CAPGEMINI SE (FORMERLY KNOWN AS CAPGEMINI SA,MUMBAI vs. ACIT-(INTL TAX) CIRCLE 2(1)(1), MUMBAI

आदेश/ ORDER

PER VIKAS AWASTHY, JM:

Shri M.M.Golvala appearing on behalf of the assessee submits that the 2. solitary issue raised in the appeal by the assessee is taxability of guarantee commission Rs.47,93,286/- received by the assessee / appellant during the period relevant to the assessment year under appeal. The ld. Authorized Representative for the assessee submits that the issue in appeal is identical to the one adjudicated by the Tribunal in assessee’s own case for assessment years 2012-13, 2013-14, 2015-16 and 2016-17. The Dispute Resolution Panel (DRP) in para- 5 of the directions has recorded that the issue involved is pari- materia to the earlier years decided in assessment year 2015-16 and 2016-17. The DRP in the impugned assessment year, placed reliance on the findings of the DRP in assessment year 2015-16 and 2016-17 and rejected the objections raised by the assessee in respect of guarantee commission. In assessment year 2015-16 and 2016-17 the assessee carried the issue in appeal before the Tribunal in and ITA No.1252/Mum/2021, respectively. The Tribunal vide order dated 07/11/2022 common for both said assessment years directed the Assessing Officer to deleted the addition in respect of guarantee commission. The ld. Authorized Representative for the assessee submits that the Department has accepted Tribunal order for the preceding assessment years as no further appeal was filed by the Department. The ld. Authorized Representative for the assessee further contended that once the issue has been settled, the Assessing Officer and DRP should have followed the order of Tribunal to avoid multiplicity of litigation. In support of his submissions the ld. Authorized Representative for the assessee placed reliance on the decision rendered by Hon’ble Apex Court in the case Asstt. Collector Central Excise Chandan Nagar vs. Dunlop India Ltd., 154 ITR 172. He further placed reliance on the decision in the case of Radhasoami Satsang vs. CIT, 193 ITR 321 (SC) to contend that rule of consistency should be followed to curb multiplicity of litigation.

“5. We have considered rival contentions and found that the AO taxed the guarantee commission on the plea that guarantee has been provided for the purpose of raising finance by an India company. As per the AO finance was raised in India. The AO further observed that finance requirement is met by a Indian branch of the bank, the benefits of guarantee are shared by the Indian entity with the assessee by making a compensatory payment. Accordingly the AO held that fees for guarantee arise in India. From the record we found that guarantee commission received by France company did not accrue in India nor it can be deemed to be accrued in India, therefore, not taxable in India under Income Tax Act. Furthermore, as per Article 23.3, income can be taxed in India, only if it arises in India. In the instant case, the income clearly arises in France because the guarantee has been given by the assessee, a French company to BNP Paribas, a French Bank, in France and, therefore, Article 23.3 has no applicability as income does not arise in India.” It is relevant to point here that in Assessment Year 2009-10 the addition was made by Assessing Officer holding guarantee commission to be “other income” invoking Article-23 of Double Taxation Avoidance Agreement (DTAA) between India and France. In subsequent Assessment Years, i.e. Assessment Year 2012-13, 2013-14, 2015-16 and 2016-17 similar addition was made. The Tribunal following the decision rendered in assessee's own case in Assessment Year 2009-10 deleted the addition.