ASST CIT 16(2), MUMBAI vs. BSR AND CO. LLP, MUMBAI

O R D E R PER BENCH 1. These appeals are filed by revenue against different orders of the Learned Commissioner of Income Tax (Appeals)-5, Mumbai [hereinafter in short “Ld.CIT(A)”] dated 04.10.2016, 05.10.2016 and 05.10.2016 for the A.Y. 2012-13.

ITA.No. 360/MUM/2017 (A.Y. 2012-13) ITA.No. 362/MUM/2012 (A.Y. 2012-13) 3. In both these appeals, revenue has raised following identical grounds except for change in figures. Grounds raised in ITA.No.360/MUM/2017 are reproduced below: -

Page No. 2 , 361 & 362/MUM/2017 (A.Y. 2012-13) M/s. BSR and Company& Other group concerns “1. On the facts and in the circumstances of the case and in law, whether the Ld.CIT(A) was justified in deleting the disallowance of Rs. 19,18,003/u/s. 40(a)(i) being professional fees paid outside India without deduction of tax at source; 2. On the facts and circumstances of the case and in law, whether the Ld. CIT(A) was justified in directing to delete the disallowance of Rs. 72,93,039/- made by the Assessing Officer (AO) u/s 40(a)(ia) of the Income Tax Act in respect of payment made to KPMGI Co-operative, Switzerland (henceforth, KPMGI for the sake of brevity/without appreciating that the said receipts in the hands of KPMGI are taxable in India as Royalty Income and as such the tax is required to be deducted on this payment u/s 195 of the IT Act, 1961.

3. On the facts and circumstances of the case and in law, whether the Ld. CIT (A) was justified in holding that KPMGI is a mutual association of the assessee concern and hence its receipts would not be taxable in India without appreciating that the concept of mutuality within concerns operating on multi-national forum is non-existing either under Income-tax Act or under respective Double Taxation Avoidance Agreements (DTAA) and hence, the payments to KPMGI are rightly held as royalty payments.

4. On the facts and circumstances of the case and in law, whether the Ld. CIT (A) was justified in holding that the payments made to KPMGI are not taxable in India without appreciating that as per the Sublicense Agreement entered into by the assessee company with KPMGI on 1.9.2007, the assessee was given right, license and privilege to use the KPMG Marks in India and hence the payments to KPMGI do constitute royalty payments, on which tax was supposed to be deducted by the assessee company.

5. The appellant prays that order of the CIT (A) on the above grounds to be set aside and that of the Assessing Officer restored.

6. The appellant craves leave to amend or alter any ground or add a new ground which may be necessary."

4. At the time of hearing, Ld. AR of the assessee submitted that tax effect on the issue in the present appeals is below₹.50 Lacs and in view of the CBDT Circular No. 17/2019 dated 08.08.2019 in Page No. 3 , 361 & 362/MUM/2017 (A.Y. 2012-13) M/s. BSR and Company& Other group concerns F.No.279/Misc.142/2007-ITJ (Pt), the appeals of the Revenue are not maintainable. Ld. AR of the assessee submitted the computation of tax effect for both the appeals which is reproduced below: - ITA.No. 360/Mum/2017 BSR and Company AY 2012-13 Computation of tax effect Computation of Tax effect Total Tax on Tax on Total Education Total Income assessed Particulars Income @ cess @3% (INR) Income INR 30% INR (A) INR(B) (A+B) Assessed Income as per Asst 95,616,262 28,684,879 860,546 29,545,425 Order dated 16-Feb-2015 Income as per Return of 86,405,220 25,921,566 777,647 26,699,213 Income filed on 28 September 2012 Additions made 9,211,042 Tax Effect 2,846,212 ITA.No. 362/Mum/2022 BSR and Co AY 2012-13 Computation of Tax effect Total Tax on Tax on Total Education Total Income assessed Particulars Income @ cess @3% (INR) Income INR 30% INR (A) INR(B) (A+B) Assessed Income as per Asst 80,579,979 24,173,994 725,220 24,899,214 Order dated 26-Feb-2015 Income as per Return of Income 73,725,330 22,117,599 663,528 22,781,127 filed on 28 September 2012 Additions made 6,854,649 Tax Effect 2,118,087

Page No. 4 , 361 & 362/MUM/2017 (A.Y. 2012-13) M/s. BSR and Company& Other group concerns 5. On the other hand, Ld. DR also agreed with the above submission of the Ld. AR of the assessee.

ITA.No. 361/MUM/2017 (A.Y. 2012-13) 8. Revenue has raised following grounds in its appeal: - “1. On the facts and in the circumstances of the case and in law, whether the Ld.CIT(A) was justified in deleting the disallowance of Rs. 2,50,08,400/- u/s 40(a) being professional fees paid outside India without deduction of tax at source.

2. On the facts and circumstances of the case and in law, whether the Ld. CIT(A) was justified in directing to delete, the disallowance of Rs. 5,49,13,305/- made by the Assessing Officer (AO) u/s 40(a)(a) of the Income Tax Act in respect of payment made to KPMGI Co-operative, Switzerland (henceforth, KPMGI for the sake of brevity)without appreciating that the said receipts in the hands of KPMGI are taxable in India as Royalty Income and as Page No. 5 , 361 & 362/MUM/2017 (A.Y. 2012-13) M/s. BSR and Company& Other group concerns such the tax is required to be deducted on this payment u/s 195 of the I.T. Act, 1961.

4. On the facts and circumstances of the case and in law, whether the Ld. CIT (A) was justified in holding that the payments made to KPMGI are not taxable in India without appreciating that as per the Sublicense Agreement entered into by the assessee company with KPMGI on 1.9.2007, the assessee was given right, license and privilege to use the KPMG Marks in India and hence the payments to KPMGI do constitute royalty payments, on which tax was supposed to be deducted by the assessee company.

5. The appellant prays that order of the CIT (A) on the above grounds to be set aside and that of the Assessing Officer restored.

6. The appellant craves leave to amend or alter any ground or add a new ground which may be necessary."

9. With regard to Ground No. 1 which is in respect of payment made to associate concerns constitute as independent personal services and there is no requirement to deduct tax in India. Ld. AR brought to our notice on similar issue relating to same parties, the Coordinate Bench has considered in assessee’s own case that the issue of “whether the payment made to associate concerns constitute as independent personal service and as such there is no requirement to deduct tax India” and decided in favour of the assessee in previous and subsequent

Page No. 6 , 361 & 362/MUM/2017 (A.Y. 2012-13) M/s. BSR and Company& Other group concerns assessment years. Ld.AR of the assessee relied on following decisions in its own case: - a. DCIT v. M/s. BSR and Co. LLP., in ITA.No. 723, 724, 725, 726/Mum/2023 dated 06.06.2023. b. DCIT v. M/s. BSR and Co. LLP in ITA.No. 2549/Mum/2018 dated 15.06.2022. c. ACIT v. BSR & Company LLP in ITA.No. 4533, 4534, 4535 & 4536/Mum/2016 dated 05.12.2018. d. ACIT v. M/s. BSR & Co. in ITA.No. 1917/Mum/2013 dated 06.05.2016. e. DCIT v. M/s. KPMG in ITA.No. 2493/Mum/2012 dated 07.04.2017.

10. Ld. AR brought to our notice relevant Paras and copies of the orders are placed on record.

11. On the other hand, Ld.DR relied on the orders of Ld CIT(A) and the Assessing Officer.

Page No. 8 ITA Nos. 360, 361 & 362/MUM/2017 (A.Y. 2012-13) M/s. BSR and Company& Other group concerns Sr. Amount in Description of Name of the Payee Remarks No. INR Services 1 KPMG Corporate Review of Covered in favour of taxpayer by: 1. 1,81,560 Finance P. Ltd regulatory filings Tribunal order taxpayers own cases (Singapore) for AY 2013 - 14 (ITA No. (Company) 2549/M/2018) (refer para 7 to 12 on pages 6 to 10 of the case law compilation) 2 KPMG Services Pte Taxation / Audit Covered in favour of taxpayer by: 1. Ltd. (Singapore) 1,77,729 Services Tribunal order taxpayers own cases (Company) for AY 2013 - 14 (ITA No. 2549/M/2018) (refer para 7 to 12 on pages 6 to 10 of the case law compilation) 3 13,23,900 Tax Advisory SomekhChaikin Covered in favour of taxpayer by: 1. (Israel) (Firm of Services Tribunal order taxpayers own cases Individuals) for AY 2008 - 09 (ITA No. 2843/M/2014) (refer para 4.8 on page 40 of the case law compilation) (Similar to payments made to KPMG Ireland) 4 1,82,124 KPMG IFRG Ltd. (UK) Accounting Covered in favour of taxpayer by: 1. (Company) Advisory Services Tribunal order taxpayers own cases for AY 2013 - 14 (refer para 7 to 12 on pages 6 to 10 of the case law compilation) - (Similar payments to KPMG UK Plc) 2. Tribunal order taxpayers own cases for AY 2010 - 11 (ITA No. 4536/M/2016 & (refer para 17 page 24 and refer 5 & 6 pages 17 to 22 of the case law compilation) 5 KPMG LLP (UK) 17,87,793 Transfer pricing Covered in favour of taxpayer by: 1. (Firm of Individuals) Services Tribunal order taxpayers own cases for AY 2013 - 14 (ITA No. 2549/M/2018) (refer para 7 to 12 on pages 6 to 10 of the case law compilation) 6 KPMG LLP 11,53,124 Audit Services Covered in favour of taxpayer by: 1. (Singapore) (Firm of Tribunal order taxpayers own cases Individuals) for AY 2013 - 14 (ITA No. 2549/M/2018) (refer para 7 to 12 on pages 6 to 10 of the case law compilation)

Page No. 9 ITA Nos. 360, 361 & 362/MUM/2017 (A.Y. 2012-13) M/s. BSR and Company& Other group concerns Sr. Amount in Description of Name of the Payee Remarks No. INR Services 7 KPMG Meijburg& Taxation Services Covered in favour of taxpayer by: 1. 9,74,589 Co Special Services Tribunal order in taxpayer’s own BV. (Netherlands) cases for AY 2013 - 14 (refer para 7 (Company) to 12 on pages 6 to 10 of the case law compilation) - (Similar treaty with Singapore and UK) 2. Bombay High Court order in network member firm's case for AY 2008 - 09 CIT - 16 vs. KPMG (ITA No. 690 of 2017) (refer para 9/page 48 of the case law compilation) (Similar to payments made to KPMG Accountants NV a company resident of Netherlands) 8 Audit Services KPMG S.A. (France) Covered in favour of taxpayer by: 1. 1,61,807 (Company) Tribunal order taxpayers own cases for AY 2013 - 14 (ITA No. 2549/M/2018) (refer para 7 to 12 on pages 6 to 10 of the case law compilation). (Similar to payments made to KPMG UK Plc) 9 Manabat Audit Services Covered in favour of taxpayer by: 1. Sanagustin& Co 1,88,894 Tribunal order taxpayers own cases CPA,(Philippines) for AY 2013 - 14 (refer para 7 to 12 (Firm of Individuals) on pages 6 to 10 of the case law compilation) (Similar Treaty with Bangladesh) 2. Tribunal order taxpayers own cases for AY 2011 - 12 (ITA No.4535/Mum/2016 & (refer para 14 on page 24 and refer 5 & 6 pages 17 to 22of the case law compilation) 10 KPMG, Norway 7,44,723 Covered in favour of the taxpayer by: Tax Advisory Services 1. Bajaj Hindustan Limited 2011(47 SOT 74) (Mumbai)(URO) (refer para 14 on page 103 of the case law compilation) on the basis of above chart, the Ld. Counsel submitted that: a. In the case of payment made to Singapore entities at Sr. No. 1, 2 & 6, payment made to the UK entity at Sr. No. 4 & 5, payment made to France entity at Sr. No. 8 and payment made to the Netherlands entity at Sr. No. 7, the services

