TMI Blog2022 (4) TMI 1381X X X X Extracts X X X X X X X X Extracts X X X X ..... essee that the same would definitely belong to the AMQ group of cases and not the non-resident. The non-resident individual/entity did not have an office in India is an uncontroverted position. Even the assessing authorities have nowhere alleged that the nonresident had an office in India. Therefore, these hard discs, in our opinion, cannot be said to be belonging to the person other than the searched person. So far as the printouts of emails retrieved from the hard discs mentioned above are concerned, we find merit in the arguments of the Learned Counsel for the Assessee that the exchange of mail may be between the non-resident and AMQ group employees, but the mails found in inbox or outbox of the AMQ group employees would belong to the respective employee(s) and not the non-resident. In our opinion, although, the mail may have been initiated by the non-resident or its staff and may figure name of Jean Louis Deniot/Cabinet Jean Louis/Design Inc. but it cannot be said that the email found from the hard disc of the AMQ group, located at the premises in India, in inbox/outbox of the respective employee belongs to the non-resident. As regards the invoices raised by Jean Louis De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and his associate concern M/s. Cabinet Jean Louis Denior and Design-39 Inc. being a non-resident is entitled to claim the benefit of Article-15 of DTAA between India and France and, therefore, any income accruing to a resident of France is not taxable in India who has not stayed in India for a period of more than 180 days. We find the Hon ble Delhi High Court in the case of Comverse Networks System India Pvt. Ltd. [ 2014 (8) TMI 6 - DELHI HIGH COURT] has held that where a person in respect of whom an Agent is sought to be made the representative-assessee does not attain the status of non-resident from the relevant accounting period, provisions of Section 163 cannot be invoked in such a case. We are of the considered opinion that the Ld. CIT(A) was not justified in upholding the action of the A.O. in making the addition by treating the assessee as representative assessee of Jean Louis Deniot on the basis of the order passed under section 163 - Appeal of assessee allowed. - ITA.Nos.6672, 6673, 6674 & 6675/Del./2018 And ITA.Nos.6668, 6669, 6670 & 6671/Del./2018 And ITA.No.6667/Del./2018 - - - Dated:- 27-4-2022 - Shri R.K. Panda, Accountant Member And Shri Anubhav Sharma, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt years as reflected in the documents seized during the search proceedings, details of which are given by the A.O. from pages 3 to 5 of his order. In view of these facts, the A.O. of the searched person handed over the relevant seized documents/evidences belonging to the assessee, being other person and after recording satisfaction, proceedings u/s 153C r.w.s. 153A of I. T. Act were initiated. 2.1. The A.O. analysed the details/transactions mentioned in the documents/evidence found during the search and worked-out the amounts paid by assessee to Mr. Jean Louis Deniot in different years and noted that no taxes were paid by him on the income earned. In view of this, since Mr. Jean Louis Deniot had left the country without payment of income tax on such income, the A.O. issued a show cause notice under section 163 of the of the I.T. Act, 1961 asking the assessee to explain as to why he should not be treated as representative assessee/agent of Mr. Jean Louis Deniot and his associate companies M/s Design 39 Inc. and M/s Cabinet Jean Louis Deniot. In reply, the assessee contended that he did not make any payment to Mr. Jean Louis Deniot and the farm house is owned by M/s Impres Estate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .x-rates.com.) for his services rendered in India to Mr. Moin Akhtar Qureshi. During the year under consideration the assessee viz., Mr. Moin Akhtar Qureshi or M/s Impress Estate Pvt. Ltd. was liable to deduct TDS u/s 195 of the Income Tax Act, on the payments that were made to Mr. Jean Louis Deniot, but failed to deduct tax. Further, income earned by Mr. Jean Louis Deniot is not offered for taxation before French Taxation Authority. In view of the above, the A.O. held that the income earned by Mr. Jean Louis Deniot of ₹ 36,95,263/- for A.Y. 2009-10 is taxable in hands of Mr. Moin Akhtar Qureshi as representative assessee/agent. Accordingly, the A.O. computed the income of the assessee as representative assessee/agent of Mr. Jean Louis Deniot at ₹ 36,95,263/-. 2.4. On identical facts, addition of ₹ 4,89,682/-, ₹ 6,68,970/- and ₹ 14,07,530/- have been made by the A.O. in A.Y. 2010-11, 2011-12 and 2014-15 respectively. 2.5. Similarly, addition of ₹ 1,54,37,322, ₹ 21,01,188/-, ₹ 3,18,947/-, ₹ 57,89,319/- for A.Ys. 2009-10, 2010-11, 2012-13 and 2014-2015 respectively were made by the A.O. by treating him as Representative Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he documents/evidence found during the search proceedings as per annexures mentioned by AO. Clearly, these documents belong to appellant only. Moreover, the ratio given by Hon'ble Court in the case Pepsico India Holdings vs ACIT has been further defined in the case Pr. CIT vs Super. Malls Pvt. Ltd. 393 ITR 557 wherein it has been held that while construing a document, expressions should not be interpretated too literally as if they were words carved in stone or in a statute. As per Hon'ble Court, the expression belong , in the context in which it is used has to be understood as imputing relating to , or any other term was not persuasive. Hon'ble Court has further held that having regard to the conspectus of the facts, the AO has to satisfy