TMI Blog2012 (12) TMI 186X X X X Extracts X X X X X X X X Extracts X X X X ..... oods. Therefore, no part of the payment therefore can be classified as payment towards royalty. Because the installation contractor is a subsidiary of the assessee holding company would not, by itself, give rise to a business connection. Therefore, assessee did not have any business connection in India. In view of this, it is not necessary to go into the issue whether the assessee had any Permanent Establishment in India or not during the relevant period in India or not.- Decided in favor of assessee. Regarding levy of interest charged u/s 234B it is held that levy of interest was not justified, inasmuch as the assessee had no obligation to pay any advance tax as tax was deductible at source on its income that was chargeable to tax in India. - ITA Nos: 1735 to 1740/Del/2011 - - - Dated:- 20-7-2012 - SHRI A.D. JAIN, AND SHRI J. SUDHAKAR REDDY, JJ. For the Appellant: Shri Perci Pardiwala, Sr. Adv., S/Shri Sandeep Chaufla, Nitin Vaid, Naveen Dhamija, C.As. For the Respondent: Shri D.K.Gupta, CIT, D.R. O R D E R PER J.SUDHAKAR REDDY, ACCOUNTANT MEMBER All these appeals are filed by the assessee and are directed against a common order passed by the CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. TPG Cellcom Limited 396,769 468,507 5. Srinivas Cellcom Limited 760,000 12,035,453 6. Reliance Telecom Limited 391,568 1,237,451 7. JT Mobiles Limited 117,704 1,568,223 8. Hexacom India Ltd. 0 454,734 9. Bharti Televenture Limtied 72,657 363,943 10. Bharti Cellular Limited 0 4,336,896 Total 5,990,156 23,730,127 4. The assessee (also referred to as ERA) and M/s Ericsson Communications P.Ltd. (now known as Ericsson India Pvt.Ltd. and hereinafter referred to as ECI) are wholly owned subsidiaries of LME Sweden. The nexus between them is represented in the chart below: Eriscss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgement was reserved. (Subsequently the judgement was delivered). It was also pointed out that the A.O. has recorded a finding that there was no change in the facts and circumstances of the case from the facts and circumstances of the earlier years i.e. for A.Y. 1997-98 and 1998-99. Reliance was also placed on the decision of the Jurisdictional High Court in ;the case of DIT vs. Jacob Civil Inc. in ITA 491/2008. 5. The First Appellate Authority at para 3.0 formulated the following questions which are extracted for ready reference:- The short question of law to be answered in the instant case i) whether the appellant has PE in India u/Art.5(1) of DTAA by way of a fixed place of business being maintained by ECI and used by the appellant; ii) whether the appellant has a dependent agent u/Art.5(6)(a) of the DTAA in the form of ECI; iii) whether the appellant has a dependent agent u/Art.5(6)(c ) of DTAA in the form of ECI; iv) whether the appellant is having supervisory PE in terms of Art.5(3) of DTAA; v) whether the appellant is having business connection in India; vi) whether the sale of equipment is deemed to have taken place in India and softw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5(3) of DTAA. * That the appellant is having business connection in India ;within the meaning of S.9(1)(i) of the Act. * That the sale of equipment is deemed to have taken place in India and software has been licensed in India. * That the revenue arising to the appellant from the licensing of software to Indian clients are taxable as Royalty in terms of Art.12 of DTAA read with S.9(1)(vi) of the I.T.Act, 1961. * That the action of the AO is correct and hence sustained. (Grounds of the appellant dismissed). * Charge of interest u/s 234B is consequential. 8. Aggrieved the assessee is in appeal on various grounds. 9. The Ld.Sr.Advocate Mr.Percy Pardiwala appearing for the assessee submitted that the A.O. in his order at para 5 has recorded a finding that the facts and circumstances of the case remained the same for this year as compared with the preceding years and that the nature of activities carried out and the contracts under which such activities have been carried out remained the same. He relied on the decision of the Jurisdictional High Court in the assessee s own case, where the order of the Special Bench of the Tribunal in the case of Motorola ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DCIT in ITA no. 3326/Mum/2006. 13. The Ld.D.R. Mr.D.K.Gupta on the other hand opposed the contentions of the assessee s counsel and submitted that all these cases should be heard along with the appeal for A.Y. 2006-07. He further submitted that the order of the A.O. as well as the CIT(A) for the A.Y. 2006-07 were based on the assessment order for the A.Y. 2005-06 and hence should be heard together. On a query from the Bench it was submitted that the assessment order for the A.Y. 2005-06 is before the CIT(A) and the matter is not yet disposed off and hence it has not reached the Tribunal. On a further query from the Bench the Ld.D.R. submitted that, it would be his effort to refer to the assessment orders for the A.Y. 2005-06 and 2006-07 and convince the Bench that there are certain evidences which were found during the course of survey which have a bearing on the facts of the present cases and pleaded that the Tribunal, if convinced, should set aside the matter to the file of the A.O. to consider all this fresh material found during survey, as brought out by the Assessing Officer in the Assessment Year 2005-06 and adjudicate the issue afresh. On a query from the Bench the ld.D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business model. Annexure B to the survey documents consisting a vital document, were not available before the AO; h) Reliance was placed on the following decisions: Aramex International Logistics 2012-TII-29-ARA International; i) The plea that the issue whether the assessee has a P.E. in India or not was not adjudicated upon by the High Court; j) The thrust of the High Court order was that software was embedded in the hardware and hence cannot be royalty; k) That the software prices was separately quoted and ascertainable and hence there is change in the facts, situations; l) That after the year 2006-07 EIL was authorized to separately download software and this shows that software is separable; m) The Act has been amended in 2012 with retrospective effect and hence the decision of Jurisdictional High Court in assessee s own case is no more good law; n) Reliance was placed on the following decisions: i) Samsung Electronics (Karnataka)-2011-TII-43-HC-Jar-Intl. ii) CIT vs. RIX Systems Asia Pacific P.Ltd. -2011-TII-04-ARAInternational; iii) GRACEMAC Corporation vs aDIT, Delhi H Bench, ITA no. 1331 to 1336/Del/2008 order dt. 26.10.