TMI Blog2016 (5) TMI 543X X X X Extracts X X X X X X X X Extracts X X X X ..... essed to tax in the hands of Air India Limited, as an agent under section 163 of the Act. - Decided in favour of revenue - ITA No.6630/Mum/06 - - - Dated:- 5-4-2016 - Pramod Kumar AM and Pawan Singh JM For The Appellant : Jasbir Chauhan For The Respondent : Jitendra Sanghvi ORDER Per Pramod Kumar, AM: 1. By way of this appeal, the Assessing Officer has challenged correctness of the order dated 17th August 2006 passed by the learned CIT(A) in the matter of assessment under section 144 r.w.s. 147 and 163 of the Income Tax Act, 1961 (hereinafter referred to as the Act ) for the assessment year 2000-01. 2. Grievances raised by the appellant are as follows: 1. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in holding that the same income cannot be assessed first in the hands of the non resident and simultaneously through its agent, representative of the assessee. 2. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in holding that income of ₹ 97,35,04,000 is not required to be assessed, and, therefore, deleted. 3. On the facts and in the circumst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompensation for loss of income as lease rental, was income of the Carbijet Inc. It was noted that The Assessing Officer held that any receipt arising from the termination of wet lease contract with Air India, after the expiry of the first wet lease agreement, was revenue receipt in nature, and that it was taxable in the hands of the assessee in the year in which the right to receive the said income crytstallized. The Assessing Officer also noted that the appeal against the arbitral award was rejected by the Court of Appeal. It was noted the business of Carbijet Inc was to provide aircraft on lease, and, therefore, receipt in question was a receipt in the course of its normal business. Converted into INRs, under rule 115A, the amount was quantified at ₹ 97,35,04,000. This amount was brought to tax in the hands of the assessee, as a representative assessee of Carbijet Inc, aggrieved by which assessee carried the matter in appeal before the CIT(A). 5. Learned CIT(A) upheld the taxability of the arbitral award, in the hands of the Carbijet Inc, in principle. He also held that this amount is taxable in this assessment year. What is, particularly in the context of issues requiri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt (India) Pvt Ltd (supra), and Claggett Brachi Co Ltd (supra), Jyoti Prasad Agarwal Ors Vs ITO [(1959) 37 ITR 107 (All)] and ITO Vs Bachu Lal Kapur [(1966) 60 ITR 74 (SC )] and finally concluded as follows: 2.20 After considering the various provisions of the Act and the decisions of Hon ble Supreme Court and other High Court as discussed above, it is held that the same income cannot be assessed first in the hands of non-resident and simultaneously through its agent, representative of assessee. 2.21 It is seen that the assessment proceedings in the case of CI were initiated by filing of return by CI on 28.11.2000 before the DCIT Cir. 2(1). Return was filed on NIL income and a note was given in the return mentioning that the International Arbitration Tribunal issued a Quantum Award on 15.11.1999. It was claimed that the Arbitration proceedings gave raised to compensation. Since the Arbitration proceedings were conducted outside and the Quantum Award was issued outside India, amount payable by AI to CI did not accrue to CI in India. The CI accordingly claimed that the Quantum Award as per Order of IAT dated 15.11.99 did not accrue or arise in India. Case was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment in the hands of non-resident and his agent assessing the same income twice. AI is already liable to tax u/s. 195. Its liability u/s. 195 is not in anyway affected by the assessment of income of CI whether in the hands of CI or in the hands of AI as agent of CI. The power of AO to recover the tax relating to income of CI, u/s.226(3), if AI is found to hold any money payable to CI either in present or anytime future is not affected by assessment in the hands of agent. It is therefore clear that the interest of revenue is not jeopardised in anyway in respect of recovery of tax. 2.23 In view of this it is held that income of ₹ 97,35,04,000/- is not required to be assessed and the same is therefore deleted 6. The Assessing Officer is aggrieved and is in appeal before us. 7. We have heard the rival contentions, perused the material on record and duly considered the facts of the case in the light of the applicable legal position. 8. The question whether the same income can be taxed in the hands of the assessee, in his own name, as also in the hands of his agent under section 163 in the representative capacity, came up for adjudication before Hon ble Supreme Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment is done directly on the principal, i.e Carbijet Inc, on 28th March 2003. On these facts, therefore, when the Assessing Officer exercised his option to bring the income to tax in the hands of Air India, as a representative assessee, he was perhaps legally functus officio so far as assessment of the same income in the hands of Carbijet Inc directly was concerned. However, merely because a day later, the Assessing Officer also taxed the same income in the hands of Carbijet Inc as well, the assessment of that income in the hands of the representative assessee- i.e. Air India, cannot be faulted with. We are, therefore, unable to hold, as has been held by the CIT(A), that the assessment in the hands of this income in the hands of Air India, in representative capacity, ceases to hold good in law because he has also taxed, though subsequently, the same income in the hands of the assessee directly. As a matter of fact, learned CIT(A) has frequently used the expression simultaneous to describe this dual assessment, and it is there that he apparently fell in error. While the process of assessment may be simultaneous and somewhat parallel in approach, the assessment is not ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
