+ Ita 571/2024 The Commissioner Of Income Tax - International Taxation -3 v. Vetco Gray Pte Ltd

$~48 IN THE HIGH COURT OF DELHI AT NEW DELHI+ITA 571/2024THE COMMISSIONER OF INCOMETAX - INTERNATIONAL TAXATION -3THE COMMISSIONER OF INCOMETAX - INTERNATIONAL TAXATION -3 .....Appellant Through:Mr Ruchir Bhatia, SSC, Mr AnantMann, JSC and Mr Abhishek Anand,Advocate.Mann, JSC and Mr Abhishek Anand,Advocate. versus VETCO GRAY PTE LTD. .....Respondent Through:Mr Sachit Jolly, Sr Advocate with MrAbhyudaya Shankar Bajpai and MsDisha Jham, Advocates.Abhyudaya Shankar Bajpai and MsDisha Jham, Advocates. CORAM:HON'BLE THE ACTING CHIEF JUSTICEHON'BLE MR. JUSTICE TUSHAR RAO GEDELAO R D E R %12.12.2024 1.The Revenue has filed the present appeal under Section 260A of theIncome Tax Act, 1961 (hereafter the Act) impugning an order dated15.05.2024 (hereafter the impugned order) passed by the learned IncomeTax Appellate Tribunal (hereafter the ITAT) in ITA No.2537/Del/2023 inrespectoftheassessmentyear(AY)2017-18captionedAssistantCommissioner of Income Tax v. Vetco Gray Pte. Ltd. 2.TheRevenuehadpreferredtheaboveappeal(ITANo.2537/Del/2023) impugning an order dated 12.06.2023 passed by theCommissioner of Income Tax (Appeal-43) [hereafter the CIT(A)] wherebyan appeal preferred by the respondent (hereafter the Assessee) in respect ofthe order dated 27.06.2022 passed by the Assessing Officer (AO), wasallowed. 3.The controversy essentially relates to an order passed under Section263 of the Act in respect of AY 2017-18. 4.The Assessee had filed its return of income for the AY 2017-18 on31.07.2017, which was taken up for scrutiny. The assessment proceedingsculminated in an order dated 17.02.2020 passed under Section 143(3) readwith Section 144C (3) of the Act whereby the part of the receipts of theAssessee from off shore supplies were construed as attributable to theAssessee’s permanent establishment (PE) in India and were charged to taxunder the Act. The Assessee did not object or appeal the said assessmentorder, however, the learned Commissioner of Income Tax held thesaid assessment order to be erroneous and prejudicial to the Revenue. Thelearned CIT passed an order dated 24.03.2022 under Section 263 of the Act,attributing 25% of the income to the Assessee’s PE. 5.The Assessee successfully challenged the order dated 24.03.2022before the learned ITAT in ITA No.733/Del/2022. And, by an order dated20.12.2022, the learned ITAT set aside the CIT’s order dated 24.03.2022,passed under Section 263 of the Act. 6.This court is informed that the Revenue challenged the learnedITAT’s order dated 20.12.2022 before this court under Section 260A of theAct, being ITA No. 448/2023. However, the said appeal was dismissed. 7.Notwithstanding that the Assessee had succeeded in its challenge tothe order dated 24.03.2022, the AO passed a separate order dated27.06.2022 under Section 263 read with Section 143(3) of the Act to giveeffect to the learned CIT’s order dated 24.03.2022. 8.Obviously, the said order cannot sustain because the order dated24.03.2022 passed under Section 263 of the Act had been set aside. 9.The Revenue has projected the following questions of law forconsideration of this court:- “1. Whether on the facts and in the circumstancesof the case, the ld. ITAT has erred in setting asidethe order under section 263 by holding that theassessment order sought to be revised is noterroneous as the A8 has taken the same view astakenbyhispredecessorintheprecedingassessment years on the issue of taxability ofoffshore supply @1% interest of @10% u/s 44BBof the Act and therefore holding that CIT’srevisionary order is a change of opinion byignoring the fact that there could not have anopinion at the first place in the absence of materialrelevant fact gathered, inquired and investigated? 9.The Revenue has projected the following questions of law forconsideration of this court:- “1. Whether on the facts and in the circumstancesof the case, the ld. ITAT has erred in setting asidethe order under section 263 by holding that theassessment order sought to be revised is noterroneous as the A8 has taken the same view astakenbyhispredecessorintheprecedingassessment years on the issue of taxability ofoffshore supply @1% interest of @10% u/s 44BBof the Act and therefore holding that CIT’srevisionary order is a change of opinion byignoring the fact that there could not have anopinion at the first place in the absence of materialrelevant fact gathered, inquired and investigated? 2. Whether on the facts and in the circumstances ofthe case, the ld. ITAT has erred in not appreciatingthe legal position that income from lease rentalreceived by the Assessee is taxable under section44DA of the Act instead of 44BB of the Act beingin the nature of royalty income and therefore,factual infirmity in the form of a typological errorwith regard to payer cannot be a ground to quashthe order under section 263 of the Act? 3. Whether on the facts and in the circumstances ofthe case, the ld. ITAT has erred in appreciating thefact that the order passed in the instant case undersection 143(3) of the Act is in contrary to legalprovisions and settled legal position and therefore,such an order can be revised under section 263 ofthe Act in view of the Hon’ble Supreme Court inTara Devi Aggarwal Vs. CIT 88 ITR 323 (SC),which held that an order is erroneous if it is basedon an incorrect fact or an incorrect application oflaw or non-application of mind or based on no or insignificant material?” 10.It is apparent from the facts as narrated above that none of thequestions as projected by the Revenue arise in the present appeal.Thedecision of the learned ITAT is not based on the merits of the order passedunder Section 263 of the Act as that was the subject matter of another appeal[ITANo.733/Del/2022captionedVetcoGrayPte.Limitedv.CIT(International Taxation), New Delhi]. The impugned order is premisedsolely on the ground that the AO has passed an order, essentially, to giveeffect to the order passed under Section 263 of the Act, which had been setaside. 11.Clearly, no substantial questions of law arise in the present appeal.The same is, accordingly, dismissed. VIBHU BAKHRU, ACJ DECEMBER 12, 2024 M TUSHAR RAO GEDELA, J Click here to check corrigendum, if any