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Commissioner of Income Tax (TDS) Versus M/s Air Liquide India Holdings

2015 (12) TMI 910 - DELHI HIGH COURT

Failure to deposit TDS deducted from the salary received by the expatriate employee outside India - penalty u/s 271C - Held that:- In the present case, in light of the factual findings of the ITAT that there was nothing brought on record by the Department to show that the Respondent had been intimated by the expatriate employees about the remuneration received by them from ALF, it is held that the Respondent could not be held to be an Assessee in default and no penalty under Section 271C of the .....

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by the Revenue under Section 260A of the Income Tax Act, 1961 ('Act') are directed against the common order dated 23rd January 2003 passed by the Income Tax Appellate Tribunal ('ITAT') in ITA Nos. 1448 to 1451/Del/2002 for Assessment Years ('AYs') 1996-97 to 1999- 2000. 2. Initially this Court dismissed the appeals on 5th October 2004 on the ground that no substantial question of law arose. This order was taken in appeal by the Revenue to the Supreme Court and on 5th Sep .....

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epartment under Section 260A of the Income Tax Act, 1961 on the g round that no question of law arose in the present case. In this case, after the survey, the tax deducted has been deposited with the Government. Therefore, in our view, the question of law which arise for determination is whether the assessee was entitled to plead reasonable cause for not depositing the tax. Moreover on page 88 of the paperbook there is finding that TDS was deducted from the salary paid to the expatriate employee .....

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Court on 15th September 2008, the following order was passed: "Earlier this appeal had been dismissed by this Court by an order dated 5.10.2004 as in its view no substantial question of law arose for consideration. However, the matter was taken in appeal by the revenue before the Supreme Court which set aside the said order by its order dated 10.12.2007. The Supreme Court also observed that the question of law which arose for determination was : "Whether the assessee was entitled to p .....

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After Notice Miscellaneous' matters. It is ordered accordingly. Renotify on 17.10.2008." 4. The facts leading to the filing of the present appeals are that the Respondent is a wholly owned Indian subsidiary of Air Liquide France ('ALF') which is a French multinational company. The Respondent company had both Indian and expatriate employees on its pay rolls during the Financial Years ('FYs') 1995-96 to 1998-99. Initially there was a liaison office of ALF which was closed .....

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he Respondent on 3rd February 2000. It was found that the ALF had deputed Mr. Philippe Counathe and Mr. Bruce Beaton to the Respondent to look after the business in India. It was found that the Respondent was deducting tax at source from the salaries paid to the aforementioned two persons. However, no tax had been deducted at source on the salaries paid to them by the parent company i.e. ALF in France in terms of Section 192 read with Section 9 (1)(ii) of the Act. Accordingly penalty proceedings .....

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'CIT (A)'] dismissed the Respondent's appeals by the order dated 23rd January 2003, the Respondent appealed to the ITAT. 8. The factual findings of the ITAT were that there was no material on record to show that the Respondent had been intimated by the expatriate employees about the remuneration received by them from ALF in France. It noted: "Neither in the course of search under Section 133A nor subsequent thereto in evidence was found by the Department to this effect". It .....

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s 192(1) and 192(2) stood complied with by the Respondent even before penalty was levied under Section 271C of the Act by the order dated 17th November 2000. 9. The ITAT interpreted Sections 192(1) and 192(2) and held that a duty to deduct tax at source from salary received by an expatriate employee from the 'other employer' could arise only when the employee himself furnishes the details in that regard to the company in India with which he was employed. 10. A similar view has been taken .....

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