MICHAEL PAGE INTERNATIONAL PTE LIMITED,MUMBAI vs. DEPUTY COMMISSIONER OF INCOME TAX (INTERNATIONAL TAXATION ) -3(2)(2), MUMBAI

ITA 1427/MUM/2025Status: DisposedITAT Mumbai15 May 2025AY 2022-238 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the income earned by the assessee from rendering management support services is not taxable as Fees for Technical Services (FTS) under Article 12(4) of the India-Singapore DTAA. The Tribunal relied on its coordinate bench's decisions in the assessee's own case for Assessment Years 2017-18 and 2018-19. The reasoning was that the 'make available' clause in the treaty requires the technical knowledge and skill to remain with the recipient even after the contract ends, enabling them to deploy similar technology without dependence on the provider. The Tribunal found that this condition was not satisfied, and the revenue had not made out a case for transfer of technology or skills. The Tribunal noted that the DRP had rejected the assessee's objections to keep the issue alive for the revenue, despite prior favorable rulings. Consequently, the addition of INR 15,59,23,979 was deleted. Ground No. 2 was allowed. Regarding Ground No. 3, as relief was granted on Ground No. 2 and the assessee did not wish to press it, it was dismissed as infructuous. Ground No. 4 was held to be consequential and needing no separate adjudication. Ground No. 5, concerning penalty proceedings, was dismissed as premature. The appeal was partly allowed.

What were the facts?

The assessee, Michael Page International Pte Ltd., a Singapore resident, appealed against the final assessment order dated 09/12/2024, passed under section 143(3) read with section 144C(13) of the Income Tax Act, 1961, for Assessment Year 2022-23. The appeal followed directions issued by the Dispute Resolution Panel-3, Mumbai. The primary dispute concerned the taxability of INR 15,59,23,979 earned from management support services. The assessee contended these were not taxable in India as Fees for Technical Services (FTS) under Article 12 of the India-Singapore DTAA, as no technical knowledge was made available. The Assessing Officer (AO) and the DRP disagreed, classifying the services as FTS. The assessee also raised grounds regarding the AO's failure to grant credit for Equalisation Levy paid, incorrect computation of interest under section 234B, and proposed penalty proceedings under section 270A.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the amount of INR 15,59,23,979 received for business support services constitutes 'Fees for technical services' under Article 12 of the India-Singapore Double Taxation Avoidance Agreement (DTAA)? - Assessee's contention: The receipts are not taxable as FTS because the services do not make available any technical knowledge, skill, or know-how to the Indian entity, and there is no transfer of technology. Reliance was placed on the coordinate bench's decision in the assessee's own case for preceding years. - Revenue's contention: The services are highly technical, resulting in a transfer of skills or technology, and thus taxable as FTS under Article 12 of the India-Singapore DTAA and section 9(1)(vii) of the Act. The lower authorities' orders were relied upon. 2. Whether the AO erred in failing to grant credit for Equalisation Levy (EL) of INR 31,18,480 while computing the tax demand, thereby violating section 144C(13)? - Assessee's contention: If relief is granted on the primary issue (Ground No. 2), the assessee does not wish to press this ground as it has suo motu discharged the EL and is not claiming a refund. 3. Whether the AO erred in computing and levying interest of Rs.47,50,746 under section 234B? - This issue is consequential. 4. Whether the AO erred in proposing to initiate penalty proceedings under section 270A?

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144C(13),Section 144C(1),Section 144C(5),Section 9(1)(vii),Section 90(2),Section 234B,Section 270A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “I” BENCH, MUMBAI

Before: SHRI SANDEEP SINGH KARHAILSHRI GIRISH AGRAWAL

For Appellant: Ms. Hirali Desai
For Respondent: Shri Soumendu Kumar Dash, Sr.DR

PER SANDEEP SINGH KARHAIL, J.M. The assessee has filed the present appeal against the impugned final assessment order dated 09/12/2024, passed under section 143(3) read with section 144C(13) of the Income Tax Act, 1961 (“the Act”), pursuant to the directions dated 27/11/2024 issued by the learned Dispute Resolution Panel-3, Mumbai, (“learned DRP”), for the assessment year 2022-23. 2. In this appeal, the assessee has raised the following grounds: ITA No.1427/Mum/2025 (A.Y. 2022-23) 2 "

1.

On the facts and in the circumstances of the case and in law, the final assessment order dated 9 December 2024 passed by the Learned Deputy Commissi

The order continues below.

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