TMI Blog2003 (8) TMI 538X X X X Extracts X X X X X X X X Extracts X X X X ..... deduct tax at source @ 5 per cent whereas no tax was really required to be deducted at source from the remittance in question. 3. Briefly, the facts. CESC Ltd. also known as Calcutta Electricity Supply Corporation and hereinafter referred to as the 'assessee tax deductor', is an Indian company engaged in the business of generation and distribution of electricity. This company sponsored, jointly with Rolls Royce plc of UK, setting up of coal fired thermal power plant on Balagarh Island, near Kolkata. In addition to these two sponsorors, Asian Development Bank (ADB), Commonwealth Development Corporation (CDC) and International Finance Corporation (IFC), and certain Indian investors like Industrial Credit and Investment Corporation of India Ltd. (ICICI) were to hold the equity in the project company. It was in this backdrop of facts that one M/s Mott Ewbank Preece, a unit of Mott McDonald Limited (hereinafter referred to as 'MEP') was appointed as 'technical advisor' to the financial institutions. We may mention that the expression 'financial institution' collectively refer to Asian Development Bank (ADB), Commonwealth Development Corporation (CDC), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39;no objection certificate' which is subject-matter of impugned revision order passed by the CIT. 6. The CIT, being of the view that the above receipt in the hands of MEP was taxable @ 20 per cent, initiated revision proceedings under s. 263 on 21st Jan., 1998. After giving an opportunity of hearing to the assessee and after taking into account assessee's objection to the proposed revision, learned CIT concluded as follows : The payment for fees for such services is well within the scope of fees for technical services and, therefore, taxable under the DTAA and the Indian IT Act, 1961. Further, the rate prescribed as per DTAA between India and U.K. is 20 per cent. In view of this position, AO has to adopt the rate of 20 per cent for deducting the tax at source. The order under s. 195 deducting tax at 5 per cent is, therefore, erroneous and prejudicial to the interest of Revenue. I, accordingly, set aside the order under s. 195, dt. 6th Dec., 1995, and direct AO to pass an order in conformity with the provisions of DTAA and IT Act, 1961, as discussed above. 7. Aggrieved by this order of the learned CIT, the assessee is in appeal before us. 8. We have heard Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. Thus, where a Double Taxation Avoidance Agreement provided for a particular mode of computation of income, the same should be followed, irrespective of the provisions in the IT Act. Where there is no specific provision in the agreement, it is the basic law, i.e., the IT Act, that will govern the taxation of income.' In our view, the circular reflected the correct legal position inasmuch as the convention or agreement is arrived at by the two contracting Governments in deviation from the general principles of taxation applicable to the contracting States; otherwise, the Double Taxation Avoidance Agreement will have no meaning at all. We will, therefore, take up taxability of impugned payments to the MEP, in the light of provisions in applicable India-UK DTAA. 9. Let us first take a look at the scope of expression 'fees for technical services' so far as applicable India-UK DTAA is concerned. 10. Art. 13(4) of the India-UK DTAA defines fees for technical services as payments of any kind to any person in consideration for the rendering of any technical or consultancy services (including the provisions of services of technical or other personnel) which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overnment of India has confirmed that memorandum of understanding between India and USA with regard to interpretation of art. 12 (royalties and fees for included services) also represents the views of the Indian Government. This memorandum, inter alia, provides as follows : Para. 4(b) of art. 12 refers to technical or consultancy services that make available to the person acquiring the service technical knowledge, experience, skill, know-how, or processes, or consist of the development and transfer of a technical plan or technical design to such person (for this purpose, the person acquiring the service shall be deemed to include an agent, nominee, or transferee of such person). This category is narrower......... because it excludes any service that does not make technology available to the person acquiring the service. Generally speaking, technology will be considered made available when the person acquiring the service is enabled to apply the technology. The fact that the provision of the service may require technical input by the person providing the service does not per se means that technical knowledge, skills, etc. are made available to the person purchasing the service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to such person's as is the expression used in India-UK and India-USA DTAAs. 