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TMI Blog2013 (12) TMI 1550X X X X Extracts X X X X X X X X Extracts X X X X ..... . BANSAL, JM AND SHRI SANJAY ARORA, AM For the Appellant: Shri V.K. Duggal For the Respondent: Shri Ajay Shrivastava O R D E R PER I.P BANSAL, JM: Both these appeals are filed by the assessee. They are directed against the two separate orders of the Ld. CIT(A)-11, Mumbai dt. 19.8.2010 and 28.6.2012 for A.Yrs 2004-05 and 2009-10 respectively. 2. Grounds of appeal in each of the year read as under: ITA No. 7986/M/2010 A.Y. 2004-05 1. On the facts and in the circumstances of the case and in the law, the authorities below were not justified in rectifying the order u/s 154 by changing his opinion on rate of tax. 2. On the facts and in the circumstances of the case and in the law, the authorities below were not justified in passing non-speaking order dealing with all grounds of appeal. 3. On the facts and in the circumstances of the case and in the law, the authorities below were not justified in changing its opinion on tax rate while it applied its mind on deduction of TDS on interest on delayed income tax refund to assessee. 4. On the facts and in the circumstances of the case and in the law, the authorities below were not justified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alter/modify any or all the grounds of the appeal stated hereinabove. ITA No. 7986/M/2010 A.Y. 2004-05 3. For assessment year 2004-05, the assessee has filed its return of income on 31.10.2004 declaring income of ₹ 3,89,35,032/- in which the following income was shown under the head Income from Other sources which were shown to be liable for tax at the rate of 15%. 1) Interest income from banks and bothers - ₹ 30,07,693/- 2) Interest on income tax refund from Income tax department - ₹ 7,83,357/- 3) Interest income from banks -Rs. 15,626/- 4) Interest for delayed payment on Foreign supply contract with PPN in Foreign currency -Rs. 72,94,775/- ---------------------- Total Rs.1,11,01,452/- ============= 4. The claim of the assessee that the aforementioned income is liable to be taxed at 15% was accepted by the AO in the assessment order dt. 26th December 2006 passed under the provisions of Sec. 143(3) of the Act. Subsequently on 10.12.2008, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ke in the assessment order passed by him. In the original assessment order, the AO accepted the claim of the assessee as per its return and no opinion was formed by the AO, therefore, Ld. DR pleaded that the order u/s. 154 cannot be held to be invalid simply on the basis of change of opinion . 8. We have heard both the parties and their contentions have been carefully considered. The aforementioned income was considered to be liable for tax at the rate of 15% by the assessee itself in its return of income. No material has been brought on record to show that applicability of rate of 15% was examined by the AO during the course of original assessment proceedings. Even during the course of rectification proceedings, the assessee did not submit any reply to the AO. It is also not the case of the assessee that AO did not give opportunity to explain that as to why 15% rate of tax was justified. In these circumstances, we are of the opinion that there was no change of opinion as has been argued by Ld. AR. The levy rate of tax has to be in accordance with the statutory provisions. If there is less levy, then it is liable for rectification. Accordingly, we hold that AO was not wron ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f income showing nil income after adjusting the brought forward business loss and unabsorbed depreciation. The assessment was completed on income of ` 17,00,22,100/- by taxing various income including interest on Income Tax refund of ` 22,15,213/-. The AO taxed the said interest income as per the provisions of the Act which has been challenged by the assessee before the CIT(A) and claimed that the interest on Income Tax refund attract the tax rate as provided in Indo-Japan DTAA. The CIT(A) allowed the claim of the assessee by following the decision of Special Bench of this Tribunal in case of Clough Engineering Ltd. Vs ACIT 130 ITD 137 and directed the AO to tax the interest on Income Tax refund at lower rate as provided in the DTAA. 4. We have heard the Ld. DR as well as Ld. AR and considered the relevant material on record. At the outset we note that the issue is covered by the decision of Special Bench of this Tribunal in case of ACIT Vs Clough Engineering Ltd. (supra). We further note that the Co-ordinate Bench of this Tribunal in case of Bechtel International Inc. Vs ADIT in ITA No. 5198/M/2010 and 6998/M/2011 vide order dated 8.2.2012 has also considered and decided the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tel International Inc. we decide this issue in favour of the assessee. Accordingly the order of the CIT(A) qua this issue is upheld. 6. In the result, the appeal of the revenue is dismissed. Accordingly, it is held that the interest on income tax refund is liable for lower rate of taxation as per DTAA. (iii) Interest from delayed payments on foreign supply contract with PPN in foreign currency. For this component, it is the case of the assessee that this is liable for lower rate of taxation as per Sec. 115(a)(ii) r.w. Explanation-B. It is the case of the Ld. AR that this aspect, though raised before the Ld. CIT(A) has not been adjudicated by Ld. CIT(A). He submitted that it will be in the interest of justice, if the issue regarding this component of interest is restored back to the file of the AO with a direction to readjudicate the same after giving the assessee reasonable opportunity of hearing. He further submitted that ground No. 7 raised before ITAT was also raised before Ld. CIT(A) which has also not been adjudicated. The AO may be directed to adjudicate this issue if the matter is restored back to the AO. 10. On the other hand Ld. Departmental Representative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r issue arose i.e. as to whether the service tax charged and collected by the assessee, which is a France based foreign company engaged in providing consultancy service to Chennai Metropolitan Water Supply and Sewerage Board (CMWSSB), is its business receipts subject to tax on gross basis under section 115A r.w. 44D of the Act. The Tribunal vide para 8 has held that reimbursement of service tax could not form part of taxable income of the assessee. Fee for technical services is for the services rendered by the assessee and service tax would not form part of fee for technical services. That service tax is not expenditure incurred by the assessee and it is a statutory levy on the person who avail services from the assessee. It was held that it would have been a different case if the assessee had collected service tax and not paid the same to Government account but that was not the case and it was only reimbursement of service tax paid by the assessee to the Government account. Thus, the receipt cannot be treated as a trading receipt. Hence, reimbursement of service tax cannot form part of total income of the assessee. It was held that Section 44D provides for deduction from rece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice tax which is a statutory liability, would not involve any element of profits and a service provider is collecting the same from its customers on behalf of the Government and, accordingly, same cannot be included in the total receipts for determining the presumptive income. Therefore, the order of the DRP was to be set aside and the AO was to be directed not to include the amount of service tax in the total receipts for determining the income u/s. 44B of the Act. He further submitted that the provisions of Sec. 44B are not similar to the provisions of Sec. 44D which is applicable to the present case. Thus, he submitted that the decision rendered by Tribunal in assessee s own case should be followed. 16. We have heard both the parties and their contentions have carefully been considered. The decision relied upon by the Ld. DR is not applicable to the present case as the provisions considered in the said decision are different from the provisions applicable to the present case. The Coordinate Bench of the Tribunal, in assessee s own case has already adjudicated this issue in respect of assessment year 2007-08. As a matter of precedent, the Tribunal is bound to follow the decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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