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Income Tax Appellate Tribunal, MUMBAI BENCHE (I
Before: SHRI PRAMOD KUMAR, VICE- & SH. ANIKESH BANERJEE
5.4 The ld. Counsel fully relied on the order of the Coordinate Bench of assessee‟s own case in case of date of order 22.05.2019. The relevant para 20 to 22 is extracted below: “20. In view of the above factual and legal discussions, we hold that the assessing officer erred in taxing the service agreement receipt as „fee for included services‟ as per Article 12(4) of India USA DTAA for such services as mentioned in para 4 (supra), in absence of clause in the service agreement dated 09.01.2009, that the recipient would be able to perform these services of its own without any further assistance of the assessee.
The ratio of decision of Cochin Tribunal in M/s US Technology Resources Pvt. Ltd. vs. ACIT (supra) relied by Id. DR for the revenue is not helpful to the revenue. In the said case the assessee rendering the services in the field of management decision making. Further, in the said case it was clearly held the expertise and technology was made available by USA company was a technical services within meaning of Article 12(4)(b) of India-USA DTAA.
In the result, the ground No. 2 of the appeal is allowed.” to 162/Mum/2022 12 Assessment Years: 2007-08 & 2009-10
Considering the above fact, it is clear that the activities of the assessee is related to the GSA which the assessee was entered in agreement on 02.06.2003. The GSA receipts are not taxable under Article 12(4) of India-USA DTAA. From the memorandum of understanding, it is, obvious that as provided in clause 4B of Article 12 of the India-USA DTAA, that if the technical and consulting services made available are technical knowledge, experience, skill, know howor process orconsistthe development and transfer of a technical plan or technical design are considered to be technical or consultancy services. 6.1 It is also clarified that consultancy services not of technical nature cannot fall under “Included Services”. In view of this memorandum of understanding between two sovereign countries, the consultancy services which are technical in nature alleging to be included as technical and consultancy services for the purpose fees for included service as per sub-clause 4B of Article 12 of DTAA between India –USA. The services provided by the assessee consist of. i) Development and determination of short-term business strategies. ii) Overall management and co-ordination in relation to general policies and strategies per country perdivision. to 162/Mum/2022 13 Assessment Years: 2007-08 & 2009-10 iii) Maintenance of external relationship, to the extent that these services do not compromise shareholder services. iv) Humanresource services regarding group policy. v) Legal consultant services. vi) Insurance services. vii) Development, control and maintenance of management information systems; viii) Administrative support to group companies, including analysis of management information; ix) Development of short term and long-term IT policies and strategies; x) Management and co-ordination of IT policies between group companies. xi Tax invoices; xii Financial risk management services, to the extent these services donot compromise financing services; xiii Support in the area of international staffing career development and international job rotation; xiv Market research, target research and competitor research; and stock-based compensation.
We have noted that while undertaking the above services, the assessee had not executed any contract to make anybusiness. So, as to use services to 162/Mum/2022 14 Assessment Years: 2007-08 & 2009-10 independently by applying the technology. All the services undertaken by the assessee or either support service IT enable services; co-ordination of tax services as rendered above are not stage which request transfer of technology receipts to skill company. We are fully relied on the order of the coordinate bench in this issue and the addition amount of Rs.15,06,52,986/- are liable to be deleted. All other appeals are mutatis mutandis factually similar with ITA No. 160/Mum/2022.
In the result, all the appeals of the Revenue bearing to 162/Mum/2022 are dismissed.