Itta/53/2008 Of M/S Fsl Projects Limited, [Formerly Frontline Soft Limited] v. The Deputy Commissioner Of Income Tax

IN THE HIGH COURT FOR THE STATE OF TELANGANAAT HYDERABAD THURSDAY, THE TWENTY FIRST DAY OF SEPTEMBERTWO THOUSAND AND TWENTYTHREE PRESENT THE HON'BLE SRI JUSTICE P.SAM KOSHYANDTHE HON'BLE SRI JUSTICE LAXMI NARAYANA ALISHETW INCOME TAX TRIBUNAL APPEAL No: 53 of2008 lncome Tax Tribunal Appeal Under Section 260-4 of the lncome Tax Act, 1961arising out of the order of the lncome-tax Appellate Tribunal, Hyderabad Bench' B [1]arising out of the order of the lncome-tax Appellate Tribunal, Hyderabad Bench' B [1]Hyderabad, in ITA No.1O81/Hyd/O3, for assessment Yeat 2O03-2OO4 dated 03-08-2007 preferred against the Order of Commissioner of lncome Tax (Appeals) V,Hyderabad in ITA Nos.0397 & 0398/DC 14(3)lClT (A)N|2OO2-03, dated 27-06-2003against the Order of the Deputy Commissioner of lncome Tax 1 (3) (TDS),Hyderabad in ITA Nos.0397 & 0398/DC 14(3)lClT (A)N|2OO2-03, dated 27-06-2003against the Order of the Deputy Commissioner of lncome Tax 1 (3) (TDS),Hyderabad, Appeal No.HYDFOo191F/DCIT 14(3XTDSy02-03 dated:10-02-2003,preferred against the Order of Commissioner of lncome Tax (Appeals)-V, HyderabadPAN/GIR No. AAACF 4743Q.PAN/GIR No. AAACF 4743Q. Between: M/s FSL Projects Limited, fformerly Frontline Soft Limitedl, A public Limitedcompany, Having its registered office at 602, Lake Shore Towers, RajbhavanRoad, Soma.jiguda, Hyderabad. Represented by its Director [vlr. Mir Hussain AliS/o Sri Mir Yousuf Ali Khan, Aged 44 years. .,.APPELLANT AND The Deputy Commissioner of lncome Tax, Circle 14 (3) (TDS), Hyderabad. ...RESPONDENT ITTAMP. NO: 63 OF 2008 Petition under Section 151 CPC praying that in the c.ircumstances stated inthe affidavit filed in support of the petition, the High Court may be pleased staythe collection tax of Rs. 7,23,783.501: disputed in the appeal for the assessmentyear 2O03-2004.the affidavit filed in support of the petition, the High Court may be pleased staythe collection tax of Rs. 7,23,783.501: disputed in the appeal for the assessmentyear 2O03-2004. I Counsel forthe Appellant: SRI S. RAVI Counsel for the Respondent: SRI A- RAMAKRISHNA REDDY The Court delivered the following: JUDGMENT q HONOURABLE SRI JUSTICE P.SAM KOSI{YANDHON'BLE SRI JUSTICE LAXMI NARAYANA ALISHETTY INCOME TAX TRIBUNAL APPEAL NO.53 OF'2OO8 JUDGMENT: (per Hon'bLe Srt Justice P.Sam Koshg) The present appeal has been hled under Section 260-A ofIncome Tax Act, 1961 (for short, the "Act") assailing the orderpassed by Income Tax Appellate Tribunal, Bench-B, Hyderabad(for short "Tribunal") in ITA No.1087/Hyd/03, dated O3.08.2007for the Assessment Year 2OO3-O4. Vide impugned order, theorder preferred by the appellant stood rejected and in theprocess, the order passed by the Commissioner of Income Tax(Appeals), Hyderabad, for the assessment year 2OO3-04 wasalfirmed. 2. The whole issue raised by the appellant in the presentappeal is so far as the denial of exemption under Section 195(3)of the Act, in spite of there being an order passed by the JointDirector in this regard so far as the deduction of TDS in respectof remittances made by the appellant to US based company i.e.,M/s.IGTL Solutions (U.S.A.). PSK J & 1,,\A,JI lf) )\'o 53 of 2008I lf) )\'o 53 of 2008 l 3. At the outset, learned counsel for appellant [drew ][the]attention of this Court to [the ][documents, ][which ][were ][furllished]before the Appellate Tribunal i.e., the [order ][dated ][la.Oi,.2OO3]passed by the Joint Director of Income Tax-IV [(lnternational]Taxation), Ayakar Bhavan, [Mumbai, whereby the ][Joint ][Director]had permitted the authorities in [India ]to [receive ][sums ][r,r'ithout]deduction of income tax as is [required ]under [Section ][195(1) ][of]the Act. PSK J & 1,,\A,JI lf) )\'o 53 of 2008I lf) )\'o 53 of 2008 l 3. At the outset, learned counsel for appellant [drew ][the]attention of this Court to [the ][documents, ][which ][were ][furllished]before the Appellate Tribunal i.e., the [order ][dated ][la.Oi,.2OO3]passed by the Joint Director of Income Tax-IV [(lnternational]Taxation), Ayakar Bhavan, [Mumbai, whereby the ][Joint ][Director]had permitted the authorities in [India ]to [receive ][sums ][r,r'ithout]deduction of income tax as is [required ]under [Section ][195(1) ][of]the Act. 4. karned counsel for the appellant [contended ][that ][in ][spite]of specifrc certificate have not been [issued ][under ][Section ][195(3)]of the Act by the Joint Director of [the ][Department, ][the]authorities concerned have [made ]the [remittalces ][after]deduction of tax at source in [contravention ][to ][the ][afcrresaid]Circular dated 18.O2.2003. This [granting ][of ][exemption under]Section 195(3) of the Act in spite of [its ][appraisal ][lo ][the]authorities below, ignoring the same, [the ][Commissioner of]Income Tax (Appeals), so [also ][the ][Tribunal ][have ][decided ][the]matter against the assessee. 