Page No. 10 , 361 & 362/MUM/2017 (A.Y. 2012-13) M/s. BSR and Company& Other group concerns are in the nature of business profits under Article 7 of the respective tax treaties and are not taxable in India in the absence of permanent establishment of non – residents in India under Article 5 of the said tax treaties since services are not in nature of make available of technical knowledge, experience, skill, know-how or process. b. In the case of payment made to Israel entity at Sr. No. 3, it was pointed out that the Israel tax treaty is similar to Ireland tax treaty and the services cannot be construed as managerial or technical services so as to be governed by article 13 of the Israel tax treaty dealing with FTS. Since there is a specific article 15 on Independent Personal services in Israel tax treaty, this specific article will override the general article pertaining to FTS and these would not be taxable in India in absence of fixed base of non-resident in India. c. In the case of payment made to Philippines entity at Sr. No. 9, it was pointed out that Philippines tax treaty is similar to Bangladesh tax treaty. There is no article dealing with FTS in both the tax treaties. The payment would be covered under article 15 of the Philippines tax treaty and would not be taxable in India in absence of fixed base of non-resident in India. The payment would not be covered under article 23 dealing with other income. Ld. Counsel of the assessee placed reliance on the decision of ITAT Mumbai in the case of P.T. McKinsey Indonesia [2013] 29 taxmann.com 100, placed in the case law compilation at page number 94 d. In the case of payment made to Norway entity at Sr. No. 10 it is submitted that the professional fees are paid for services utilised for the purpose of earning income from a source outside India and hence, are not taxable in India pursuant to the provisions of Section 9(1) (vii) (b) of the IT Act. Ld. Counsel explained that the professional fees have been paid by the assessee, an India tax resident to KPMG Norway, a nonresident for earning income from a source outside India i.e. from an overseas client. Ld. Counsel of the assessee placed reliance on the decision of ITAT Mumbai in the case of Bajaj Hindustan Limited [2011] 13 taxmann.com 13 placed in the case law compilation at page number 99.

7. Ground Nos. 1, 2, 3 and 4 are interlinked, hence disposed of by common finding. We have heard both the parties and have gone through the records, contentions of the AO, submissions of the Page No. 11 , 361 & 362/MUM/2017 (A.Y. 2012-13) M/s. BSR and Company& Other group concerns assessee and order of the Ld. CIT (A). The issue before us revolves around the payments made by the assessee to certain non-resident entities for professional services rendered by them outside India which were availed in the course of execution of engagements of the assessee firm.

8. We have gone through the chart and case law compilation submitted by the assessee before us and the submissions of the assessee before the Ld. CIT(A) and found that the payments made to non-resident firms mentioned at Sr. No. 1 & 2 (Singapore), 4 & 5 (UK), 6 (Singapore), 7 (Netherlands) and 8 (France) in the table at para 5 above, will not come under Article 12 dealing with ‘Fees for Technical Services’, rather they fall under Article 7 dealing with ‘Business Profits’ and there is no Permanent Establishment (PE) in India, and therefore these payments would not be taxable in India.

Page No. 12 , 361 & 362/MUM/2017 (A.Y. 2012-13) M/s. BSR and Company& Other group concerns profits’. It has also (Assessment Year : 2009-10) not been disputed that such entities do not have a permanent establishment in India, therefore, such incomes are not chargeable to tax in India so as to require deduction of tax at source. On this aspect also, we affirm the stand of the CIT (Appeals) that such payments are not liable for disallowance under section 40(a) (i) of the Act. 5.1 In so far as payments to KPMG LLP, UK and KPMG USMCG Ltd. UK are concerned, herein also the said entities do not have permanent establishment in India. The CIT (Appeals) has found that such entities are eligible for the benefit of Article -15 of Indo-US Double Taxation Avoidance Agreement dealing with independent personal services and hence, payments are not chargeable to tax in India so as to require deduction of tax at source. The aforesaid findings have not been disputed before us on the basis of any cogent material and, therefore, we hereby affirm the same. Consequently, invoking of section 40(a) (i) in the context of aforesaid payments is also not justified.

5. In the above background, we have carefully considered the rival submissions. Pertinently, the issue revolves around the payments made by the assessee to certain non-resident entities for professional services rendered by them outside India. It has been consistently explained by the assessee that the services of such entities were availed during the (Assessment Year: 2009-10) course of the execution of engagements of assessee firm. The assessee firm did not deduct the tax at source and, therefore, the Assessing Officer invoked the provisions of section 40(a) (i) of the Act and disallowed such expenditure. The details of the entities along with the amounts paid have been culled out by the Assessing Officer in Para3 of the assessment order and the same is not being repeated for the sake of brevity. The payments have been made to 12 different professional entities based in 10 different countries. In so far as the payments that are made to KPMG LLP, USA and KPMG LLP, Canada are concerned, the same has been made on account of professional services rendered in relation to taxation and transfer pricing. Undisputedly, the professional services have been rendered by the aforesaid entities outside India. The stand of the Revenue is that such services are in the nature of ‘fee for technical services’ and, therefore, tax was liable to be deducted at source in India. Factually speaking, the aforesaid stand of the Revenue is devoid of any support

Page No. 13 ITA Nos. 360, 361 & 362/MUM/2017 (A.Y. 2012-13) M/s. BSR and Company& Other group concerns because there is no material to establish that any technical knowledge, skill, etc. has been made available to the assessee so as to consider it as falling within the purview of Article-12 of Indo-US Double Taxation Avoidance Agreement. It is also an established fact that such non- resident recipients do not have permanent establishment in India and, therefore, in the said background the same can, at best, be treated as independent personal services covered by Article15 of the Indo-US Double Taxation Avoidance Agreement. As a consequence and in the absence of any fixed base in India, such income cannot be held chargeable to tax in India so as to require deduction of tax at source. (Assessment Year: 2009-10) Therefore, invoking of section 40(a) (i) of the Act to disallow such expenditure is not tenable.

11. In so far as payment made to Israel entity mentioned at Sr. No. 3 in the table, we note that the Israel tax treaty is similar to the Ireland tax treaty. We are of the view that the services cannot be construed as managerial or technical services so as to be governed by article 13 of the Israel tax treaty dealing with FTS. As pointed by the Ld. Counsel of the assessee, since there is a specific article 15 on Independent Personal services in Israel tax treaty, this specific article will override the general article pertaining to FTS and these would not be taxable in India in absence of Fixed base of non-resident in India. We observe that this issue is covered by the decision of ITAT in assessee’s own case for AY 2008-09 in which is reproduced below:- “4.8 In respect of the payment made by the assessee to KPMG, Ireland for audit services, it is not in dispute that the said services have been rendered outside India and the same cannot be construed as managerial or technical services so as to be governed by Article 13 of IndiaIreland DTAA as contended by Revenue. In our view, they are clearly in the nature of independent personal services coming within the purview of Article-14 of the India-Ireland DTAA and therefore in the absence of any fixed place of business of the recipient, the said payments/income is not exigible to tax in India. In this view of the matter, we are of the considered view that the assessee is not liable to deduct tax on the aforesaid payment made to the non-resident entity in Ireland for the provisions of section 40(a)(i) of the Act to be invoked. We, therefore, uphold the finding of the learned CIT (A) on this issue which has not been controverted before us by the Revenue.”

Page No. 14 , 361 & 362/MUM/2017 (A.Y. 2012-13) M/s. BSR and Company& Other group concerns 12. In so far payment made to Philippines entity at Sr. No. 9 in the table we note that Philippines tax treaty is similar to Bangladesh tax treaty. There is no article dealing with FTS in both the tax treaties. We are of the view that the payment would be covered under article 15 of the Philippines tax treaty and would not be taxable in India in absence of fixed base of non-resident in India. We observe that this issue is covered by decision of ITAT Mumbai in the case of P.T. McKinsey Indonesia [2013] 29 taxmann.com 100, which is reproduced below: 8………….As far as taxing under the head ‘Other Income’ is concerned, as held by the penal, we are of the opinion that residuary head is analogous to sections 56-57 of the Act. If a certain receipt cannot be taxed under any other head, only then sections dealing with ‘Income from Other Sources’ comes into play in domestic taxation matters. Likewise, under the DTAAs if a sum can be taxed under any other Article, provisions of Article 22 will not be applicable. We are of the opinion, in light of the earlier decisions of the Mumbai Tribunal income received by the assessee- company form McKinsey India is not to be treated as Royalty- rather it has to be assessed as business income as per Article 7 of the DTAA.

13. In so far as payment made to Norway entity at Sr. No. 10 of the table we note that the professional fees have been paid by the assessee, an India tax resident to KPMG Norway, a non-resident. We note from the order of the Ld. AO that the AO has not disputed that the payment has been made by the assessee for earning income from a source outside India i.e. from an overseas client. Thus the payment does not get covered under Section 9(1) (vii) of the IT Act in view of the exclusion pursuant to clause (b) of Section 9(1)(vii) of the Act. We further note that this issue is covered by the decision of ITAT Mumbai in the case of Bajaj Hindustan Limited [2011] 13 taxmann.com 13 reproduced below:- “14……… As far as the second exception mentioned in Sec.9 (1) (vii) clause (b) is concerned viz., “for the purposes of earning any income from any source outside India.” the undisputed facts are that the Assessee wanted to acquire sugar mills/distillery plants in Brazil and for that purpose also wanted to set up a subsidiary company. In fact, the Assessee had set up a subsidiary company on 8.8.2006 in Brazil. Thus the Assessee was contemplating to create a source for earning income outside India. It is no doubt true that the source of income had not come into existence. But Page No. 15 ITA Nos. 360, 361 & 362/MUM/2017 (A.Y. 2012-13) M/s. BSR and Company& Other group concerns there is nothing in Sec.9 (1) (vii) clause (b) of the Act, to show that the source of income should have come into existence so as to except the payment of fees for technical services. The expression used is “for the purpose of earning any income from any source outside India”. There is nothing in the language of Sec.9 (1)(vii) clause (b) of the Act, which would go to show that the same is restricted to only to an existing source of income. We therefore agree with the conclusions of the CIT (A) on this aspect. We therefore uphold the order of the CIT (A) holding that the payment by the Assessee of fees for technical services rendered by M/s. KPMG was outside the scope of Sec. 9(1) (vii) of the Income Tax Act. Hence it cannot be considered as income deemed to have accrued in India and not chargeable to tax in India and hence the Assessee was not liable to deduct tax u/s. 195 of Income Tax Act………..”

