9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (5) TMI 543 - AT - Income TaxAssessment of income on the non-resident in the name of the agent - whether the same income can be taxed in the hands of the assessee, in his own name, as also in the hands of his agent under section 163 in the representative capacity? - Held that - In the present case, the assessment is on two different dates, and the date of assessment on the Air India in a representative capacity is a day earlier than the assessment on the Carbijet Inc directly. Therefore, the assessment in the hands of Air India, in the representative capacity, cannot be said to be legally unsustainable. It is only the assessment in the hands of Carbijet Inc which may not be sustainable in law but that aspect of the matter is wholly academic since, in view of the provisions of Section 165 of the Act, even though the assessment may be in the hands of a representative assessee under section 163(3), there is no bar on direct recovery, of taxes so held to be leviable, from Carbijet Inc. Thus conclude that the impugned income has been rightly assessed to tax in the hands of Air India Limited, as an agent under section 163 of the Act. - Decided in favour of revenue
Issues Involved:
1. Whether the same income can be assessed first in the hands of the non-resident and simultaneously through its agent. 2. Whether the income of ?97,35,04,000 is required to be assessed and subsequently deleted. 3. Justification for deleting the addition made of ?97,35,04,000. Detailed Analysis: Issue 1: Simultaneous Assessment of Income The core issue revolves around whether the same income can be assessed both in the hands of the non-resident (Carbijet Inc) and its agent (Air India). The learned CIT(A) held that the same income cannot be assessed first in the hands of the non-resident and simultaneously through its agent. The CIT(A) cited several judicial precedents, including decisions from the Hon’ble Supreme Court and various High Courts, which support the principle that once income has been assessed in the hands of the non-resident, it cannot thereafter be assessed in the hands of the agent. The CIT(A) concluded that the assessment of the same income in both the hands of Carbijet Inc and Air India constituted double assessment and was, therefore, not permissible. Issue 2: Taxability of ?97,35,04,000 The CIT(A) upheld the taxability of the arbitral award in the hands of Carbijet Inc but admitted additional grounds of appeal regarding the simultaneous assessment. The CIT(A) called for a report from the Assessing Officer (AO) to justify the assessment of the same income twice. The AO argued that the simultaneous assessment was to safeguard the interests of the revenue, ensuring that Air India would be absolved of its liability once Carbijet Inc paid the corresponding demand. However, the CIT(A) noted that the assessment orders for both Carbijet Inc and Air India were identical and passed simultaneously, leading to a clear case of double assessment of the same income. Issue 3: Deletion of Addition The CIT(A) analyzed the judicial precedents and concluded that the same income could not be assessed in the hands of both the non-resident and its agent. The CIT(A) observed that the assessment proceedings for Carbijet Inc were initiated by filing a return on 28.11.2000, and the assessment was completed on 28.03.2003. Simultaneously, Air India was issued a notice on 15.03.2001, and the assessment was completed on 27.03.2003. The CIT(A) noted that both assessment orders were identical, leading to double assessment. The CIT(A) held that the income of ?97,35,04,000 was not required to be assessed and deleted the same. Appellate Tribunal’s Decision: The Tribunal examined the legal position and noted that the Supreme Court in Claggett Brachi & Co Ltd held that the AO can only assess either the non-resident or the agent, not both. The Tribunal observed that once the AO taxes the income in the hands of one, he loses the right to tax the same income in the hands of the other. In this case, the assessment on Air India was completed a day before the assessment on Carbijet Inc. Therefore, the Tribunal upheld the assessment in the hands of Air India, as the representative assessee, and reversed the CIT(A)’s conclusion. Conclusion: The Tribunal concluded that the income of ?97,35,04,000 was rightly assessed in the hands of Air India as an agent under section 163 of the Act. However, it clarified that this does not prevent direct recovery of taxes from Carbijet Inc, and to the extent taxes are recovered from Carbijet Inc, Air India’s liability would be correspondingly exonerated. The appeal was allowed, and the order was pronounced on 5th April 2016.
|
