9911796707
TMI Blog2025 (1) TMI 1500X X X X Extracts X X X X X X X X Extracts X X X X ..... observed that an assessee is liable to pay tax only on such income which is otherwise chargeable under the Act. Our Court thus held that merely because certain income or receipt may have been mistakenly offered to tax, the same would not be conclusive if it were found and established that the same was not chargeable at all. The said principles would equally apply to the suo moto disallowance which the petitioner had made under the bona fide and yet mistaken belief that the same was liable to be offered for taxation. The said stand, in our considered opinion, could not have been negated merely because the RoI had not been amended. The conclusion so reached by the Commissioner in this regard clearly fails to bear in consideration the salutary power that Section 264 creates and confers. The power that the statute vests in the Commissioner could have been validly invoked if the assessee were to assert that it had erred or proceeded on the mistaken assumption that the said item of income or expenditure was liable to be taxed under the Act. Findings rendered in the context of Section 9 are concerned, as noted hereinabove, the Commissioner has failed to either advert to or examine the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onded employees, it would clearly not satisfy the "make available" stipulation which appears in Article 12. Article 12 of the DTAA is extracted hereinbelow: "ARTICLE 12 ROYALTIES 1. Royalties arising in one of the Contracting States, being royalties to which a resident of the other Contracting State is beneficially entitled, may be taxed in that other State. 2. Such royalties may also be taxed in the Contracting State in which they arise, and according to the law of that State, but the tax so charged shall not exceed: (a) in the case of : (i) royalties referred to in sub-paragraph (3)(b) ; (ii) payments or credits for services referred to in subparagraph (3)(d), subject to sub-paragraphs (3)(h) to (l), that are ancillary and subsidiary to the application or enjoyment of equipment for which payments or credits are made under sub-paragraph (3)(b); or (iii) royalties referred to in sub-paragraph (3)(f) that relate to equipment mentioned in sub-paragraph (3)(b); 10 per cent of the gross amount of the royalties; and (b) in the case of other royalties : (i) during the first 5 years of income for which this Agreement has effect: (a) where the payer is the Government ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credits; or (l) to an employee of the person making the payments or credits or to any individual or firm of individuals (other than a company) for professional services as defined in Article 14. 4. The provisions of paragraphs (1) and (2) shall not apply if the person beneficially entitled to the royalties, being a resident of one of the Contracting States, carries on business in the other Contracting State, in which the royalties arise, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the property, right or services in respect of which the royalties are paid or credited are effectively connected with such permanent establishment or fixed base. In such a case, the provisions of Article 7 or Article 14, as the case may be, shall apply. 5. Royalties shall be deemed to arise in a Contracting State when the payer is that State itself or a political sub-division or local authority of that State or a person who is a resident of that State for the purposes of its tax. Where, however, the person paying the royalties, whether the person is a resident of one of the Contracting State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d TDS officer. Moreover, in its submission too, the assessee has failed to point out any manifest error in the assessment order. In the subsequent assessment years too similar addition has been made in the case of assessee and the assessee has availed the remedy by filing an appeal before the appellate authority instead of making an application u/s 264. Therefore, the assessee's request for allowing expenditure of Rs. 4.5 crore on account of reimbursement cannot be entertained u/s 264 of the Income Tax Act." 6. The Principal Commissioner while rendering those findings in the impugned order, has additionally alluded to the provisions of Section 9(1)(vii) of the Act to hold that the remittance was in fact chargeable to tax in the sense of the same being liable to be construed as income which had arisen or accrued in India. 7. In our considered opinion, the aforesaid finding has evidently come to be rendered without the Principal Commissioner having either adverted to or examined the case of the writ petitioner on the basis of Article 12 of the DTAA. We further find ourselves unable to sustain the impugned order, since once the Commissioner had come to conclude that the amendment to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied or recovered without authority of law. Article 265 of the Constitution of India and section 114 of the State Constitution imposes an embargo on imposition and collection of tax if the same is without authority of law." 9. The aforesaid position in law has been more lucidly explained in a subsequent decision of this Court in Interglobe Enterprises Pvt. Ltd. v. Pr. Commissioner of Income Tax 2023 SCC OnLine Del 462 and where the principles which would govern were summarized in the following terms: "17. Undisputedly, if the records for the assessment year 2014-15 are recalled, it would reveal that the sum of Rs. 1,51,67,868, received on account of interest on Income-tax, was assessed as income for the previous year 2013-14 relevant to the assessment year 2014-15. However, as stated above, the said amount was brought to tax by the Income-tax authority in the assessment year 2012-13. Clearly, the same amount cannot be taxed twice over. 18. It is settled law that an assessee is liable to pay Income-tax only on the income that is chargeable under the Act. Merely because an assessee has offered a receipt of income in his return does not necessarily make him liable to pay tax on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... noted above further hold that an assessee could invoke the power conferred by Section 264 in order to rectify a mistaken stand taken earlier and where it may have offered income to tax even though the law placed no such liability. It was pertinently observed that an assessee is liable to pay tax only on such income which is otherwise chargeable under the Act. Our Court thus held that merely because certain income or receipt may have been mistakenly offered to tax, the same would not be conclusive if it were found and established that the same was not chargeable at all. The said principles would equally apply to the suo moto disallowance which the petitioner had made under the bona fide and yet mistaken belief that the same was liable to be offered for taxation. The said stand, in our considered opinion, could not have been negated merely because the RoI had not been amended. The conclusion so reached by the Commissioner in this regard clearly fails to bear in consideration the salutary power that Section 264 creates and confers. The power that the statute vests in the Commissioner could have been validly invoked if the assessee were to assert that it had erred or proceeded on the m ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