5. Today, when the matter is [taken ][up ][for ][hearing, ][l,:arned]counsel for appellant strongly [contended ][that ][once wh'en ][the]certificate was obtained from the Joint [Director ][so ][far ][as ][the] certiflcate was obtained from the Joint Director so far as thewaiver of deduction of TDS in respect of remittances is made toM/s.IGTL Solutions (USA) has not been considered, discussed,referred to either by the Commissioner of Income Tax (Appeals)or by the Tribunal. According to the appellant, the exemptionfrom deduction of tax at source was permissible under Section195 (3) of the Act, which appellant had availed and which wasalso granted by the respondent, but when it carne for deduction,they had made the remittances only after deduction of TDS wasmade. 6. Perusal of the pleadings would go to show that theappellant had been all along taking this stand both before theCommissioner of Income Tax (Appeals) and before the Tribunalthat they are not liable to make deductions for the reasons thatthey have an exemption already obtained by way of certifrcateunder Section 195(3) of the Act. In spite of the categorical standbeing taken, the two appellate forums for the reasons bestknown have not discussed, deliberated or relied upon the saidcertilicate at all. 7. Today, when the matter is taken up for hearing, the entirepaper-book that was hled before the Tribunal was made ( P-\,(.J & 1_.\.J.JI7'1..1 \'o 53 of 2008 available by the learned counsel for appellant and ono suchdocument therein is the certificate so issued under Siection195(3) of the Act, granting exemption to M/s.lGTL Solutions(USA) so far as receiving of remittances without deducr,ion ofincome tax at source. If the contents of the said documerrt is tobe accepted and on verihcation, found to be genuine, theconsequences would be that the entire remittances that havebeen made to M/s. IGTL Solutions (USA) would be non-taxableso far as TDS is concerned. Further, if the contents of th.e saidletter stands accepted, then the action on the part 'cf therespondent in carrying out deduction at source o:n theremittances made to M/s.lGTL Solutions (USA) would be per sebad. B. In view of the aforesaid factual matrix of the case, moreparticularly, taking note of the fact that there is a non-refr:renceor non-deliberation of the exemption so obtained under Section195(3) of the Act by the two forums below, we are r>f theconsidered opinion that it is a fit case where matter can beremitted back to the Tax Tribunal for considering thecontentions raised by the appellant so far as exemption thatthey have got under Section 195(3) of the Act insofar zts the x-E B. In view of the aforesaid factual matrix of the case, moreparticularly, taking note of the fact that there is a non-refr:renceor non-deliberation of the exemption so obtained under Section195(3) of the Act by the two forums below, we are r>f theconsidered opinion that it is a fit case where matter can beremitted back to the Tax Tribunal for considering thecontentions raised by the appellant so far as exemption thatthey have got under Section 195(3) of the Act insofar zts the x-E remittances that have been made to M/s.IGTL Solutions (USA) isconcerned. considering the fact that the order of the Tribunal isone, which was passed as early as on O3.OS.2OO7, it is expectedthat the Tribunal shall reconsider this matter, particularly,taking into consideration the exemption so gr€rnted to theappellant on LO.O2.2OO3. Let the Tribunal now decide thematter on priority basis within the outer limit of 9O days fromthe date of receipt of copy of this order. 9. Accordingly, Appeal stands allowed to the aforesaid extent.There shall be no order as to costs. 10. Pending miscellaneous applications, if any, shall standclosed. To, Sd/- M. VIJAYA BHASKERJOINT REGISIRAR/d'SECTION OFFICER //TRUE COPY// 1. The lncometax [Appellate ][Tribunal, ][Hyderabad Bench ' ] [' ][Hyderabad'] 2. The Commissioner [of ][lncome Tax (Appeals) ][V, ][Hyderabad'] 3. The Deputy [Commissioner ][of ][lncome ][Tax ][14(3) ][(TDS)' ][Hyderabad] 4. The Commissioner [of ][lncome Tax ][(Appeals)-V, ][Hyderabad] 5. One CC to SRI [S. ][RAVI' ][Advocate ] 6. One CC to [A. ] [REDDY, ][Advocate {OPUCI] 7. Two CD Copies HIGH COURTDATED:21 10912023 JUDGMENT!TTA.No.S3 of 2008 THE APPEALIS ALLOWED \oi"-\'1, [\ ]t,$\{ 1$t: [ST4a]€Yq(12* oes I