14. As the facts mentioned above for the year under consideration and findings of the ITAT, Mumbai in earlier years in assessee’s own case and other cases, as reproduced in the preceding paragraphs are found to be similar, we don’t find any perversity in the order of Ld. CIT (A), hence order of the Ld. CIT (A) is sustained and Ground Nos. 1, 2, 3 and 4 raised by the Revenue are dismissed.” ……. (AY 2015-16) 17. Now we turn to the appeal filed by the Revenue for AY 2015-16. The grounds of appeal

raised by the Revenue are reproduced below:

1. On the facts and in the circumstances of the case and in law, whether the Ld. CIT(A) was justified in deleting the disallowance of Rs.2,70,41,039/- u/s. 40(a)(i) being professional fees paid outside India without deduction of tax at source? Whether on the facts and in the circumstances of the case and in law, 2. the Ld. CIT (A) has erred in holding that the payment made by the assessee to its associate concerns based in countries apart from Israel, Philippines, constitute payments for Independent Personal Service instead of ‘Fees for Technical Services” as defined under Article 12/13 of the respective DTAAs? Whether on the facts and in the circumstances of the case and in law, 3. the Ld. CIT (A) has erred in holding that the payments made by the assessee

Page No. 16 , 361 & 362/MUM/2017 (A.Y. 2012-13) M/s. BSR and Company& Other group concerns to its associate concerns based in Israel, Philippines, constitute payments for Independent Personal Services instead of “Royalty” as defined under Article 12/13 of the respective DTAAs? Whether on the facts and in the circumstances of the case and in law, 4. the Ld. CIT(A) has erred in holding that the services rendered by the associate concerns to the assessee constitute “Independent Personal Services” under DTAAs not appreciating that only those services performed by an independent non-resident alien contractor would constitute “Independent Personal Services” under DTAA which is not the case here as in this case, the Services were rendered by the Group entities to an Indian entity which were closely working with each other? On the facts and in the circumstances of the case and in law, whether 5. the Ld. CIT(A) erred in holding that the KPMG Co-operative, Switzerland, is a mutual association and its receipts would not constitute income chargeable to tax and is not obliged to withhold and any tax without appreciating the facts, thereby deleting the disallowance of Rs.7,89,82,072/- u/s. 40(a)(i). On the facts and in the circumstances of the case and in law, whether 6. the Ld. CIT (A) erred in holding that the payments made by the assessee to KPMG for names, mark and other facilities were in the nature of royalty and chargeable to tax in India. On the facts and circumstances of the case and in law, allowing tax 7. relief in regard to income earned in Japan. The Ld. CIT (A) has not considered the provisions of Article 14A of India-Japan DTAA dealing with Independent Personal Services. As per the provisions of Article 14A the income itself is not taxable, the tax credit in respect thereof is not allowable.” Facts of the case AY 2015-16: 18. The assessee is a Limited Liability Partnership firm of Chartered Accountants and filed its return of income for AY 2015-16 electronically on 28.11.2015 declaring a total income of Rs. 40,97,67,300/- Assessee’s case was selected for scrutiny under CASS-Limited and statutory notices u/s. 142(1) and 143(2) of the I.T Act were issued. During the course of scrutiny proceedings, the AO

Page No. 17 ITA Nos. 360, 361 & 362/MUM/2017 (A.Y. 2012-13) M/s. BSR and Company& Other group concerns made addition to the total income of the assessee on account of (i) claim of professional fees of Rs. 2,70,41,039/- paid to non-residents without deduction of tax at source and (ii) claim of remittance of Rs. 7,89,82,072/- made to KPMG International Co-operative, Switzerland without TDS. The AO also denied the claim of the assessee of foreign tax credit to the extent of 71, 39,952/pertaining to Japan. Ground Nos. 1 to 4 of AY 2015-16: 19. During the year under consideration, the assessee has made payments of Rs. 2,70,41,039/- as professional fees to various non-residents without deduction of tax at source as under:- Sr. No. Name of the non-resident Amount 1 KPMG Advisory Indonesia 581,227 2 KPMG Al Fozan& Partners Saudi Arabia 907,138 3 KPMG Corporate Finance Pte. Ltd (Singapore) 310,660 4 KPMG LLP, UK 238,240 5 KPMG LLP (Singapore) 597,241 6 KPMG, USA 4,893,905 7 KPMG Phoomchai Audit Ltd. Thailand 529,864 8 KPMG Phoomchai Tax Ltd. Thailand 182,634 9 KPMG, Mauritius 201,493 10 KPMG SA France 37,720 11 RG Manabhat& Co. Philippines 136,819 12 KPMG LLP, USA 18,424,099 Total 27,041,039 20. Ld. Counsel of the assessee pointed out that the issues in the instant appeal are similar to those in and also came up for adjudication in assessee’s own case before the “I” bench of Mumbai Tribunal (ITAT) in AY 2013-14 and the same were decided in favour of the assessee. Ld. Counsel also pointed out that while deciding the appeal for the AY 2015- 16, the Ld. CIT (A) has relied upon the order of the ITAT for AY 2013-14. Ld. Counsel furnished a chart showing the similarity between the payments made during AY 2013-14 and the impugned assessment year. The same is reproduced hereunder:

Page No. 18 , 361 & 362/MUM/2017 (A.Y. 2012-13) M/s. BSR and Company& Other group concerns Sr. Name of the Amount in Description of Remarks No. Payee INR Services 1 KPMG LLP (USA) 48,93,905 + Taxation Services Covered in favour of taxpayer (Firm of Individuals) 1,84,24,099 by: 1. Tribunal order taxpayers own case for AY 2013 - 14 (ITA No. 2549/M/2018) (refer para 7 to 12 on pages 6 to 10 of the case law compilation) 2. Bombay High Court order in network member firm's case for AY 2008 - 09 CIT - 16 vs KPMG (ITA No. 690 of 2017) (refer para 9/page 48 of the case law compilation) 2 KPMG Corporate Review of regulatory Covered in favour of taxpayer Finance P. Ltd 3,10,660 filings by: 1. Tribunal order taxpayers (Singapore) own cases for AY 2013 - 14 (Company) (ITA No. 2549/M/2018) (refer para 7 to 12 on pages 6 to 10 of the case law compilation) 3 KPMG LLP (UK) (Firm Taxation Services Covered in favour of taxpayer of Individuals) 2,38,240 by: 1. Tribunal order taxpayers own cases for AY 2013 - 14 (ITA No. 2549/M/2018) (refer para 7 to 12 on pages 6 to 10 of the case law compilation) 4 KPMG LLP Audit Services Covered in favour of taxpayer (Singapore) (Firm of 5,97,241 by:1. Tribunal order taxpayers Individuals) own cases for AY 2013 - 14 (ITA No. 2549/M/2018) (refer para 7 to 12 on pages 6 to 10 of the case law compilation) 5 KPMG S.A. (France) Audit Services Covered in favour of taxpayer (Company) 37,720 by: 1. Tribunal order taxpayers own cases for AY 2013 - 14 (ITA No. 2549/M/2018) (refer para 7 to 12 on pages 6 to 10 of the case law compilation).(Similar to payments made to KPMG UK Plc) 6 KPMG Advisory Business Covered in favour of taxpayer 5,81,227 Advisory (Indonesia) by: 1. Tribunal order taxpayers Services (Company) own cases for AY 2013 - 14 (ITA No. 2549/M/2018) (refer para 7 to 12 on pages 6 to 10 of the case law compilation) (Similar to payments made to KPMG Hadibroto& Co, a company resident of Indonesia)

Page No. 19 , 361 & 362/MUM/2017 (A.Y. 2012-13) M/s. BSR and Company& Other group concerns Sr. Name of the Amount in Description of Remarks No. Payee INR Services 2. Covered by Mumbai ITAT case of P.T. Mckinsey Indonesia [2013] 29 taxmann.com 100 (Mumbai-trib) (refer para 8 on pages 98 of the case law compilation) 7 KPMG Al Fozan& Audit Services Covered in favour of taxpayer Partners (Saudi 9,07,138 by:1. Tribunal order in Arabia) (Firm of taxpayers own cases for AY Individuals) 2013 - 14 (ITA No. 2549/M/2018) (refer para 7 to 12 on pages 6 to 10 of the case law compilation) (Similar Treaty with Indonesia) 8 KPMG Phoomchai Audit Services Covered in favour of taxpayer Audit Ltd (Thailand) 5,29,864 by: 1. Tribunal order in taxpayers (Company) own cases for AY 2013 - 14 (ITA No. 2549/M/2018) (refer para 7 to 12 on pages 6 to 10 of the case law compilation) (Similar Treaty with Indonesia)

9 KPMG Phoomchai Transfer Pricing Covered in favour of taxpayer Tax Ltd (Thailand) 1,82,634 Services by: 1. Tribunal order in taxpayers (Company) own cases for AY 2013 - 14(ITA No. 2549/M/2018) (refer para 7 to 12 on pages 6 to 10 of the case law compilation) (Similar Treaty with Indonesia) 10 KPMG (Mauritius) 2,01,493 Audit Services Covered in favour of taxpayer (Firm of Individuals) by:1. Tribunal order in taxpayers own cases for AY 2013 - 14 (ITA No. 2549/M/2018) (refer para 7 to 12 on pages 6 to 10 of the case law compilation) (Similar Treaty with Bangladesh)2. Bombay High Court order in network member firm's case for AY 2008 - 09 CIT - 16 vs KPMG (ITA No. 690 of 2017) (refer para 9/page 48 of the case law compilation) 11 R.G. Manabat& Co. 1,36,819 Audit Services Covered in favour of taxpayer (Philippines) (Firm of by: Individuals) 1. Tribunal order in Page No. 20 ITA Nos. 360, 361 & 362/MUM/2017 (A.Y. 2012-13) M/s. BSR and Company& Other group concerns Sr. Name of the Amount in Description of Remarks No. Payee INR Services taxpayers own cases for AY 2013 - 14 (ITA No. 2549/M/2018) (refer para 7 to 12 on pages 6 to 10 of the case law compilation) (Similar Treaty with Bangladesh) 2. Tribunal order taxpayers own cases for AY 2011 - 12 (ITA No.4535/Mum/2016 & (refer para 14 on page 24 and and refer 5 & 6 pages 17 to 22of the case law compilation) (similar payments made to ManabatSanagustin& Co, Philippines) 21. On the basis of above chart, the Ld. Counsel submitted that: (a)Payments made to entities mentioned at Sr. No. 2, 3, 4, 5 and 11 which are located in Singapore, the UK, France and Philippines entities are identical to the payments made in the AY 2014-15 and hence the arguments and submissions made in the earlier AY 2014-15 will apply in the current year too. (b) In the case of payment made to the USA entity at Sr. No. 1 the services are in the nature of Independent Personal Services under Article 15 of the USA tax treaty and are not taxable in India in the absence of fixed base of non-resident in India since services are not in nature of make available of technical knowledge, experience, skill, know-how or process. (c) In the case of payment made to Indonesia, Saudi Arabia and Thailand entities at Sr. No. 6, 7, 8 and 9 it was pointed out that Indonesia tax treaty was a subject matter of decision in AY 2013-14 and Saudi Arabia and Thailand tax treaties are similar to Indonesia tax treaty. There is no article dealing with FTS in these tax treaties. The payment would be covered under article 7 of the tax treaties dealing with Business Profits and would not be taxable in India in absence of Permanent Establishment of non-residents in India. The payment would not be covered under article 21/22/23 dealing with other income. Ld. Counsel of the assessee also placed reliance on the decision of ITAT Mumbai in the case of P.T. McKinsey Indonesia [2013] 29 taxmann.com 100, placed in the case law compilation at page number 94.

