TaxTMI 
TaxTMI 
2012 (12) TMI 186
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.... Sweden. The company is a wholly owned subsidiary of Telefonaktiebolaget LM Ericsson, Sweden. The main business of the assessee is supply of GSM Mobile Telecommunication system comprising of hardware and software to various cellular companies operation in India (ICO's). 2. The assessee company was not filing its return of income in India. Pursuant to the notices sent by the ITO returns were filed. The return of income for this year was filed on December 4,2001 declaring NIL income. Notice u/s 148 was issued on October 4,2002. Vide letter dated 17.10.2002, it was stated that the return filed on 4.12.2001 may be treated as the return filed in response to notice u/s 148 of the I.T.Act. In response to the notice issued u/s 143(2) of the I.T.Act, 1961, Sh. Krishan Malhotra, Sh. Rajiv Monga and Sh.A.Jain of M/s RSM & Co. appeared from time to time. The submissions and details were filed which have been placed on record. 3. The assessee company is globally renowned for its telecom hardware and software products, equipment and expertise. During the year, the assessee has supplied GSM system comprising of hardware and software to the undermentioned ICO's under contracts. These supplie....
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....the same for this year as in preceding years. The nature of activities carried out and the contracts under which such activities have held to be business profits liable to tax in India under this head. The payments received by the assessee for the supply of software is held to be 'royalty' within the meaning of the DTAA and is to be taxed, as such. The position regarding royalty payments has also been upheld by the Hon'ble CIT(A)."(Emphasis own) 4. Aggrieved, the assessee carried the matter in appeal before the First Appellate Authority. It was pleaded that the issue in question stands covered in assessee's own case by the decision of the Special Bench of the Tribunal in M/s. Motorola Inc. vs DCIT, 96 TTJ 01 (S.B.) (Delhi). It was also brought to the notice of the Ld.CIT(A), that the Revenue has filed an appeal against the order of the Special Bench and the Hon'ble Delhi High Court had concluded the hearings on 27.9.2010 and the judgement was reserved. (Subsequently the judgement was delivered). It was also pointed out that the A.O. has recorded a finding that there was no change in the facts and circumstances of the case from the facts and circumstances of the earlier years i.e....
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.... later developments in the case of the appellant into consideration for better clarity of the facts and issues involved in the case, and the same is discussed in the subsequent paragraphs." 7. Thereafter he referred to the survey conducted on 22.11.2007 and after summarizing the facts found during the survey held as follows. "4.0. Gist of the order:- In the light of above facts and circumstances the gist of my order is given below:- * That the appellant has PE in India under Art.5(1) of DTAA by way of fixed place of business maintained by ECI and has dependent agent under Art 5(6)(a) of the DTAA in form of ECI who has habitually exercised to conclude the contract on behalf of the appellant, and also has a dependent agent under Art.5(6)(c) of the DTAA in the form of ECI who has habitually secured the order on behalf of the appellant. * That the appellant is having also supervisory PE in terms of Art.5(3) of DTAA. * That the appellant is having business connection in India ;within the meaning of S.9(1)(i) of the Act. * That the sale of equipment is deemed to have taken place in India and software has been licensed in India. * That the revenue arising to the appel....
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....ter and have no relevance to the years under appeal. 11. Without prejudice he submits that the CIT(A) has not pointed out as to which are the documents/evidences that are relied upon by and how such document enabled him to draw certain presumptions on facts. He argued that under these circumstances it was not possible for the company to explain its point of view on the material found during the course of survey in the year 2007. 12. He further argued that the issues are covered in favour of the assessee in its own case and that the retrospective amendment made to S.9(1)(vi) of the Income Tax Act by the Finance Act, 2012 is of no consequence to the assessee's tax liability as there was no change in the DTAA. He relied on the following decision of the Tribunal: i) ADIT vs. M/s Siemens Aktienge ellschaft in ITA no. 4502/Mum/2009 order dt. 18.5.2012; ii) B4U International Holdings Ltd. Vs. DCIT in ITA no. 3326/Mum/2006. 13. The Ld.D.R. Mr.D.K.Gupta on the other hand opposed the contentions of the assessee's counsel and submitted that all these cases should be heard along with the appeal for A.Y. 2006-07. He further submitted that the order of the A.O. as well as the CIT(....
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....lauses in the agreements, documents, letters and decision of the Hon'ble High Court and submitted that :- a) Acceptance Clause differs but warranty clause remains the same; b) Hon'ble High Court stated that the assessee had the power to reject the goods, the decision of the Court would be different; c) The Clauses in the agreement entered into by the assessee post 2003, were identical with the clauses entered into by the assessee prior to 2003, as far as, Acceptance Clause and Infringement Clause are concerned; d) Cost recharge Clause is freshly introduced and this changes the facts of the case; e) Filters and Antenna was supplied by EIL for two years without agreement; f) DRI has given a show cause notice which shows that the assessee's contention that there are no change in facts is incorrect; g) EIL was found to be making copies of software prior to change in business model. Annexure B to the survey documents consisting a vital document, were not available before the AO; h) Reliance was placed on the following decisions: Aramex International Logistics 2012-TII-29-ARA International; i) The plea that the issue whether the assessee has a P.E. in India or ....
