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TMI Blog2003 (5) TMI 220X X X X Extracts X X X X X X X X Extracts X X X X ..... -6-2000 giving some vague reasons for filing of cross-objection late was filed. The contents of the same are as follows: - (i) The abovementioned appeal is fixed for hearing before the Tribunal on 19-6-2000. (ii) Please find attached hereto a copy of certain grounds the assessee wishes to urge against the order of the Commissioner of Income-tax (Appeals) along with Form No.36A duly executed by way of abundant caution. (iii) The assessee says that the issues raised by it go to the very root of the assessment itself and the true and proper meaning of the agreement for avoidance of Double Taxation between India and Malaysia as applied in view of the provisions of the Income-tax Act. The appellant says that a number of High Courts, Benches of the Tribunal and other appellate authorities have held that in view of the provisions of the DTAA income by way of dividends declared by a Malaysian Co. cannot be taxed in the hands of the recipient thereof in India. In view of the same the entire assessment of such dividend is contrary to law and ought to be deleted. The assessee says that this contention goes to the very root of the assessment and hence the assessee ought to be permitted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... required, is concerned and the matters are listed for hearing on 28th March, 2003. The company says that this letter is being filed by way of abundant caution as will be explained hereinafter. (ii) The facts set out hereinafter are in respect of the Assessment year 1992-93 which was the year, which was argued before the Tribunal. The issues arising therefrom are identical for all the assessment years and the material facts for all the assessment years are similar in nature and hence what is set out hereinafter applies with equal force for all the assessment years in question. (iii) The assessor is an investment company. The assessor's entire income arises from the business of investment in shares and securities of various companies. The nature of income is dividends, interest etc. which is routine from year to year and as a consequence the company decided to only make claims and assertions in their returns of income which are well settled in nature and which, with respect, really do not involve disputed legal issues. (iv) The return of income for the assessment year 1992-93 was filed on 23-10-1992 and the income of the assessee-company during the relevant previous year inclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ii) The department filed an appeal to the Tribunal against the said order of the CIT(A). At the time the appeal memo was served on the assessee, the company merely noted that the appeal was only of the department and it appears that the assessee lost sight of the fact that by way of abundant caution it ought also to file a cross objection to the Tribunal on the question of non-taxability of the dividend income. (ix) The assessee in or about the year 2000 received notice of fixation of the said appeals. Immediately thereafter, the matters were discussed in conference with Counsel who was briefed to appear on the assessee's behalf, who advised the company that the correct legal position was that income from dividends received from the Malaysian Company could not be taxed in India and as a matter of abundant caution the company ought to file cross objections making this clear although it was open to the company to urge this contention even without the same. (x) Immediately thereafter on 7th June, 2000 the assessee file Cross objections in all the above mentioned matters setting out the salient features of the matter along with a covering letter which was intended to serve as an ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re-hearing so that reasons for delay could be explained by the assessee. After this, appeals were taken up for hearing on 28-3-2003 when same were partly heard and Ld. Counsel for the assessee was specifically made aware that he should explain reasons for delay in filing of cross-objections as even application dated 16-3-2003 was not specific. Finally on 25-4-2003, Ld. AR advanced his arguments in respect of condonation of delay. He contended that no condonation of delay was required, as issue raised in cross-objection was also raised before CIT(A) who has discussed this matter in para 2 and specific reference has been made to the decision of CIT v. V.R.S.R.M. Firm [1994] 208 ITR 400 (Mad.). Though finally no verdict has been pronounced on this issue, it should be presumed that same has been decided against the assessee. Then he referred to the decision of Assam Co. (India) Ltd v. CIT [2002] 256 ITR 423 (Gauhati). While referring to the various paras of the decision, he submitted that it was clearly held by Gauhati High Court that section 254(1) of the Act confer wide powers to the Tribunal. The Rules made by the Tribunal embody the principle of procedure to be followed by the Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount of mala fides. He also contended that cross-objection have been filed about 1 1/2 years before the date of hearing and other party had sufficient opportunity of hearing on these issues. He referred to the decision of Supreme Court in N. Balakrishnan v. M. Krishnamurthy [1998] 7 SCC 123. He contended that in this case, it was observed by Supreme Court that Rules of Limitation are not meant to destroy the rights of parties. They are meant to see that parties do not resort to dilatory tactics but seek their remedy promptly. It was further observed that in the absence of any thing showing mala fides or deliberate delay, Court should normally condone the delay. He then referred to judgment of State of UP v. Bahadur Singh [1983] 3 SCC 73. He also relied on State of West Bengal v. Administrator, Howrah Municipality [1972] 1 SCC 366. He then proceeded to advance arguments on merits of cross-objection, which we shall consider later on for the reasons recorded along with such contentions. 6. On the other hand, Ld. DR submitted that no reasons have been given in application for delay in filing of cross-objections. He also referred to page 7726 of Commentary of Income-tax law by Cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision". 9. Again in case of Padmasundara Rao v. State of Tamil Nadu [2002] 255 ITR 147, Constitutional Bench of the Hon'ble Supreme Court observed at page 153 that "Courts should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. There is always peril in treating the words of a speech or judgment as though they are words in a legislative enactment, and it is to be remembered that judicial utterances are made in the setting of the facts of particular case, said Lord Morrin in Herrington v. British Railways Board [1972] 2 WLR 537 (HD). Circumstantial flexibility, one additional or different fact may make a world of difference between conclusions in two cases". 