HONOURABLE SRI JUSTICE P. SAM KOSHY
AND
HON'BLE SRI JUSTICE LAXMI NARAYANA ALISHETTY
INCOME TAX TRIBUNAL APPEAL NO.53 OF 2008
Date: 21.09.2023
Between :
M/s.FSL Projects Limited,
(formerly Frontline Soft Limited),
A public limited company, having its
Regd.office at 602, Lake Shore Towers,
Rajbhavan Road, Somajiguda, Hyderabad,
Rep.by its Director, Mr. Mir Hussain Ali,
s/o. Sri Mir Yousuf Ali Khan.
...Appellant
and
The Deputy Commissioner of Income Tax,
Circle 14 (3) (TDS), Hyderabad.
.... Respondent
This Court made the following:
PSK,J & LNA,J ITTA No.53 of 2008 2 HONOURABLE SRI JUSTICE P.SAM KOSHY AND HON'BLE SRI JUSTICE LAXMI NARAYANA ALISHETTY INCOME TAX TRIBUNAL APPEAL NO.53 OF 2008 JUDGMENT: (per Hon'ble Sri Justice P.Sam Koshy) The present appeal has been filed under Section 260-A of Income Tax Act, 1961 (for short, the "Act") assailing the order passed by Income Tax Appellate Tribunal, Bench-B, Hyderabad (for short "Tribunal") in ITA No.1081/Hyd/03, dated 03.08.2007 for the Assessment Year 2003-04. Vide impugned order, the order preferred by the appellant stood rejected and in the process, the order passed by the Commissioner of Income Tax (Appeals), Hyderabad, for the assessment year 2003-04 was affirmed.
2. The whole issue raised by the appellant in the present appeal is so far as the denial of exemption under Section 195(3) of the Act, in spite of there being an order passed by the Joint Director in this regard so far as the deduction of TDS in respect of remittances made by the appellant to US based company i.e., M/s.IGTL Solutions (U.S.A.).
PSK,J & LNA,J ITTA No.53 of 2008 3
3. At the outset, learned counsel for appellant drew the attention of this Court to the documents, which were furnished before the Appellate Tribunal i.e., the order dated 18.02.2003 passed by the Joint Director of Income Tax-IV (International Taxation), Ayakar Bhavan, Mumbai, whereby the Joint Director had permitted the authorities in India to receive sums without deduction of income tax as is required under Section 195(1) of the Act.
4. Learned counsel for the appellant contended that in spite of specific certificate have not been issued under Section 195(3) of the Act by the Joint Director of the Department, the authorities concerned have made the remittances after deduction of tax at source in contravention to the aforesaid Circular dated 18.02.2003. This granting of exemption under Section 195(3) of the Act in spite of its appraisal to the authorities below, ignoring the same, the Commissioner of Income Tax (Appeals), so also the Tribunal have decided the matter against the assessee.
5. Today, when the matter is taken up for hearing, learned counsel for appellant strongly contended that once when the certificate was obtained from the Joint Director so far as the PSK,J & LNA,J ITTA No.53 of 2008 4 waiver of deduction of TDS in respect of remittances is made to M/s.IGTL Solutions (USA) has not been considered, discussed, referred to either by the Commissioner of Income Tax (Appeals) or by the Tribunal. According to the appellant, the exemption from deduction of tax at source was permissible under Section 195 (3) of the Act, which appellant had availed and which was also granted by the respondent, but when it came for deduction, they had made the remittances only after deduction of TDS was made.
6. Perusal of the pleadings would go to show that the appellant had been all along taking this stand both before the Commissioner of Income Tax (Appeals) and before the Tribunal that they are not liable to make deductions for the reasons that they have an exemption already obtained by way of certificate under Section 195(3) of the Act. In spite of the categorical stand being taken, the two appellate forums for the reasons best known have not discussed, deliberated or relied upon the said certificate at all.
7. Today, when the matter is taken up for hearing, the entire paper-book that was filed before the Tribunal was made available by the learned counsel for appellant and one such PSK,J & LNA,J ITTA No.53 of 2008 5 document therein is the certificate so issued under Section 195(3) of the Act, granting exemption to M/s.IGTL Solutions (USA) so far as receiving of remittances without deduction of income tax at source. If the contents of the said document is to be accepted and on verification, found to be genuine, the consequences would be that the entire remittances that have been made to M/s. IGTL Solutions (USA) would be non-taxable so far as TDS is concerned. Further, if the contents of the said letter stands accepted, then the action on the part of the respondent in carrying out deduction at source on the remittances made to M/s.IGTL Solutions (USA) would be per se bad.
8. In view of the aforesaid factual matrix of the case, more particularly, taking note of the fact that there is a non-reference or non-deliberation of the exemption so obtained under Section 195(3) of the Act by the two forums below, we are of the considered opinion that it is a fit case where matter can be remitted back to the Tax Tribunal for considering the contentions raised by the appellant so far as exemption that they have got under Section 195(3) of the Act insofar as the remittances that have been made to M/s.IGTL Solutions (USA) is PSK,J & LNA,J ITTA No.53 of 2008 6 concerned. Considering the fact that the order of the Tribunal is one, which was passed as early as on 03.08.2007, it is expected that the Tribunal shall reconsider this matter, particularly, taking into consideration the exemption so granted to the appellant on 10.02.2003. Let the Tribunal now decide the matter on priority basis within the outer limit of 90 days from the date of receipt of copy of this order.
9. Accordingly, Appeal stands allowed to the aforesaid extent. There shall be no order as to costs.
10. Pending miscellaneous applications, if any, shall stand closed.
__________________________________ P.SAM KOSHY,J __________________________________ LAXMI NARAYANA ALISHETTY,J Date: 21.09.2023 Kkm/ktm PSK,J & LNA,J ITTA No.53 of 2008 7 HONOURABLE SRI JUSTICE P.SAM KOSHY AND HON'BLE SRI JUSTICE LAXMI NARAYANA ALISHETTY INCOME TAX TRIBUNAL APPEAL NO.53 OF 2008 Date: 21.09.2023 Kkm/ktm