that the documents seized belong to the assessee in view of what is contained or brought out on a fair reading of their contents. Thus, in the case of appellant also, the fair reading of the contents as reflected in the seized documents as above, clearly uphold the view that the said documents belong to assessee only. Similarly, in other case Pr. CIT vs. Nau Alidhi Overseas Pvt. Ltd. 394 ITR 752, Hon'ble Jurisdictional High Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts. During the appellate proceedings also, appellant has failed to give any submissions in support of grounds raised by him or additions made by AO. He has simply filed the copy of reply which was submitted to AO during the assessment proceedings. Since no submissions have been made by appellant against the addition made by AO, the conclusions drawn by AO are upheld. Moreover, the genera! submissions given by appellant that his case is covered by DTAA or the payments made by him are in the nature of reimbursements, have no merit in absence of any specific details or supporting evidence. The appellant has failed to mention any instance to demonstrate that the payments made by Mr. Moin Akhtar Qureshi to Mr. Jean Louis Deniot or his two associate companies are nothing but reimbursements of payments. How the provisions of DTAA are applicable in his case, nothing has been submitting by appellant in this regard. In view of this, I uphold the conclusion drawn by AO that income of ₹ 36,95,263/- earned by Mr. Jean Louis Deniot for A.Y. 2009-10 is taxable in the hands of Mr. Moin Akhtar Qureshi as representative assessee/agent and dismiss the grounds taken by appellant. 4. Aggrie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia for a period less than 180 days since if it was inferred otherwise afortiori the provisions of section 163 became inapplicable as the said section is only applicable in the case of a non resident. 4. That without prejudice to the above grounds of appeal even if such income were to be assessed in the hands of Moin Akhtar Qureshi as representative assessee only the income element was to be taxed and reimbursement of expenses was required to be eliminated. 5. That the appellant craves leave to add, alter, modify any of the grounds at the time of hearing or before the hearing. 5. Identical grounds have been taken by the assessee in the other appeals. 6. The Learned Counsel for the Assessee at the outset drew the attention of the Bench to the written submissions filed before the Ld. CIT(A) dated 21.02.2008, 17.09.2018 and 19.09.2018 and submitted that these were not at all considered by the Ld. CIT(A) in which the assessee had categorically stated that Jean Louis Deniot and his associate concerns M/s. Cabinet Jean Louis Deniot and Design-39 Inc. being a non-resident is entitled to claim the benefits of Article-15 of the DTAA between India and France and, therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... il conversation regarding designing, furnishing and payment to Mr. Jean Louis Deniot in foreign currency. A-18 Hard Disc Email conversation regarding payment to Mr. Jean Louis Deniot in foreign currencies A-20 Hard Disc Bills of for a hand knitted carpet purchased from M/s Textico Creations for the Farm House. Email conversation regarding payment to Mr. Jean Louis Deniot foreign currencies. A-2 28-29 Copies Email conversation between Dinesh and Heather Walter and Virgine Deniot regarding invoices from Jean Louis Deniot's office. 6.3. The Learned Counsel for the Assessee drew the attention of the Bench to the above and submitted that the contents of the satisfaction note, the documents alleged to be belonging to person other than searched person, can be broadly classified into following categories. A. Hard Disc and contents thereof. B. Print outs of emails retrieved from the hard disc where name of Jean Louis Deniot, Cabinet Jean Louis and Design-39 Inc. is mentioned and also payments to these indivi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of Satyam Food Specialties Pvt Ltd vs., DCIT 57 taxmann.com 194. 6.6. The Learned Counsel for the Assessee drew the attention of the Bench about the item wise chart filed in the Paper Book at page No. 50-53 explaining nature of each and every seized material and clarifying why it does not belong to the non-resident, which the CIT(A) has not considered the same while adjudicating the appeal. So far as the reliance placed by the Ld. CIT(A) on the decisions of the Hon ble Delhi High Court in the case of Pr.CIT vs., Super Malls (P) Ltd. 76 Taxmann.com 267 (Delhi) and Pr. CIT vs., Nau Nidh Overseas (P) Ltd. 88 Taxmann.com 665 (Delhi) is concerned, he submitted that both the decisions are distinguishable and not applicable to the facts of the case and are misplaced. He submitted that that in the case of Super Malls (P) Ltd. (supra) the facts were that pen drives were seized from the individual (who also happened to be director of the company) and the print outs from the pen drive indicated cash receipts from the sale of shops and offices in assessee's other concern. On these facts the court held that contents belonged to the assessee i.e. the company. Similarly, in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be taxed in India. The payments worked-out on the basis of these seized documents are summarized at page No. 33 to 35 of the Assessment order for AY 2009- 10. Similar summary has also been given in Assessment orders for AY 2010-11, 2012-13 2014-15. On the basis of these documents/evidences seized and summarized at page No.33 to 35 of the assessment order for AY 2009-10, it was held by the Assessing officer that the provisions of section 163 of the I.T. Act are squarely applicable to the assessee for his business connection with Mr. Jean Louis Deniot and his associates namely M/s Cabinet Jean Louis Deniot and Design-39 Inc., who are non-resident and have received income directly/indirectly from the assessee. Accordingly, order has been passed under section 163 treating the assessee as representative assessee/agent of Mr. Jean Louis Deniot and his associate concerns Cabinet Jean Louis Deniot and Design-39, Inc. and thereafter assessments have been framed under section 153C of the of the I.T. Act, 1961 for the block period from AY 2008-09 to 2014-15 in the hands of the assessee. 