Karnataka H.C : The DTAA Clause 23 entered into by the Indian Government with the Canadian Government as well as the Thailand Government the income which fall part of total turnover and the consequential TDS claimed, in Canada and Thailand cannot be allowed, in India when computing the total deduction

High Court Of Karnataka

CIT vs. Infosys Technologies Ltd.

Assessment Year : 1994-95

Section : 263

D.V. Shylendra Kumar And H.S. Kempanna, JJ.

IT Appeal No. 3099 Of 2005

January 3, 2012

JUDGMENT

1. In this appeal by the Revenue u/s. 260-A of the Income Tax Act, 1961, the following substantial questions of law have been posed for our answer :-

“1. Whether the Tribunal was correct in holding that the commissioner exercising jurisdiction under Section 263 of the Act by holding that the Assessing Officer should rework the credit in respect of Canadian and Thailand Tax claimed under Double Taxation Avoidance Agreement (DTAA) without specifying the error in the original order sought to be revised and how it was erroneous and prejudicial to the interest of the revenue.

2. Whether the Tribunal committed an error in failing to appreciate that in accordance with the DTAA Clause 23 entered into by the Indian Government with the Canadian Government as well as the Thailand Government the income which fall part of total turnover and the consequential TDS claimed, in Canada and Thailand cannot be allowed, in India when computing the total deduction.

3. Whether the Tribunal committed an error in holding that the judgment of the Hon’ble Supreme Court in the case of Hind Wire Industrial Ltd. cannot be mode applicable when jurisdiction under Section 263 of the Act is invoked.”

2. The assessee is a company and the assessment year is 1994-95. The assessment order is dated 27.2.1997 and this was the subject-matter of a revisional order dated 20.2.2001 passed by the Commissioner of Income Tax exercising suo motu revisional powers u/s. 263 of the Act and the order came to be passed in common along with the assessment orders for the years 1995-96 and 1996-97 in respect of the very assessee.

3. Though these three questions are posed for our answer as arising out of common order passed by the Tribunal dated 2.6.2005 and insofar as the present appeal is concerned arising out of ITA No. 226/Bang./2001, whereunder the Tribunal allowed the appeal of the assessee by setting aside the revisional order of the Commissioner on the ground of limitation for this assessment year apart from other grounds in respect of the order insofar as it related to subsequent assessment years.

4. While the Revenue is in appeal in respect of the order of the Tribunal relating to all the three assessment years 1994-95, 1995-96 and 1996-97, in this appeal we are examining only the question of limitation i.e. the third question for the purpose of disposal of this appeal as if this question is answered against the Revenue irrespective of the answers to the other two questions, this appeal inevitably has to be dismissed. Therefore, we are relegating to examine the other two questions for the consideration in other two appeals against the revenue viz. ITA No. 3098/05 and ITA No. 3160/05. In this appeal, we examine the question regarding limitation.

5. The order of the Commissioner on the face of it and undisputedly is beyond two years from the date of the assessment order which is dated 27.2.1997. However, the stand of the Revenue, and submission of Sri. Indrakumar, learned Senior Counsel appearing for the Revenue is that the assessing order was the subject-matter of an appeal and succeeded to some extent while giving effect to the directions of the Appellate Commissioner, the assessing authority had passed art order afresh on 31.3.1999, but with regard to the deduction permitted in respect of computation of tax liability of the assessee. under the Act and by giving relief in respect of that tax paid by the assessee in respect of the income earned in Canada and for which some amount, had been deducted at source etc. which amount had been indicated by the assessee and claimed relief for the proportionate amount, that amount had remained the same even after the remission order issued by the Appellate Commissioner and consequential order passed by the Appellate Authority on 31.3.1999.

6. Though Sri. Indrakumar would point this a circumstance to urge that the starting point for computation of period of limitation of two years should be taken as 31.3.1999, it is vehemently opposed to by Sri. Sarangan, learned counsel for the assessee by pointing cut that there was no occasion for the Commissioner to think or treat this to be the starting point as this fact was very much on record ever since the order came into existence on 21.2.1997 and had not underwent any variance, more so, to the detriment of the Revenue.

7. After examination of the fact and legal position we are quite satisfied that the order passed by the Commissioner in exercise of the revisional jurisdiction on 20.2.2001 is clearly out of time insofar as it relates to order dated 27.2.1997 relating to the assessment year 1994-95. Therefore, the tribunal was very correct in setting aside the order of the Commissioner on this ground. Though the question as framed is not explicit and is rather an indirect one, it has been answered. Accordingly, the question is answered in the negative and against the revenue.

The appeal is dismissed.

[Citation : 341 ITR 290]

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