2007 (10) TMI 453 - AT - Income Tax

Summary

Issues Involved:
1. Exemption u/s 10(6A) of the Income-tax Act, 1961.
2. Liability u/s 234B of the Income-tax Act, 1961.

Summary:

Issue 1: Exemption u/s 10(6A) of the Income-tax Act, 1961

The appeals pertain to the assessment years 1998-99 and 1999-2000, focusing on the CIT(A)'s direction to grant exemption u/s 10(6A) of the Income-tax Act, 1961, for taxes borne by Indian Aluminium Co. Ltd. The assessee, a non-resident company, claimed exemption for taxes borne by Hindalco and Indal. The Assessing Officer denied the exemption for Indal due to the lack of specific approval from the Government of India, despite the agreement being covered by the "automatic route" under the Statement of Industrial Policy, 1991. The CIT(A) allowed the claim, stating that the agreement fell within the "automatic route" and did not require specific approval from the Ministry of Industry. The Tribunal upheld the CIT(A)'s order, emphasizing that the agreement related to high priority industries and thus qualified for automatic approval, negating the need for specific approval u/s 10(6A)(b).

Issue 2: Liability u/s 234B of the Income-tax Act, 1961

For the assessment year 1999-2000, the revenue objected to the CIT(A)'s decision that no liability u/s 234B arises for the non-resident assessee, as the entire income was subject to TDS u/s 195. The Tribunal dismissed the revenue's appeal, referencing the Special Bench decision in Motorola Inc. v. Dy. CIT [2005] 95 ITD 269 (Delhi)(SB), which held that non-residents are not liable for advance tax if their income is subject to TDS.

Conclusion:

The Tribunal dismissed the revenue's appeals for both assessment years, affirming the CIT(A)'s decisions on both the exemption u/s 10(6A) and the non-liability u/s 234B.