Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2013 (1) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2013 (1) TMI 509 - ITAT MUMBAIPenalty u/s 271(1)(c) - Tax deducted in Korea by S.K. Telecom - Indian branch received an amount as income from M/s S.K. Telecom, Korea - Assessee is a corporate entity registered and controlled in India from Head Office in Tokyo, Japan - Held that:- There is no bonafide reason for excluding the above amount from the computation of income by assessee as on facts there is no dispute that the amount of Rs. 2,43,56,074 was receivable from M/s SK Telecom, Korea in respect of the loan granted by the Bank to DSS Mobile Communication Ltd in India. Assessee has in fact accounted for the total interest as income in the P/L A/c. The issue is with reference to the tax deducted by M/s SK Telecom, Korea as per the law of Korea to an extent of Rs. 59,85,368. It is to be kept in mind that assessee is not a resident in India. Assessee a resident of Japan has a Permanent Establishment (PE) in India and its taxation is governed by Indo Japan DTAA. Therefore, the decision given by the jurisdictional High Court in Madhavrao J. Scindia [1999 (2) TMI 25 - BOMBAY HIGH COURT] in the case of resident Indian do not support assessee's contention that the tax deducted in Korea by SK Telecom cannot be subject to tax in India. As seen from the computation statement, assessee has not even claimed the tax credit for the amount deducted in Korea as the same has to be given credit in the hands of the principal company in Japan. Therefore, as far as accrual of the income of assessee is concerned, the entire amount of Rs. 2,43,56,074 has accrued to the principal company through its branch in India which was the taxable entity by virtue of PE in India. There is no claim for credit of the tax paid in Korea. As assessee has accounted for the entire income in the books of account as accrued. No explanation was given why the amount was not included when assessee was claiming credit of tax so deducted while filing the return of income. Even though assessee has left a note that so much of the amount being the tax deducted in Korea does not accrue to its in India, the same cannot be accepted as assessee accounted entire amount as income in its books of account prepared for the purpose of being assessed in India having its PE. Since the amount excluded is not an expenditure claim but only a tax paid on behalf of the principal company in Korea ,as far as provisions of DTAA is concerned r.w. provisions of the Indian Income Tax Act governing the accrual of income, entire amount of Rs. 2,43,56,074 is taxable in the hands of assessee in India. Therefore, since this claim is not bona fide, nor there is any justification for excluding the same, not persuaded by the contention of assessee's that the principles laid down by the Hon'ble Supreme Court in the case of Reliance Petro Products (P.) Ltd. (2010 (3) TMI 80 - SUPREME COURT) will apply to assessee's case. Making a legal claim under the provisions of IT Act is different from not offering income without any valid/ bona fide reason. In view of this, since the exclusion of the amount is not bona fide and there is no justification for excluding the amount, penalty under section 271(1)(c) is warranted on the facts of the case - against assessee.
|