TaxTMI 
TaxTMI 
2015 (3) TMI 491
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....at Rs. 30,08,50,160/-. The case was selected for scrutiny and thereafter, the assessment was framed u/s 143(3) of the Act vide order dated 31.03.2004 and the total income was determined at Rs. 66,24,07,018/-, inter alia by making disallowance of claim of Rs. 19,46,07,610/- u/s 42 of the Act. Subsequently, the assessment was reopened u/s 147 of the Act by issuance of notice u/s 148 on 28.03.2008, inter alia for the reason that the Tribunal in the case of M/s. Niko Resources Ltd in ITA Nos.661 and 789/Ahd/2005 had denied the assessee the claim of deduction u/s 42 of the Act and held that M/s. Niko Resources Ltd, which is a joint-venture company of Gujarat State Petroleum Corporation for oil and gas exploration, is not entitled to deduction u/s 42 of the Act. The Assessing Officer, therefore, believed that the income of the assessee on account of expenditure of Rs. 46,09,847/- claimed u/s 42 of the Act has resulted into escaped income within the meaning of Section 147 of the Act. Before the Assessing Officer, the assessee objected to the reopening, but, however, the objections raised by the assessee were rejected and thereafter, the assessee was framed u/s 143(3) r.w.s. 147 of the Act....
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.... and after fully satisfying himself AO had disallowed major portion and allowed deduction of Rs. 4609847/-. He, therefore, submitted that it cannot be alleged that there was any failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment for the assessment year and in such circumstances, it was not open to the Assessing Officer to reopen the assessment beyond the period of four years from the end of assessment year when the original assessment has been framed u/s 143(3) of the Act. He further submitted that the reasons recorded do not show that any new information has come to the knowledge of the Department. The learned Authorized Representative of the assessee further submitted that the Assessing Officer had reopened the assessment not on the basis of failure on the part of the assessee to disclose the truly and fully material facts and information but because of change of opinion. He further submitted that when the notice for reopening the assessment is issued after the expiry of four years from the end of assessment year, the Assessing Officer has to show that there was failure of assessee to disclose all material facts and in ....
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....have jurisdiction to issue a notice for the assessment or reassessment beyond the period of four years. In the present case, admittedly, a scrutiny assessment was done u/s 143(3) of the Act for Assessment Year 2001-02 and the re-assessment is after the expiry of four years from the end of the relevant assessment year. In such a scenario, the first proviso to section 147 of the Act gets attracted and in such a case, no action for initiation of re-assessment proceedings for Assessment Year 2001-02 could be initiated unless the income chargeable to tax had escaped assessment by reason of the failure on the part of the assessee to disclose fully and truly all material facts. Further, when the requirements of proviso to section 147 of the Act are not satisfied and in the absence of any satisfaction having been recorded by the Assessing Officer that the income has escaped assessment by reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment, the assumption of jurisdiction under section 147 of the Act is invalid. From the reasons recorded, it is apparent that the Assessing Officer has re-opened the assessment mainly for the....
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.....2004. The assessment was framed u/s 143(3) vide order dated 28.12.2006 and the total income was determined at Rs. 353,25,31,902/- as against the returned income of Rs. 7,62,99,106/-. Subsequently, the assessment was reopened by issuing a notice u/s 148 dated 18.07.2008, inter alia for the reason that the assessee had claimed depreciation of Rs. 7,05,68,132/- in respect of share of investments for exploration of mineral oils in joint venture with Niko Resources Ltd which included the depreciation amounting to Rs. 3,62,05,051/- on oil wells. The Assessing Officer noted that the ITAT Ahmedabad Bench in the case of coventure, M/s. Niko Resources Ltd has held that an oil-well is nothing but a building to which depreciation at 10% is allowable. The Assessing Officer was, therefore, of the view that on account of higher depreciation allowed to the assessee the income has escaped assessment and accordingly the case was reopened by issuing notice u/s 148 of the Act and thereafter, the assessment was framed u/s 143(3) r.w.s. 147 of the Act vide order dated 24.12.2008 and the total income was recomputed at Rs. 11,84,97,420/- by disallowing the claim of depreciation of Rs. 2,17,23,032/-. 8. ....
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....ich is placed at page no.90 of the paper-book. He further submitted that, subsequently another letter dated 26.11.2008 was also written to the Assessing Officer to first decide the objections raised before proceeding with the reassessment. He pointed to page Nos.88-89 of the paper-book in this regard. The ld. Authorized Representative of the assessee submitted that the Assessing Officer, without first disposing of the objections, has passed the assessment order and in the assessment order itself had disposed the objections to reopening. He further submitted that the Assessing Officer is required to dispose of the objections of the assessee by a reasoned and speaking order and it was not open to the Assessing Officer to reject the objections of reassessment in the assessment order itself and for the aforesaid proposition, he relied on the decision of the Hon'ble Gujarat High Court in the case of General Motors India Pvt. Ltd vs. DCIT, reported in (2013) 354 ITR 244 (Guj.) He also placed reliance on the decision of the Ahmedabad Bench of the Tribunal in the case of Bharuch Enviro Infrastructure Ltd v. DCIT in ITA Nos.731 & 732/Ahd/2007, order dated 05.08.2014. He, thus, submitted tha....