8.1. We find in appeal the Ld. CIT(A) upheld the validity of the assessment order passed under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Ltd., is concerned, we find merit in the arguments of the Learned Counsel for the Assessee that the same would definitely belong to the AMQ group of cases and not the non-resident. The non-resident individual/entity did not have an office in India is an uncontroverted position. Even the assessing authorities have nowhere alleged that the nonresident had an office in India. Therefore, these hard discs, in our opinion, cannot be said to be belonging to the person other than the searched person. 8.4. So far as the printouts of emails retrieved from the hard discs mentioned above are concerned, we find merit in the arguments of the Learned Counsel for the Assessee that the exchange of mail may be between the non-resident and AMQ group employees, but the mails found in inbox or outbox of the AMQ group employees would belong to the respective employee(s) and not the non-resident. In our opinion, although, the mail may have been initiated by the non-resident or its staff and may figure name of Jean Louis Deniot/Cabinet Jean Louis/Design Inc. but it cannot be said that the email found from the hard disc of the AMQ group, located at the premises in India, in inbox/outbox of the respec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the converse case if the vendor's premises are searched and a copy of the sale deed is seized, it cannot be said that the said copy belongs to the purchaser just because it refers to him and he (the purchaser) holds the original sale deed. In this light, it is obvious that none of the three sets of documents - copies of preference shares, unsigned leaves of cheque books and the copy of the supply and loan agreement - can be said to belong to the petitioner. 8.7.1. Similar view has been taken in the case of Satyam Food Specialization (P) Ltd., (supra) relied on by the Learned Counsel for the Assessee. 8.8. So far as the decisions of the Hon ble Delhi High Court in the case of Pr.CIT Vs. Super Malls (P) Ltd. 76 Taxmann.com 267(Delhi) and Pr. CIT Vs. Nau Nidh Overseas (P) Ltd. 88 Taxmann.com 665 (Delhi) relied on by Ld. CIT(A) are concerned, these decisions in our opinion are distinguishable and not applicable to the facts of the present case. In the case of Super Malls (P) Ltd. (supra) the facts were that pen drives were seized from the individual (who also happened to be director of the company) and the print outs from the pen drive indicated cash receipts from the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontracting State is for a period or periods amounting to or exceeding in the aggregate 183 days in the relevant fiscal year ; in that case, only so much of the income as is derived from his activities performed in that other Contracting State may be taxed in that other Contracting State. 2. The term professional services includes independent scientific, literary, artistic, educational or teaching activities, as well as the independent activities of physicians, surgeons, lawyers, engineers, architects, dentists and accountants. 8.12. A perusal of the above Article shows that it specifically provides that the income derived by an individual or a partnership, who is resident of France, from the performance of professional services or other independent activities of a similar character shall be taxable only in France except the following circumstances when such income may be taxed in India. a. If there is a fixed base regularly available for the purpose of performing activities in India; b. If the stay of the non-resident in India is for a period or periods amounting to or exceeding in aggregating 183 days in the relevant assessment year. 8.13. We find merit in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... through whom the non-resident is in receipt of any income, whether directly or indirectly . We have already seen from the decision in Abdullabhai Abdul Kadar s case (supra) that the income bears reference to the accounting year for which the statutory agent is to be appointed. In the present case, the year in question is the year ended on 31.03.2003. During that year Mr Francis Daly was not a non-resident. Therefore, the petitioner cannot even be regarded as a deemed agent under Section 163(1)(c) of the said Act. Consequently, the petitioner cannot be considered to be the representative assessee of Mr Francis Daly in respect of the assessment year 2003-04 (relating to the previous year ended on 31.03.2003). 18. This consideration itself is sufficient for us to decide the case in favour of the petitioner and it is for this reason that we have neither mentioned nor considered the other arguments which have been placed before us. As a result, the writ petition is allowed and the impugned order is set aside. The parties shall bear their respective costs. 8.15. In view of the above discussion, we are of the considered opinion that the Ld. CIT(A) was not justified in upholding ..... X X X X Extracts X X X X X X X X Extracts X X X X
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