9911796707
TMI Blog2015 (10) TMI 2658X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant craves for the permission to add, delete or amend the grounds of appeal before or at the time of hearing of the appeal. 2. The brief facts of the case are as follows: 1.1 Mitsubishi Heavy Industries, Ltd ("MHI" or "Appellant") is a foreign company incorporated under the laws of Japan. Earlier in 2007, MHI had entered 'into a License and Technical Assistance Agreement with Larsen & Toubro Limited, India ("L&T") for grant of license and transfer of know-how and technical -information to L&T for engineering, manufacturing, selling and marketing of supercritical boilers and steam turbine generators and related parts. Subsequently, MHI entered into Joint Venture agreements with L&T for engaging in business of design, engineering, manufacture, selling and distribution of supercritical boilers and supercritical steam generators. For this purpose, MHI and L&T have made investments in 2 joint venture companies in India viz. - L&T -MHI Boilers Private Limited; and -L&T-MHI Turbine Generators Private Limited 1.2 During the previous year 2008-09, the respondent assessee company had deputed certain employees to the joint venture company in India, to work under the contro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act aggregating to Rs. 2,23,65,425 (including interest under section 201(IA) of Rs. 14,90,655). 1.6 Subsequent to the payment of taxes, the Ld. AO initiated proceedings under section 201(IA) by issuing a notice dated April 13, 2010 (which was received by the respondent assessee company on August 2, 2010) and penalty proceedings under section 221(1) of the Act for levy of penalty for payment of taxes of Rs. 2,08,74,773 not being in accordance with the provisions of the Act. 1.7 The respondent assessee company received the impugned notice on 16 July 2010 requiring the respondent assessee company to show cause as to why penalty may not be imposed under section 221(1) for nonpayment of amount of tax of Rs. 2,06,74,773 in accordance with the provisions of the Act. The respondent assessee company had, however, deposited all taxes on 05 June 2009 i.e. even before the impugned notice had been received by it. Further, the respondent assessee company had suo-motto deposited amount of interest due by it, as per the provision 201(1A) of the Act even before the receipt of the impugned notice. 1.8 The penalty proceedings were concluded and an order under section 221 of the Act wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly, the appellant should not be considered as assessee in default on the ground that the appellant has failed to deduct the tax at source. However, such contentions are contrary to the submissions wherein it has been stated that 'upon recognizing the mistake that the appellant was required to make tax payments in the nature of withholding of tax on employees' salaries on its own under the tax equalization policy, it had suo- motto made such tax payments along with interest'. 6.1. There is no dispute to the fact that the tax actually required to be deducted, has been deducted and paid to the Govt. account alongwith due interest. But there was certainly delay in depositing the TDS. It has been contended that appellant had no mala fide intentions as to non- compliance of Indian tax laws. All the taxes have suo-motto been paid by appellant even before the issue of notice u/s 221(1) by the AO and therefore, appellant should not be considered as assessee in default on the ground that the appellant has failed to pay the taxes. However, explanation to section 221(1) provides that an assessee shall not cease to be liable to any penalty under this sub-section merely by reason o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of section 192 read with section 9 of the Act vis-a-vis the deduction of tax at source, the Hon 'ble Apex court in the case of CIT vs. Eli Lilly and Co. (312 ITR 225) has held that this was the first instance' that such an issue was examined by the Court. The Hon'ble Court also went ahead in holding that where the tax deductor was under a genuine and bonafide belief that it was not under an obligation to withhold taxes, there was no question of imposition of penalty as the assessees had been able to discharge the burden of showing reasonable cause for non deduction of taxes. The Hon'ble Court held that only those persons will be liable to penalty who do not have good and sufficient reason for not deducting the tax. Accordingly, the penalty proceedings under Section 271 C were quashed on the ground that the assessee was under a genuine belief not to deduct taxes and therefore, there was a reasonable cause for not imposing penalty. It has been held that for these reasons, no penalty proceedings under section 271 C shall be taken in any of these cases as the issue involved was a nascent issue. The Hon'ble Apex Court has also held that the Indian Joint Venture part ..... X X X X Extracts X X X X X X X X Extracts X X X X
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