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Income Tax Appellate Tribunal, DELHI BENCH “D” NEW DELHI
Before: SHRI AMIT SHUKLA & SHRI PRASHANT MAHARISHI
PER AMIT SHUKLA, J.M.: The aforesaid appeal has been filed by the Revenue against the impugned order dated 30.01.2006, passed by the CIT (Appeals)-XXIX, New Delhi for the quantum of assessment passed u/s.143(3) for the Assessment Year 2002-03. In the grounds of appeal, the Revenue has challenged that the ld. CIT (A) has erred in law and on facts by holding that payment received by the assessee on supply of design and drawing is not in the nature of ‘fees for technical services’ and accordingly, the Assessing Officer held that such a payment of Rs.1,21,25,556/- which has been subjected to TDS @20% should have been taxed in India in view of the provision of Section of Section 115A. Now the Revenue has revised the ground stating that the said payment amounts to ‘royalty’. The relevant ground now revised by the Department reads as under: “1. Whether on the facts and in the circumstances of the case, the ld. CIT (A) has erred in holding that the amount of Rs.1,21,25,556/- received by the assessee from M/s. Delhi Metro Rail Corp. Ltd. (DMRC) on account of off-shore design services was not liable to tax in India.
2. Without prejudice to the above, the ld. CIT (A) has erred in not considering the taxability of the said receipt as Royalty, failing to appreciate that the receipt is liable to tax in India as Royalty u/s.9(1)(vi) read with Article 12(3) of the India-France Double Avoidance Agreement (DTAA) as the payments under consideration were for the use of or for transfer of rights in drawings, design etc. to DMRC.”
It is undisputed that the tax rate for charging of royalty u/s.9(1)(vi) read with Article 12(3) of the India-France DTAA, is @10%; and accordingly, the tax effect would be Rs.12,12,555/-. This tax effect is much below the monetary limit of Rs.20 lacs as now prescribed by CBDT Circular No.03/2008 [F.NO.279/Misc.142/2007-ITJ (Pt)] dated 11th July, 2018.
Learned Department Representative, admitted that the tax effect involved in the appeal filed by the Revenue is below Rs. 20 lacs, therefore, in view of the aforesaid circular raising the monetary limits for filing of appeals by the Department before the ITAT has been increased to Rs.20 lacs, the department’s appeal is to be dismissed as withdrawn.
Further we find that, as per para 3 of the said Circular, it has been clarified that the pending appeals of the Revenue before the ITAT having monetary limit of Rs.20 lac will be treated as withdrawn. Since in the instant case, the tax effect is admittedly below Rs.20 lac, therefore, in view of the latest CBDT Circular (supra) raising the monetary limits for filing of the appeals before the Tribunal which is applicable even to pending appeals, the appeal filed by the Revenue is dismissed.
In the result, the appeal filed by the Revenue is dismissed.
Order pronounced in the open Court on 7th August, 2018.