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Income Tax Appellate Tribunal, DELHI ‘D’ BENCH,
Before: SHRI N.K. BILLAIYA, & SHRI CHALLA NAGENDRA PRASAD
PER N.K. BILLAIYA, ACCOUNTANT MEMBER:
This appeal by the assessee is preferred against the dated 28.06.2017 framed u/s 144C(13) r.w.s 143(3) of the Income-tax Act, 1961 [hereinafter referred to as 'The Act'].
The assessee has raised the following grounds of appeal:
“1. That on the facts and in the circumstances of the case and in law, the Learned Assessing Officer (“Ld. AO”) has erred in assessing the income of the appellant at INR 1,13,03,29,201/- for the subject year.
1.1. That on the facts and in the circumstances of the case and in law, the Hon’ble Dispute Resolution Panel (“Hon'ble Panel”) erred in not directing the Ld. AO to hold that the appellant is not liable to tax in India.
2. That on the facts and in the circumstances of the case and in law, the Hon’ble Panel erred in not directing the Ld. AO to follow the orders issued by the Hon’ble High Court of Delhi in the appellant's own case for AY 2006-07 to AY 2008-09, wherein the Hon’ble Delhi
High Court has dismissed the appeals filed by the Revenue Department against the favourable orders of the Hon’ble Income Tax Appellate Tribunal, New Delhi (“Hon’ble ITAT”).
3. That on the facts and circumstances of the case and in law, the Hon’ble Panel and the Ld. AO erred in holding that the receipts of the appellant are in the nature of "Royalties" within the ambit of Explanation 2 to section 9(i)(vi) of the Income-tax Act, 1961 (“the Act”) and Article 12(3) of the India-USA Double Taxation Avoidance Agreement (“DTAA”).
4. That without prejudice to the above, on facts and circumstances of the case and in law, the Hon’ble Panel and the Ld. AO erred in not appreciating that appellant being a resident of USA is covered by the beneficial provisions of DTAA between India and USA and accordingly, could not be taxed under the provisions of the Act.
5. That without prejudice to the above, on facts and circumstances of the case and in law, the Hon’ble Panel and the Ld. AO erred inferring that the expanded definition of “Royalties” contained in section 9(i)(vi) of the Act as retrospectively amended by Finance Act, 2012, is applicable on the definition of "Royalties" as provided under Article 12(3) of the India-USA DTAA, whereas it is a settled position in law that amendment in the Act cannot automatically impact the interpretation of a DTAA.
6. That without prejudice to the above, on the facts and in the circumstances of the case and in law, the Hon’ble Panel and Ld. AO erred in holding that the receipts of appellant from its non resident customers are also chargeable to tax in India as per the provisions of section 9(i)(vi)(c) of the Act and Article 12(7) of the India-USA DTAA.
6.1 That without prejudice to the above, on the facts and circumstances of the case and in law, the Hon’ble Panel and Ld. AO erred in categorizing the receipts of appellant from its non resident customers into three categories without giving a reasonable basis and accordingly, taxing 90 percent, 50 percent and 5 percent of the revenue from such non-resident customers.
That without prejudice to the above, the Assessing Officer on facts and circumstances of the case and in law, while computing the tax payable, the Assessing Officer erred in law in levying surcharge at 2 percent and education cess [including secondary and higher education cess] of 3 percent on the rate of tax as provided under Article 12 of the India-USA DTAA.
8.That the Ld. AO erred in initiating penalty proceedings under section 271(i)(c) of the Act.
The above grounds are without prejudice to each other.”
At the very outset, the ld. counsel for the assessee stated that the impugned issues have been decided by this Tribunal in assessee’s own case in Assessment Year 2015-16 in favour of the assessee and against the assessee.
Per contra, the ld. DR could not bring any distinguishing decision in favour of the Revenue.
We have carefully perused the orders of the authorities below. We find force in the contention of the ld. counsel for the assessee. A similar quarrel was considered and decided by this Tribunal in vide order dated 11.10.2021. The relevant findings read as under:
“8. We have carefully considered the orders of the authorities below. In our considered opinion and after going through the decisions of the Hon'ble High Court of Delhi in the case of the appellant, we find that the quarrel has now been well settled in favour of the assessee and against the Revenue by the decision of the Hon'ble High Court of Delhi in and 545/2012 order dated 28.09.2012. The Hon'ble High Court of Delhi, again in ITA no.
900/2019, order dated 15.12.2019 had the occasion to consider similar quarrel and held as under:
“The present appeal is directed against the order dated 26.03.2019 passed by the Income Tax Appellate Tribunal Delhi Bench (ITAT): „G‟, New Delhi in in respect of the assessment year 2012-13. The Tribunal has placed reliance on the decisions of this Court in M/s Asia Satellite Telecommunications Co. Ltd. Vs. DIT (2011) 332 ITR 340 (Del) and Director of International Taxation Vs. New Skies Satellite BV, (2016) 382 ITR 114 Del.
Since the issues raised by the Revenue are squarely covered by the aforesaid decisions of this Court, in our view, no question of law arises for our consideration. Dismissed.”
Similar view was taken in Assessment Year 2013-14 by this Tribunal in wherein the Tribunal has placed strong reliance on the decision of the Hon'ble High Court of Delhi in the case of Asia Satellite Telecommunications Co. Ltd 332 ITR 340 and New Sky Satellite 382 ITR 114 and since the order of the Tribunal was based on these decisions of the Hon'ble Jurisdictional High Court of Delhi, the Hon'ble High Court dismissed the appeal of the Revenue holding that no question of law arises.
Considering the facts of the case in light of the decisions of the Hon'ble Jurisdictional High Court [supra] in the appellant’s own case, we direct the Assessing Officer to treat the income of the assessee as not liable to tax in India.”
On finding parity of facts, respectfully following the findings of the co-ordinate bench [supra], we direct the Assessing Officer to treat the income of the assessee as not liable to tax in India.
In the result, the appeal of the assessee in is allowed.
The order is pronounced in the open court on 13.12.2021 in the presence of both the rival representatives.