9911796707
TMI Blog2011 (1) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 201 r.w.ss. 195, 201(1A) and 250 of the Act and directing to grant interest u/s 244A. 3.1 Facts recorded by the lower authorities are that the assessee is a company registered in Mauritius and engaged in the business of telecasting sports channel known as "Ten Sports". The assessee is a tax resident of Mauritius in terms of Article 4 of the India-Mauritius tax Treaty (treaty). 3.2 The assessee had entered into agreements with various non-residents for acquiring programming rights for telecasting sports events taking place outside India on Ten Sports channel. For some events, the rights acquired were for live telecasting while for some events the same were for delayed telecasting in India. The assessee contended that both, the events and parties with whom assessee has entered into agreements for telecasting sports events were outside India. The assessee considered the residential status in India of the parties with whom the assessee entered into agreement under the Act as "non-resident". 3.3 The AO held that the payments made by the assessee to the non-residents were in the nature of "Royalty" and attracts the provisions of Explanation 2 to section 9(1)(vi) of the Act, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on-resident content providers and issued them withholding tax certificates for Rs. 5,425,177. 3.7 The AO has passed giving effect order dated 27.5.2005 to the order passed u/s 250 and determined the refund due to the assessee as under : Particulars Amount in Rs. Total taxes collected under section 201 39,230,279 Less: withholding tax certificates issued World wrestling federation entertainment inc. British Sky Broadcasting Ltd. 4,850,166 575,011 5,425,177 Less : tax under section 201 (1) in respect of content providers in respect of whom TRC's have not been submitted ' For the year ended 31.3.2003 213,028 7,404 220,433 Refund due 33,584,669 3.8 The AO has issued refund order dated 22.8.2005 with income tax computation form. However the DDIT did not grant interest u/s 244A while computing the amount of final refund to be issued to the assessee and granted only the refund of Rs. 33,584,669 after giving effect to the order of the CIT(A). 3.9 Aggrieved by the order of the AO for non-granting the interest u/s 244A, the assessee filed an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nguage of the Explanation to Clause (b) of sub-section (1), the interest on the refund is payable only on the amount which is excess of the demand u/s 156. He has attempted to distinguish the decision in the case of Delhi Development Authority (supra) and Tata Chemicals (supra) and submitted that in those decisions the aspect of excess of demand u/s 156 as well as sub-section (4) of section 244A have not been considered and therefore, these decisions are not applicable in the case of the assessee when the assessee is not a payee of the money but only the deemed assessee under section 201, 201(1A) and the payment of tax was not in excess of demand issued under section 156. Moreover, there was no assessment on the assessee resulting the demand u/s 156 and payment of tax. The learned DR has forcefully contended that the legislature their wisdom has provided under the explanation that the interest is payable on the refund of the amount which is excess of the demand u/s 156 and only in respect of the assessment for the assessment commencing on 1.4.1989 and subsequent years. 3.11 On the other hand, the learned AR has submitted that the Explanation to clause (b) to sub-section (1) of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.2010 reported in 43 DTR 311. Therefore, in the mean time, the assessee moved an application u/s 195(2) before the AO for certificate in respect of payment to be made to the GCC is not taxable in India. The Asstt. Directors of Income-tax (International Taxation) vide its order dated 27.04.2007 passed under section 195 of the IT Act directed the assessee to withhold tax at the rate of 10.96% on the payment to GCC. Accordingly, the assessee withheld the payment not voluntarily but in pursuance to the order of the ADIT of Income Tax (International Taxation) u/s 195. So far as the circulars referred by the learned DR are concerned the Board has clarified the refund to be made to the person responsible for deducting the tax at source in the cases where (a) after the deposit of tax deducted at source under section 195, the contract is cancelled and no remittance is required to be made to the foreign collaborator, (b) the remittance is duly made to the foreign collaborator, but the contract is cancelled and the foreign collaborator returns the remitted amount to the person responsible for deduction tax at sources, (c) the tax deducted at source is found to be in excess of tax deductible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present assessee resulting the payment of tax; and consequently the refund. 