KELLY SERVICES INDIA PVT. LTD.,NEW DELHI vs. ADDL. CIT, SPECIAL RANGE- 5, NEW DELHI

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ITA 556/DEL/2019Status: DisposedITAT Delhi09 February 2023AY 2015-162 pages
AI SummaryWithdrawn

What did the Tribunal hold?

The assessee's counsel stated that the dispute had been settled under the Vivad se Vishwas Act, 2020, and submitted the relevant form. Based on this concession, the appeal was dismissed as withdrawn.

What were the facts?

The assessee appealed against the CIT(A)'s order confirming adjustments made by the AO, including disallowances for payments to Kelly US and Kelly Singapore, and additions for stale cheques. The assessee argued these payments were not Fee for Included Services (FIS) or Fees for Technical Services (FTS) and that Section 41(1) was wrongly invoked for stale cheques.

What were the issues?

Whether payments to foreign entities constituted FIS/FTS under DTAA and whether stale cheques were taxable under Section 41(1). The primary issue became the settlement of the dispute under the Vivad se Vishwas Act.

Which sections of the Income-tax Act were involved?

Section 41(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘D’, NEW DELHI

Before: SH. N. K. BILLAIYA & SH. ANUBHAV SHARMA

Hearing: 09/02/2023Pronounced: 09/02/2023

PER N. K. BILLAIYA, AM:

1.

This appeal by the assessee is preferred against the order of the CIT(A)-36, New Delhi dated 10.10.2018 pertaining to A.Y.2015-16.

2.

The grievance of the assessee read as under :-

1. 1. That on facts and circumstances of the case and in law, the Assessing Officer ("AO") erred in completing the assessment of the Appellant at an income of INR 2,70,61,936 as against returned loss of INR 15,34,501. The CIT(A) has further erred in arbitrarily confirming the adjustments made in the assessment order by the AO.

2. That on facts and in circumstances of the case and in law, Ld. CIT(A) has erred in upholding the disallowance made by Ld. AO of INR 1,13,46,730 towards pro- rates paid to Kelly Services Inc., ('Kelly US') without appreciating the fact that these services are not covered under the definition of fee for included services ('FIS') as per Article 12(4) of the Double Taxation Avoidance Agreement between India - USA ('India- US DTAA').

2.1. That on the facts and circumstances of the case and in law, Ld. CIT(A) has erred in upholding the disallowance made by Ld. AO on the basis that services rendered by Kelly US 'make available' technical knowledge or know-how or skill to the Appellant and hence are taxable as FIS under Article 12(4) of India - US DTAA.

3. That on the facts and circumstances of the case and in law, Ld. CIT(A) has erred in upholding the disallowance made by Ld. AO of INR 1,56,25,880 paid to Kelly Services Pte. Ltd. ('Kelly Singapore') on account of Intercompany Divisional Charges without appreciating the fact that these services are not covered under the definition of fee for technical services ('FTS') as per Article 12(4) of the Double Taxation Avoidance Agreement between India - Singapore (Tndia- Singapore DTAA').

That on the facts and circumstances of the case and in law, Ld. CIT(A) has erred in upholding the disallowance of Intercompany divisional charges made by AO, being in the nature of Fees for Technical Services ('FTS') under Article 12(4) of the India- Singapore DTAA without appreciating the fact that services do not make available technical knowledge, skill etc.

4. That on the facts and circumstances of the case and in law, Ld. CIT(A) erred in upholding the addition made by Ld. AO of Rs. 16,23,827 being cheques issued by the Appellant but not presented for payment (stale cheques) by the recipients, incorrectly invoking the provisions of Section 41(1) of the Act.

4.1. That on the facts and circumstances of the case and in law, the Ld. AO/ Ld. CIT(A) erred in not appreciating the fact that the Appellant has not written back the amount pertaining to such stale cheques in the books of account.

3.

At the very outset the Counsel for the assessee stated that the quarrel has been settled under the VSV Act, 2020 and submitted form No.5 issued by the department.

4.

On such concession the appeal is dismissed as withdrawn. 5. Decision announced in the open court on 09.02.2023.

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