TaxTMI 
TaxTMI 
2012 (7) TMI 7
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.... Income-tax Act. 2 The appellant craves to add, amend, modify or alter any grounds of appeal at/the time or before the hearing of the appeal." Since similar issues are involved, these appeals were heard simultaneously for the sake of convenience and are being disposed of through this common order 2. Adverting now to ground no.1 in these appeals, facts, in brief, as per relevant orders in the case of Alcatel Lucent USA Inc are that the assessee, a tax resident of USA, is one of the Alcatel-Lucent group entity and supplied telecom equipment to customers in India in the years under consideration. The said group started its operations in India 1982 in terms of an agreement with ITI Ltd. Subsequently, a joint venture was established with CDOT at Chennai besides having a research centre at Bangalore. A survey u/s 133A of the Income-tax Act, 1961 [hereinafter referred to as the 'Act'] was conducted on 27.2.2009 in the various office premises of M/s Alcatel Lucent India Ltd., as mentioned in para 2.5 of the assessment order. The said company provided marketing support to these assessees. In the course of assessment proceedings in the case of Alcatel -Lucent France, a f....
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....issue disputed before us, the ld. CIT(A) while following the decision of Hon'ble jurisdictional High Court in the case of DIT v. Jacabs Civil Incorporated/Mitsubishi Corpn. [2011] 330 ITR 578/[2010] 194 Taxman 495 (Delhi) concluded as under in the AY 2004-05 in the case of Alcatel Lucent USA Inc.:- "7. I have carefully considered the submissions made by the appellant in this regard. From the scheme of payment of advance tax provided under the Income-tax Act, the obligation of any assessee to pay advance-tax out of the provisions of section 208 read with section 209 & 210. The method of computation of advance-tax is given in section 209 of the Income-tax Act, 1961. Clause (d) of sub section 1 of section 209 provides that the amount of advance-tax payable by the assessee shall be the amount of income-tax which would be deductible or collectible at source during the said financial year under any provision of this Act from any income. As long as the assessee has discharged its obligation to pay advance-tax as per the provisions of section 208 read with section 209 and section 210, he cannot be held liable for defaulting in payment of advance-tax. Section 234B and section 234C only p....
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.... to deduct at source from the payments made to a non-resident but also penalties, etc. Once it is found that the liability was that of the payer and /the said payer has defaulted in deducting the tax at source, the Department is not remedy-less and, therefore, can take action against the payer under the provisions of section 201 of the Income-tax Act and compute the amount accordingly. No doubt, if the person (payer) who had to make payments to the nonresident had defaulted in deducting the tax at source from such payments, the non-resident is not absolved from payment of taxes thereupon. However, in such a case, the non-resident is liable to pay tax and the question of payment of advance tax would not arise. This would be clear from the reading of section 191 of the Act along with section 209(1)(d) of the Act. For this reason, it would not be permissible for the revenue to charge any interest u/s 234B of the Act." Similar view has been taken by the other High Courts in various cases, e.g.; (i) Commissioner of Income-tax v. Tide Water Marine International Inc. [2009] 309 ITR 85 Uttarakhand, (ii) CIT v. Sedco Forex International Drilling Co. Ltd. [20....
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....urrent income, the assessee could not be given benefit of the amount of tax deductible/collectible at source on such income. There was no application from the assessee u/s 195 or u/s 197 for non deduction or less deduction of tax at source. The assessee would have told the payer that it did not have PE in India which was the basis of non-deduction by the payers. Thus, the assessee now cannot be allowed to take benefit that it was payer who defaulted in making deduction and thus, be not visited with levy of interest u/s 234B of the Act. The ld. DR further submitted that Hon'ble Jurisdictional High Court in their decision had made a reference to amended provisions of section 201(3) of the Act. Prior to insertion of the said Amendment by Finance Act No.2 of 2009 w.e.f. 01.04.2010, no time limit was prescribed for invoking the provisions of section 201 of the Act. However, post amendment, the said time limit has already expired in cases where the financial year ended on 31st March, 2007, the ld. DR added. Subsequent to his arguments, the ld. DR submitted a synopsis of his arguments in the following terms:- "4.4 At the outset it is submitted that the Hon'ble Delhi High Court decided ....
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....e read together. A conjoint reading of various provisions would make it clear that -the act makes assessee responsible for estimation of its current income and also for payment of advance tax. The Section 207 deals with the liability for payment of advance tax in respect of total income of assessee, which would be chargeable to tax in the assessment year, which is referred to as "current income". The section 208 prescribes condition where advance tax is payable I e where the amount of advance tax liability exceeds a particular monetary limit. Further section 209 deals with mechanism of computation of advance tax. Section 210 obligates the assessee to pay advance tax on his own accord or in pursuance of order of A.O. As regards section 209(l)(d),it is submitted that this is to be read with clause (a) of see 209(1). Further it is submitted that even the clause (d) that which uses the word deductable or collectable has to be read as a whole. Clause is a reproduced as under :- "(d) The income-tax calculated under clause (a) or clause (b) or clause (c) shall, in each case, be reduced by the amount of income-tax which would be deductible or collectible at source during the said financ....
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....e PE and contends that income was chargeable to tax and deduction of tax at source should have been made by the payer u/s 195. 5.4 Provisions of Section 201 and alternate Remedy: no case of unjust enrichment or charging double compensatory interest : As regards alternate remedy available with the Department u/s 201 of the LT. Act as observed by the Hon'ble High Court, it was submitted that in this case subsequent to the survey, A.O invoked provisions of section 148 and made assessment of taxable income after holding that there existed a permanent establishment of assessee in India. By the time appeal came to be decided on 31.5.2011, the department was not left with any remedy to take action u/s 201 against the payers who had made payment without deduction of tax u/s 195. A reference was made to amended provisions of section 201(3).It is submitted that there was an amendment by insertion of sub-clause 3 by Finance Act No.2 2009 w.e.f 1.4.2010. It was submitted that prior to insertion no time limit was prescribed for invoking provisions of section 201. However, post amendment the said time has clearly expired in cases where financial year ended on 31.32007 i.e. cases upto A.Y. 200....
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....the aforesaid two assessees are liable to pay interest u/s 234B of the Act. Indisputably and as pointed out by the learned CIT(A), the tax on the entire income received by these assessees was required to be deducted at source at appropriate rates by the respective payers u/s 195 of the Act. Section 2(1) of the Act defines "advance tax" to mean the advance tax payable in accordance with the provisions of Chapter XVII-C of the Act. The scheme of provisions of sections 208 and 209 falling in Chapter XVII-C of the Act indicates that in order to compute advance tax, the assessee has to, inter alia, estimate his current income and calculate the tax on such income by applying the rates in force. In terms of provisions of section 209(1)(d) of the Act, the income-tax calculated is to be reduced by the amount of tax which would be deductible at source or collectible at source, which in this case has not been done by the payers, for which these assessees cannot be faulted. Though the ld. DR argued that these assessees represented to the payers that their income was not liable to tax deductible at source, therebeing no PE, no such material in support of this plea has been placed before us nor ....