NALCO COMPANY,USA vs. CIT (IT & TP), KOLKATA, KOLKATA

This appeal is time barred by 16 days. The assessee has filed an affidavit giving the reasons for the delay. Such reasons have been perused and found to be satisfactory. The delay is condoned and the appeal is admitted for hearing.

We have heard both the sides and gone through the relevant material on record. The ld. CIT held the assessment order passed u/s 143 of the Act on 29-02-2016 as erroneous and prejudicial to the interest of revenue inasmuch as the Headquarter Service Fees received by the assessee was claimed and accepted as not chargeable to tax. The ld. CIT opined that the amount ought to have been considered as “Royalty/Fees for included services” u/s.9(1)(vi)/9(1)(vii) read with Article 12 of the Double Tax Avoidance Agreement (DTAA) between India and USA and hence taxable. In reaching this conclusion, he also took into consideration the assessment order passed u/s 143(3) for the assessment year 2014-15 in which the amount of Head quarter service fee was held to be chargeable to tax.

Here it is pertinent to note that the ld. CIT took similar view in his order u/s 263 for the A.Y. 2011-12. Such order for the immediately preceding year came up for consideration before the Tribunal along with the instant appeal. We have passed a separate order in for such preceding year and allowed the assessee’s appeal by setting aside the revision order. While so holding, the Tribunal took note of the fact that the AO examined the issue; applied his mind to it; and then took a possible view of accepting the assessee’s claim, which was based on his own order passed u/s.143(3) for the assessment year 2010-11. Insofar as the assessment year under consideration is concerned, the AO had the assessment orders for the immediately preceding two assessment years, namely, 2010-11 and 2011-12, in both of which the assessee’s claim about non chargeability of the amount of Headquarter Service Fees was accepted.

It is worth mentioning that the ld. CIT also took support of the assessment order for the assessment year 2014-15 in canvassing a view that the amount should have been charged to tax for the year under consideration. The assessment order for the A.Y. 2014-15 was passed on 06-02-2017 much after the passing of the assessment order by the AO for the year under consideration.

Both the sides are agreeable that the facts and circumstances of the present appeal are mutatis mutandis similar to those of immediately preceding assessment years.

In the result, the appeal is allowed.