3.15 As far as the first contention of the learned DR that the appellant before us is not an assessee in respect of the tax paid and he has paid tax on behalf of the other assessee is concerned. The Hon ble Supreme Court in the case of ITO v. Delhi Development Authority (supra) has considered this contention of the department at page 775 and then page 776 of the report : "It is submitted that sub-section (1A) of section 244 will not be applicable since the payment of tax was not made in pursuance of any order or assessment. This contention in our view has no force. It would not be necessary that in all cases, before payment is made, there must always be an actual order of assessment. Tax is payable in advance as well" "In the case in hand, as indicated earlier, the direction to refund the amount has been made in appellate proceedings before the Tribunal. The amount is to be refunded to the assessee. It cannot be said that the refundee will not be an assessee only for the reason that actually no assessment proceeding had taken place. It would be pertinent to refer to the provision contained unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esulted by the order passed by the CIT(A) is very much covered under the provisions of section 244A. 3.16 As regards the explanation to clause (b) of sub-section (1) is concern we deem fit and proper to quote clause (b) and Explanation as under: "244A. (1) Where refund of any amount becomes due to the assessee under this Act, he shall, subject to the provisions of this section, be entitled to receive, in addition to the said amount, simple interest thereon calculated in the following manner, namely : (a) . (b) in any other case, such interest shall be calculated at the rate of one-half per cent for every month or part of a month comprised in the period or periods from the date or, as the case may be, dates of payment of the tax or penalty to the date on which the refund is granted. Explanation. For the purposes of this clause, "date of payment of tax or penalty" means the date on and from which the amount of tax or penalty specified in the notice of demand issued under section 156 is paid in excess of such demand. Clause (b) provides that the interest on the excess payment of tax in the case which are not covered under (a). In other words clause (b) deals w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall be increased or reduced accordingly, and in a case where the interest is reduced, the Assessing Officer shall serve on the assessee a notice of demand in the prescribed form specifying the amount of the excess interest paid and requiring him to pay such amount; and such notice of demand shall be deemed to be a notice under section 156 and the provisions of this Act shall apply accordingly" Therefore, if the interpretation sought by the learned DR if given to clause (b) and explanation thereto, it will lead to absurdity. 3.17 As regards the assessment referred in sub-section (4) of section 244A is concerned, the hon'ble Supreme Court in the case of ITO v. DDA (supra) held that It cannot be said that the "refundee" will not be an assessee only for the reason that actually no assessment proceeding had taken place. It would be pertinent to refer to the provision contained under section 201 of the Income-tax Act which clearly provides that if the principal officer or the company liable to deduct the income-tax at source fails to do so, he shall be deemed to be assessee in default in respect of the tax. The term "assessee" includes actual assessees as well as deemed assessees ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra), which in turn had held that "the word itself shows that it is". Applying the principles of Hon'ble Supreme Court in S. Sundaram Pillai' s case (supra) it was held in Grindwell Norton Ltd.'s case (supra), that 'where the assessee had claimed interest on excess payment of self-assessment tax under section 140A of the IT Act, the interest on such refunds due to the assessee was payable'. 22. In the facts of the present case, the payment of tax is made pursuant to order under section 195(2) of the Act passed by the AO. Section 156 of the Act talks of service of a notice of demand in the prescribed form, where any tax, interest, penalty, fine or any other sum is payable in consequence of any order passed under this Act. The order in the present case has been passed under section 195(2) of the Act for which notice of demand is to be issued under section 156 of the Act, which very categorically provides that where any tax, interest, penalty or any other sum is payable, because of 'any order passed under the Act'. The order under section 195(2) of the Act has been passed under the provisions of the Act and any notice of demand for the said amount due pursuant to order passed under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eposited by the persons on their own and voluntarily, without any demand being made by the AO or any other authority under the Act. But, in the facts of the present case, the amount was paid pursuant to an order passed by AO under the provisions of section 195(2) of the IT Act, against which the assessee filed an appeal before the CIT(A). In the order giving appeal effect to the order of CIT(A), refund became due to the assessee which in fact arises because of the provisions of section 240 of the IT Act. The provisions of the Act prevail over the instructions issued by the Board by way of CBDT circulars, which in any case are not applicable to the facts of the present case. Their Lordships of Hon'ble Supreme Court in Sandvik Asia Ltd.'s case (supra) had held that where excess amount of tax is collected from assessee, the Revenue must compensate assessee and the compensation in this case is by way of interest under section 244A of the Act for the period when the amount was withheld. Accordingly, we direct the AO to allow the interest under section 244A(1)(b) of the IT Act on the amount due to the assessee pursuant to the order passed giving effect to CIT(A)'s order appeal. Thus, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