Page No. 21 ITA Nos. 360, 361 & 362/MUM/2017 (A.Y. 2012-13) M/s. BSR and Company& Other group concerns (d) In the case of payment made to Mauritius (Firm) entity at Sr. No. 10 it was pointed out that Mauritius tax treaty in respect of firm is similar to Bangladesh tax treaty which was a subject matter of decision in AY 201314. There is no article dealing with FTS in these tax treaties. The payment would be covered under article 14 of the tax treaty dealing with Independent Personal Services and would not be taxable in India in absence of fixed base of non-resident in India. The payment would not be covered under article 22 dealing with other income. Ld. Counsel of the assessee also placed reliance on the decision of ITAT Mumbai in the case of P.T. McKinsey Indonesia [2013] 29 taxmann.com 100, placed in the case law compilation at page number 94.

22. Ground Nos. 1 to 4 relate to deleting the disallowance of professional fees paid to various non-residents. We have noted that these grounds of appeal

are identical to the grounds of appeal raised by the Revenue in in AY 2014-15 which we have already dismissed in the Para No. 14 of this order. Following the principles of consistency, these grounds of appeal are also dismissed with similar observations. Ground Nos. 5 & 6 of AY 2015-16:

23. Ground of 5 and 6 relate to deleting the disallowance of payment to KPMG International Cooperative Switzerland. We have noted that these grounds of appeal are identical to the grounds of appeal raised by the Revenue in ITA No. 723/Mum/2023 in AY 2014-15 which we have already dismissed in the Para No. 17 of this order. Following the principles of consistency, these grounds of appeal are also dismissed with similar observations. Ground No. 7 of AY 2015-16:

24. The facts pertaining to this ground are that the Ld. AO did not grant credit of INR 71, 39,952 being taxes paid in Japan on income earned by the assessee in Japan. The Ld. AO observed that the income earned by the assessee in Japan was not taxable in Japan pursuant to Article 15 of the IndiaJapan DTAA dealing with Independent Personal Services. He held that since the income itself is not taxable, the tax credit in respect thereof is not allowed. He placed reliance on the decisions of Ershisanye Construction Group India Pvt. Ltd. In ITA No. 756/Kol/2015, Maharashtra State Electricity Board as reported in 90 ITD 793 (Mum) and Chandbourne& Parke LLP (2005) 2 SOT 434 (Mum).

Page No. 22 ITA Nos. 360, 361 & 362/MUM/2017 (A.Y. 2012-13) M/s. BSR and Company& Other group concerns 25. Ld. CIT(A) while deciding the matter relied on the decision of Mumbai ITAT in the case of Amarchand&Mangaldas& Suresh A Shroff & Co. in which is reproduced below:- “To put a question to ourselves, what could possibly be the situations in which views of the source and residence jurisdictions may differ about the applicability of a treaty taxation provision, and yet the residence country could still provide the related tax credits. In our humble understanding, for the detailed reasons set out above, these are the cases in which the treaty partner source jurisdiction has taken a reasonable bonafide view which is not manifestly erroneous- even though it is not the same as is the view taken by the residence jurisdiction. That aspect alone, however, is not the sole determinative factor in the present context since we have already held that, on the peculiarities of Indo Japanese tax treaty provisions, the legal fees paid to a partnership firm of lawyers can indeed be subjected to levy of tax under article 12 as the exclusion clause under article 12(4) does not get triggered for payments to persons other than individuals, and the provisions of article 14 are required to be read in harmony with the provisions of article12(4).”

raised by the Revenue are reproduced below:

1. On the facts and in the circumstances of the case and in law, whether the Ld. CIT(A) was justified in deleting the disallowance of Page No. 23 , 361 & 362/MUM/2017 (A.Y. 2012-13) M/s. BSR and Company& Other group concerns Rs.2,59,36,186/- u/s. 40(a)(i) being professional fees paid outside India without deduction of tax at source? Whether on the facts and in the circumstances of the case and 2. in law, the Ld. CIT (A) has erred in holding that the payment made by the assessee to its associate concerns based in countries apart from Israel, Philippines, constitute payments for Independent Personal Service instead of ‘Fees for Technical Services” as defined under Article 12/13 of the respective DTAAs? Whether on the facts and in the circumstances of the case and 3. in law, the Ld. CIT (A) has erred in holding that the payments made by the assessee to its associate concerns based in Israel, Philippines, constitute payments for Independent Personal Services instead of “Royalty” as defined under Article 12/13 of the respective DTAAs? Whether on the facts and in the circumstances of the case and 4. in law, the Ld. CIT(A) has erred in holding that the services rendered by the associate concerns to the assessee constitute “Independent Personal Services” under DTAAs not appreciating that only those services performed by an independent non-resident alien contractor would constitute “Independent Personal Services” under DTAA which is not the case here as in this case, the Services were rendered by the Group entities to an Indian entity which were closely working with each other? On the facts and in the circumstances of the case and in law, 5. whether the Ld. CIT(A) erred in holding that the KPMG Co-operative, Switzerland, is a mutual association and its receipts would not constitute income chargeable to tax and is not obliged to withhold and any tax without appreciating the facts, thereby deleting the disallowance of Rs.10,22,44,715/- u/s. 40(a)(i). On the facts and in the circumstances of the case and in law, 6. whether the Ld. CIT (A) erred in holding that the payments made by the assessee to KPMG for names, mark and other facilities were in the nature of royalty and chargeable to tax in India. On the facts and circumstances of the case and in law, allowing 7. tax relief in regard to income earned in Japan. The Ld. CIT(A) has not considered the provisions of Article 14A of India-Japan DTAA dealing

Page No. 24 , 361 & 362/MUM/2017 (A.Y. 2012-13) M/s. BSR and Company& Other group concerns with Independent Personal Services. As per the provisions of Article 14A the income itself is not taxable, the tax credit in respect thereof is not allowable.” Facts of the case AY 2016-17: 29. The assessee is a Limited Liability Partnership firm of Chartered Accountants and filed its return of income for AY 2016-17 electronically on 17.10.2016 declaring a total income of Rs. 74, 44, 04,740/- Assessee’s case was selected for compulsory scrutiny under CASS and statutory notices u/s. 142(1) and 143(2) of the I.T Act were issued. During the course of scrutiny proceedings, the AO made addition to the total income of the assessee on account of (i) claim of professional fees of Rs. 2,59,36,186/- paid to nonresidents without deduction of tax at source and (ii) claim of remittance of Rs. 10,22,44,715/- made to KPMG International Co-operative, Switzerland without TDS. The AO also denied the claim of the assessee of foreign tax credit to the extent of 43, 55,934/-. Ground Nos. 1 to 4 of AY 2016-17:- 30. During the year under consideration, the assessee has made payments of Rs. 2,59,36,186/- as professional fees to various non-residents without deduction of tax at source as under:- Sr. No. Name of the non-resident Amount 1 KPMG Advisory Indonesia 5,80,298 2 KPMG LLP, UK 23,86,880 3 KPMG LLP (Singapore) 6,69,650 4 KPMG Meijburg& Co. Special Services BV 4,84,637 Netherlands 5 KPMG Phoomchai Audit Ltd. Thailand 5,58,828 6 KPMG, Mauritius 2,66,830 7 KPMG Services Pte. Ltd. Singapore 13,31,234 8 KPMG Tax Services Ltd. Mauritius 2,58,974 9 KPMG Ireland 1,91,910 10 RG Manabhat& Co. Philippines 3,19,196 11 Rahman RahmanHuq 2,91,676 12 KPMG LLP, USA 1,85,96,072 Total 2,59,36,186

Page No. 25 ITA Nos. 360, 361 & 362/MUM/2017 (A.Y. 2012-13) M/s. BSR and Company& Other group concerns 31. Ld. Counsel of the assessee pointed out that the issues in the instant appeal are similar to those in 724/Mum/2023 and also came up for adjudication in assessee’s own case before the “I” bench of Mumbai Tribunal (ITAT) in AY 2013-14 and the same were decided in favour of the assessee. Ld. Counsel also pointed out that while deciding the appeal for the AY 2016- 17, the Ld. CIT (A) has relied upon the order of the ITAT for AY 2013-14. Ld. Counsel furnished a chart showing the similarity between the payments made during AY 2013-14 and the impugned assessment year. The same is reproduced hereunder:

Sr. Name of the Amount in Description of Remarks No. Payee INR Services Covered in favour of taxpayer 1 KPMG LLP Taxation by: (USA) (Firm of 1,85,96,072 Services Individuals) 1. Tribunal order in taxpayers own cases for AY 2013 - 14 (ITA No. 2549/M/2018) (refer para 7 to 12 on pages 6 to 10 of the case law compilation) 2. Bombay High Court order in network member firm's case for AY 2008 - 09 CIT - 16 vs KPMG (ITA No. 690 of 2017) (refer para 9/page 48 of the case law compilation) 2 KPMG LLP Taxation Covered in favour of taxpayer (UK) (Firm of 23,86,880 Services by: Individuals) 1. Tribunal order taxpayers own cases for AY 2013 - 14 (ITA No. 2549/M/2018) (refer para 7 to 12 on pages 6 to 10 of the case law compilation) 3 KPMG LLP Audit Covered in favour of taxpayer (Singapore) 6,69,650 Services by: (Firm of 1. Tribunal order taxpayers own Individuals) cases for AY 2013 - 14 (ITA No. 2549/M/2018) (refer para 7 to 12 on pages 6 to 10 of the case law compilation) 4 KPMG Taxation Covered in favour of taxpayer Services Pte.Ltd. 13,31,234 Services by:1. Tribunal order taxpayers (Singapore) own cases for AY 2013 - 14 (ITA (Company) No. 2549/M/2018) (refer para 7 to 12 on pages 6 to 10 of the case law compilation) Covered in favour of taxpayer 5 Rahman 2,91,676 Taxation by: Rahman Huq Services (Bangladesh) 1. Tribunal order in taxpayers (Firm of own cases for AY 2013 - 14 (ITA Individuals) No. 2549/M/2018) (refer para 7 to Page No. 26 , 361 & 362/MUM/2017 (A.Y. 2012-13) M/s. BSR and Company& Other group concerns Sr. Name of the Amount in Description of Remarks No. Payee INR Services 12 on pages 6 to 10 of the case law compilation) 6 KPMG 1,91,910 Taxation Covered in favour of taxpayer (Ireland) (Firm by: Services of 1. Tribunal order taxpayers own Individuals) cases for AY 2008 - 09 (ITA No. 2843/M/2014) (refer para 4.8 on page 40 of the case law compilation) 7 KPMG Taxation Covered in favour of taxpayer by:1.Tribunal order in taxpayers Meijburg& Co 4,84,637 Services own cases for AY 2013 - 14 (ITA Special No. 2549/M/2018) (refer para 7 to Services B.V. 12 on pages 6 to 10 of the case law (Netherlands) compilation) (Similar Treaty with (Company) UK and Singapore)2. Bombay High Court order in network member firm's case for AY 2008 - 09 CIT - 16 vs KPMG (ITA No. 690 of 2017) (refer para 9/page 48 of the case law compilation) (Similar to payments made to KPMG Accountants NV a company resident of Netherlands) 8 KPMG Audit services Covered in favour of taxpayer Phoomchai Audit 5,58,828 by: 1. Tribunal order in taxpayers Ltd. own cases for AY 2013 - 14 (ITA (Thailand) (Company) No. 2549/M/2018) (refer para 7 to 12 on pages 6 to 10 of the case law compilation) (Similar Treaty with Indonesia)