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r has chosen not to rely on any of the material for the reasons that this might not be relevant. He further contended that the CIT(A) did not refer to the very specific evidence or document, nor did he call for a remand report from the A.O. nor he has put any document to the assessee and under these circumstances the Revenue cannot be given a second innings. He strongly objected to the plea for setting aside the matter to the file of the A.O. He relied on the following case law. Zuari Leasings Finance Corporations Ltd. Vs ITO, 112 ITD 205 (Del) 18. On survey material he submitted that reliance was placed by the Ld.D.R. on the notice given by the DRI which is no more relevant. On the issue of cost recharge agreement he submitted that it does not affect the passing of the property in assessee s equipment supplied outside India. He distinguished the judgements relied upon by the Ld.D.R. He tried to demonstrate that there is no change in the scope of the contracts during these years as compared to the earlier A.Ys, as the whole purpose of the agreement was to purchase of a system. On splitting of prices between hardware and software, he drew the attention of the Bench to para 41.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts. Surmises and conjectures are drawn. The nature of evidence found, the nexus the particular document/evidence has with the impugned Assessment Years, the inference that the CIT(A) seeks to draw from these documents and the reply of the assessee to such proposed inferences are not brought out or discussed in the order. Under these circumstances we are unable to concur with the view of the CIT(A) that the facts and circumstances of the case in these Assessment Years before us, differ from the facts and circumstances of the case in the earlier Assessment Years based on which the Jurisdictional High Court has delivered a judgement. 23. Coming to the arguments of the Ld.D.R. for setting aside the assessment to the file of the Assessing Officer so as to enable the Assessing Officer to undertake a fresh exercise, we find that, the Delhi Bench of the Tribunal in the case of Zuari Leasing Finance Ltd. (Del) 112 ITD 205 (Del) @ page 234, para 9 10 held as under:- Therefore, the first question to be examined relates to the principles, which are to be followed by the appellate authorities while exercising discretion to remand the matter. For above proposition, I would like ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etired. In a recent decision their Lordships of the Supreme Court laid down that power to order retrial after ;remand, where there had already been a trial on evidence before the Court of first instance, cannot be exercised merely because the Appellate Court is of the view that the parties who could lead better evidence in the court of first instance have failed to do so. (5) In the case of Ghasi Ram Dayanand vs CST 92 STC 478 at the rate of 480, 481 (All.) it has been held that remand cannot be made for the purpose of de novo trial for permitting the parties to adduce fresh evidence to fill up lacuna or to decide a point when material is already on record. (6) Powers of the Tribunal in the matter of setting aside an assessment are large and wide, but these powers cannot be exercised to allow the AO an opportunity to patch up the week parts of his case and to fill up the omission by giving another innings ACIT vs. Anima Investment Ltd. (2000) 73 ITD 125 (Delhi) ACIT vs Arunodoi Apartments P.Ltd. (2002) (Gau) (Mag.) Smt.Neena Syal vs. ACIT(1999) 70 ITD 62 (Chd.) (7) The courts have held that appeals are not to be decided for giving one more innings to the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 as the risk and the title passed to the buyer abroad and that the acceptance/rejection clause has no relevance. Coming to the reliance placed by the Ld.D.R. on the show cause notice given by the DRI, much water has flown thereafter and the Revenue has no idea as to what is the fate of this show cause notice. A show cause notice of DRI cannot be the basis to say the facts have changed. The Ld.Sr.Counsel states at the Bar that CESTAT has accepted the appeal of the assessee on this show cause notice and subsequent proceedings. In such a situation, the show cause notice and the charges therein do not survive. Arguments have been advanced by the Ld.D.R. without knowing the ultimate result of this show cause notice given by the DRI. Thus we dismiss this argument as without merit. Coming to the argument on the clause of cost recharge in the agreements, we find that this does not affect the time and place of passing of risk and title in the property outside India. Nothing much turns on the fact that the software can be separately valued, as this argument was considered by the Special Bench of the Tribunal and the facts remained the same. Thus the Ld.Departmental Representative could n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an end of the route so far as legal developments in that regard are concerned. It is not the scheme of the Act that entire assessment is open before the Tribunal and it must consider the same. Ground which was raised by the Revenue was confined to profits relatable to commercial units and therefore, it is not really open to the Tribunal to go beyond the said ground. Jeypore Timber Veneer Mills P.Ltd. vs CIT (1982) 137 ITR 415 (Gau.) applied; CIT vs. Assam Travels Shipping Service (1993) 199 ITR 1 (SC) and JCIT vs. Sakura Bank Ltd. (2006) 99 TTJ (Mumbai) 689; (2006) 100 ITD 215 (Mumbai) distinguished; Mcorp Global (P) Ltd. Vs CIT (2009) 222 (SC) 110; (2009) 19 DTR (SC) 153; (2009) 309 ITR 434 (SC) followed . Mumbai Special Bench of the Tribunal in Mahindra Mahindra Ltd. Vs DCIT (2009) 313 ITR (AT) 263 (SB), held as follows:- In our considered opinion the ld.D.R. has no jurisdiction to go beyond the order passed by the A.O. He cannot raise any point different from that considered by the AO or the CIT(A). His scope of arguments is confined to supporting or defending the impugned order. He cannot set up an altogether different case. If the ld. D.R. is allowed to take up a ne ..... X X X X Extracts X X X X X X X X Extracts X X X X
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