2012 (6) TMI 314 - AT - Income Tax

Recall/rectification of order - typographical error - TDS assessee in default - held that - In the light of the conclusion in the preceding sentence, the usage of the word NOT in the above sentence appears to be a typographical error. Accordingly the last two sentences of paragraph 103 at page 66 of the Tribunal order are substituted. Mistake relating to issue the offshore - held that - The Board circular admits the existence of doubts indicating the possibility of duality of opinions. When duality of opinions exists, there cannot be said to arise a mistake apparent from records. Mistake in view of retrospective amendment - held that - a retrospective amendment to law does not entitle the filing of maintaining of a miscellaneous petition under section 254(2) of the Act.

Issues Involved:
1. Recall/rectification of the Tribunal's order dated 28-8-2009.
2. Validity of certificates issued under section 197.
3. Assessment proceedings and non-deduction of tax at source.
4. Reimbursement of expenses as fees for technical services.
5. Offshore services and their tax implications.
6. Retrospective amendment and its applicability to TDS provisions.

Issue-wise Detailed Analysis:

1. Recall/Rectification of the Tribunal's Order:
The revenue filed miscellaneous applications seeking recall/rectification of the Tribunal's order dated 28-8-2009. The applications were based on alleged mistakes apparent from the records within the meaning of section 254(2).

2. Validity of Certificates Issued Under Section 197:
The assessee, M/s. Bovis Lend Lease (India) Pvt. Ltd., entered into an agreement with a Singapore Company for administrative services. The Singapore Company applied under section 197(1) to receive payments without TDS, and certificates were issued by different officers, including an Addl. CIT. These certificates were never canceled. The Tribunal concluded that retrospective cancellation of the certificates was not fair, as the revenue had not taken steps to cancel or modify them. Thus, the assessee could not be declared an assessee-in-default under section 201.

3. Assessment Proceedings and Non-Deduction of Tax at Source:
The Tribunal noted that regular assessment proceedings for the assessment year 2004-05 and intimation for 2005-06 were completed without disallowance under section 40(a)(i) for non-deduction of tax at source. This indicated that the revenue accepted no tax was required to be deducted at source, contradicting the lower authorities' demand under section 201.

4. Reimbursement of Expenses as Fees for Technical Services:
The Tribunal affirmed that the reimbursement represented payment for services and satisfied the definition of 'fees for technical services' under section 9(1)(vii) and the Treaty. The Tribunal clarified that the term 'make available' in the Treaty refers to the willingness of the provider, not the recipient's acceptance. Thus, section 195 was applicable to the reimbursement of expenses.

5. Offshore Services and Their Tax Implications:
The services were rendered outside India, confirmed by the Chartered Accountant's certificate. The Tribunal held that income from services rendered outside India was not deemed to accrue in India, following decisions in Jindal Thermal Power Co. Ltd. and Ishikawajima Harima Heavy Industries Ltd. Consequently, section 195 was not attracted.

6. Retrospective Amendment and Its Applicability to TDS Provisions:
The Tribunal addressed the revenue's argument about the retrospective amendment to section 9(2) effective from 1-6-1976. It was held that retrospective amendments could impose a tax on the recipient but could not retrospectively impose liability on the deductor. The Karnataka High Court and the Supreme Court have held that orders passed based on then-operative law cannot be termed erroneous if the law changes retrospectively. Thus, no rectification was warranted.

Conclusion:
The Tribunal concluded that the assessee could not be treated as an assessee-in-default under section 201(1) and no interest was leviable under section 201(1A). The miscellaneous petitions filed by the revenue were partly allowed to correct a typographical error but were otherwise dismissed, as no mistake apparent from records required rectification. The matter was also pending before the High Court, covering the entirety of the subject matter.

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