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TMI Blog2005 (9) TMI 496X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee had filed original returns of income in all the cases on 19-9-2003 as agent of the persons mentioned in the caption of the order who were employees of the assessee and in the returns of income the assessee had declared income from salary. As per employment agreements made with the employees, the assessee had undertaken to pay tax on the remuneration paid to the employees in India. In the original returns of income filed, the assessee had declared salary income on the basis of multiple grossing up of tax as per provision of section 195A. Subsequently the assessee revised the returns in all the cases on 2-12-2003 reducing the total income on the basis of single stage grossing up. During the course of assessment proceedings, the Assessing Officer called upon the assessee to explain the reasons for reducing income in all the cases by filing revised returns. The assessee submitted that revised returns have been filed on the basis of the judgment of jurisdictional High Court of Uttaranchal in the case of CIT v. ONGC as an agent of Cooper Services Intl. Inc. [2004] 265 ITR 129 . It was submitted that income was revised by applying single stage grossing up while orig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowing decisions of ITAT Delhi Bench : 1. ITO, Special Ward-I, Dehradun v. ONGC as agent of Mr. V.T. Arasenko, ONGC Dehradun [IT Appeal No. 4723 (Delhi) of 1990] for the assessment year 1988-89 (copy placed at pages 1 to 5 of the paper book). 2. Hughes Services (EE) (P.) Ltd. as Representative of Assessee of Mr. Agmedio J. Tumanda v. Asstt. CIT, Dehradun [IT Appeal No. 1924 (Delhi) of 1997] for the assessment year 1993-94 (copy placed at pages 6 to 9 of the paper book). 3. M/s Hughes Services (Ear East) (P.) Ltd. as representative of assessee for Mr. Nahmedo Allan v. Asstt. CIT, Dehradun [IT Appeal No. 1918 (Delhi) of 1997] for the assessment year 1993-94 (copy placed at pages 10 to 13 of the paper book). 4. ITO, Special Ward (Asstt.) Range-I, Dehradun v. Hughes Services (EE) (P.) Ltd. as agent of Mr. Edgar David Mark [IT Appeal No. 2111 (Delhi) of 1994] for the assessment year 1992-93 (copy placed at pages 14 to 16 of the paper book). 5. Huges Services (EE) (P.) Ltd. as representative assessee of Mr. Stephen J. Strickland v. Asstt. CIT/Dy. CIT (Asstt.) Range, Dehradun [IT appeal No. 1926 (Delhi) of 1997] for the assessment year 1993-94 (copy placed at pag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not taxable. But in the present cases, assessee had itself declared income from salary and was liable to tax in the hands of the assessee as an agent of the above-mentioned employees. He further submitted that as per provisions of section 195A, tax paid by the employer as per terms of agreement is liable to be included in the income of the assessee in such a manner that after deduction of tax thereon, the income should be equal to the net amount payable under such agreement. This necessarily includes multiple grossing up of income. He relied on the decision of Delhi High Court in the case of Frank Beaton v. CIT [1985] 156 ITR 16. He particularly drew our attention to sub-para ( ii ) of para 4 on page 3 of the assessment order. Thus, he has submitted that the orders of the CIT(A) do not merit any interference. 8. We have heard both the parties and given our thoughtful consideration to the rival contentions, examined the facts, evidence and material placed on record. We have also gone through the orders of the authorities below. The undisputed facts of these cases are that the assessee was an agent of the aforesaid employees and as per terms of agreement, the employees were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreement or arrangement. In the case of Emil Webber v. CIT [1993] 200 ITR 483 , the facts before the Hon ble Apex Court were that assessee was not employee of Indian concern. He was a foreign personnel whose services were provided for setting up plant in India and as per agreement, salary paid to such person was to free of tax. The assessee had claimed that tax paid on income of such person was not integral part of salary income and hence not taxable. The Assessing Officer included tax on such income as part of salary and taxed the same. On these facts, it was held that since the person was not an employee of the assessee, such tax paid by the assessee could not be taxed under the head salary . Nevertheless, the same was income under section 2(24) of the Act liable to tax under the head Income from other sources . The issue whether cost of tax is to be computed on the basis of single stage or multiple basis was not before the Supreme Court. The Court held that the tax paid by an Indian concern pursuant to agreement with foreign concern was income of assessee taxable under the head Income from other sources . In the present case undoubtedly the income as declared and as ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 195A was explained by Circular No. 495 dated 22-9-1987. As per this Circular, it was explained that section 195A provided for grossing up of tax only if it formed part of the income. In case of royalty etc. paid to a foreign company the same was not treated as part of the income of the foreign recipient, under section 10(6A) of the Act and therefore, the same did not form part of the total income. Grossing up of tax was not applicable in respect of payments covered under section 10(6A) of the Act. Similarly, the tax portion of the employer to the extent, it is exempt under section 10(6)( viia ), was not to be grossed up for the purpose of tax deduction at source. Thus it is clear that section 195A which provides for grossing up of income wholly if it forms part of the total income as in the case. Therefore, we agree with the Learned AR that the judgment of Uttaranchal High Court in the above case is not applicable to the facts of the present case. Now it is to be seen whether the cases are covered by the decisions of ITAT, Delhi Bench cited above which were neither cited before the authorities below nor considered by them. 12. We have referred to the decisions of ITAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his plea no longer survives because the learned counsel himself conceded before us that the decision is not applicable to the facts of the present cases. Besides the Learned CIT(A) has also decided the appeals in a summary manner without passing a reasoned orders. The decisions of the Tribunal now cited before us were not cited before the Learned CIT(A) and the order of the Tribunal where detailed reasoning was given has not been placed before us. In the light of these facts and circumstances of the case, we consider it fair and appropriate to set-aside the orders of CIT(A) and restore the appeals to his file for deciding the same afresh as per law and after allowing proper and reasonable opportunity to both the parties. While re-deciding the appeals, the Learned CIT(A) shall consider the decisions of ITAT relied upon by the learned counsel in the light of provisions of section 195A of the Act and assessee shall also furnish a copy of the order of the Tribunal in the IT Appeal No. 4758 (Delhi) of 1990 etc. where reasoning was given for applying single stage grossing up. We order accordingly. The respective ground of appeals in all the cases is treated as allowed for statistical pur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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