M/S.tata Teleservices Ltd.,Chennai-96 v. The Income Tax Officer, Tds Wardii(5), Wanaparthy Block Iii Floor

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 02.7.2019 CORAM : THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAMANDTHE HONOURABLE MRS.JUSTICE V.BHAVANI SUBBAROYAN TAX CASE APPEAL NO.411 OF 2019 M/s.Tata Teleservices Ltd.,Chennai-96. ...Appellant Vs The Income Tax Officer, TDS WardII(5), Wanaparthy Block III Floor,121, M.G.Road, Chennai-34....Respondent APPEAL under Section 260A of the Income Tax Act, 1961 to setaside the order dated 07.2.2019 made in ITA.No.339/Chny/2018 onthe file of the Income Tax Appellate Tribunal, Chennai 'B' Benchfor the assessment year 2007-08. against the order of theCommissioner of Income Tax (Appeals)-17, Nungambakkam, Chennai-34, dated 21.11.2017 made in ITA.No.347/2013-14/CIT(A)-17, andagainst the order of the Income Tax Officer, TDS Ward-II(5),Chennai-34, dated 05.04.2007 for the Assessment Year 2007-2008,made in TNN Number, CHET 02745B. For Appellant :Mr.Tarun Gulati, SC for Ms.Deepika Murali & Mr.Karthik SundaramFor Respondent :Mr.Karthik Ranganathan, SSC assisted by Mr.S.Rajesh Judgment was delivered by T.S.Sivagnanam,J This appeal, filed by the assessee under Section 260A of theIncome Tax Act, 1961 (for short, the Act), is directed againstthe order dated 07.2.2019 in ITA.No.339/Chny/2018 on the file ofthe Income Tax Appellate Tribunal, Chennai 'A' Bench for theassessment year 2007-08. The Tribunal, by the impugned order,set aside the order passed by the Assessing Officer dated05.4.2007 and the order passed by the Commissioner of Income Tax(Appeals)-17, Chennai-34 [for short, the CIT(A)] dated21.11.2017 and remanded the matter to the Assessing Officer. https://hcservices.ecourts.gov.in/hcservices/ 2. The assessee has filed this appeal by raising thefollowing substantial questions of law : “i. Whether the Tribunal's order isgrossly erroneous for not adjudicating thegrounds and contentions specifically raisedin the memorandum of appeal filed by theappellant in a manner contrary to the lawlaid down by this Court in CIT Vs. RamdasPharmacy [reported in (1970) 77 ITR 276]? ii. Whether the Tribunal's order isgrossly erroneous for not following thedecision of the Coordinate Bench in VodafoneEast Ltd. Vs. Additional CIT [reported in(2015) 61 Taxmann. Com 263] (KolkattaTribunal), which is in accordance with thelaw laid down by this Court in the case ofMadras Bar Association Vs. Central Board ofDirect Taxes [reported in (1995) 216 ITR240] and not adjudicating that the appellantis not liable to deduct tax at source underSection 194C of the Act on IUC payments madeto other telecom operators? iii. Whether the Tribunal erred infailing to consider that the appellant isnot an assessee in default in the light ofthe nil deduction certificates issued underSection 197 of the Act to the payees beingother telecom operators ? And iv. Whether the Tribunal erred inremitting the file back to the AssessingOfficer by neither adjudicating on thegrounds raised nor giving the appellant theliberty to raise the said grounds at a laterstage ? ” 3. We have heard Mr.Tarun Gulati, learned Senior Counselappearing on behalf of Ms.Deepika Murali and Mr.KarthikSundaram, learned counsel on record for the appellant andMr.Karthik Ranganathan, learned Senior Standing Counsel assistedby Mr.S.Rajesh, learned Standing Counsel appearing for therespondent. With consent, the main appeal itself is taken up forfinal disposal. 4. It is submitted by Mr.Tarun Gulati, learned Senior Counselappearing on behalf of the appellant that the Tribunal, though,in paragraph 3 of the impugned order, noted the submission of https://hcservices.ecourts.gov.in/hcservices/ 3. We have heard Mr.Tarun Gulati, learned Senior Counselappearing on behalf of Ms.Deepika Murali and Mr.KarthikSundaram, learned counsel on record for the appellant andMr.Karthik Ranganathan, learned Senior Standing Counsel assistedby Mr.S.Rajesh, learned Standing Counsel appearing for therespondent. With consent, the main appeal itself is taken up forfinal disposal. 