9 KPMG Audit services Covered in favour of taxpayer by:1. Tribunal order in taxpayers own (Mauritius) 2,66,830 cases for AY 2013 - 14 (ITA No. (Firm of 2549/M/2018) (refer para 7 to 12 on Individuals) pages 6 to 10 of the case law compilation) (Similar Treaty with Bangladesh)2. Bombay High Court order in network member firm's case for AY 2008 - 09 CIT - 16 vs KPMG (ITA No. 690 of 2017) (refer para 9/page 48 of the case law compilation) 3. Tribunal order taxpayers own cases for AY 2011 - 12 (ITA No.4535/Mum/2016 & (refer para 14 on page 24 and refer 5 & 6 pages 17 to 22of the case law compilation)

Page No. 27 ITA Nos. 360, 361 & 362/MUM/2017 (A.Y. 2012-13) M/s. BSR and Company& Other group concerns Sr. Name of the Amount in Description of Remarks No. Payee INR Services 10 KPMG Tax Taxation Covered in favour of taxpayer by: Services Ltd. 2,58,974 Services (Mauritius) 1. Tribunal order in taxpayers (Company) own cases for AY 2013 - 14 (ITA No. 2549/M/2018) (refer para 7 to 12 on pages 6 to 10 of the case law compilation) (Similar Treaty with Indonesia) 2. Bombay High Court order in network member firm's case for AY 2008 - 09 CIT - 16 vs KPMG (ITA No. 690 of 2017) (refer para 9/page 48 of the case law compilation) 3. Tribunal order taxpayers own cases for AY 2011 - 12 (ITA No.4535/Mum/2016 & (refer para 14 on page 24 and refer 5 & 6 pages 17 to 22of the case law compilation) 11 R.G 3,19,196 Audit Covered in favour of taxpayer Manabat& Co services by:1. Tribunal order in taxpayers (Phillippines) own cases for AY 2013 - 14 (ITA (Firm of No. 2549/M/2018) (refer para 7 to Individuals) 12 on pages 6 to 10 of the case law compilation) (Similar Treaty with Bangladesh)2. Tribunal order taxpayers own cases for AY 2011 - 12 (ITA No.4535/Mum/2016 & ITA No. 4533/M/2016) (refer para 14 on page 24 and refer 5 & 6 pages 17 to 22of the case law compilation) (similar payments made to ManabatSanagustin& Co, Philippines) 5,80,298 Taxation Services Covered in favour of taxpayer by: 12 KPMG Advisory 1. Tribunal order taxpayers (Indonesia) own cases for AY 2013 - 14 (ITA (Company) No. 2549/M/2018) (refer para 7 to 12 on pages 6 to 10 of the case law compilation) (Similar to payments made to Hadibroto& Co, a company resident of Indonesia) 2. Covered by Mumbai ITAT case of P.T. Mckinsey Indonesia [2013] 29 taxmann.com 100 (Mumbai- trib) (refer para 8 on pages 98 of the case law compilation)

Page No. 28 ITA Nos. 360, 361 & 362/MUM/2017 (A.Y. 2012-13) M/s. BSR and Company& Other group concerns 32. On the basis of above chart, the Ld. Counsel submitted that: (a) Payments made to entities mentioned at Sr. No. 1 (the USA), 2 (the UK), 3 & 4 (Singapore), 6 (Ireland), 7 (Netherland), 8 (Thailand), 9 (MauritiusFirm), 11 (Philippines) and 12 (Indonesia) are identical to the payments made in the AY 2014-15 and AY 2015-16 and hence the arguments and submissions made in the earlier AY 2014-15 and AY 2015-16 will apply in the current year too. (b) In the case of payment made to Mauritius (Company) entity at Sr. No. 10, it was pointed out that Mauritius tax treaty with respect to company is similar to Indonesia tax treaty. There is no article dealing with FTS in these tax treaties. The payment would be covered under article 7 of the tax treaties dealing with Business Profits and would not be taxable in India in absence of Permanent Establishment of non-residents in India. The payment would not be covered under article 22 dealing with other income. Ld. Counsel of the assessee also placed reliance on the decision of ITAT Mumbai in the case of P.T. McKinsey Indonesia [2013] 29 taxmann.com 100, placed in the case law compilation at page number 94. (c) In the case of payment made to Bangladesh entity at Sr. No. 5 it was pointed out that Bangladesh tax treaty which was a subject matter of decision in AY 2013-14 and hence the issue is squarely covered in favour of the assessee.

are identical to the grounds of appeal raised by the Revenue in in AY 2014-15 and ITA No. 724/Mum/2023 in AY 2015-16 which we have already dismissed in the Para No. 14 of this order. Following the principles of consistency, these grounds of appeal are also dismissed with similar observations. Ground Nos. 5 & 6 of AY 2016-17:

34. Ground of 5 and 6 relate to deleting the disallowance of payment to KPMG International Cooperative Switzerland. We have noted that these grounds of appeal are identical to the grounds of appeal raised by the Revenue in ITA No. 723/Mum/2023 in AY 2014-15 which we have already dismissed in the Para No. 17 of this order. Following the principles of consistency, these grounds of appeal are also dismissed with similar observations.

Page No. 29 ITA Nos. 360, 361 & 362/MUM/2017 (A.Y. 2012-13) M/s. BSR and Company& Other group concerns Ground No. 7 of AY 2016-17: 35. Ground of 7 relates to non grant of credit of taxes paid in Japan by the assessee in respect of income earned in Japan. We have noted that this ground of appeal is identical to the ground of appeal raised by the Revenue in in AY 2015-16 which we have already decided in the Para No. 28 of this order. Following the principles of consistency, this ground of appeal is allowed for statistical purposes with similar observations. ITA No. 726/Mum/2023 (AY 2017-18)

36. Now we turn to the appeal filed by the Revenue for AY 2017-18. The grounds of appeal raised by the Revenue are reproduced below: “1. On the facts and in the circumstances of the case and in law, whether the Ld. CIT(A) was justified in deleting the disallowance of Rs.3,48,31,787/- u/s. 40(a)(i) being professional fees paid outside India without deduction of tax at source? Whether on the facts and in the circumstances of the case and in law, 2. the Ld. CIT (A) has erred in holding that the payment made by the assessee to its associate concerns based in countries apart from Israel, Philippines, constitute payments for Independent Personal Service instead of ‘Fees for Technical Services” as defined under Article 12/13 of the respective DTAAs? Whether on the facts and in the circumstances of the case and in law, 3. the Ld. CIT (A) has erred in holding that the payments made by the assessee to its associate concerns based in Israel, Philippines, constitute payments for Independent Personal Services instead of “Royalty” as defined under Article 12/13 of the respective DTAAs? Whether on the facts and in the circumstances of the case and in law, 4. the Ld. CIT(A) has erred in holding that the services rendered by the associate concerns to the assessee constitute “Independent Personal Services” under DTAAs not appreciating that only those services performed by an independent non-resident alien contractor would constitute “Independent Personal Services” under DTAA which is not the case here as in this case, the Services were rendered by the Group entities to an Indian entity which were closely working with each other? On the facts and in the circumstances of the case and in law, whether 5. the Ld. CIT(A) erred in holding that the KPMG Co-operative, Switzerland, is a mutual association and its receipts would not constitute income chargeable

Page No. 30 , 361 & 362/MUM/2017 (A.Y. 2012-13) M/s. BSR and Company& Other group concerns to tax and is not obliged to withhold and any tax without appreciating the facts, thereby deleting the disallowance of Rs.10,79,68,274/- u/s. 40(a)(i). On the facts and in the circumstances of the case and in law, whether 6. the Ld. CIT (A) erred in holding that the payments made by the assessee to KPMG for names, mark and other facilities were in the nature of royalty and chargeable to tax in India. On the facts and circumstances of the case and in law, allowing tax 7. relief in regard to income earned in Japan. The Ld. CIT (A) has not considered the provisions of Article 14A of India-Japan DTAA dealing with Independent Personal Services. As per the provisions of Article 14A the income itself is not taxable, the tax credit in respect thereof is not allowable.” Facts of the case AY 2017-18: 37. The assessee is a Limited Liability Partnership firm of Chartered Accountants and filed its return of income for AY 2017-18 electronically on 31.10.2017 declaring a total income of Rs. 93, 92, 72,310/- Assessee’s case was selected for compulsory scrutiny under CASS and statutory notices u/s. 142(1) and 143(2) of the I.T Act were issued. During the course of scrutiny proceedings, the AO made addition to the total income of the assessee on account of (i) claim of professional fees of Rs. 3,48,31,787/- paid to nonresidents without deduction of tax at source and (ii) claim of remittance of Rs. 10,79,68,274/- made to KPMG International Co-operative, Switzerland without TDS. The AO also denied the claim of the assessee of foreign tax credit to the extent of 58, 66,651/-. Ground Nos. 1 to 4 of AY 2017-18: 38. During the year under consideration, the assessee has made payments of Rs. 3,48,31,787/- as professional fees to various non-residents without deduction of tax at source as under:- Sr. No. Name of the non-resident Amount 1 KPMG LLP (Singapore) 1,746,709 2 KPMG Al Fozan& Partners Saudi Arabia 676,400 3 KPMG Australia 567,280 4 KPMG LLP, UK 778,765

