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2015 (3) TMI 349 - AT - Income TaxValidity of notice u/s 148 - notice issued against ONGC as the representative assessee of the non-resident company - whether notice issued in this case beyond the statutory limit and that the provisions of section 149(3) were applicable for determining the time limit for the issue of the notice - Held that - As per conduct of the assessee and decision of the Special Bench Mumbai ITAT in the case of J.M. Baxi (2010 (2) TMI 884 - ITAT, Mumbai ) the provisions of section 149(3) of the Act and limit prescribed therein for issuance of notice u/s 148 of the Act is not applicable to the present case. Finally, we reach to a conclusion that the CIT(A) was not justified in holding that since the assessment has been framed on M/s ONGC by treating it as a representative assessee of non-resident M/s Foster Wheeler Energy Ltd., therefore the limitation for issuance of notice u/s 148 of the Act beyond two years to the representative assessee u/s 163 of the Act from the end of assessment year. Thus the conclusion of the CIT(A) in the impugned order is not only perverse but also carries ambiguity and misinterpretation of legal provisions of the Act and inconsistent with the ratio of the decision of Special Bench in the case of J.M. Baxi (supra) and, therefore, we set aside the same by holding that the notice issued to the assessee was well within the period prescribed under the Act. - Decided in favour of revenue. Assessment of income of the assessee - whether was in the nature of Technical Services being rendered and taxable as per provisions of the section 115A r/w section 9(1)(vii) of the Act ? - Held that - since by the earlier part of this order, we have decided the issue of limitation in favour of the Revenue and thus, it has been held that the CIT(A) was not correct in holding that the notice u/s 148 of the Act was issued beyond prescribed limitation period and the impugned order of the CIT(A) has been set aside, therefore, we deem it appropriate to restore the other issues on merits to the file of the first appellate authority i.e. CIT(A) for adjudication on merits. - Decided in favour of revenue for statistical purposes.
Issues Involved:
1. Whether the notice under section 148 of the Act was issued beyond the statutory limit. 2. Whether the notice under section 148 was issued against ONGC as the representative assessee of M/s Foster Wheeler Energy Ltd. UK and not against the NRC itself. 3. Whether the income of the assessee was in the nature of technical services and taxable as per the provisions of section 115A read with section 9(1)(vii) of the Act. Detailed Analysis: Issue 1: Notice Issuance Beyond Statutory Limit The revenue contended that the CIT(A) erred in holding that the notice under section 148 was issued beyond the statutory limit, and that the provisions of section 149(3) were applicable for determining the time limit for the issuance of the notice. The CIT(A) had observed that the assessment was framed on ONGC by treating it as a representative assessee of M/s Foster Wheeler Energy Ltd., and thus the limitation against issuing a notice under section 148 of the Act beyond two years to a representative assessee under section 163 of the Act from the end of the assessment year as mandated in section 149(3) of the Act was applicable. The Tribunal, however, disagreed with the CIT(A), stating that the provisions of section 149(3) had no application in this case, and there was no necessity to pass any order in terms of section 163(2) of the Act. The Tribunal emphasized that the ONGC, by submitting returns as an agent of the non-resident, only discharged its obligation under the law and should not escape reassessment proceedings under sections 147/148 of the Act. Therefore, the Tribunal concluded that the notice issued to the assessee was well within the period prescribed under the Act, and the CIT(A)'s conclusion was perverse and inconsistent with the legal provisions and the Special Bench decision in the case of J.M. Baxi. Issue 2: Notice Issued Against ONGC as Representative Assessee The revenue argued that the CIT(A) misunderstood the provisions of limitation for issuance of notice under section 148 of the Act and concluded that the notice was issued against ONGC as the representative assessee of M/s Foster Wheeler Energy Ltd. UK and not against the NRC itself. The Tribunal noted that the ONGC never disputed its liability to be assessed as an agent/representative assessee of the non-resident company and had filed returns and several other documents as an agent for and on behalf of the non-resident. The Tribunal held that it was not necessary for the revenue authorities to provide any opportunity of being heard to the assessee ONGC regarding its liability to be treated as an agent under the Act, as it would have been futile and absurd to provide such an opportunity to a person who had accepted and never disputed this liability. Therefore, the Tribunal concluded that the CIT(A) was not justified in holding that the limitation for issuance of notice under section 148 of the Act was applicable. Issue 3: Income Nature and Taxability The revenue contended that the CIT(A) erred in not giving a finding on merits that the income of the assessee was in the nature of technical services and taxable as per the provisions of section 115A read with section 9(1)(vii) of the Act. The Tribunal noted that since it had decided the issue of limitation in favor of the revenue, it was appropriate to restore the other issues on merits to the file of the first appellate authority (CIT(A)) for adjudication on merits. The Tribunal directed the CIT(A) to adjudicate the other issues raised by the assessee on merits after affording due opportunity of hearing to the assessee as per the provisions of the Act and legal provisions held by various authorities on the issue, including the decision of ITAT "I" Bench Delhi in the case of CGG Marine SAS vs ADIT. Conclusion: The Tribunal allowed the revenue's appeal, setting aside the CIT(A)'s order and holding that the notice issued to the assessee was within the period prescribed under the Act. The Tribunal also directed the CIT(A) to adjudicate the other issues on merits.
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