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2019 (12) TMI 30 - AT - Income TaxOrder u/s. 201(1)/ 201 (1A) - whether interest payable by the assessee u/s. 201 (1A) does not arise as the income tax was assessed in the hands of the foreign company which was done by the revenue authority by passing assessment order in M/s. Formula One World Championship Ltd. and has been taxed in the hands of the foreign entity - HELD THAT - Since the foreign company i.e. Formula One Championship Ltd. 2016 (12) TMI 123 - DELHI HIGH COURT has already been taxed and the Hon ble Supreme Court 2017 (4) TMI 1109 - SUPREME COURT has confirmed the same in foreign company s case, it will be appropriate to remand back this issue for modifying the demand if any arise after verifying the records as per decisions of the Hon ble Supreme Court in foreign company s case, as the assessee has already deducted the TDS and paid the same with interest. Needless to say the assessee be given an opportunity of hearing by following the principles of natural justice. Ground No.2 and 3 are partly allowed for statistical purposes.
Issues:
1. Validity of the order under section 201 of the Income Tax Act. 2. Liability of tax under section 201(1) for non-deduction of tax from a fee paid to a non-resident foreign company. 3. Liability of interest under section 201(1A) and its computation. Issue 1: Validity of the Order under Section 201: The appellant challenged the order under section 201 of the Income Tax Act, contending that the show-cause notice was issued to a non-existent company that had amalgamated with another entity. Despite proper intimation of amalgamation, the Assessing Officer did not substitute the amalgamated company as the assessee. The appellant argued that the order should be quashed as null and void. The Tribunal held that the assessment proceedings were valid as the name of the amalgamated company was clearly mentioned in the assessment order. Therefore, the challenge on the validity of the order was dismissed. Issue 2: Liability of Tax under Section 201(1): The appellant disputed the tax demand under section 201(1) for non-deduction of tax from a fee paid to a non-resident foreign company. It was argued that the foreign company had already been assessed for its income chargeable in India and had paid the tax directly. Citing legal precedents and circulars, the appellant contended that the tax could not be doubly collected. The Tribunal agreed that the foreign company had been taxed and directed a remand to modify the demand, if necessary, in accordance with the decisions of the Honorable Supreme Court. The appellant was given an opportunity for a hearing, and the issue was partly allowed for statistical purposes. Issue 3: Liability of Interest under Section 201(1A) and its Computation: Regarding the interest payable under section 201(1A), the appellant argued that it should be computed with reference to the tax on the chargeable income paid and assessed in the hands of the foreign company. The Tribunal directed the Assessing Officer to calculate the interest payable by the appellant based on the tax assessed in the foreign company's case. The interest was to be computed up to the date of payment by either the appellant or the foreign company, whichever was earlier. The order of the CIT(A) was set aside on this issue, and the Assessing Officer was instructed to recompute the interest accordingly. In conclusion, the Tribunal partly allowed all three appeals filed by the assessee for statistical purposes. The issues of validity of the order under section 201, liability of tax under section 201(1), and computation of interest under section 201(1A) were thoroughly analyzed and addressed in the judgment, providing clarity on each aspect of the dispute.
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