DDIT(International Taxation)-4(2), Mumbai v. M/s Panasonic Aviation Corporation
[Citation -2016-LL-0928-55]

Citation 2016-LL-0928-55
Appellant Name DDIT(International Taxation)-4(2), Mumbai
Respondent Name M/s Panasonic Aviation Corporation
Court ITAT-Mumbai
Relevant Act Income-tax
Date of Order 28/09/2016
Assessment Year 2008-09
Judgment View Judgment
Keyword Tags head office expenditure • deduct tax at source • levy of interest • indian currency • non-resident
Bot Summary: It is observed that the assessee is a company incorporated in USA which set up branch office in India to provide technical, maintenance services in respect of in-flight entertainment system installed in aircrafts operated by Jet Airways India Limited. Certain employees of the assessee-company from USA frequently traveled in India for undertaking activities as per contract with Jet Airways. The first question is as to whether the amount spent on air tickets, domestic expenses in respect of loading, boarding and conveyance of such employees from USA should be considered u/s 44C. It has been recorded by the Assessing Officer in para 6 of the order that : This expenditure was incurred by the employees of PAC, US in India, in Indian currency, and subsequently reimbursed to them in foreign currency. Section 44C talks of deduction of head office expenses in the case of non- residents. Clause of Explanation to this section defines head office expenditure to mean executive and general administration expenditure incurred by the assessee outside India, including .......... A bare perusal of the definition of head office expenditure in section 44C makes it manifest that only the expenditure incurred outside India can be brought within the purview of this provision. From the reproduction of the part of the assessment order, it is clear that the Assessing Officer himself admitted that this amount was spent by the employees of PAC, US in India, in Indian currency. As the amount in question represents the expenses incurred by head office employees exclusively for rendering services in India, this cannot be covered within the ambit of section 44C from this angle also.


IN INCOME TAX APPELLATE TRIBUNAL C , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI PAWAN SINGH, JM ITA No.525/Mum/2014 (Assessment Year :2008-2009) DDIT(International Taxation)-4(2), Vs. M/s Panasonic Mumbai Aviation Corporation, C/o.SRBC & Associates LLP, 14 t h Floor, Ruby, 29, Senapati Bapat Marg, Dadar(W ), Mumbai-28 PAN/GIR No. : AAECP 2283 P (Appellant) (Respondent) Revenue by : Shri Awungshi Gimson Assessee by : Shri Nikhil Tiwari Date of Hearing : 23/08/2016 Date of Pronouncement 28/09/2016 ORDER PER R.C.SHARMA (A.M): This is appeal filed by revenue against order of CIT(A), Mumbai, for assessment year 2008-200, in matter of order passed u/s.143(3) r.w.s.144C of I.T.Act. 2. At outset, ld. AR placed on record order of Tribunal dated 28/03/2013 in assessee s own case for assessment year 2007-08, wherein both issues were decided in favour of assessee. issue with regard to leviability of interest u/s.234B in case of non-resident, has been decided by Tribunal at para 9, which reads as under :- 2 ITA No.525/14 Ground no.9 is about levy of interest ills 234B. Having heard rival submissions and perused relevant material on record we find that issue of charging interest u/s 234B in present case is no more res integra in view of judgment of Hon'ble jurisdictional High Court in case of Director of Income-tax (International Taxation) v. NGC Network Asia LLC [(2009) 313 ITR 187 (Born.)] in which it has been held that when duty is cast on payer to deduct tax at source, on failure of payer to do so, no interest can be charged from payee assessee U/S 234B. same view has been reiterated in DIT (IT) v, Krupp UDHE GmbH[(2010) 38 DTR (Bom.) 251]. As assessee before us is non-resident, naturally any amount payable to it which is chargeable to tax under Act, is otherwise liable for deduction of tax at source. In that view of matter and respectfully following above precedents, we hold that no interest can be charged u/s 234B and 234C of Act. This ground is allowed. 3. Ground with regard to applicability of section 44C has been decided by Tribunal vide para 4 which reads as under :- 4. We have heard rival submissions and perused relevant material on record. It is observed that assessee is company incorporated in USA which set up branch office in India to provide technical, maintenance services in respect of in-flight entertainment system installed in aircrafts operated by Jet Airways India Limited. Certain employees of assessee-company from USA frequently traveled in India for undertaking activities as per contract with Jet Airways. It is in this connection that said sum was incurred on such employees visiting India. first question is as to whether amount spent on air tickets, domestic expenses in respect of loading, boarding and conveyance of such employees from USA should be considered u/s 44C. It has been recorded by Assessing Officer in para 6 of order that : "This expenditure was incurred by employees of PAC, US in India, in Indian currency, and subsequently reimbursed to them in foreign currency". Section 44C talks of deduction of head office expenses in case of non- residents. Clause (iv) of Explanation to this section defines "head office expenditure" to mean "executive and general administration expenditure incurred by assessee outside India, including ..........". bare perusal of definition of head office expenditure in section 44C makes it manifest that only expenditure incurred outside India can be brought within purview of this provision. From reproduction of part of assessment order, it is clear that Assessing Officer himself admitted that this amount was spent by employees of PAC, US "in India, in Indian currency". In view of this it is vivid that provisions of section 44C cannot apply. More over it is seen that section 44C refers to common head office expenses and cannot encompass expenses exclusively incurred by head office for Indian branch. 3 ITA No.525/14 Mumbai Bench of Tribunal in case of Addl.DIT (IT) v. Bank of Bahrain and Kuwait [(2011) 44 SOT 693 (Mum.)] has held so. As amount in question represents expenses incurred by head office employees exclusively for rendering services in India, this cannot be covered within ambit of section 44C from this angle also. 4. It is pertinent to mention here that appeal filed by revenue against order of Tribunal dated 28.3.2013 before Hon ble Bombay High Court has been dismissed by Hon ble Bombay High Court vide its order dated 5-10-2015 with regard to addition made u/s.44C. As facts and circumstances during year under consideration are same, respectfully following order of Tribunal in assesee s own case, as quoted above, we do not find any infirmity in order of CIT(A). 5. In result, appeal of revenue is dismissed. Order pronounced in open court on this 28/09/2016. sd/- sd/- PAWAN SINGH R.C.SHARMA JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated 28/09/2016 .pkm, PS Copy of Order forwarded to : 1. Appellant 2. Respondent. 3. CIT(A), Mumbai. 4. CIT BY ORDER, 5. DR, ITAT, Mumbai 6. Guard file. //True Copy// (Asstt. Registrar) ITAT, Mumbai DDIT(International Taxation)-4(2), Mumbai v. M/s Panasonic Aviation Corporation
Report Error