PER A.D. JAIN, JUDICIAL MEMBER: These are departments appeal for Assessment Year 1997-98 against the orders dated 06.03.2013, passed by the CIT (A)-I, New Delhi. ITA Nos.3322 & 3323/Del/2013
2. The Assessing Officer made additions of ` 35,54,49,000/- in the case of M/s Mideast India Ltd. and of ` 13,05,01,000/- in the case of M/s Mesco Pharmaceuticals Ltd., being the income derived by the respective permanent establishment of Mideast India Ltd. in Russia and Germany and of Mesco Pharmaceuticals Ltd. in Russia. The Assessing Officer made the additions on the ground that the department had gone in reference before the Honble High Court against the order of the Tribunal, whereby it was held that income of foreign PE, in Russia and Germany, was not chargeable to tax in India.
3. The Ld. CIT (A) deleted these additions, following the Tribunal orders in the cases of M/s PAVL Kulandagan Chettiar vs. ITO, as followed in the case of M/s Mesco Pharmaceuticals Ltd. for Assessment Year 1998-99.
4. Before us, the department contends that the Ld. CIT (A) has erred in deleting the additions correctly made by the Assessing Officer on account of profit earned by foreign branches of the assessees at Russia and Germany and Russia, respectively, operated as permanent establishment; that the Ld. CIT (A) has erred in following the decision of the Tribunal in the case of M/s PAVL Kulandagan Chettiar vs. ITO; that the Ld. CIT (A), while doing so, has wrongly not considered that as per sections 4 to 6 of the IT Act, in respect of an Indian company, all the global income of the company is taxable and where the assessee is operating Permanent Establishment in foreign countries, with whom DTAA is entered, the taxes paid by the Permanent Establishment in the foreign countries is to be deducted from the tax liabilities of the Indian company from its global income, as per the relevant Finance Act.
5. The ld. Counsel for the assessee, on the other hand, has placed reliance on the impugned orders. Attention has been drawn to the Order of the Honble Delhi High Court dated 15.12.2009 in the case of Mideast India Ltd. for Assessment Year 1998-99 (copy at pages 26-27 of the assessees paper book). ITA Nos.3322 & 3323/Del/2013
6. Having considered the matter, we find that the Honble Delhi High Court in the case of Mideast India Ltd. for Assessment Year 1998-99 has held as follows:- ITA No.1349/2009 In the detailed order passed by the Income Tax Appellate Tribunal, all aspects of the matter are duly considered, holding that the appellant, which is permanent establishment in USSR (since the case relates to the year 1991) and the income earned by the assessee company in USSR would not be taxable in India by virtue of Article 7 of Indo-USSR Double Taxation Avoidance Act (DTAA). It is also recorded that the assessee paid the tax in USSR for the relevant assessment year. Further finding of fact, which is noticed is that the Tribunal had decided the similar issue in assessees own case for the assessment years 1991-92, 1992-93 & 1993-94. Though the Department had filed Reference Petitions against that decision of the Tribunal, learned counsel for the assessee informs us that those References were returned unanswered by this Court. We also find that the Tribunal has relied upon the judgment of the Supreme Court in the case of PAVL Kulandagan Chettiar vs. ITO, [267 ITR 654]. Therefore, no substantial question of law arises in this appeal, which is accordingly dismissed. Sd/- A.K. SIKRI, J. Sd/- SIDDHARTH MRIDUL, J.
7. No decision to the contrary has been brought to our notice.
8. The Ld. CIT (A) has not committed any error in following the aforesaid order passed by the Honble jurisdictional High Court in the case of one of the present assessees, i.e., Mideast India Ltd. Therefore, finding no merit therein, the grievance sought to be raised by the department is rejected.
9. In the result, both the appeals filed by the department are dismissed. The order pronounced in the open court on 05.12.2013. Sd/- Sd/- [G.D. AGRAWAL] [A.D. JAIN] VICE PRESIDENT JUDICIAL MEMBER Dated,05th December, 2013. ITA Nos.3322 & 3323/Del/2013 Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT (A)
5. DR, ITAT AR, ITAT, NEW DELHI.