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Facts
The assessee, ABB Switzerland Ltd., filed appeals for multiple assessment years (2010-11, 2011-12, 2012-13, 2014-15) against assessment orders concerning various taxability issues including offshore supply income, existence of PE, FTS/royalty, training charges, TDS credit, interest, and penalties. During the tribunal proceedings, the assessee applied to settle all these disputes under the Vivad-Se-Vishwas Scheme 2024 (VSVS).
Held
The Income Tax Appellate Tribunal dismissed all four appeals as withdrawn, noting that the assessee had opted for the Vivad-Se-Vishwas Scheme. The Tribunal granted liberty to the assessee to seek revival of the appeals if the VSVS application does not become final.
Key Issues
The key legal issues initially challenged included the taxability of offshore supply income, existence of business connection/Permanent Establishment (PE), tax rates for Fees for Technical Services (FTS)/royalty and training charges as per DTAA, short credit of TDS, levy of interest under sections 234A, 234B, 234D, and penalties under sections 271(1)(c), 271A. However, the appeals were ultimately dismissed as withdrawn due to the assessee opting for the Vivad-Se-Vishwas Scheme.
Sections Cited
250, 139(1), 234A, 234B, 234D, 271(1)(c), 271A, Article 5(1), Article 5(5), Article 12, Vivad-Se-Vishwas Scheme 2024
AI-generated summary — verify with the full judgment below
Before: SMT. BEENA PILLAI & SMT. RENU JAUHRI
Assessee by : Ms. Vasanti Patel Revenue by : Shri Vinod Tanwani Date of Hearing 17.02.2025 Date of Pronouncement 18.02.2025 आदेश / O R D E R PER BENCH :- These appeals are filed by the assessee against the order of the Learned Commissioner of Income-tax (Appeals), Mumbai passed u/s. 250 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] for Assessment Years [A.Ys.] 2010-11, 2011-12, 2012-13, 2014-15.
940/Mum/2015, 970/Mum/2016, 776/Mum/2019 A.Ys. 2010-11, 2011-12, 2012-13, 2014-15 ABB Switzerland Ltd. 2. The sole substantive issue of all the grounds of appeal of the above appeals is the same. The grounds of appeal for AY 2010-11 are as under: for AY 2010-11
1. Offshore supply taxed in India. a) On the facts and in the circumstances of the case, the learned Assessing Officer ('learned AO') has erred in law and in facts in holding that the consideration received from offshore supply contracts are taxable in India even though the title and ownership in goods supplied by the Appellant gets transferred outside India.
2. Holding that the Appellant has a business connection in India and also has a Permanent Establishment ('PE') in India and taxing 10% of the gross receipts of the Appellant from the offshore supply contracts at 40% (plus applicable surcharge and cess). a) On the facts and in the circumstances of the case, the learned AO has erred in law and in facts in holding that the Appellant has a business connection in India under the Act and also a PE in India in terms of Article 5(1) and Article 5(5) of Double Taxation Avoidance Agreement between India and Switzerland ('DTAA'). b) On the facts and in the circumstances of the case, the learned AO has erred in law and in facts in taxing 10% of the gross receipts from offshore supplies as business income, even though no business activities in respect of offshore supply contracts were carried out by the Appellant in India.
3. Fees for technical services/royalty income received from ABB Limited and ABB Global Industries & Services Limited taxed at 40% (plus surcharge and cess). a) On the facts and in the circumstances of the case, the learned AO has erred in law and in facts in taxing the fees for technical services/royalty income received from ABB Limited and ABB Global Industries & Services Limited aggregating to Rs 15,719,238 at 40% (plus surcharge and education cess) without considering the fact that the same should be taxable at 10% on gross basis as per Article 12 of the DTAA.
4. Training charges received from Power Grid Corporation of India Limited ('PGCIL) taxed at 40% (plus surcharge and cess). a) On the facts and in the circumstances of the case, the learned AO has erred in law and in facts in taxing the training charges received from PGCIL of Rs 937,125 at 40% (plus surcharge and education cess) without considering the fact that the same should be taxable at 10% on gross basis as per Article 12 of the DTAA.
5. Short credit of Tax Deducted at Source (TDS') a) The learned AO has erred in not granting TDS credit to the extent of Rs. 1,156,631.
6. Levy of interest under sections 234A of the Act 940/Mum/2015, 970/Mum/2016, 776/Mum/2019 A.Ys. 2010-11, 2011-12, 2012-13, 2014-15 ABB Switzerland Ltd. a) The learned AO has erred in levying interest under section 234A of Act amounting to Rs. 398,479, though the Appellant had filed the return of income within the statutory due date as per section 139(1) of the Act, as extended vide the Press Release dated 28 September 2010 issued by the Central Board of Direct Taxes. 7 Levy of interest under sections 234B of the Act a) The learned AO has erred in levying interest under section 234B of the Act amounting to Rs. 18,330,034.
8. Addition of Rs. 13,716,611 alleged as amount refunded to the Appellant and levy of consequential interest under section 234D of the Act, on the said refund. a) On the facts and in the circumstances of the case, the learned AO has erred in facts and in law in adding an amount of Rs. 13,716,611 as amount refunded to the Appellant, whereas no such refund has been received by the Appellant. b) The learned AO has erred in law and in facts, in levying consequential interest under section 234D of the Act amounting to Rs. 2,471,733 on the said refund, whereas there is no ground. to charge such interest as the Appellant has not received any refund.
9. Calculation error in the final assessment order. a) The learned AO has erred in committing a totaling error of Rs. 822,995 while calculating the total taxes payable by the Appellant.
10. Penalty under section 271(1)(c) and 271A of the Act. The learned AO has erred in initiating penalty proceedings under section 271(1)(c) and 271A of the Act.
11. Directions issued by the Honorable Dispute Resolution Panel ['DRP'] a) The DRP has erred in law and in facts in not taking cognizance of the objections filed by the Appellant in relation to the draft assessment order issued by the AO in the proceedings before them. b) The DRP further erred on facts and in law in confirming the draft order of the AO.
Relief a) The Appellant prays that directions be given to grant all such relief arising from the above grounds and also all relief consequential thereto. b) The Appellant craves leave to add to or alter, by deletion, substitution, modification or otherwise, the above grounds of appeal
, either before or during the hearing of the appeal. c) Further, the Appellant prays that all the above adjustments/additions / disallowances made by the learned AO and upheld by the DRP are bad in law and liable to be deleted.”
3. Similar grounds have been filed in 790/Mum/2016 & 776/Mum/2019 for AYs 2011-12, 2012-13 & 2014-15 respectively.
940/Mum/2015, 970/Mum/2016, 776/Mum/2019 A.Ys. 2010-11, 2011-12, 2012-13, 2014-15 ABB Switzerland Ltd. As the assessee has moved an application under the Vivad-Se-Vishwas- Scheme 2024 (VSVS) to settle all four appeals, these are being decided by a common order.
For each of the above assessment years, the assessee has filed Form No. 1 and the Designated authority has issued Form No. 2 determining the amount of tax payable by the assessee. Copies of these forms have been submitted before us.
In view of the above factual position, Ld. AR has submitted that the assessee would file Forn No. 3 with the Designated authority soon, and therefore, the appeals for AYs 2010-11, 2011-12, 2012-13 and 2014-15 be treated as withdrawn.
Accordingly, all four appeals are hereby dismissed as withdrawn. However, in the event, the assessee’s applications do not become final, it is given liberty to request for the revival of the appeals.