Page No. 31 , 361 & 362/MUM/2017 (A.Y. 2012-13) M/s. BSR and Company& Other group concerns Sr. No. Name of the non-resident Amount 5 KPMG Advisory Indonesia 37,510 6 KPMG LLP, USA 25,796,510 7 KPMG Meijburg& Co. Special Services BV 156,261 Netherlands 8 KPMG Services Pte. Ltd. Singapore 2,425,121 9 KPMG Mauritius 1,007,754 10 RG Manabhat& Co. Philippines 305,336 11 Rahman RahmanHuq Bangladesh 1,334,140 34,831,787

Page No. 32 , 361 & 362/MUM/2017 (A.Y. 2012-13) M/s. BSR and Company& Other group concerns Sr. Name of Amount in Description Remarks No. the Payee INR of Services 4 KPMG Audit Covered in favour of taxpayer by:1. Services Pte. 24,25,121 Service, Tribunal order taxpayers own cases Ltd. Tax for AY 2013 - 14 (ITA No. (Singapore) Advisory 2549/M/2018) (refer para 7 to 12 on (Company) Services pages 6 to 10 of the case law compilation) 5 KPMG Tax Covered in favour of taxpayer by: 1. (Australia) 5,67,280 Advisory Tribunal order taxpayers own cases for AY 2013 - 14 (ITA No. (Firm of Services 2549/M/2018) (refer para 7 to 12 on Individuals) pages 6 to 10 of the case law compilation) 6 Rahman 13,34,140 Taxation Covered in favour of taxpayer by: Rahman Huq Services 1. Tribunal order in taxpayers own (Bangladesh) cases for AY 2013 - 14 (refer para 7 (Firm of to 12 on pages 6 to 10 of the case Individuals) law compilation) 7 KPMG Tax Covered in favour of taxpayer by:1. Meijburg& Co 1,56,261 Advisory Tribunal order taxpayers own cases Special Services for AY 2013 - 14(refer para 7 to 12 on Services BV. pages 6 to 10 of the case law (Netherlands) compilation) - (Similar treaty with Singapore and UK)2. Bombay High (Company) Court order in network member firm's case for AY 2008 - 09 CIT - 16 vs KPMG (ITA No. 690 of 2017) (refer para 9/page 48 of the case law compilation) (Similar to payments made to KPMG Accountants NV a company resident of Netherlands) 8 KPMG Al Audit Covered in favour of taxpayer by: Fozan& 6,76,400 Service 1. Tribunal order in taxpayers own Partners cases for AY 2013 - 14 (ITA No. (Saudi Arabia) 2549/M/2018) (refer para 7 to 12 on (Firm of pages 6 to 10 of the case law Individuals) compilation) (Similar Treaty with Indonesia) 9 KPMG 10,07,754 Audit Covered in favour of taxpayer by:1. (Mauritius) Services Tribunal order in taxpayers own cases (Firm of for AY 2013 - 14 (ITA No. Individuals) 2549/M/2018) (refer para 7 to 12 on pages 6 to 10 of the case law compilation) (Similar Treaty with Bangladesh)2. Bombay High Court order in network member firm's case for AY 2008 - 09 CIT - 16 vs KPMG (ITA No. 690 of 2017) (refer para 9/page 48 of the case law compilation)

Page No. 33 ITA Nos. 360, 361 & 362/MUM/2017 (A.Y. 2012-13) M/s. BSR and Company& Other group concerns Sr. Name of Amount in Description Remarks No. the Payee INR of Services 3. Tribunal order taxpayers own cases for AY 2011 - 12 (ITA No.4535/Mum/2016 & (refer para 14 on page 24 and refer 5 & 6 pages 17 to 22of the case law compilation) R.G. Manabat& 10 3,05,336 Audit Covered in favour of taxpayer by: Co.

Page No. 34 ITA Nos. 360, 361 & 362/MUM/2017 (A.Y. 2012-13) M/s. BSR and Company& Other group concerns 41. Ground Nos. 1 to 4 relate to deleting the disallowance of professional fees paid to various non-residents. We have noted that these grounds of appeal are identical to the grounds of appeal raised by the Revenue in in AY 2014-15, ITA No. 724/Mum/2023 in AY 2015-16 and ITA No. 725/Mum/2023 in AY 2016-17 which we have already dismissed in the Para No. 14 of this order. Following the principles of consistency, these grounds of appeal are also dismissed with similar observations. Ground Nos. 5 & 6 of AY 2017-18:

42. Ground of 5 and 6 relate to deleting the disallowance of payment to KPMG International Cooperative Switzerland. We have noted that these grounds of appeal are identical to the grounds of appeal raised by the Revenue in ITA No. 723/Mum/2023 in AY 2014-15 which we have already dismissed in the Para No. 17 of this order. Following the principles of consistency, these grounds of appeal are also dismissed with similar observations. Ground No. 7 of AY 2017-18:

43. Ground of 7 relates to non grant of credit of taxes paid in Japan by the assessee in respect of income earned in Japan. We have noted that this ground of appeal is identical to the ground of appeal raised by the Revenue in ITA No. 724/Mum/2023 in AY 2015-16 which we have already decided in the Para No. 28 of this order. Following the principles of consistency, this ground of appeal is allowed for statistical purposes with similar observations.”

6. Ground Nos. 1, 2, 3 and 4 are interlinked, hence disposed of by common finding. We have gone through the assessment records, contentions of the AO, submissions of the assessee and order of the Ld. CIT (A). The issue before us revolves around the payments made by the assessee to certain non-resident entities for professional services rendered by them outside India which were Page No. 35 , 361 & 362/MUM/2017 (A.Y. 2012-13) M/s. BSR and Company& Other group concerns availed in the course of execution of engagements of the assessee firm.

7. We have gone through the Paper Book submitted and the submissions of the assessee before the Ld. CIT(A) and found that the payments made to nonresident firms mentioned, supra, in the table will not come under Article 12 dealing with ‘Fees for Technical Services’, rather they fall under Article 15 dealing with ‘Independent Personal Service’ and further, as these payments were made outside India and there is no Permanent Establishment (PE) in India, the payment would not be taxable in India.

9. For the above, the appellant relied on decisions of the ITAT, Mumbai, in its own case for AYs. 2008-09, 2009-10, 2010-11, 2011-12 and 2012-13. The Tribunal in I.T. Appeal No. 1917(Mum) of 2013, A.Y. 2009-10 decided on 06.05.2016, in assessee’s own case held as under: “In the context of payments made to KPMG Tax Services Pvt. Ltd., Singapore, KPMG LLP, Singapore and KPMG Tax Advisor, Belgium, the CIT (Appeals) noted that they are companies registered in the respective countries, who have rendered services outside India. Such services related to assistance in audit, taxation, information technology services, conducing background checks, etc. Considering the nature of the services rendered, which is not disputed by the Revenue, in our view, the CIT(Appeals) made no mistake in holding that the payments are not 'fee for technical services'. The aforesaid services have been rightly held to be outside the purview of Article-12 and/or Article-13 of the respective tax treaties, and instead such income falls within the scope of Article-7 thereof i.e. in the nature of ‘business profits’. It has also (Assessment Year : 2009-10) not been disputed that such entities do not have a permanent establishment in India, therefore, such incomes are not chargeable to tax in India so as to require deduction of tax at source. On this aspect also, we affirm the stand of the Page No. 36 , 361 & 362/MUM/2017 (A.Y. 2012-13) M/s. BSR and Company& Other group concerns CIT (Appeals) that such payments are not liable for disallowance under section 40(a)(i) of the Act. 5.1 In so far as payments to KPMG LLP, UK and KPMG USMCG Ltd. UK are concerned, herein also the said entities do not have permanent establishment in India. The CIT (Appeals) has found that such entities are eligible for the benefit of Article -15 of Indo-US Double Taxation Avoidance Agreement dealing with independent personal services and hence, payments are not chargeable to tax in India so as to require deduction of tax at source. The aforesaid findings have not been disputed before us on the basis of any cogent material and, therefore, we hereby affirm the same. Consequently, invoking of section 40(a) (i) in the context of aforesaid payments is also not justified.

Page No. 37 ITA Nos. 360, 361 & 362/MUM/2017 (A.Y. 2012-13) M/s. BSR and Company& Other group concerns resident recipients do not have permanent establishment in India and, therefore, in the said background the same can, at best, be treated as independent personal services covered by Article15 of the Indo-US Double Taxation Avoidance Agreement. As a consequence and in the absence of any fixed base in India, such income cannot be held chargeable to tax in India so as to require deduction of tax at source. (Assessment Year: 2009-10) Therefore, invoking of section 40(a) (i) of the Act to disallow such expenditure is not tenable. 10 With regard to the remittances for professional fees to Sri Lanka, Indonesia and Bangladesh entities, the services did not fall under the ambit of Article 22/23 of the respective tax treaties dealing with other income correlated with the fact that the entities based in these countries did not have any Permanent Establishment in India, hence did not attract section 195 of the I.T. Act as the said payments were not in the nature of income chargeable to tax in India.

Page No. 38 , 361 & 362/MUM/2017 (A.Y. 2012-13) M/s. BSR and Company& Other group concerns by the assessee to SiddhartaSiddharta and Widjaja, Indonesia for rendering of audit services, it is seen by the learned CIT (A) that the India-Indonesia DTAA does not have any Article defining FTS and that the services were rendered in respect of audit and taxation matters. In these factual circumstances the learned CIT(A) was of the view that since the payment made by the assessee for such services fall within the scope of Article-14 of the India- Indonesia DTAA dealing with independent personal services and in the absence of any PE of the recipient in India, income from such services is not exigible to tax in India, there was no requirement to deduct tax at source on the said payment and accordingly deleted the disallowance under section 40(a)(ia) of the Act as not sustainable. In this factual matrix, we are of the considered view that the assessee is not liable to deduct tax at source on the aforesaid non-resident entity in Indonesia for the provisions of section 40(a) (i) of the Act to be evoked. We, therefore, uphold the finding of the learned CIT (A) on this issue which has not been controverted before us by the Revenue. 2.3 I have considered the facts and perused the material on record. It is noticed that Rahman RahmanHuq, Bangladesh and KPMG Mauritius are firms of individuals registered in Bangladesh and Mauritius respectively. KPMG Portugal, KPMG Sweden, KPMG Netherlands, Background Bureau Inc., USA Scherzer Intl, USA, KPMG IFRG Lid, UK and KPMG USCMG Ltd, UK are companies registered in the respective countries. The services were entirely rendered outside India. Further the services relate to assistance in audit, taxation, information technology services, conducting background checks, responses to queries related to International Financial Reporting Standards and review of documents to be filed with Securities and Exchange Commission in respect of companies listed in US stock exchanges which are not fees for technical services in nature and having been rendered outside India, fall outside the purview of Article 12/13 of the respective tax treaties, therefore the income fell under the ambit of Article 7 of the respective tax treaties dealing with Business Profits. Since the overseas entities did not have a permanent establishment in India, there was no income chargeable to tax in India and consequently, no requirement of tax withholding.” 4.9 With respect to the payment made by the assessee to SiddhartaSiddharta and Widjaja, Indonesia for KP rendering

Page No. 39 , 361 & 362/MUM/2017 (A.Y. 2012-13) M/s. BSR and Company& Other group concerns of audit services, it is seen by the learned CIT (A) that the India-Indonesia DTAA does not have any Article defining FTS and that the services were rendered in respect of audit and taxation matters. In these factual circumstances the learned CIT (A) was of the view that since the payment made by the assessee for re such services fall within the scope of Article- 14 of the India-Indonesia DTAA dealing with independent pe personal services and in the absence of any PE of the recipient in India, income from such services is not i exigible to tax in India, there was no requirement to deduct tax at source on the said payment and accordingly deleted the disallowance under section 40(a)(ia) of the Act as not sustainable. In this factual matrix, we are of the considered view that the assessee is not liable to deduct tax at source on the aforesaid non-resident entity Indonesia for the provisions of section 40(a)(i) of the Act to be evoked. We, therefore, uphold the finding of the learned CIT (A) on this issue which has not been controverted before us by the Revenue.”