4. It is submitted by Mr.Tarun Gulati, learned Senior Counselappearing on behalf of the appellant that the Tribunal, though,in paragraph 3 of the impugned order, noted the submission of https://hcservices.ecourts.gov.in/hcservices/ the assessee that they assailed application of Section 194C ofthe Act on interconnection usage charges (IUC) paid to othertelecom operators, in the operative portion of the order, theTribunal did not discuss the said issue nor rendered anyfinding. According to the learned Senior Counsel, on thecontrary, the Tribunal proceeded to consider the alternatesubmission of the assessee and to a certain extent, accepted thesubmissions of the assessee and ultimately, without expressingany opinion on the ground of the assessee that they were notliable to pay tax at source in respect IUC payments to varioustelecom providers, set aside the orders passed by the LowerAuthorities and remanded the matter to the file of the AssessingOfficer. 5. Mr.Tarun Gulati, learned Senior Counsel further submitsthat the assessee was not aggrieved by the direction of theTribunal remanding the matter to the Assessing Officer, but theyare concerned about the further direction issued by the Tribunalfor verifying as to whether the payees included the amountsreceived from the assessee in their returns of income and paiddue taxes thereon with a further direction to the assessee toproduce records in support of their plea before the AssessingOfficer. This, according to the learned Senior Counsel, is arestricted remand and not an open remand and all that theAssessing Officer is expected to do is to verify as to whetherthe payees included the amounts received from the assessee intheir returns of income and paid due taxes thereon. It is alsosubmitted that if this Court upholds the order of remand, itshould be an open remand enabling the assessee to raise all thepoints. The learned Senior Counsel has drawn the attention ofthis Court to the written submissions filed by the assesseebefore the Tribunal on 03.12.2018 wherein all the points werecanvassed and more particularly with regard to application ofSection 194C of the Act. 6. It is further submitted by the learned Senior Counselappearing on behalf of the assessee that even on merits, theissue is covered in favour of the assessee in the light of thedecision of the Kolkatta Bench of the Tribunal in the case ofVodafone East Ltd. Vs. Additional CIT [reported in (2015) 61Taxmann. Com 263]. It is also submitted that this decision wasnoted by the Tribunal when it heard the stay petition and passedorders on 16.3.2018 granting stay of 50% of the demand on theground that a similar issue was decided in favour of theassessee by the Kolkatta Bench of the Tribunal in the decisionin the case of Vodafone East Ltd. 7. Per contra, Mr.Karthik Ranganathan, learned SeniorStanding Counsel for the Revenue submits that a detailed orderhas been passed by the CIT(A) wherein all the contentions of the https://hcservices.ecourts.gov.in/hcservices/ assessee were taken into consideration including the decision ofthe Kolkatta Bench of the Tribunal in the case of Vodafone EastLtd. It is his further submission that if at all this Court isof the view that a verification is required to be done, thematter may be sent back to the Tribunal for considering themiscellaneous application filed by the assessee on 27.5.2019. 7. Per contra, Mr.Karthik Ranganathan, learned SeniorStanding Counsel for the Revenue submits that a detailed orderhas been passed by the CIT(A) wherein all the contentions of the https://hcservices.ecourts.gov.in/hcservices/ assessee were taken into consideration including the decision ofthe Kolkatta Bench of the Tribunal in the case of Vodafone EastLtd. It is his further submission that if at all this Court isof the view that a verification is required to be done, thematter may be sent back to the Tribunal for considering themiscellaneous application filed by the assessee on 27.5.2019. 