16. We may also mention that this paradigm shift in definition of the 'fees for technical services', so far as art. 13(4)(c) of India-UK DTAA is concerned, is a concerned departure from the traditional model which represented broadly by the definition of technical services as given in the Indian IT Act. Even after India entered into DTAA with United States on 12th Sept., 1989, wherein this departure from traditional definition was made for the first time, India has entered into several DTAAs wherein traditional definition, on the lines of definition in Indian IT Act, 1961, continues to find the place, such as in India Australia DTAA, dt. 25th July, 1991, India Belgium DTAA, dt. 26th April, 1993, India France DTAA, dt. 29th Sept., 1992, India Germany DTAA and India Israel DTAA, dt. 29th Jan., 1996. On the other hand, there are several DTAAs wherein the narrower definition of 'technical services', as in the case before us, has been adopted e.g., in India Switzerland DTAA, dt. 2nd Nov., 1994, and, of course, India UK DTAA, dt. 25th Jan., 1993. The choice of narrower definition for the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstitutions to assess critical technical, economic, commercial and environmental aspects and risks related to the project, with a view to providing finance or other credit support to finance the construction and start up costs expected to be incurred upto project completion'. As to the precise scope of work in phase one, which is relevant for our purposes, art. 2 of the agreement states that the duties undertaken will be technical appraisal of the project for financial institutions to be made before financial close in accordance with the scope of work outlined in terms of reference set out in Appendix A'. Appendix A, in turn, inter alia, states as follows : The Engineer (MEP) will review the project documentation with respect to technical feasibility and economic viability on behalf of the Asian Development Bank, Commonwealth Development Corporation, International Finance Corporation ECGD and ICICI (India) (the Senior Lenders ). This engineering review will encompass the proposed design, procurement, construction, start-up and testing, and operation and maintenance of the project. The Engineer will identify risks or issues which, if not corrected or mitigated, could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nally (x) prepare draft task reports for each of the major tasks described above and send these to senior lenders for review and comment upon completion of each task. 21. We have carefully perused the details of precise nature of work performed by MEP, as discussed above, vis-a-vis the scope of 'fees for technical services' referred to in art. 13(4)(c), as discussed in para 16 earlier in this order. In our considered view, while the service rendered by MEP undoubtedly has substantial technical inputs, it does not result in, to use the phraseology employed in the India UK DTAA, 'making available the technical knowledge, experience, skill, know-how or processes, or consist of the development and transfer of a technical plan or technical design'. We may also mention that the agreement, under which services were provided by MEP and genuineness of which has not at all been called to question by the Revenue, categorically mentions that MEP's role is that of reviewing and opining rather than designing or directing the project , as evident from the extracts reproduced in para 18 above. We are of the considered view that merely expressing opinion on or reviewing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the aforesaid M/s Mott Ewbank Preece. It is also not in dispute, in the light of Hon'ble jurisdictional High Court's judgment in the case of CIT vs. Davy Ashmore India Ltd. (supra), that provisions of such double taxation avoidance agreements override the provisions of the Act, to the extent these agreements are more favourable to the assessee. Accordingly, provisions of the IT Act, 1961, will not apply to the case before us. In this view of the matter and bearing in mind the fact that the no objection certificate dt. 6th Dec., 1995, authorized the assessee to make the remittance after deduction of tax at source @ 5 per cent, we are of the considered view that the 'order' sought to be revised by the learned CIT was not prejudicial to the interests of the Revenue inasmuch as consequent to the 'no objection certificate' in question, the assessee had to deduct tax at source @ 5 per cent whereas no tax was really required to be deducted at source from the remittance in question. Hon'ble Supreme Court, in the case of Malabar Industrial Co. Ltd. vs. CIT (2000) 159 CTR (SC) 1 : (2000) 243 ITR 83 (SC) has, inter alia, observed that A bare reading of this pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aised by the assessee in this appeal before us, including the issue as to whether a non-statutory 'no objection certificate' issued by the AO can at all be subject-matter of revision under s. 263 of the Act. In the light of our findings above, this and remaining grounds of appeal become infructuous. We, accordingly, refrain from making any observations on merits of the same. 24. In the result, appeal is allowed. B.K. MITRA, J.M. : 15th July, 2002 I have gone through the draft order recorded by my learned Brother in minute details. I am unable to agree with the finding of the learned AM on the following reasons : I have noticed that the learned CIT has passed the following order : (i) On a perusal of the agreement between assessee and Mott the purpose of obtaining