DIRECTOR OF INCOME TAX Vs. ERICSSON AB

JUDGEMENT

(1.) THE Revenue is aggrieved by the order of the Income Tax Appellate Tribunal (hereinafter referred to as "the ITAT") dated 20.07.2012 in several appeals preferred by the assessee for Assessment Years (AYs) 1999 -2000 to 2004 -05. Its grievance is that the ITAT erroneously examined the merits of the contentions and drew inferences in the assessee's favour which were entirely unwarranted.

(2.) THIS Court does not propose to discuss the facts in detail in view of the final order made. The assessee (Swedish company) is a subsidiary of LME. It entered into a contract with Indian telecom service providers during 1995 -97 for supply of telecommunication equipments which comprise hardware and software components. It claimed that it was not liable to tax under the provisions of Income Tax Act, 1961 (hereinafter referred to as "the Act") and also relied upon a Double Taxation Avoidance Agreement (DTAA) between India and Sweden. For previous year i.e. 1997 -98, the Revenue unsuccessfully brought to tax the consideration received by the assessee, towards the supply of equipments. The matter ultimately culminated in a reported decision of this Court in Director of Income Tax v. Ericsson (2012) : 343 ITR 470 (Del).

(3.) FOR the succeeding years, 1999 -2000 to 2004 -05, assessments were pending. Apparently for some years, re -assessment notices had been issued and matters proceeded. In these circumstances, a survey was conducted on 22.11.2007 in the premises of Ericsson India Limited (EIL), a subsidiary of LME. For the concerned year, the assessment was completed on 31.12.2007. For some years which this Court is concerned, the assessment had been completed earlier in the light of the previous assessments made for 1997 -98. Appeals were pending before the CIT (Appeals). The said authority took note of the materials collected during the course of survey under Section 133A and sought to use them in the assessee's pending appeals. The discussion, on the basis of which the CIT (Appeals) arrived at its findings, is to be found in para 3.1 to 3.3 of the order dated 23.02.2011. The assessee appealed to the ITAT for all these assessment years. In its common order - impugned order for these proceedings, the ITAT held that: - "The First Appellate Authority came to a conclusion that new facts/evidences were gathered during the survey U/S 133A and were also collected from Cellular operators u/s 133(6) of the Act much after the Order of the Special Bench of the Tribunal in assessee's own case for the A.Y. 1997 -98. The Ld. CIT(A), without confronting the assessee or the Assessing Officer tried to make out a case that the facts are different in these years. He summarized the new facts/evidences at para 3.3 of his order at pages 6 to 11. The basis on which this summary is arrived is not stated. A perusal of this summary demonstrates that the Ld.CIT(A) has not indicated as to what is the documentary evidences are relied upon by him for coming to a conclusion, that the facts of the current years are different from that of the earlier years. General observations are made and vague conclusions are drawn. The documents were not put to the assessee, nor explanations were called for from the assessee. The views of the assessee and the Assessing Officer on these new evidences are I necessary to form an opinion or draw conclusions on these documents. Surmises and conjectures are drawn. The nature of evidence found, the nexus the particular document/evidence has with the impugned Assessment Years, the inference that the CIT(A) seeks to draw from these documents and the reply of the assessee to such proposed, inferences are not brought out or discussed in the order. Under these circumstances we are unable to concur with the view of the CIT(A) that the facts and circumstances of the case in these Assessment Years before us, differ from the facts and circumstances of the case in the earlier. Assessment Years based on which the Jurisdictional High Court has delivered a judgment."