Pramod Kumar, A.M. - (1.) THESE three appeals relate to the same assessee and arise out of common set of facts. We, therefore, deem it expedient to dispose of all these appeals by this consolidated order, Out of these three appeals which are subject-matter of this order, ITA No 103/Cal/2001, filed by the assessee, and ITA No 237/Cal/2001, filed by the Revenue, are cross-appeals against the order dt. 28th Nov., 2000, passed by the CIT(A)-I Kolkata in the matter of order under Section 201(1A) r/w Section 194C of the IT Act, 1961. ITA No 238/Cal/01 pertains to penalty under Section 221 in the matter of same deduction issue. We will take up all the three appeals together.
(2.) In order to properly appreciate controversy requiring our adjudication, it is necessary to take a careful look at rather peculiar facts leading to this litigation before us. ITC Ltd. (hereinafter referred to as ITC) entered into an agreement with Pak~Indo-Lanka Committee (hereinafter referred to as PILCOM), organisers of 1996 World Cup Cricket Tournament, for sponsoring the said tournament. In consideration of being granted the sponsorship, ITC was required to make payment of UK � 8 million out of which 55 per cent was to be paid in British pounds and the balance 45 per cent was to be paid in Indian rupees. It was under these arrangements that the ITC made, besides other payments, following four payments to PILCOM which are subject-matter of this litigation before us. JUDGEMENT_6959_TLIT0_20020.htm However, before we come to the core issue regarding tax deductions from these payments, and Revenue's objections in the matter, we may briefly explain certain relevant developments which took place before these payments were made. It appears that on 9th May, 1995, the assessee tax deductor, with a view to ascertain its withholding tax liability from payments under the sponsorship arrangements, wrote a letter to the PILCOM which was responded to by PILCOM's convenor secretary Shri J. Dalmiya as follows: Thank you for your letter, dt. 9th May, 1995, regarding deduction of tax at source. We hereby inform you that the headquarters of PILCOM are at Dr. B.C. Roy Club House, Eden Gardens, Calcutta 700 021. In view of this, PILCOM has a resident status in India. We trust you would find the information useful. The first of these payments of Rs. 9,62,88,500 (being rupee equivalent of British pounds 19,25,000) became due and payable in July, 1995 and Revenue, in response to assessee tax deductor's application dt. 21st June, 1995, allowed the assessee tax deductor to make this payment without any deduction of tax at source. The No objection certificate issued by the Dy. CIT, Special Range 16, Kolkata, inter alia, read as follows : "I have no objection to ITC Ltd. 37 Chowringhee, Calcutta 700071 remitting sterling pounds 19,25,000 (sterling pounds Nineteen lakhs twenty-five thousand only) to Pak-Indo-Lanka Committee being sponsorship fees. The remitter (in his capacity as representative-assessee) and the person to whom money is remitted has no liabilities for the remittance referred to above......"
(3.) SIMILARLY, the assessee tax deductor was allowed to make remittance of Rs. 8,21,95,800 (being rupee equivalent of sterling pounds 15,40,000) without any deduction of tax at source. In the meantime, the assessee also made two payments in Indian rupees of Rs. 7,86,55,500 and Rs. 6,78,51,000 in the month of July 1995 and November 1995, respectively. Although the assessee did not obtain No objection certificates for making these payments, apparently there was no such procedural requirement for rupee payments, no taxes were deducted at source from these payments which admittedly were of similar nature as the sterling pound payments.;