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TMI Blog2023 (7) TMI 136X X X X Extracts X X X X X X X X Extracts X X X X ..... er. Moreover, the relationship between petitioner and the principal has also been accepted right from AY 2005-2006 until Assessment Year 2018-2019 that petitioner was only remitting to the principal the money that belonged to the principal. Even in the affidavit in reply, the only stand taken is the pendency of the appeal. Decided in favour of assessee. - K.R. SHRIRAM AND FIRDOSH P. POONIWALLA, JJ. For the Petitioner : Mr. Nishant Thakkar a/w. Ms. Jasmin Amalsadvala i/b. Lumiere Law Partners. For the Respondents : Mr. Suresh Kumar. P.C.: 1. Petitioner is aggrieved by an order dated 30th March 2023 passed by respondent no. 1 under Section 201 (1)/201(1A) of the Income Tax Act, 1961 (the Act) holding that petitioner was liable to pay a sum of Rs. 19,15,580/- which included principal under Section 201(1) and interest under Section 201(1A) of the Act. Petitioner is challenging this order. 2. Petitioner is the agent of one Hapag Lloyd AG with effect from 1st January 2007. Petitioner supports Hapag Lloyd AG (the principal) in booking and collection of freight in India. The principal operates ships in international traffic and owns several ships which transpor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its principal including the remittances made by petitioner to its principal. Respondents have accepted the return of income filed by petitioner. 6. It is petitioner s case that the principal being a resident of Germany is entitled to protection and benefit of the DTAA. In compliance thereof, the principal has also filed its return of income for all assessment years since Assessment Year 2005-2006. Even for the year in question, i.e., 2019-2020, the principal has filed its return of income declaring Nil income as chargeable to tax in India claiming exemption under Article 8 of the DTAA. The claim of exemption of the principal, as filed, has been accepted by respondents. 7. For the first time in 14 years petitioner was served with a notice dated 8th March 2023 initiating proceedings under Section 201 of the Act calling upon petitioner to furnish details of bifurcation of income from feeder vessels, details of purchase of shares made during the assessment year, details of nature of transactions pertaining to repatriation of surplus funds alongwith supporting documentary evidences etc. Petitioner was also called upon to show cause as to why order under Section 201 of the Act shou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a in view of Section 191 of the Act, respondents have no jurisdiction to proceed against petitioner under Section 201 of the Act in as much as it is a sine qua non and a jurisdictional precondition for respondents to demonstrate that the principal has failed to pay any tax due on the feeder income directly before it can proceed against petitioner under Section 201 of the Act. Relying on a judgment of the Apex Court in GE India Technology Cen. (P.) Ltd. V/s. Commissioner of Income Tax 327 ITR 456 (SC), Mr. Thakkar submitted that tax deducted at source was liable to be deducted by the payer on the gross amount if such payment included in it an amount which was exigible to tax in India. This was an alternative submission to the submission made by Mr. Thakkar that in any event, petitioner was not making any payment to its principal but was only remitting to the principal the money that belonged to the principal which petitioner had collected in India on behalf of the principal. Mr. Thakkar concluded by submitting that the only basis on which the order has been passed is that the issue as to whether the income of the principal by way of slot chartering would form a part of income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers were not actuated by any malafides in passing the impugned orders. They perhaps genuinely felt that the claim of the assessee was not tenable and that, if it was accepted, the Revenue would suffer. But what Sri Reddy overlooks is that we are not concerned here with the correctness or otherwise of their conclusion or of any factual malafides but with the fact that the officers, in reaching in their conclusion, by-passed two appellate orders in regard to the same issue which were placed before them, one of the Collector (Appeals) and the other of the Tribunal. The High Court has, in our view, rightly criticised this conduct of the Assistant Collectors and the harassment to the assessee caused by the failure of these officers to give effect to the orders of authorities higher to them in the appellate hierarchy. It cannot be too vehemently emphasised that it is of utmost importance that, in disposing of the quasi-judicial issues before them, revenue officers are bound by the decisions of the appellate authorities; The order of the Appellate Collector is binding on the Assistant Collectors working within his jurisdiction and the order of the Tribunal is binding upon the Assistant Co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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