DECIDED BY: ITAT, MUMBAI BENCH `L’, IN THE CASE OF: Hindalco Industries Ltd. Vs. DCIT(IT), APPEAL NO: ITA Nos. 3667 and 4684/Mum/2005, 6923/Mum/2006 , DECIDED ON May 14, 2010
ORDER
PER N. V. VASUDEVAN, JM:-
1. Therein after referred to as Hindalco}; while ITA No. 4968/Mum/2005 is an appeal by the revenue. Both these appeals are directed against the Hindalco Industries Limited order dated 31.3.2005 of learned CIT(A)-XXXI, Mumbai relating to A.Y. 2001-02 arising out of proceedings u/s. 147 of the Act read with section 163 of the Act.
2. ITA No. 3667/Mum/2005 is an appeal by Hindalco against the order dated 21.2.2005 of learned CIT(A)-XXXIII, Mumbai relating to A.Y. 2001-02; whereby learned CIT(A) confirmed the order of the Assessing Officer passed u/s. 163 of the Act, treating Hindalco as representative assessee of M/s. Alcan Inc (Canada).
3. Facts and circumstances under which, these appeals arise for consideration are as follows :-
Alcam Aluminum Limited (Alcan) is a company incorporated under the laws of Canada. After taking necessary approval from the Reserve Bank of India (RBI) from time to time, Alcan had acquired 3,88,44,324 shares in Indian Aluminum Company Limited (Indal) over a period of time. Alcan has agreed to sell its entire holdings in Indal at an agreed price of Rs. 190/- per share to Hindalco. Alcan being a non-resident company and holding shares in a company incorporated in India is governed by the provisions of section 45 read with section 48 of the Income Tax Act, 1961 (ITA). Therefore it is liable to pay tax in respect of gains made from sale of shares in Indal. Under the provisions of section 195 of the Act, any person responsible for paying to a non-resident any sum chargeable to tax under the Act has an obligation to deduct income tax at the time of making payment at the rates in force. Under section 197(1) of the Act the recipient of the payment can make an application to the Assessing Officer for issue of a certificate regarding no deduction of tax or deduction of tax at a lower rate by the person making payment. If the Assessing Officer is satisfied with such claim by the recipient of the payment, he shall issue a certificate as may be appropriate. On the basis of such certificate the person making payment shall deduct tax at rates specified in such certificate.
4. Alcan filed an application dated 26.4.200 u/s. 197(1) of the Act before the Assessing Officer praying that the Assessing Officer issue a requisite certificate u/s. 197(1) of the Act. Alcan computed it’s tax liability on sale of shares to Hindalco as follows :-
