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TMI Blog2014 (7) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... im relief – thus, the ITO is directed to pass a fresh order for the A.Ys. 1990-91 and 1991-92 after excluding the income received by Davy as fees for providing technical services – Decided in favour of Assessee. - Writ Petition No. 2505 of 2012 - - - Dated:- 11-3-2014 - MOHIT S. SHAH AND M.S.SANKLECHA, JJ. For the Appellant : J.D. Mistry and Atul Jasani. For the Respondent : Abhey Ahuja. ORDER:- 1. Rule. 2. By this petition under Article 226 of the Constitution of India, the Petitioner has challenged the order dated 24 August 2012 of Respondent no.1 - Assistant Commissioner of Income Tax, 6(3), Mumbai declining to grant the Petitioner's claim for refund pursuant to the order dated 5 May 2010 passed by this Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... protest as withholding tax for the first installment of payments to Davy. The Petitioner again on 5 September 1990 paid tax of Rs.2,81,83,272/- under protest as withholding tax on the second instalment of payment to Davy. These amounts were paid by the Petitioner over and above the total amount payable to Davy by Petitioner under BEAT agreement; (c) In its return of income-tax for the A.Ys.1990-91 and 1991-92, Davy declared nil income as chargeable to tax in India. This was on the ground that the income received by Davy from the Petitioner under the BEAT Agreement head had not accrued in India. However, by assessment order dated 30 November 1992 for the A,.Y.1990-91 and by assessment order dated 16 March 1993 for the A.Y.1991-92, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received from Petitioner no.2 may have been utilized by the Petitioner no.1 in India. The law requires both the conditions to be satisfied viz services rendered in India and utilized in India. For these reasons, we are of the view that the income by way of fees for technical services by the Petitioner is not liable to the Indian income tax under the Act. Consequently, petition is allowed and the assessment orders made by the Respondent nos.2 and 3 in original or in appeal subjecting the income received by the Petitioner no.2 from Petitioner no.1 under the BEAT agreement dated 22 October 1989 to Indian income tax are quashed and set aside. The Respondents are directed to pass fresh orders excluding the income received by Petitioner no.2 by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is clear that you are not entitled for refund of the TDS deposited by you on behalf of Davy and no effect to the order of the Hon'ble High Court can be given in your case. 4. Aggrieved by the above communication, Mr. Mistry, learned Senior Advocate appearing on behalf of the Petitioner submitted that the Petitioner had to pay the withholding tax under protest in view of the stand of Revenue in the order dated 5 December 1989 that the amount payable by the Petitioner to Davy under BEAT agreement was taxable in India. This resulted in the Petitioner paying amounts aggregating Rs.5.54 crores to the Revenue out of its funds under protest, in December-1989 and in September-1990, as tax deducted at source. It is submitted that once th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ately due to them. It is, therefore, submitted that the Petitioner has been deprived of its funds for about twenty five years and, therefore, this Court should direct the Respondents to refund the above amounts to the Petitioner with interest in accordance with law. 5. Mr. Mistry also placed reliance upon the Circular No.769, dated 6 August 1998 as also a subsequent Circular being Circular No.790, dated 20 April 2000 issued by CBDT substituting the earlier Circular No.769, dated 6 August 1998. However, it is submitted that the underlying principle even under the new Circular dated 20 April 2000 would apply in cases where ultimately it is found that no tax was payable by the foreign entity, the refund of the tax paid by the Indian ente ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssued by ITO 3(1)(4) to Davy. 7. In rejoinder, learned counsel for Petitioner points out that the letter dated 30 December 2013 sent by ITO 3(1)(4) was sent on the following address : To, The Principal Officer, Davy McKee Corporation, C/o. Arthur Anderson Co; 66, Maker Towers, 'F', Cuffe Parade, Mumbai-400005 It is submitted that Arthur Anderson Co. was a Chartered Accountant's firm, and were Chartered Accountant of Davy. The said firm has been closed down in Mumbai and Davy had also merged with Kvaerner U.S. Inc. Hence, the Department has deliberately sent notice to an address which was not the address of Davy. The officer could have at the very least sent a notice to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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