upheld this finding, noting that the JV had deducted tax at source and remitted it to the government account, and thus, the provisions of section 163 could not be applied.4. Invoking Section 163 Proceedings:The assessee argued that the Assessing Officer invoked section 163 proceedings without providing an opportunity to the appellant. The CIT(A) noted that the order u/s 163 for the assessment year 2006-07 was passed on the same date as the notice, without providing an opportunity to the appellant. The Tribunal agreed with the CIT(A) that the order was bad in law due to the lack of opportunity provided to the appellant.Conclusion:The Tribunal dismissed the Revenue’s appeals (ITA Nos. 1132 to 1139/Hyd/2015) and allowed the assessee’s Cross Objections (CO Nos. 6 to 13/Hyd/2017). The Tribunal concluded that the CIT(A) rightly held that the section 163 mechanism set into motion by the Assessing Officer against the assessee was not sustainable in law. The Tribunal rejected the Revenue’s legal and technical arguments and accepted the assessee’s contentions.Final Order:Revenue’s eight appeals ITA Nos. 1132 to 1139/Hyd/2015 were dismissed, and the assessee’s Cross Objections in CO Nos. 6 to 13/Hyd/2017 were allowed. The order was pronounced in the open court on 29th October 2021.