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....) has held as under:- 23 ....... A.O is mandated to decide the objection to the notice u/s. 148 and supply or communicate it to the Assessee. The Assessee gets an opportunity to challenge the order in a writ petition. Thereafter the A.O may pass the re-assessment order. We hold that it was not open to the A.O to decide the objection to notice u/s/ 148 by a composite assessment order. Assessing Officer was required to first decide the objection of the Assessee filed u/s. 148 and serve a copy of the order of the Assessee and after giving reasonable time to the Assessee for challenging his order it was open to him to pass an assessment order. This was not done by the A.O therefore the order on the objection to the notice u/s. 148 of the assessment order passed under the Act deserved to be quashed". 9. Before us, Revenue has not brought any contrary binding decision of Hon'ble Apex Court or Hon'ble jurisdictional High Court in support of its contention that the order disposing of the objections of the Assessee to reassessment proceedings along with the assessment order is in order and therefore valid as per law. We therefore, respectfully following the aforesaid decision of H....
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....A), the assessee is now in appeal before us. Before us, the ld. Authorized Representative of the assessee submitted that the prayer raised in the grounds of appeal may be treated as the concise grounds and the same reads as under:- (i) The order of the learned CIT(A) is required to be cancelled as the same is bad in law and in turn the demand of Rs. 74,28,772/- (Grossing up U/s 195A Rs. 45,80,123/- + S.C. & E.C. Rs. 2,06,106/- + interest u/s 201A Rs. 24,96,992/-) may kindly be deleted. (ii) The levy for non-deduction of tax in respect of following non-residents may kindly be deleted. (A) A L Lay & Associates (B) CGG Canada Services Limited (C) Core Laboratores International B.V. (D) Fugro GEOS Limited (E) Fugro Singapore Pte Limited (F) Grant Prideco Singapore Pte Limited (G) Jason Geosystems Inc. (H) Landmark graphics Corporation (I) McGregor Geoscience Limited (J) Petrotel Inc. (iii) The levy for short deduction of tax in respect of following non residents may kindly be deleted. (A) Mr. Fred Dawes (B) Gaffney, Cline & Associates Limited (C) Mrs. Maureen T. Gallagher (D) Noble Denton & Associates Limited (E) Total Safety Inc. (iv) Levy of interest under Se....
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....is not so assessable, there is no question of TAS being deducted. [See : Vijay Ship Breaking Corporation and Others Vs. CIT 314 ITR 309] 9. One more aspect needs to be highlighted. Section 195 falls in Chapter XVII which deals with collection and recovery. Chapter XVII-B deals with deduction at source by the payer. On analysis of various provisions of Chapter XVII one finds use of different expressions, however, the expression "sum chargeable under the provisions of the Act" is used only in Section 195. For example, Section 194C casts an obligation to deduct TAS in respect of "any sum paid to any resident". Similarly, Sections 194EE and 194F inter alia provide for deduction of tax in respect of "any amount" referred to in the specified provisions. In none of the provisions we find the expression "sum chargeable under the provisions of the Act", which as stated above, is an expression used only in Section 195(1). Therefore, this Court is required to give meaning and effect to the said expression. It follows, therefore, that the obligation to deduct TAS arises only when there is a sum chargeable under the Act. Section 195(2) is not merely a provision to provide information to the I....
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....itutes one single integral inseparable Code. Hence, the provisions relating to TDS applies only to those sums which are chargeable to tax under the I.T. Act. If the contention of the Department that any person making payment to a non-resident is necessarily required to deduct TAS then the consequence would be that the Department would be entitled to appropriate the moneys deposited by the payer even if the sum paid is not chargeable to tax because there is no provision in the I.T. Act by which a payer can obtain refund. Section 237 read with Section 199 implies that only the recipient of the sum, i.e., the payee could seek a refund. It must therefore follow, if the Department is right, that the law requires tax to be deducted on all payments. The payer, therefore, has to deduct and pay tax, even if the so-called deduction comes out of his own pocket and he has no remedy whatsoever, even where the sum paid by him is not a sum chargeable under the Act. The interpretation of the Department, therefore, not only requires the words "chargeable under the provisions of the Act" to be omitted, it also leads to an absurd consequence. The interpretation placed by the Department would result i....
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....ures effective compliance of Section 195 of the I.T. Act relating to tax deduction at source in respect of payments outside India in respect of royalties, fees or other sums chargeable under the I.T. Act. In a given case where the payer is an assessee he will definitely claim deduction under the I.T. Act for such remittance and on inquiry if the AO finds that the sums remitted outside India comes within the definition of royalty or fees for technical service or other sums chargeable under the I.T. Act then it would be open to the AO to disallow such claim for deduction. Similarly, vide Finance Act, 2008, w.e.f. 1.4.2008 sub-Section (6) has been inserted in Section 195 which requires the payer to furnish information relating to payment of any sum in such form and manner as may be prescribed by the Board. This provision is brought into force only from 1.4.2008. It will not apply for the period with which we are concerned in these cases before us. Therefore, in our view, there are adequate safeguards in the Act which would prevent revenue leakage. Applicability of the judgment in the case of Transmission Corporation (supra) 10. In Transmission Corporation case (supra) a non-resident....
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....ble to tax in India. In our view, the above observations of this Court in Transmission Corporation case (supra) which is put in italics has been completely, with respect, misunderstood by the Karnataka High Court to mean that it is not open for the payer to contend that if the amount paid by him to the non-resident is not at all "chargeable to tax in India", then no TAS is required to be deducted from such payment. This interpretation of the High Court completely loses sight of the plain words of Section 195(1) which in clear terms lays down that tax at source is deductible only from "sums chargeable" under the provisions of the I.T. Act, i.e., chargeable under Sections 4, 5 and 9 of the I.T. Act. 11. Before concluding we may clarify that in the present case on facts the ITO (TDS) had taken the view that since the sale of the concerned software, included a license to use the same, the payment made by appellant(s) to foreign Suppliers constituted "royalty" which was deemed to accrue or arise in India and, therefore, TAS was liable to be deducted under Section 195(1) of the Act. The said finding of the ITO(TDS) was upheld by the CIT(A). However, in second appeal, the ITAT held that ....