12. As the facts mentioned above for the year under consideration and findings of the ITAT, Mumbai in earlier years in assessee’s own case are found to be similar, we don’tfind any perversity in the order of Ld. CIT (A), hence order of the Ld CIT (A) is sustained and Ground Nos. 1, 2, 3 & 4 raised by Revenue are dismissed.”

Page No. 40 , 361 & 362/MUM/2017 (A.Y. 2012-13) M/s. BSR and Company& Other group concerns Taxation Avoidance Agreements. In sum and substance, the discussion made by the CIT(Appeals) on each of the payments, in Para 1.3 to 1.3.4 by the CIT(Appeals) has been relied upon.

5. In the above background, we have carefully considered the rival submissions. Pertinently, the issue revolves around the payments made by the assessee to certain non-resident entities for professional services rendered by them outside India. It has been consistently explained by the assessee that the services of such entities were availed during thecourse of the execution of engagements of assessee firm. The assessee firm did not deduct the tax at source and, therefore, the Assessing Officer invoked the provisions of section 40(a)(i) of the Act and disallowed such expenditure. The details of the entities alongwith the amounts paid have been culled out by the Assessing Officer in Para-3 of the assessment order and the same is not being repeated for the sake of brevity. The payments have been made to 12 different professional entities based in 10 different countries. In so far as the payments that are made to KPMG LLP, USA and KPMG LLP, Canada are concerned, the same has been made on account of professional services rendered in relation to taxation and transfer pricing. Undisputedly, the professional services have been rendered by the aforesaid entities outside India. The stand of the Revenue is that such services are in the nature of ‘fee for technical services’ and, therefore, tax was liable to be deducted at source in India. Factually speaking, the aforesaid stand of the Revenue is devoid of any support because there is no material to establish that any technical knowledge, skill, etc. has been made available to the assessee so as to consider it as falling within the purview of Article- 12 of Indo-US Double Taxation Avoidance Agreement. It is also an established fact that such non-resident recipients do not have permanent establishment in India and, therefore, in the said background the same can, at best, be treated as independent personal services covered by Article-15 of the Indo-US Double Taxation Avoidance Agreement. As a consequence and in the absence of any fixed base in India, such income cannot be held chargeable to tax in India so as to require deduction of tax at source.Therefore, invoking of section 40(a)(i) of the Act to disallow such expenditure is not tenable. 5.1 In so far as payments to KPMG LLP, UK and KPMG USMCG Ltd. UK are concerned, herein also the said entities do not have permanent establishment in India. The CIT(Appeals) has found that such entities are eligible for the benefit of Article -15 of Indo-US Double Taxation Avoidance Agreement dealing with independent personal services and hence, payments are not chargeable to tax in Page No. 41 , 361 & 362/MUM/2017 (A.Y. 2012-13) M/s. BSR and Company& Other group concerns India so as to require deduction of tax at source. The aforesaid findings have not been disputed before us on the basis of any cogent material and, therefore, we hereby affirm the same. Consequently, invoking of section 40(a)(i) in the context of aforesaid payments is also not justified. 5.2 In the context of payments made to KPMG Tax Services Pvt. Ltd., Singapore, KPMG LLP, Singapore and KPMG Tax Advisor, Belgium, the CIT(Appeals) noted that they are companies registered in the respective countries, who have rendered services outside India. Such services related to assistance in audit, taxation, information technology services, conducing background checks, etc. Considering the nature of the services rendered, which is not disputed by the Revenue, in our view, the CIT(Appeals) made no mistake in holding that the payments are not 'fee for technical services'. The aforesaid services have been rightly held to be outside the purview of Article-12 and/or Article-13 of the respective tax treaties, and instead such income falls within the scope of Article-7 thereof i.e. in the nature of ‘business profits’. It has alsonot been disputed that such entities do not have a permanent establishment in India, therefore, such incomes are not chargeable to tax in India so as to require deduction of tax at source. On this aspect also, we affirm the stand of the CIT(Appeals) that such payments are not liable for disallowance under section 40(a)(i) of the Act. 5.3 With regard to the payments to KPMG, Mauritius, KPMG Hazen Hassan, Egypt, KPMG Dubai, UAE and KPMG, Sri Lanka are concerned, the CIT(Appeals) has noticed that the tax treaties with the respective countries do not have any Article defining 'fee for technical services'; and that the services were being rendered in relation to taxation matters. In this back ground, the CIT(Appeals) held that the payments for such services fall within the scope of article 14/15 of the respective treaties dealing with independent personal services and in the absence of any fixed place of business of the recipient in India, income from such services was not chargeable to tax in India. Therefore, there was no requirement to deduct tax at source and accordingly the invoking of section 40(a)(i) of the Act has been set-aside by the CIT(Appeals). The aforesaid factual matrix brought out by the CIT(Appeals) has not been assailed by the Revenue before us on the basis of any cogent material and, thus, the same is hereby affirmed. 5.4 The last item remaining is payment made by assessee to KPMG, Malaysia for audit services. It is not in dispute that the said services have been rendered outside India and the same cannot be Page No. 42 , 361 & 362/MUM/2017 (A.Y. 2012-13) M/s. BSR and Company& Other group concerns construed as managerial or technical services so as to be governed by Article-13 ofIndia-Malaysia tax treaty, as contended by the Revenue. Clearly, they are in the nature of independent personal services falling for consideration under Article-14 of Indo-Malaysia tax treaty and, therefore, in the absence of any fixed place of business of the recipient in India, the impugned income is not chargeable to tax in India. Therefore, in such a situation, assessee is not liable for deduction of tax at source in India so as to invoke the provisions of section 40(a)(i) of the Act. The stand of the CIT(Appeals) on this aspect is also affirmed by us on the basis of his findings, which have remained uncontroverted before us by the Revenue.

, Tribunal in assessee’s group case in ACIT vs. BSR & Co. in for Assessment Year 2009-10 passed the following order:

4. At the time of hearing, Ld. Representative for the assessee has furnished a fact sheet, which brings out the nature of services rendered by each of the recipients of income. Primarily, it is revealed that professional services have been rendered by such entities for assistance in audit, taxation, IT services, professional services in relation to transfer pricing, VAT, etc. Ld. Representative for the assessee has also tabulated the recipient entities country- wise and made reference to the respective clauses in the Double Taxation Avoidance Agreements. In sum and substance, the discussion made by the CIT(Appeals) on each of the payments, in Para 1.3 to 1.3.4 by the CIT(Appeals) has been relied upon.

5. In the above background, we have carefully considered the rival submissions. Pertinently, the issue revolves around the payments made by the assessee

Page No. 43 , 361 & 362/MUM/2017 (A.Y. 2012-13) M/s. BSR and Company& Other group concerns to certain non-resident entities for professional services rendered by them outside India. It has been consistently explained by the assessee that the services of such entities were availed during the course of the execution of engagements of assessee firm. The assessee firm did not deduct the tax at source and, therefore, the Assessing Officer invoked the provisions of section 40(a)(i) of the Act and disallowed such expenditure. The details of the entities alongwith the amounts paid have been culled out by the Assessing Officer in Para-3 of the assessment order and the same is not being repeated for the sake of brevity. The payments have been made to 12 different professional entities based in 10 different countries. In so far as the payments that are made to KPMG LLP, USA and KPMG LLP, Canada are concerned, the same has been made on account of professional services rendered in relation to taxation and transfer pricing. Undisputedly, the professional services have been rendered by the aforesaid entities outside India. The stand of the Revenue is that such services are in the nature of 'fee for technical services' and, therefore, tax was liable to be deducted at source in India. Factually speaking, the aforesaid stand of the Revenue is devoid of any support because there is no material to establish that any technical knowledge, skill, etc. has been made available to the assessee so as to consider it as falling within the purview of Article-12 of Indo-US Double Taxation Avoidance Agreement. It is also an established fact that such non- resident recipients do not have permanent establishment in India and, therefore, in the said background the same can, at best, be treated as independent personal services covered by Article-15 of the Indo-US Double Taxation Avoidance Agreement. As a consequence and in the absence of any fixed base in India, such income cannot be held chargeable to tax in India so as to require deduction of tax at source. Therefore, invoking of section 40(a)(i) of the Act to disallow such expenditure is not tenable. 5.1 In so far as payments to KPMG LLP, UK and KPMG USMCG Ltd. UK are concerned, herein also the said entities do not have permanent establishment in India. The CIT(Appeals) has found that such entities are eligible for the benefit of Article-15 of Indo-US Double Taxation Avoidance Agreement dealing with independent personal services and hence, payments are not chargeable to tax in India so as to require deduction of tax at source. The aforesaid findings have not been disputed before us on the basis of any cogent

