Revlon Mauritius Ltd, Mumbai vs Assessee
- CitationITA No. 588/Mum/2013
Ratio decidendi
The rule this decision rests on
The Appellate Authority cannot dismiss an appeal on the merits merely because the assessee was absent on the date of hearing; the appeal must be decided on its merits, and a summary dismissal for non-appearance, resting on presumptions about the assessee's lack of interest, is not a permissible disposal. Where the Assessing Officer, by an order under section 154 of the Income Tax Act, has rectified a mistake apparent from the record and accepted the assessee's position on the applicable rate of tax, the grievance that formed the subject of the pending appeal is no longer live, and the appellate proceedings founded on that grievance become infructuous. Interest chargeable under section 234B falls away where the tax liability is reduced to the rate accepted by the Assessing Officer, so that an appeal by the Revenue challenging the deletion of such interest is rendered infructuous.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
M/s. Revlon Mauritius Ltd. Dy. Director of Income Tax C/o Pricewaterhouse Coopers (International Taxation), 2(1) Pvt. Ltd., PwC House, Plot 18/A Vs. Scindia House, Ballard Estate Guru Nanak Road (Stn. Road) N.M. Road, Mumbai 400038 Bandra (W), Mumbai 400050 PAN - AACCR7298E Appellant Respondent
ITA No. 1290/Mum/2013 (Assessment Year: 2009-10)
Dy. Director of Income Tax M/s. Revlon Mauritius Ltd. (International Taxation), 2(1) C/o Pricewaterhouse Coopers Scindia House, Ballard Estate Vs. Pvt. Ltd., PwC House, Plot 18/A N.M. Road, Mumbai 400038 Guru Nanak Road (Stn. Road) Bandra (W), Mumbai 400050 PAN - AACCR7298E Appellant Respondent
Assessee by: Shri Dhanesh Bafna & Shri Arpit Agrawal Revenue by: Shri Love Kumar
Date of Hearing: 24.02.2015 Date of Pronouncement: 27.02.2015
ORDER
Per D. Manmohan, V.P.
These cross appeals are directed against the order dated 11.11.2012 passed by CIT(A)-11, Mumbai and they pertain to AY 2009-10.
2. Facts necessary for disposal of the appeal are stated in brief. Assessee is a foreign company incorporated in Mauritius and is a tax resident of Mauritius. For the year under consideration it declared total income of `8.40 crores. In the original return of income assessee claimed that tax is payable on royalty income at 15%. This rate is specified in Article 12 of India- Mauritius DTAA, as per which the maximum tax rate is prescribed on the 2 ITA No. 588 & 1290/Mum/2013 M/s. Revlon Mauritius Ltd.
gross amount of royalties arising in India and payable to a tax resident of Mauritius. Though it was claimed that the rate would be 15% but there is no specific column in the E-return filed, consequent to which the AO proceeded to raise a demand of `3.41 crores including surcharge, etc. which was on account of the following adjustment; i.e. levy of tax at 40% instead of 15% on the royalty income earned by the assessee.
3. Aggrieved, assessee filed an appeal before the CIT(A) and simultaneously a petition under section 154 of the Act before the AO. Since petition under section 154 was pending, appeal filed before the CIT(A) appears to have been not taken up for hearing for some time. In the meantime the AO passed an order under section 154 of the Act wherein he had accepted the plea of the assessee and, vide order dated 25.10.2012, the tax payable thereon was reworked out. However, the appeal before the CIT(A) was posted for hearing on 29.10.2012 and on account of non-appearance on the part of the assessee the learned CIT(A) sought to dismiss the appeal by following the decision of the Hon'ble Bombay High Court dated 17.09.2010 in the case of M/s. Chemipol vs. Union of India in Central Excise Appeal No. 62 of 2009. Detailed discussion in this regard indicates that if there is no appearance on the part of the assessee on the date fixed for hearing it has to be presumed that the assessee is not interested in pursuing the appeal and the appeal can be summarily dismissed on that count. However, in order to comply with the formality of dismissing the appeal on merit he observed that the assessee has not even shown the agreement or document to specify that the payment received is assessable as royalty and to show that the maximum rate of 15% is applicable thereon. Assessee is aggrieved by the order passed by the CIT(A) and therefore preferred an appeal before us. Since the CIT(A) deleted the interest levied under section 234B, Revenue is in appeal before us.
4. At the time of hearing the learned counsel for the assessee placed before us a copy of the order passed under section 154 of the I.T. Act to submit that the AO noticed that there is a mistake apparent on record and accepted the plea of the assessee that on royalty income the maximum rate of tax applicable would be 15%. Since the AO examined the record and accepted the same, assessee has no grievance; hence the order passed by 3 ITA No. 588 & 1290/Mum/2013 M/s. Revlon Mauritius Ltd.
the CIT(A) does not stand. Even otherwise the CIT(A) was not justified in proceeding to dispose of the appeal exparte by raising several presumptions and in particular by applying the decision of the Hon'ble Bombay High Court in the case Chemipol overlooking the fact that the Hon'ble Bombay High Court in a later decision, in the case of Bharat Petroleum 359 ITR 371, observed that the Appellate Authority has no power to dismiss an appeal for non-appearance, since matter has to be decided on merits.
5. We have heard the learned D.R. also in this regard and carefully perused the record. It is not in dispute that the income earned by the assessee is in the form of royalty and the AO has not disputed the fact that the India-Mauritius treaty is applicable to royalty income and accepted the rate of 15% in the order passed under section 154 of the Act. Consequent to the order passed under section 154 no grievance can said to be pending before the CIT(A). We, therefore, vacate the order passed by the CIT(A) and held that in the light of the factual findings of the AO the tax rate applicable to the royalty income received by the assessee is 15%, in which event the appeal filed by the Revenue also becomes infructuous because there is no interest chargeable under section 234B of the Act. The appeals are disposed off accordingly.
Order pronounced in the open court on 27th February, 2015.
Sd/- Sd/- (D. Karunakara Rao) (D. Manmohan) Accountant Member Vice President
Mumbai, Dated: 27th February, 2015
Copy to:
1. The Appellant 2. The Respondent 3. The CIT(A) - 11, Mumbai 4. Director of Income Tax (IT)-1, Mumbai 5. The DR, "D" Bench, ITAT, Mumbai By Order
//True Copy// Assistant Registrar ITAT, Mumbai Benches, Mumbai n.p.
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