MEP's expert opinion is to provide a basis for the financial institutions to assess critical technical, economic, commercial and environmental espects and risks related to the project with a view to providing financing or other credit support to finance the construction and start up costs expected to be incurred up to project completion. (ii) On careful reading of the agreement and consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an come on relevant material fact in respect of which reasonable opportunity must be given to the person sought to be affected and as such reasonable opportunity again on the principle of natural justice requires that the assessee to be affected should be given intimation of the material. It is also true that if the basic materials upon which the CIT proposes to act are intimated or communicated to the assessee the CIT may in his order rely on such supporting materials. It is found that such basic materials upon which the CIT proposes to act in an action under s. 263 must be intimated to the assessees concerned. In the instant case, we have noticed that such basic materials upon which the CIT proposes to act have been communicated to the petitioner. Furthermore, in the instant case there is a challenge thrown by the assessee that there were no materials on the facts and circumstances of the case for the CIT to come to the conclusion that the order in question is erroneous insofar as it is prejudicial to the interests of the Revenue. 2. An order must be erroneous so as to be prejudicial to the interests of the Revenue. In this connection it may however by stated that anything whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. In the result, the appeal is dismissed. REFERNCE UNDER S. 255(4) OF THE IT ACT, 1961 BY THE BENCH August, 2002 As there is a difference of opinion between the JM and the AM, the matter is being referred to the Hon'ble President of the Tribunal with a request that the following questions may be referred to a Third Member or pass such orders as the Hon'ble President may kindly decide : Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that income embeded in the payment of UK ' 52,000 paid to M/s Mott Ewbank Preeece was not exigible to tax in India, or whether the Tribunal should have held that the same being covered by the scope of fees for technical services under the applicable Double Taxation Avoidance Agreement, the CIT was justified in holding that the order under s. 195(2) passed by the AO was indeed prejudicial to the interests of the Revenue, inasmuch as it directed the assessee to deduct tax @ 5 per cent whereas correct rate of tax should have been 20 per cent ? M.A. Bakshi, Vice President (As third member) : 23rd July, 2003 As a result of difference of opinion amongst the Members con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he CBDT in Circular No. 659, dt. 29th Nov., 1994 [211 ITR (St) 28] prescribed a form for the said purpose. The assessee had filed an application dt. 10th Nov., 1995 with the AO seeking authorization for payment of the abovenoted amount without deduction of tax at source. The AO issued a letter dt. 6th Dec., 1995, permitting remittance of the sum after deduction of tax at source @ 5 per cent of the amount payable. The assessee though had claimed that no deduction is required to be made at source, yet accepted the order of the AO of deducting tax @ 5 per cent and the remittance was made after the deduction of the said tax. It may be pertinent to mention that the order under s. 195 passed by the AO asking the assessee to deduct tax @ 5 per cent as against the claim of the assessee of nil deduction of tax is appealable under s. 248 of the IT Act, 1961. However, the order of the AO was not challenged before any authority. 3. Subsequently, the assessee had furnished similar applications to the AO in regard to further payments to MEP. The AOP in the respective orders passed under s. 195 had directed the assessee to remit the payments after deduction of tax @ 20 per cent. The learned co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stances of the case, the Tribunal was justified in holding that income embedded in the payment of UK pound 52,000 paid to M/s Mott Ewbank Preece was not exigible to tax in India, or whether the Tribunal should have held that the same being covered by the scope of fees for technical services under the applicable Double Taxation Avoidance Agreement, the CIT was justified in holding that the order under s. 195(2) passed by the AO was indeed prejudicial to the interests of the Revenue, inasmuch as it directed the assessee tko deduct tax @ 5 per cent whereas correct rate of tax should have been 20 per cent ? 