DCIT (INTERNATIONAL TAXATION), CIRCLE-1(2)(1), NEW DELHI vs. CARRIER CORPORATION, USA

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ITA 5083/DEL/2018Status: HeardITAT Delhi01 February 2022AY 2013-143 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal dismissed the appeal as the tax effect was less than Rs. 50 lakhs, as per CBDT Circular No. 17/2019. The revenue was granted liberty to approach the Tribunal if the tax effect was found to be higher.

What were the facts?

The revenue appealed against the CIT(A)'s deletion of an addition made on account of taxation of reimbursements for IT-related support. The addition was treated as Fee for Included Services (FIS) and Royalty under the Indo-US DTAA and the IT Act.

What were the issues?

Whether the appeal is maintainable based on the tax effect criterion as per CBDT circulars, and the underlying issue of taxing IT support reimbursements as FIS and Royalty.

Which sections of the Income-tax Act were involved?

Section 115A

AI-generated summary — verify with the full judgment below

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

Before: SH. N. K. BILLAIYA & MS. ASTHA CHANDRA

Hearing: 01/02/2022Pronounced: 01/02/2022

This appeal filed by the revenue is preferred against the order of the CIT(A)-44, New Delhi dated 27.04.2018 for A.Y. 2013-14.

2.

The solitary grievance of the revenue read as under :- “1. Whether on the facts and circumstances of the case and on the basis of law, the Ld.CIT(A) has erred in deleting the addition of Rs.2,03,33,932/- made by AO on account of taxation of Reimbursements for IT related support held to be in the nature of Fee for Included Services [FIS] taxable under Article 12(4) of the Indo-US DTAA and also taxable as Royalty for use of equipment under the IT Act as well as Article 12(3) of the Indo-US DTAA. 2. The CIT(A) failed to appreciate that as per the TP study of Indian AE such services were of the nature of FIS and even make available clause was satisfied in the TP study.” 2. A perusal of the grievance of the revenue show that the deletion by the CIT(A) is subject to 10% of tax u/s.115A of the Act which means that the tax effect would be less than Rs. 50 lakhs, therefore, this appeal is not maintainable as per CBDT Circular No. 17/2019 dated 08.08.2019.

3.

This appeal is, accordingly, dismissed with liberty to the revenue to approach the Tribunal as per the provisions of law, should it feel that the tax effect is more than Rs. 50 lakhs.

4.

In the result, the appeal filed by the revenue is dismissed.

5.

The order is pronounced in the open court on 01.02.2022 in the presence of both the rival representatives.

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