INTERNATIONAL MANAGEMENT GROUP (UK) LIMITED,LONDON vs. ACIT (INTERNATIONAL TAXATION) - 2(1)(1), NEW DELHI

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ITA 118/DEL/2021Status: DisposedITAT Delhi08 September 2021AY 2017-184 pages

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

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the issue was identical to previous assessment years where the issue was decided against the assessee. Following the co-ordinate bench's decision, the appeal was dismissed.

What were the facts?

The assessee, a UK-incorporated company, appealed against an assessment order that taxed certain receipts as fees for technical services (FTS). The assessee argued these receipts were effectively connected with its permanent establishment and should be taxed as business income under the India-UK DTAA.

What were the issues?

Whether receipts not attributable to a permanent establishment can be taxed as fees for technical services under Article 13 of the India-UK Tax Treaty, and if the 'make available' principle was correctly applied.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144C(5),Section 144C(13)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI

For Appellant: Shri Rishabh Malhotra, C.A
Hearing: 08.09.2021Pronounced: 08.09.2021

ORDER

PER ANIL CHATURVEDI, AM:

1.

This appeal filed by the assessee is directed against the order of the Asstt. Commissioner of Income Tax, Circle-2(1)(1), (Intl. Taxn.) New Delhi under section 144C(5) of the Act pursuant to the directions of Dispute Resolution Panel (DRP) – I, New Delhi order dated 29.10.2020 for Assessment Year 2017-18.

2.

The relevant facts as culled from the material on records are as under :

3.

Assessee is a company incorporated under the laws of United Kingdom (‘UK’) and is stated to be resident of UK within the meaning of Article – 4 of the Agreement for Avoidance of Double Taxation and Prevention of Fiscal Evasion between India and UK. Assessee filed its return of income for A.Y. 2017-18 on 30.11.2017 declaring income of Rs.8,43,18,751/- which was later on revised on 29.03.2018 declaring total income at Rs.10,67,32,840/-. The case was selected for scrutiny and thereafter, notice u/s 143(2) of the Act was issued and served on the assessee. Subsequently, assessment was framed u/s 143(3) r.w.s 144C(13) of the Act vide order dated 23.12.2020 and the total income was determined at Rs.18,34,89,850/-. Aggrieved by the order of AO pursuant to the direction of DRP, assessee is now in appeal before us and has raised the following grounds:

1. “That in the facts and circumstances of the case & in law, the order passed by the Ld. Assistant Commissioner of Income Tax (“AO”) under Section 143(3) read with Section 144C(13) of the Income Tax Act 1961 (“the Act”) assessing the income of the Appellant at Rs. 18,34,89,850/- instead of returned income of Rs. 10,67,32,840/- is bad in law.

2. That in the facts and circumstances of the case & in law, the Ld. AO as well as Hon’ble Dispute Resolution Panel (“DRP”) erred in not appreciating that the receipts of Rs. 7,67,57,010/- are effectively connected with the admitted PE and is accordingly to be taxed as business income in view of the provisions of Article 13(6) of the India UK DTAA.

3. That in the facts and circumstances of the case & in law, the Ld. AO as well as Hon’ble DRP erred in concluding that the balance receipts amounting to Rs. 7,67,57,010/- would partake character of fees for technical services as per the provisions of Article 13 (4) (c) of the India-UK DTAA.

4. That in the facts and circumstances of the case & in law, the Ld. AO/Hon’ble DRP grossly erred in misconstruing the principle of make available as per Article 13(4)(c) of the India UK DTAA and accordingly, erred in holding that the receipts of the Appellant satisfies the make available principle and is to be taxed as FTS under the provisions of India UK DTAA.”

4.

Before us, at the outset, Learned AR submitted that the issue involved in the present appeal is whether the balance receipts not attributable to permanent establishment of the assessee can be taxed as fees for technical services under Article- 13 of the India-UK Tax Treaty. He fairly submitted that the identical issue arose in assessee’s own case for A.Ys. 2010-11 to 2016-17 and the issue was decided against the assessee. He therefore submitted that the matter be decided accordingly.

5.

Learned DR did not controvert the submissions made by the Learned AR.

6.

We have heard the rival submissions and perused the materials available on record. Before us, it is Learned AR’s submissions that issue raised in the present appeal is identical to the issues raised in the assessee’s own case for A.Ys. 2010-11 to 2016-17 and in those years the issues has been decided against the assessee. In the absence of any distinguishing feature in the facts of the case in the year under consideration and that of the earlier years, we following the decision of the Co-ordinate Bench of Tribunal in assessee’s own case for A.Y. 2010-11 order dated 04.10.2016 and for similar reasons dismiss the appeal of the assessee. Thus the appeal of the assessee is dismissed.

7.

In the result, appeal of the assessee is dismissed.

Order pronounced in the open court on 08.09.2021

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