6. The learned counsel for the assessee contended that the power of the CIT under s. 263 for revising an order vests only if two conditions are satisfied. Firstly, the order passed by the AO must be erroneous, and, secondly, the said order should be prejudicial to the interests of Revenue. It was contended that as held by their Lordships of the Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CIT (2000) 159 CTR (SC) 1 : (2000) 243 ITR 83 (SC), both the conditions must co-exist for the exercise of the power under s. 263 by the CIT. The learned counsel further conten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... included services' is given to mean payments of any kind to any person in consideration for the rendering of any technical or consultancy services (including through the provision of services of technical or other personal) if such services : (a) are ancillary and subsidiary to the application or enjoyment of the right, property or information for which a payment described in para 3 is received; or (b) make available technical knowledge, experience, skill, know-how or processes or consist of the development and transfer of a technical plan or technical design. It was contended that the definition of 'fee for included services' is in pari materia with the definition of 'fee for technical services' provided under the DTAA between India and U.K. Reference has also been invited to the explanatory memorandum relating to para 4(b) of art. 12 of the DTAA between India and U.S.A. wherein it has been clarified that the technology will be considered made available when the person acquiring the service is enabled to apply the technology. It has also been claimed that the fact that the provision of the service may require technical input by the person providing th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of the AO under s. 195 directing to deduct tax @ 5 per cent was not challenged by the assessee, the learned counsel relied upon the decision of the Supreme Court in the case of Carborandum Co. vs. CIT 1977 CTR (SC) 209 : (1977) 108 ITR 335 at 339, 345 (SC). It was pointed out that in that case the assessee had accepted levy of tax @ 5 per cent. However, when the CIT initiated action under s. 33B of the IT Act, 1922, corresponding to s. 263 of the IT Act, 1961, the assessee challenged such action on the ground that the sum receivable by it was not per se taxable in India. The Supreme Court held that the sum received was not taxable in India and that since 5 per cent levy of tax not having been challenged by the assessee, the Court could not interfere with such taxation but held that the technical fee in excess of 5 per cent was not taxable. According to the learned counsel, the ratio of the said decision of the Supreme Court squarely applies to the facts of the present case and that the assessee is well within its right in challenging the order of the CIT under s. 263 for imposing the tax @ 20 per cent on the ground that no tax at all is chargeable without affecting the levy of 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appeal of the assessee is relating to the chargeability of tax in respect of the amount paid to MEP on the terms and the conditions of the agreement executed between the appellant along with financial institutions with MEP. Sec. 4 of the IT Act, 1961 provides for levy of tax in respect of the total income of the previous year of every person. Sec. 5 of the IT Act, 1961 gives the scope of total income, which is subject-matter of taxation under the IT Act. Sec. 5(1) is applicable in respect of residents and since the MEP is a non-resident, the same is irrelevant. Sec.5(2) is applicable in respect of the non-residents. Therefore, the same is reproduced hereunder for the sake of ready reference : 5(2) Subject to the provisions of this Act, the total income of any previous year of a person who is a non-resident includes all income from whatever source derived which (a) is received or is deemed to be received in India in such year by or on behalf of such person; or (b) accrues or arises or is deemed to accrue or arise to him in India during such year. Explanation 1 :'Income accruing or arising outside India shall not be deemed to be received in India within the meaning ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion to s. 9, the amount paid to MEP falls within the ambit of 'fee for technical services' and, accordingly, by virtue of the provisions of the IT Act, 1961, the income is deemed to accrue or arise in India. However, s. 90 of the IT Act, 1961 provides for an exception. Sec. 90 is quoted hereunder : 90(1) The Central Government may enter into an agreement with the Government of any country outside India' (a) for the granting of relief in respect of income on which have been paid both income-tax under this Act and income-tax in that country, or (b) for the avoidance of double taxation of income under this Act and under the corresponding law in force in that country, or (c) for exchange of information for the prevention of evasion or avoidance of income-tax chargeable under this Act or under the corresponding law in force in that country, or investigation of cases, of such evasion or avoidance, or (d) for recovery of income-tax under this Act and under the corresponding law in force in that country, and may, by notification in the Official Gazette, make such provisions as may be necessary for implementing the agreement. (2) Where the Central Government ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is only when there is a conflict between the provisions of the agreements in contrast with the provisions of the IT Act, 1961 that the beneficial treatment is to be given as per s. 90(2) of the IT Act, 1961. In this connection circular of the CBDT being No. 333, dt. 2nd April, 1982, also clarifies the position of law, which is quoted hereunder : Subject : Conflict between the provisions of the IT Act, 1961, and the provisions of the Double Taxation Avoidance Agreement'Clarification. It has come to the notice of the Board that sometimes effect to the provisions of double taxation avoidance agreement is not given by the AO's when they find that the provisions of the agreement are not in conformity with the provisions of the IT Act, 1961. 