THE DIRECTOR OF INCOME TAX vs. M/S ABBEY BUSINESS SERVICES INDIA PVT LTD

1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 1ST DAY OF DECEMBER 2020 PRESENT THE HON’BLE MR. JUSTICE ALOK ARADHE AND THE HON’BLE MR. JUSTICE H.T.NARENDRA PRASAD I.T.A. NO.215 OF 2014 BETWEEN: 1. THE DIRECTOR OF INCOME-TAX

INTERNATIONAL TAXATION

RASHTROTHANA BHAVAN

NRUPATHUNGA ROAD

BANGALORE. 2. THE DY. DIRECTOR OF INCOME-TAX

(INTERNATIONAL TAXATION)

CIRCLE -1 (1)

RASHTROTHANA BHAVAN

NRUPATHUNGA ROAD

BANGALORE. ... APPELLANTS (BY SRI.K.V.ARAVIND, ADV.,) AND: M/S ABBEY BUSINESS SERVICES INDIA PVT. LTD. THE RESIDENCY, 7TH FLOOR 133/1, RESIDENCY ROAD BANGALORE - 560 025. ... RESPONDENT (BY SRI.HIMANSHU SHEKHAR SINHA ADV. FOR SRI.R.V.GOUTHAM ADV. SRI.BHUWAR DOOPAR ADV. SRI.YASH VERMANI ADV. ) - - -

2 THIS ITA IS FILED UNDER SECTION 260-A OF I.T. ACT, 1961 ARISING OUT OF ORDER DATED 20.12.2013 PASSED IN ITA NO.1030/BANG/2013 FOR THE ASSESSMENT YEAR 2005-06, PRAYING TO: (I) FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE. (II) ALLOW THE APPEAL AND SET ASIDE THE ORDER DATED 31.05.2011 PASSED BY THE ITAT, BANGALORE IN ITA NO.1030/BANG/2013 AND CONFIRM THE ORDER OF THE APPELLATE COMMISSIONER CONFIRMING THE ORDER PASSED BY THE DEPUTY DIRECTOR OF INCOME TAX, CIRCLE - 1(1), BANGALORE. THIS ITA COMING ON FOR FINAL HEARING, THIS DAY, ALOK ARADHE J., DELIVERED THE FOLLOWING: JUDGMENT This appeal under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as the Act for short) has been preferred by the revenue. The subject matter of the appeal pertains to the Assessment year 2005-06. The appeal was admitted by a bench of this Court vide order dated 12.01.2016 on the following substantial questions of law: (i) Whether in the facts and circumstances of the case, the tribunal is justified in law in holding that the assessee cannot be held as 'assessee in default' under Section 201(1) of I.T.Act even when the

3 proceedings initiated by revenue under said provision is in accordance with parameters of said section? (ii) Whether in the facts and circumstances of the case, the tribunal is justified in law in holding that the assessee cannot be held as 'assessee in default' under Section 201(1A) of I.T.Act even when the proceedings initiated by revenue under said provision is in accordance with parameters of said section? (iii) Whether on the facts and circumstances of the case, the tribunal is right in holding that the payments made by assessee to Abbey National Plc, UK are not liable for deduction of TDS under Section 195 of the I.T. Act and as such invoking of Section 40(a)(i) by assessing authority is not proper even when the nature of transactions and materials available on record established that payments made by assessee to Abbey National Plc, UK, can be categorized as 'fees for technical services' under Section 9(1)(vii) of the Act' and as such liable for deduction of

4 TDS under Section 195 of the Act? (iv) Whether on the facts and circumstances of the case, the tribunal is right in law in holding that the assessee cannot be held as 'assessee in default under Section 201(1) of the Act' even when the assessing authority after considering the particulars furnished by assessee, passed order under Section 201(1) of the I.T. Act holding that services rendered by Abbey UK to Abbey, India are in the nature of Technical Services as per Section 9(i)(vii) Explanation 2 Article 13(4)(c) of the India - UK Double Taxation Agreement (for short DTAA)? 2. For the reasons assigned by us in the judgment passed today in I.T.A.No.214/2014, the substantial questions of law framed by a bench of this court are answered against the revenue and in favour of the assessee.

5 In the result, we do not find any merit in this appeal, the same fails and is hereby dismissed. Sd/- JUDGE Sd/- JUDGE ss