Page No. 44 , 361 & 362/MUM/2017 (A.Y. 2012-13) M/s. BSR and Company& Other group concerns material and, therefore, we hereby affirm the same. Consequently, invoking of section 40(a)(i) in the context of aforesaid payments is also not justified. 5.2 In the context of payments made to KPMG Tax Services Pvt. Ltd., Singapore, KPMG LLP, Singapore and KPMG Tax Advisor, Belgium, the CIT(Appeals) noted that they are companies registered in the respective countries, who have rendered services outside India. Such services related to assistance in audit, taxation, information technology services, conducing background checks, etc. Considering the nature of the services rendered, which is not disputed by the Revenue, in our view, the CIT(Appeals) made no mistake in holding that the payments are not 'fee for technical services'. The aforesaid services have been rightly held to be outside the purview of Article12 and/or Article-13 of the respective tax treaties, and instead such income falls within the scope of Article-7 thereof i.e. in the nature of 'business profits'. It has also not been disputed that such entities do not have a permanent establishment in India, therefore, such incomes are not chargeable to tax in India so as to require deduction of tax at source. On this aspect also, we affirm the stand of the CIT(Appeals) that such payments are not liable for disallowance under section 40(a)(i) of the Act. 5.3 With regard to the payments to KPMG, Mauritius, KPMG Hazen Hassan, Egypt, KPMG Dubai, UAE and KPMG, Sri Lanka are concerned, the CIT(Appeals) has noticed that the tax treaties with the respective countries do not have any Article defining 'fee for technical services'; and that the services were being rendered in relation to taxation matters. In this back ground, the CIT(Appeals) held that the payments for such services fall within the scope of article 14/15 of the respective treaties dealing with independent personal services and in the absence of any fixed place of business of the recipient in India, income from such services was not chargeable to tax in India. Therefore, there was no requirement to deduct tax at source and accordingly the invoking of section 40(a)(i) of the Act has been set-aside by theCIT(Appeals). The aforesaid factual matrix brought out by the CIT(Appeals) has not been assailed by the Revenue before us on the basis of any cogent material and, thus, the same is hereby affirmed. 5.4 The last item remaining is payment made by assessee to KPMG, Malaysia for audit services. It is not in dispute that Page No. 45 , 361 & 362/MUM/2017 (A.Y. 2012-13) M/s. BSR and Company& Other group concerns the said services have been rendered outside India and the same cannot be construed as managerial or technical services so as to be governed by Article-13 of India-Malaysia tax treaty, as contended by the Revenue. Clearly, they are in the nature of independent personal services falling for consideration under Article-14 of Indo-Malaysia tax treaty and, therefore, in the absence of any fixed place of business of the recipient in India, the impugned income is not chargeable to tax in India. Therefore, in such a situation, assessee is not liable for deduction of tax at source in India so as to invoke the provisions of section 40(a)(i) of the Act. The stand of the CIT(Appeals) on this aspect is also affirmed by us on the basis of his findings, which have remained uncontroverted before us by the Revenue. 5.5 Apart therefrom, even if we were to accept, for the sake of argument, that the services by the aforesaid entities are in the nature of technical services and are rendered and utilized in India so as to be taxable in terms of section 9(1)(vii) of the Act, even then the disallowance is not warranted as the following discussion would show. Ostensibly, the requirement of rendering services in India in order to attract section 9(1)(vii) of the Act was removed by insertion of Explanation by the Finance Act, 2010 with retrospective effect from 1/4/1976. This has been understood by the Revenue to say that inspite of the services having been rendered by the recipients outside India, the same is taxable in India by applying the aforesaid amendment. In our view, such retrospective amendment would be determinative of the tax liability in the hands of the recipients of income. So however, in the present case, what is held against the assessee is the failure to deduct tax at source at the time of payment of such income. Ostensibly, dehors the aforesaid amendment, the impugned income was not subject to tax deduction at source in India as per the prevailing legal position. Taxability of a sum in the hands of recipient, on account of a subsequent retrospective amendment would not expose the assessee-payer to an impossible situation of requiring deduction of tax at source on the date of payment. Therefore, on this count also the assessee cannot be held to be in default in not deducting tax at source so as to trigger the disallowance under section 40(a)(i) of the Act. Ld. Representative for the assessee has relied upon the decision of the Mumbai Bench of the Tribunal in the case of Channel Guide India Ltd. v. Asstt. CIT [2012] 25 taxmann.com 25/139 ITD 49 (Mum.) in support of Page No. 46 ITA Nos. 360, 361 & 362/MUM/2017 (A.Y. 2012-13) M/s. BSR and Company& Other group concerns the above said proposition. In the absence of any contrary decision, the said plea of the assessee is also liable to be upheld and the disallowance made by the Assessing Officer under section40(a)(i) of the Act is untenable. The disallowance has been rightly deleted by the CIT(Appeals), which we hereby affirm.

6. Considering the decision of Tribunal in assessee’s own case, the ground no. 1 to 3 of the appeal raised by Revenue are dismissed with similar direction.

7. Ground No.4 relates to deleting the disallowance under section 40(a)(i) on account of payment made to KPMGI Co- operative, Switzerland. The Assessing Officer disallowed the payment made to KPMGI Co-operative, Switzerland holding that payment is made for use of name, the assessee derives substantial benefit being a part of KPMG group and the payment is towards the acquiring right to use the name of KPMG is in the nature of royalty. The ld. CIT(A) deleted the addition holding that KPMGI Cooperative is a mutual association and its receipts would not constitute income chargeable to tax.

8. We have noted that in assessee’s group case in ACIT vs. BSR & Co. in to 4844 & 4556/Mum/2016 dated 04.01.2018 for A.Y. 2011-12 & 2012-13, on similar grounds of appeal

, the coordinate bench of Tribunal after relying upon the decision in DCIT vs. KPMG (81 taxmann.com 118) passed the following order:.

12. Upon careful consideration we find that identical issue was considered by this tribunal in assessee's own case in ITA No. 2493/Mum/2012 & CO No. 97/Mum/2013 dated 07.04.2017 very elaborately and the conclusion read as under:

19. With the above discussion we may conclude that in the case in hand, there is a complete identity between the contributors and participators; the actions of the participators and contributors are in furtherance of the mandate of the association. There seems be no element of profit by the contributors from a fund made by them, which could only be expended or returned to themselves. Based on these conditions.and respectfully relying on the case laws as the Hon'ble Apex Court and various High Courts laid down that the case of the ITA Nos. 4842 to 4844 & 455 6/Mum/2016 Asst. CIT vs. M/s. BSR and Company assessee falls within the four corner of the Page No. 47 , 361 & 362/MUM/2017 (A.Y. 2012-13) M/s. BSR and Company& Other group concerns ambit of the 'Principle of Mutuality'. Thus, we do not find any reason or ground to interfere in the order passed by learned Commissioner (Appeals) hence the appeal filed by the revenue is dismissed. 9. Considering the decision of Tribunal wherein the similar issue has been decided in favour of assessee and against the revenue, therefore, we do not find any merits in the grounds of appeal raised by Revenue.”

16. As could be seen from the above order, Coordinate Bench has decided the issue in favour of the assessee. Since the issue is exactly similar and grounds as well as the facts are also identical, respectfully following the above decisions in assessee’s own case for the A.Y.2009-10, 2010-11, 2011-12, 2014-15, 2015-16, 2016-17 and 2017-18, we dismiss the ground raised by the revenue.

17. With regard to Ground Nos. 2, 3 and 4 which are in respect of KPMGI Co-operative, Switzerland is a mutual association and its receipts would not constitute income chargeable to tax and thus it is not obliged to withhold any tax. Ld. AR brought to our notice that similar ground which assessee has raised before the Coordinate Bench in ITA.No.723/Mum/2023 for the A.Y.2014-15 and the Coordinate Bench has considered and adjudicated the issue in favour of the assessee and he brought to our notice Para No. 15, 16 & 17 of the order.

Page No. 48 , 361 & 362/MUM/2017 (A.Y. 2012-13) M/s. BSR and Company& Other group concerns 18. On the other hand, Ld. DR relied on the orders of the Assessing Officer.

Page No. 50 , 361 & 362/MUM/2017 (A.Y. 2012-13) M/s. BSR and Company& Other group concerns 16. The Ld. CIT (A) has allowed the relief to the appellant by observing as under: 4.5 On the similar issue, the Hon'ble ITAT, Mumbai in the assessee’s own case for AY 2013-14 decided in favour of the assessee whereby it was observed as under: 15. Fact of the matter is, the appellant had paid membership fees of Rs.7,09,17,956/- to KPMG International Co-operative (“KPMGI”) without deduction of tax at source. KPMGI is a mutual association of its members firms. It has over 150 members across the globe one of whom is KPMG. KPMG is a partnership firm registered, under the Indian Partnership Act, 1932 pursuant to the approval received from the Secretariat of Industrial Approvals, Government of India. KPMG and KPMGI have entered into a Membership Agreement. KPMG, KPMGI and the Appellant have entered into a sub-license agreement. The rights and obligations of KPMG, the member and the Appellant, the sublicensee are the same. Thus, effectively, the Appellant is a member of KPMGI. The objectives of the KPMGI relate to the development, co-ordination, support, promotion and facilitation of the operations/ services of the KPMG Member Firms to its clients in various ways. KPMGI does not make any profits on its activities and does not have any commercial purpose. All members contribute to their share of costs incurred by KPMGI in providing support to the Member firms. The total costs are shares amongst member firms based on their budgeted revenues and collected in advance/ instalments and adjusted year-on-year for any shortfall/ excess recovery for the eventual benefit of members.

Page No. 51 ITA Nos. 360, 361 & 362/MUM/2017 (A.Y. 2012-13) M/s. BSR and Company& Other group concerns 18. ITAT, Mumbai’s decision in assessee’s own case in 4536/Mum/2016 dated 05.12.2018 held as under: “On appraisal of the above said findings, we find that the CIT (A) has decided the matter of controversy on the basis of the decision of the Hon’ble TAT in the assessee’s own case bearing ITA No.2493/M/2013. It is specifically held that the payment was based on the Principle of Mutuality; therefore, the same is not liable to be taxable in India. At the time of argument, the Ld. Representative of the assessee has also relied upon the decision in the case of DCIT Vs. KPMG (2017) 81 taxmann.com 118 (Mum) dated 07.04.2017 and in the case of ACIT VS. BSR & Company in ITA. No.4842 to 4844 & 4556/M/2016 dated 04.01.2018 etc. Since the issue has squarely been covered by the decision of Hon’ble ITAT in the assessee’s own, therefore, finding no justifiable grounds to interfere with the finding of the CIT (A), we decide the issue in favour of the assessee. We confirmed the finding of the CIT (A) on these issues and decide the issue in favour of the assessee against the revenue.”

19. In this regard, order of CIT(A) and orders of Mumbai ITAT in assessee’s own case for AY 2011-12 and AY 2012- 13 held that no disallowance on this front is warranted u/s. 40(a)(i) of the I.T. Act for not withholding tax from membership fees paid to KPMGI Cooperative, Switzerland as the facts mentioned above in the assessee’s case for earlier years and year under consideration are similar and therefore following the decision of Mumbai ITAT, we don’t find any perversity in the order of the Ld. CIT(A). Hence, order of Ld. CIT (A) is sustained and grounds raised

by Revenue are dismissed.” Respectfully following the decision of the Ld. ITAT as above, disallowance made u/s 40(a) (i) in respect of claim of remittance made to KPMG International Cooperative; Switzerland without TDS is hereby deleted.”

17. We have carefully considered the facts of the current year and the decision of ITAT in the case of the assessee in ITA No. 2549/Mum/2018 for AY 2013-14 relied upon by the Ld. CIT (A). Respectfully following the decision of coordinate bench for AY 2013-14, we are not inclined to interfere with the findings of the Ld. CIT (A). Hence the order of Ld. CIT (A) on this issue is sustained and the ground number 5 and 6 raised by the Revenue are dismissed.”

Page No. 52 , 361 & 362/MUM/2017 (A.Y. 2012-13) M/s. BSR and Company& Other group concerns 20. Since the issue is exactly similar and grounds as well as the facts are also identical, respectfully following the above decision in assessee’s own case for the A.Y. 2014-15, we dismiss the ground raised by the revenue.

Order pronounced in the open court on 02nd August, 2023.