2. The correct legal position is that where a specific provision is made in the double taxation avoidance agreement, that provision will prevail over the general provisions contained in the IT Act, 1961. In fact, the Double Taxation Avoidance Agreements which have been entered into by the Central Government under s. 90 of the IT Act, 1961, also provide that the laws in force in either country will continue to govern the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the ambit of art. 13 of the DTAA between India and U.K. It would be useful to reproduce relevant portion of the said art. 13 as under : Royalties and fees for technical services. 1. Royalties and fees for technical services arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State. 2. However, such royalties and fees for technical services may also be taxed in the Contracting State in which they arise and according to the law of that State; but if the beneficial owner of the royalties or fee for technical services is a resident of the other Contracting State, the fee so charged shall not exceed : (a) in the case of royalties within para 3(a) of this article, and fees for technical services within paras 4(a) and (c) of this Article ; (i) during the first five years for which this Convention has effect; (aa) 15 per cent of the gross amount of such royalties or fees for technical services when the payer of the royalties or fees for technical services is the Government of the first-mentioned Contracting State or a political sub-division of that State, and (bb) 20 per cent of the gross amount of such ro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the payment made to MEP falls within the ambit of art. 13(4)(c). Before proceeding further, it will be relevant to point out that the definition of 'fee for technical services' under art. 13 of the DTAA between India and U.K. is a departure from the definition generally adopted in various DTAAs with various other countries. The definition adopted in this case is in pari materia with the definition adopted in the DTAA between India and USA, as reported in (1991) 91 CTR (St) 6 : (1991) 187 ITR (St) 102. Under the DTAA between India and USA, art. 12(4) defines 'fee for included services' to mean payments of any kind to any person in consideration for the rendering of any technical or consultancy services (including through the provision of services of technical or other personnel) if such services : (a) are ancillary and subsidiary to the application or enjoyment of the right, property or information for which a payment described in para 3 is received; or (b) make available technical knowledge, experience, skill, know-how or processes, or consist of the development and transfer of a technical plan or technical design. It is thus observed that the definition o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s work with the technicians in the Indian firm for a few months. Are the payments to the US firm considered to be payments for included services ? Analysis : The payments would be fees for included services. The services are of a technical or consultancy nature; in the example, they have elements of both types of services. The services make available to the Indian company technical knowledge, skill, and processes. Example (5) : Facts : An Indian firm owns inventory control software for use in its chain of retail outlets throughout India. It expands its sales operation by employing a team of travelling salesmen to travel around the countryside selling the company's wares. The company wants to modify its software to permit the salesmen to assess the company's central computers for information on what products are available in inventory and when they can be delivered. The Indian firm hires a US computer programming firm to modify its software for this purpose. Are the fees which the Indian firm pays treated as fees for included services ? Analysis : The fees are for included services. The US company clearly performs a technical services for the Indian compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervice, within the meaning of art. 12, para 4(b) of DTAA between India and USA. which is in pari materia with art. 13(4)(c) of DTAA between India and U.K. In example No. 3, the USA. firm had sent experts to India to show engineers of the Indian company how to produce the extra-strong wallboard. Since the Indian company was able to apply the technology, the payment for the services would fall within the ambit of technical knowledge, experience, skill, etc. having been made available. In example No. 5, the USA company has modified the software for the Indian company. The services provided are purely technical services and the technical plan is transferred to the Indian company. Thus, the services provided fall within the definition of 'fee for included services'. In example No. 6, the USA company had trained the employees of Indian company in applying the formula for