8. After elaborately hearing the learned counsel on eitherside, we find that the Tribunal has not taken into considerationthe first submission made by the assessee with regard to theapplicability of Section 194C of the Act on the IUC paid to theother telecom operators. It is true that in paragraph 4 of theimpugned order, the Tribunal considered the alternate submissionof the assessee and made an observation that the argument of theassessee was correct and it could not be considered as anassessee in default. However, the Tribunal further qualifiedthis finding stating that the assessee's liability for interestwould also be limited period ending on the date, on which, thedeductees/payees had paid taxes. 9. In our considered view, if a litigant raises a legal issuebefore a court or a tribunal as a principal ground of challengeand without prejudice and not in derogation with the said plea,the litigant is also entitled to raise alternate submissions. Sofar as the taxation matters are concerned, the grounds raised bythe assessee can, at times, be contradictory and there is noreason to reject the grounds. In any event, the Tribunal oughtto have rendered a finding on the grounds raised by the assesseewith regard to the applicability of Section 194C of the Act onthe IUC paid to the other telecom operators. Had the Tribunalconsidered and rendered a finding that it was not convinced withthe submissions made, then, it would have been well justified toproceed to consider the alternate submissions. We find from theimpugned order that the Tribunal has not rendered any findingwith regard to the contentions advanced by the assessee relatingto the applicability of Section 194C of the Act. 10. On a reading of the paragraph 4 of the impugned order,one gets an opinion that the Tribunal remanded the matter to theAssessing Officer. The Tribunal set aside the orders of theLower Authorities in their entirety. Thus, if the remand is fora limited purpose, the Tribunal ought to have very wellindicated in its order. In our understanding, the remand orderpassed by the Tribunal is after setting aside the orders passedby the Lower Authorities and necessarily, the Assessing Officerhas to consider the matter afresh in its entirety. 11. It may be true that the Tribunal added a rider aftersetting aside the orders passed by the Lower Authorities statingthat a verification has to be done as to whether the payees included the amounts received from the assessee in their returnof income and paid due taxes thereon. In our considered view,the further direction issued by the Tribunal cannot be construedto be restrictive in nature thereby preventing the AssessingOfficer to consider all grounds and more particularly, when theTribunal has not rendered any finding on the applicability ofSection 194C of the Act. Hence, we are of the considered viewthat the order passed by the Tribunal should be and shall beread as an open remand to the Assessing Officer to consider allthe issues that were pleaded by the assessee before theTribunal. included the amounts received from the assessee in their returnof income and paid due taxes thereon. In our considered view,the further direction issued by the Tribunal cannot be construedto be restrictive in nature thereby preventing the AssessingOfficer to consider all grounds and more particularly, when theTribunal has not rendered any finding on the applicability ofSection 194C of the Act. Hence, we are of the considered viewthat the order passed by the Tribunal should be and shall beread as an open remand to the Assessing Officer to consider allthe issues that were pleaded by the assessee before theTribunal. 12. In the light of the above, the above tax case appeal isdisposed of by clarifying that the Assessing Officer shallconsider all the issues that may be raised by the assessee andtake a fresh decision on merits and in accordance with lawuninfluenced by any observations made in his order dated05.4.2007 or the order passed by the CIT(A) dated 21.11.2017.The substantial questions of law raised are left open. No costs. Sd/- Assistant Registrar(CS V)//True Copy// Sub Assistant RegistrarrsTo1.The Income Tax Appellate Tribunal, Chennai 'B' Bench,Chennai. 2.The Income Tax Officer, TDS Ward II(5), Wanaparthy Block III Floor, 121,M.G.Road, Chennai-34. 3.The Commissioner of Income Tax Appeal-17,Nungambakkam, Chennai-34.+1cc to Ms.Deepika Murali, Advocate, S.R.No.55034 TCA.No.411 of 2019 BR(CO)CS/30/07/2019