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....clause. He submitted that the Ld.Sr.D.R. is trying to make out a fresh case, which was neither of the A.O. nor of the CIT(A) and submitted that such arguments should not be entertained. He pointed out that the parties had no right to repudiate the contract and argued that this is vital in coming to the conclusions in the matter and that there is no change in the facts. On the show cause notice issued by the DRI, he submitted that the Ld.Departmental Representative did not bring out as to how it is relevant and what happened after the show cause notice and submitted that all the charges were answered and the assessee won its case in CECSTAT. Hence he submitted that nothing turns on this show cause notice. He emphasized that all the material now be referred to by the D.R. was available with the A.O., when he passed the assessment order and the Assessing Officer has chosen not to rely on any of the material for the reasons that this might not be relevant. He further contended that the CIT(A) did not refer to the very specific evidence or document, nor did he call for a remand report from the A.O. nor he has put any document to the assessee and under these circumstances the Revenue can....
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....ee's own case for the A.Y. 1997-98. The Ld.CIT(A), without confronting the assessee or the Assessing Officer tried to make out a case that the facts are different in these years. He summarized the new facts/evidences at para 3.3 of his order at pages 6 to 11. The basis on which this summary is arrived is not stated. A perusal of this summary demonstrates that the Ld.CIT(A) has not indicated as to what is the documentary evidences are relied upon by him for coming to a conclusion that the facts of the current years are different from that of the earlier years. General observations are made and vague conclusions are drawn. The documents were not put to the assesse, nor explanations were called for from the assessee. The views of the assessee and the Assessing Officer on these new evidences are necessary to form an opinion or draw conclusions on these documents. Surmises and conjectures are drawn. The nature of evidence found, the nexus the particular document/evidence has with the impugned Assessment Years, the inference that the CIT(A) seeks to draw from these documents and the reply of the assessee to such proposed inferences are not brought out or discussed in the order. Und....
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....aharani Kanak Kumar Sahiba vs CIT (1955) 28 ITR 462 (Pat.) - Remand should only be made in very rare cases and should be used sparingly and only in cases where the Tribunal, after examination of material already placed on record by way of evidence, takes a view that it is not possible for it to make a just order - Surinder Pal Verma vs ACIT(2004) 89 ITD 129 (Chd.) (4) In the case of Karnataka Wakf Board vs State of Karnataka AIR 1996 Kar 55 at pages 63, 64, it has been held that: "Where the party had an opportunity of adducing evidence in the case but with open eyes failed to adduce that evidence, the case should not be remanded to give a second chance to the party to adduce that evidence. The policy of the law is that once that matter has been fairlyh tried between the parties, it should not, except in special circumstances, be reopened and retired. In a recent decision their Lordships of the Supreme Court laid down that power to order retrial after ;remand, where there had already been a trial on evidence before the Court of first instance, cannot be exercised merely because the Appellate Court is of the view that the parties who could lead better evidence in the court o....
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....udicated the matter and hence the issue should be set aside cannot be accepted as A.O. at the time of assessment was of the view that the facts are same and when the issue traveled to the Ld.CIT(A) without explaining the basis of coming to certain conclusions, made general observations. 25. Even otherwise the points of distinction on facts tried to be brought out by the Ld.D.R., in our considered opinion are devoid of merit. The basis on which the High Court had decided the matter is, the intention of the parties, as gathered from the contracts entered between them. The Ld.Sr.Counsel demonstrated that there is no change in the intention of the parties and the "transfer clause" in the agreement entered into by the assessee during these years, when compared with the agreements entered into by the assessee during the years 1997-98 and 1998-99 as the risk and the title passed to the buyer abroad and that the acceptance/rejection clause has no relevance. Coming to the reliance placed by the Ld.D.R. on the show cause notice given by the DRI, much water has flown thereafter and the Revenue has no idea as to what is the fate of this show cause notice. A show cause notice of DRI cannot b....
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.... escaping assessment, or even a revision proceeding everything must be completed within the prescribed time limit. To suggest that even a proceeding before the Tribunal is a continuation of assessment proceedings and, therefore, the A.O. can be allowed to make up for his deficiencies will amount to rendering all these time limits as nugatory and redundant. It is indeed not open for the Tribunal to take away the benefit given by the A.O. When the AO decided to grant deduction u/s80-113(10) in respect of residential units it was well considered and conscious decision on his part to have granted the benefit of deduction. With the benefit of hindsight this benefit of deduction might have been little more generous than what is found to be admissible by the Tribunal, but then the decision of the Tribunal has not yet reached finality and it is not an end of the route so far as legal developments in that regard are concerned. It is not the scheme of the Act that entire assessment is open before the Tribunal and it must consider the same. Ground which was raised by the Revenue was confined to profits relatable to commercial units and therefore, it is not really open to the Tribunal to go be....