Ita/345/2009 Of Commissioner Oof Income Tax v. The Malayala Manorama Colltd

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HON'BLE THE CHIEF JUSTICE DR. MANJULA CHELLUR &THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE TUESDAY, THE 8TH DAY OF OCTOBER 2013/16TH ASWINA, 1935 ITA.No. 345 of 2009 --------------------------- [AGAINST THE ORDER IN I.T.A.NO.327//COCH/2001 OF THE INCOME TAX- APPELLATETRIBUNAL, COCHIN BENCH, DATED 06-04-2004] .............. APPELLANT/APPELLANT: ------------------------------------- THE COMMISSIONER OF INCOME-TAX, KOTTAYAM. BY ADV. SRI.JOSE JOSEPH, S.C. RESPONDENT/RESPONDENT: ------------------------------------------- THE MALAYALA MANORAMA CO. LTD., KOTTAYAM. THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON 08-10-2013, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: Prv. I.T.A. NO.345/2009: APPENDIX PETITIONER'S ANNEXURES: ANNEXURE A: TRUE COPY OF THE NO OBJECTION CERTIFICATE OF THE ASSESSING OFFICER DTD. 09/08/1999. ANNEXURE B: TRUE COPY OF THE ORDER OF THE CIT (APPEALS) DTD. 15/06/2001. ANNEXURE C: TRUE COPY OF ORDER OF THE I.T.A.T. IN I.T.A. NO.327/COCH/01, DTD. 06/04/2004. RESPONDENT'S ANNEXURES: NIL. //TRUE COPY// P.A. TO JUDGE. Prv. MANJULA CHELLUR, C.J. & A.M. SHAFFIQUE, J. - - - - - - - - - - - - - - - - - - - - - - -I.T.A. No.345 of 2009 - - - - - - - - - - - - - - - - - - - - - - - Dated this the 8[th] day of October, 2013 Shaffique, J. J U D G M E N T This appeal is filed by the revenue against the orderpassed by the Income Tax Appellate Tribunal in I.T.A.No.327/Coch/2001 dated 6.4.2004. The appeal is withreference to the assessment year 1999 - 2000, in which theassessee claimed exemption from deducting tax at source inrespect of membership fee contribution of U.S. $ 10,000equivalent to Rs.3,95,855/-. The Assessing Officer calledupon the assessee to deduct the tax at source at normal rateof the amount payable to the International Press Institute(for short 'IPI') as per Section 195 (1) of the I.T. Act, 1961.The assessee went in appeal before the Commissioner ofIncome tax, which was allowed as per order dated15.6.2001 holding that Section 9 (1) (i) of the I.T. Act doesnot apply in the case. Annexure B is the said order. TheRevenue went in appeal before the Tribunal and theTribunal held that since IPI had no permanent I.T.A. No.345 of 2009 establishment in India and the assessee is not an agent ofIPI, as per order dated 6.4.2004 at Annexure C, the appealcame to be dismissed. The Revenue impugns the decisionof the Tribunal inter alia raising the following questions oflaw: “1. Whether on the facts and in the circumstances of thecase and also on an interpretation of Section 9 of theIncome Tax Act read with the relevant agreement theTribunal is right in law and fact in holding - i) the assessee in any case cannot be taxed in Indiaas it is not an agent of IPI;as it is not an agent of IPI; ii) “Section 195 (1) does not have any impactbecause the assessee is not a responsible personfor paying any interest or any other sumchargeable under the provisions of this Act”.because the assessee is not a responsible personfor paying any interest or any other sumchargeable under the provisions of this Act”. 2.Whether, on the facts and in the circumstances ofthe case and also for the reasons stated in the statementof the case and the grounds does not the assessee have anobligation under Section 195 (1) to deduct tax at sourcefrom the amount (or for the amount) paid to IPI? 3.Whether on the facts and in the circumstances of thecase are not the various findings of the Tribunalextraneous to issue, namely, the liability/obligation of theassessee to deduct tax at source and is not the conclusionof the Tribunal based on the irrelevant findings wrong andvitiated?” 2.Prima facie we do not think that the aforesaid 2.Whether, on the facts and in the circumstances ofthe case and also for the reasons stated in the statementof the case and the grounds does not the assessee have anobligation under Section 195 (1) to deduct tax at sourcefrom the amount (or for the amount) paid to IPI? 3.Whether on the facts and in the circumstances of thecase are not the various findings of the Tribunalextraneous to issue, namely, the liability/obligation of theassessee to deduct tax at source and is not the conclusionof the Tribunal based on the irrelevant findings wrong andvitiated?” 2.Prima facie we do not think that the aforesaid questions of law arises for consideration in the above appealas the first appellate authority as well as the Tribunal has I.T.A. No.345 of 2009 correctly considered the scope and effect of deducting taxat source in respect of the provisions relied upon by theAssessing Officer. In Annexure B order, the first appellateauthority found that since IPI is a non-resident body and hasno permanent establishment in India Section 9 (1) (i) doesnot apply at all. The said provision will apply only if there isany property, asset or source of income in India whichbelong to IPI and such source must be used for earningincome in India. It was hence found that since the IPI is anon-resident body incorporated by a law in another countryhaving no business or other connection in India anyreference to Section 2 (24) (ii) (a) of the Income Tax Actbecome superfluous and therefore Section 195 (1) of theIncome Tax Act does not apply in the case of the paymentsmade to the IPI. No material is produced by the revenue toarrive at a different finding. The provision of law underSection 195 (1) can have application only if the payment ismade to an income tax assessee in India. It is found by theTribunal that the IPI had no permanent establishment in I.T.A. No.345 of 2009 India and the assessee is not an agent of IPI. The assessee is only a member of IPI and by giving advertisementmembership fee or other donation the assessee is notgetting any monetary advantage. The only benefit availableto the assessee is the right to participate and to strive forachieving the objects of IPI through publications, seminars,conferences etc. Therefore it could be seen that on findingof fact itself the authorities have come to a conclusion thatthe assessee is not liable to comply with the provisionsunder Section 195 of the Income Tax Act. Such being the position, we are of the view that the questions of law mentioned in the above appeal does notarise for consideration and accordingly the appeal isdismissed. Sd/- MANJULA CHELLUR, CHIEF JUSTICE. Sd/-A.M. SHAFFIQUE, JUDGE.