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2012 (10) TMI 572 - AT - Income TaxInterest on interest on delayed refund Held that - Following the decision in assessee s own case that where refund is granted without any delay, the question of granting interest on interest will not arise. Issue decides in favour of revenue Interest u/s 234D Held that - If the regular assessment is made after 01-06-2003, interest u/s 234D becomes applicable. In favour of revenue Disallowance u/s 40(a)(i) Payment of export sales commission and service charges to non-residents for service rendered outside India without deduction of TDS None of the entities to whom payment has been made, PE in India - Held that - As the articles of the DTAA entered into by India with the respective countries, the income earned is taxable only in those countries. From the above, it is, therefore, clear that no part of the said amount is taxable in India Following the decision in case of GE India Technology Centre Private Ltd. (2010 (9) TMI 7 - SUPREME COURT OF INDIA) that the scheme of subsections (1),(2)&(3) of Sec. 195 and Sec. 197 leaves no doubt that the expression any other sum chargeable under the provisions of the Act would mean sum on which income tax is leviable. Since the amount paid by the appellant is not chargeable to tax in India, the question of deducting tax at source on the said payment does not arise. Issue decides in favour of assessee Validity of notice u/s 148 - Reopening of assessment u/s 147 AO argued that the assessee has not disclosed all the material facts fully and truly Assessee contended that issuance of notice u/s. 148 Act after four years is not valid Held that - If the assessee failed to disclose fully and truly all the material facts necessary for his assessment, the AO has jurisdiction u/s. 147 proviso to reopen the assessment even after 4 years also. Issue in favour of revenue Computing the deduction u/s 80HHC - AO has excluded the sub-contract charges for the purpose of computation Held that - The sub-contract charges received by the assessee were income akin to rent. Remit the matter back to his file with the direction to examine whether the sub contract charges received by the were akin to rent or not and to decide the issue de novo in accordance with law after giving opportunity to the assessee. Issue remand back to AO
Issues Involved:
1. Disallowance of interest under section 244A of the Income-tax Act, 1961. 2. Levy of interest under section 234D of the Income-tax Act, 1961. 3. Deletion of the disallowance under section 40(a)(i) of the Income-tax Act, 1961. 4. Reopening of the assessment under section 147 of the Income-tax Act, 1961. 5. Exclusion of sub-contract charges while computing the deduction under section 80HHC of the Income-tax Act, 1961. Detailed Analysis: 1. Disallowance of Interest under Section 244A: The assessee's appeal regarding the disallowance of interest under section 244A was dismissed. The Tribunal followed the jurisdictional High Court's decision in the assessee's own case, which held that where a refund is granted without any delay, the question of granting interest on interest does not arise. 2. Levy of Interest under Section 234D: The Tribunal dismissed the grounds raised by the assessee regarding the levy of interest under section 234D. The jurisdictional High Court had already decided against the assessee in a similar case, holding that if the regular assessment is made after 01-06-2003, interest under section 234D becomes applicable. 3. Deletion of Disallowance under Section 40(a)(i): The Revenue's appeal concerning the deletion of the disallowance under section 40(a)(i) for payments made to non-residents without deduction of tax at source was dismissed. The Tribunal upheld the CIT(A)'s decision, which was based on the Supreme Court's ruling in G.E. Technology Centre (P) Ltd. v. CIT and the jurisdictional ITAT's decision in the assessee's own case. The payments were made to non-residents for services rendered outside India, and as per the relevant DTAA, the income was taxable only in those countries, not in India. 4. Reopening of Assessment under Section 147: The Tribunal upheld the reopening of the assessment by the AO. The AO issued a notice under section 148 on the grounds of escapement of income due to incorrect computation of deduction under section 80HHC and non-compliance with section 40(a)(i) regarding foreign commission payments. The Tribunal found that the assessee had not disclosed all material facts fully and truly, justifying the reopening even after four years. 5. Exclusion of Sub-Contract Charges under Section 80HHC: The issue of excluding sub-contract charges while computing the deduction under section 80HHC was remitted back to the CIT(A) for fresh examination. The Tribunal directed the CIT(A) to determine whether the sub-contract charges were akin to rent and to decide the issue de novo in accordance with the law after giving the assessee an opportunity to present their case. Conclusion: - The assessee's appeals in ITA Nos. 04/Mds/2012 and 05/Mds/2012 were partly dismissed and partly allowed for statistical purposes. - The Revenue's appeal in ITA No. 163/Mds/2012 was dismissed.
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