producing cholesterol-free oil. Thus, the technical knowledge and skill is made available to the Indian company which falls within the definition of fee for included services'. In example No. 7, the consultancy services are involved in the use of substantial technical skill and expertise which was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the DTAA between India and USA and later on similar language having been used in the DTAA between India and U.K., the meaning assigned by the Government of India in regard to the provisions of DTAA between India and USA earlier must be held to have the same meaning as explained by the Government of India and agreed by the Government of USA. 19. In the light of the above explanation relating to the meaning of 'fee for technical services' as understood by the Government of India and the Government of USA, it will be relevant to examine as to whether the services rendered by the MEP fall within the ambit of the definition of 'fee for technical services' envisaged under art. 13(4)(c) of DTAA between India and U.K. In this connection, the scope of work of MEP is crucial for determination of the issue. As per the agreement between borrower and the financiers on the one part and the MEP on the other part, the scope of work is described as under : Scope of work Scope of work for the Technical Adviser describes the duties to be undertaken for Phase I of the work which are as follows : Phase I : Technical appraisal of the project for financial institutions to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... One. Technical appraisal of the project for senior lenders to be made before financial close in accordance with the scope of work outlines below. Two. Certification of physical progress and disbursements during the construction phase, periodic site and factory visits to ensure the developer's project management team is adequately protecting the lender's interest, witnessing site performance and efficiency tests, and certifying when project provisional and final completion is achieved. The terms of reference also provided for preparation of the reports by the Engineer. The report is required to be related to unresolved issues and asserted risks identified by the Engineers. 22. When the scope of the work of MEP described above is considered in the light of the definition of 'fee for technical services' read with the explanatory memorandum relating to similar provisions under the DTAA between India and USA, there appears to be a blurred picture at the first sight. So, however, on careful consideration it is observed that there is specific assertion in the terms of reference incorporated in the agreement to the effect that the Engineers' role is that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue, I hold that the order passed by the CIT under s. 263 does not meet the requisite conditions under s. 263 of the Act insofar as no prejudice is caused to the Revenue as a result of erroneous order of the AO. The order under s. 263 thus deserves to be set aside. I, therefore, agree with the learned AM and as a result of this order, the order of the CIT under s. 263 is liable to be set aside. 24. Before winding up, I consider it necessary to deal with another aspect of the case raised during the course of hearing of the appeal. As pointed out elsewhere in this order, the assessee had filed an application to the AO asking for no objection certificate for remittance of 52,000 sterling pound to MEP without deduction of tax. The nature of services referred to in the application was admittedly fee for personal services. The AO by an order under s. 195 had authorized remittance after deduction of tax @ 5 per cent. The order of the AO was not challenged by the assessee by way of an appeal. Thus, a pertinent question that arises for determination is as to whether in these circumstances it was open to the assessee to challenge the said order of the AO in the proceedings under s. 26 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... squarely applicable in this case in so far as the assessee had not challenged the order of the AO under s. 195 in asking to deduct tax @ 5 per cent from the payments to MEP. However, that would not stand in the way of the assessee claiming in the proceedings under s. 263 that no tax was at all chargeable on the payments made to MEP. The only restriction upon the assessee is that the relief cannot be granted to the assessee in respect of 5 per cent levy directed by the AO, which has not been challenged. 26. As a result of cancellation of the order under s. 263, the order passed by the AO will get restored and the liability @ 5 per cent shall stand. Therefore, the contention advanced on behalf of the assessee that it is permissible for them to challenge the liability of tax in respect of the remittances notwithstanding the fact that the liability as such was not challenged originally is accepted in the light of the aforementioned decision of the Supreme Court and the objection of the Revenue rejected. 27. Let the matter be placed before the regular Bench for announcing the majority view. B.K. MITRA, J.M. : 6th August, 2003 Whereas there was a difference of opinion bet ..... X X X X Extracts X X X X X X X X Extracts X X X X
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