M/S Fsl Projects Limited, ... vs The Deputy Commissioner Of Income ...
2023 Latest Caselaw 2570 Tel

        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

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. 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

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

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

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

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