The order of the Bench was delivered by
I.P. Bansal, Judicial Member - This is an appeal filed by the revenue. It is directed against the order passed by Ld. CIT(A)-18, Mumbai dated 12/09/2011 for the assessment year 2006-07. Grounds of appeal read as under:
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On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in holding that no TDS u/s. 195 of the Act, was liable to be deducted on the transponder fees for the usage of the satellite of the foreign company, for the business carried out in India. |
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The Ld. CIT(A)'s order is perverse in law and on facts and deserves to be set aside. |
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The appellant prays that the order of CIT(A) on the above grounds be set aside and that of the AO restored. The appellant craves leave to amend or alter any ground or add a new ground that may be necessary." |
2. The issue relates to addition of Rs.1,52,58,125/- an amount paid by the assessee as transponder fee which was paid to non-resident entity. According to AO assessee was under an obligation to withhold tax under the provisions of section 195 of the Income Tax Act, 1961(the Act) and since assessee did not discharge that obligation the said amount was liable to be added to the income of the assessee under section 40(a)(ia) of the Act. Accordingly, addition was made which was agitated in an appeal filed before Ld. CIT(A). Ld. CIT(A) following the decision of Hon'ble Delhi High court in the case of Asia Satellite Telecommunication Co. Ltd. v. DIT [2011] 322 ITR 340 deleted the addition. In the said case it was held that the payment made by telecast operators out of India to non-resident could not be taxed on the basis that the end consumers are in India. The department is aggrieved by the aforementioned order of the Ld. CIT(A) and, hence, has filed aforementioned grounds of appeal.
3. After narrating the facts it was submitted by Ld. DR that in view of the amendment brought into the statute in the provisions of section- 9, the amount paid by the assessee has to be considered as payment made by the assessee with regard to use or right to use of industrial, commercial or scientific equipment. Ld. DR in this regard referred to Explanation 5 & 6 to section 9(1)(vi). She submitted that Explanation 5 & 6 have been inserted in the statute by the Finance Act, 2012 with retrospective effect from 1/6/1976. She submitted that the decision of Hon'ble Delhi High Court on the basis of which Ld. CIT(A) has given relief to the assessee, did not consider the aforementioned amendment as the same was not there on the statute. She, therefore, submitted that the appeal should be decided in favour of the revenue.
4. On the other hand, Ld. AR has placed before us a copy of order of Mumbai Tribunal "L" Bench in the case of Channel Guide India Ltd. v. Asstt. ACIT and copy of the same was also given to Ld. Dr. He submitted that in the aforementioned decision the Tribunal has considered those amendments and facts of the assessee's case are similar. Therefore, he submitted that the order passed by ld. CIT(A) should be upheld.
5. In the rejoinder it was submitted by Ld. DR that in the aforementioned decision in the case Channel Guide India Ltd. (supra), though the aforementioned amendment has been considered but simultaneously provisions of Indo-Thailand treaty were also considered and after considering the treaty the issue was decided in favour of the assessee. She submitted that in the present case provisions regarding applicable treaty have never been considered. Therefore, she pleaded that relief cannot be allowed to the assessee simply on the basis of aforementioned decision of Mumbai Tribunal.
6. We have heard both the parties and their contentions have carefully been considered. We have also carefully gone through the assessment order and the order of Ld. CIT(A). It has never been claimed that according to the provisions of applicable treaty the payment made by the assessee was not taxable in the hands of the recipient. The AO is of the opinion that such payment made to non-resident are liable for deduction of tax u/s. 195 of the Act.. Ld. CIT(A) simply relying upon the aforementioned decision of Hon'ble Delhi High Court has granted relief to the assessee without discussing the provisions of applicable treaty. As against that in the decision of Mumbai ITAT which has been relied upon by Ld. AR there is a discussion in detail regarding applicable treaty which in the present case is stated to be DTAA of India with Malaysia. Accordingly, we consider it just and proper to restore this issue to the file of AO for re-adjudication of the matter in the light of applicable law and treaty. During the course of hearing Ld. AR conveyed his apprehension regarding non consideration by the AO of the relevant provisions of the Act and other law which may be relied upon by the assessee in its favour to contend that the payment made by the assessee were not liable to be taxed in India in the hands of the recipient. To remove such apprehension we may clarify that assessee will be entitled to put-forth all defense available in law to support its case and after considering all those defenses of the assessee, the AO is directed to re-adjudicate the matter in accordance with law after giving the assessee a reasonable opportunity of hearing. We direct so. With these observations the appeal filed by the revenue is disposed of which will be considered to be allowed for statistical purposes in the manner aforesaid.
7. In the result, the appeal of the revenue is considered to be allowed for statistical purposes in the manner aforesaid.
The order pronounced in the open court on September 12, 2013.