10. From these two observations, it is clear that decision of one case cannot be blindly applied in another case without going through the facts of the case and context in which it was decided. Though we have no quarrel with Ld. AR that a very liberal approach has to be adopted while condoning the delay but it does not mean the delay should be condoned in every case. Again Hon'ble Supreme Court in Lachhman Da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... default as early as 17-2-1993 and nothing was done in the court thereafter on his behalf. In these circumstances, a prayer was made for condonation of delay. It was further found by the Hon'ble Supreme Court that the appellant had also moved the Distt. Consumer Disputes Redressal Forum, Madras North ventilating his grievance and claiming a compensation of Rs. 1 lakh as against his erstwhile Advocate and the said Forum passed final order directing the said Advocate to pay a compensation of Rs. 50,000 to the appellant. Hon'ble Supreme Court was satisfied with the reasons and delay was condoned. In Bahadur Singh's case, a writ petition under Articles 226 and 227 of the Constitution was dismissed by High Court on the sole ground that petition was filed after a long delay. The High Court had observed that usually a period of limitation was 90 days for filing the writ petition and computing the limitation on this basis held that petition was delayed by 42 days. The Hon'ble Supreme Court observed that there was no limitation prescribed by any statute for filing of writ petition. However, the only known principle was that the court helps the vigilant and not the indolent. It was further o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... noted paras. From the contents of this application it is clear that no reasons whatsoever have been given. In second application, some vague reasons have been given in paras 6 to 9 where finally it is stated that it was only in year 2000 when assessee received notice of fixation of appeals that assessee company was advised to file cross-objection. Assessee company is wholly owned subsidiary of Grasim Industries Ltd., which is one of the largest companies in this country and it cannot be said that proper advice was not readily available. In para 6 it is stated that first High Court decision on this issue was published in 1993, we fail to understand why assessee could not file its cross objection in 1993 or within reasonable time. On the perusal of application, it simply seems a case of negligence and as observed by Hon'ble Supreme Court in P.K. Ramachandran's case, we have no powers to extend the period of limitation on equitable grounds. Further as observed by Hon'ble Supreme Court in Bahadur Singh's case, "the only principle was that court helps the vigilant and not indolent" and in case before us the assessee has not been vigilant. In these circumstances, we refuse to condone th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aysian company M/s. Pan-Century Edible Oil said as deemed to have been deducted at source be allowed. (ii) On the facts and in the circumstances of the case, the learned CIT(A) erred in allowing the additional ground of appeal raised by the assessee thus in directing that its claim of interest under section 244A relating to tax said as deemed to have been deducted at source on its dividend income from the Malaysian Company M/s. Pan-Century; be allowed. (iii) It is therefore, prayed that the order of the CIT(A) may please be set aside as it is bad in law on the facts of the case. 14. At the outset, Ld. DR pointed out that first ground pertain to direction of the CIT(A) for giving credit in respect of deemed tax on dividend income from Malaysian company, Pan-Century Edible Oil. The brief facts of the case are that assessee derived income from dividends. It had also earned income in form of dividend from Pan-Century Edible Oil, Malaysia and claimed deemed TDS in respect of such dividend amounting to Rs. 6,42,450. This credit was claimed on the basis of clause 2(b) of Article XXII of the Double Tax Avoidance Agreement (DTAA for short) between India and Malaysia,. Following his ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relieved by special incentive measures by Govt. of Malaysia. 17. On the other hand, Ld. AR submitted that proviso was applicable only to clause (bb) and not clause (aa) because in clause (aa) there was a specific reference to particular sections of Investment Incentive Act, 1968 of Malaysia, whereas in clause (bb) the reference was to measures which may be introduced in future in various Acts and that is why there was a proviso that scope of such new measures is yet to be approved by both the countries. He then referred to clause 3 of Article XXII and submitted that similar benefit was given to the residents of Malaysia in clause (b). He particularly referred to clause 3(b)(ii)(aa) to (ee). In clause (aa) to (ee) reference has been made to various sections, such as, section 10(15)(iv)(b) (c), section 33, section 80J, section 80K, section 80M. He contended that if there was an amendment, say for example, in section 80J that would not require separate agreement by both the countries for such amendment. He also referred to clause (a) and agreed that though basically this clause refers to credit to be allowed by other contracting States in case tax has already been paid but clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich was advanced by him while arguing the cross-objection of the assessee. He further submitted that clause 5 of Article 11 relates to altogether different sphere in the sense that it talks of profits from sources within a Contracting State derived by a company then what will be the situation regarding dividend paid by such company to non-resident shareholder of other Contracting State. On a specific query by the Bench, Ld. AR agreed that if it is held that income from dividend was not taxable in the hands of assessee company, then there was no question of allowing any credit for deemed tax paid in Malaysia. 21. We have considered the rival submissions carefully. We have also gone through the relevant material on record and judgments relied on by the parties. It is well settled by now that the provisions of the DTAA entered into with any country would override the provisions of Income-tax Act, 1961 if they are at variance from the provisions of the Act. From plain reading of Article 11, it becomes clear that dividend income can be taxed only in the Contracting States where such dividend has been declared. We are unable to agree with Ld. DR that clause 5 which refers to the compan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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