ROLLS ROYCE INDIA LTD,NEW DELHI vs. ADIT, NEW DELHI

Common issues are involved in these appeals which were heard together which are being disposed off by this consolidated order for the sake of convenience and brevity. 2.1 During the course of the hearing the ld. Counsel for the assessee at the very outset stated that under a mutual agreement procedure (MAP), the competent authority in India received a reference from competent authority in United Kingdom and a mutual agreement procedure has taken place for the impugned assessment years and that the India has agreed to withdraw the amounts of profits it has assessed and the UK had agreed to relieve the amounts in dispute. He furnished an application dated 23/01/2014 addressed to Deputy Director of Income Tax, Circle 2(1), International Taxation, copy of which is placed on the record and reads as under: “January 23, 2014 The Deputy Director of Income Tax Circle 2(1), International Taxation Room No. 419, Dr. S.P. Mukharjee Civic Center, J.L.N. Marg, New Delhi 110002 Re: M/s Rolls Royce India Limited/ PAN AAACR4693K Sub: Conclusion of Mutual Agreement Procedure (“MAP”) under the Double Taxation Avoidance Agreement between India and United Kingdom of Great Britain and Northern Ireland (“DTAA”) for the AY 1998-99 to AY 2005-06 Dear Sir This is with reference to the captioned subject. In this respect, we under the instructions of and on behalf of our client M/s Rolls Royce India Ltd. (“the Company”) submit that the Company has initiated the MAP proceedings under Article 27 of the DTAA in its case for the AY 1998-99 to AY 2005-06. As per the MAP conclusion between Competent Authority of India and United Kingdom, the assessed income of the Company for the AY 1998-99 to the AY 2005-06 is required to be reduced by the agreed amounts. Thus, we humbly request your goodself to kindly verify the enclosed letter at your end and let us know the tax demand payable by the Company after giving effect to the MAP conclusion. It may be noted that the Company has already furnished a Bank Guarantee amounting to Rs. 120 million before your goodself in relation to the aforesaid MAP proceedings. Thanking you and assuring you of our full cooperation at all the times. For Luthra & Luthra Law Offices Sd/- Mayank Aggarwal 2.2 The ld. Counsel for the assessee further stated that as per the provisions contained in section 44H(4) of the Income Tax Act, 1961, the Assessing Officer should give effect to the resolution arrived at under Mutual Agreement Procedure. 2.3 In his rival submissions the ld. CIT(DR) although supported the impugned order passed by the ld. CIT(A). However, could not controvert the aforesaid contentions of the ld. Counsel for the assessee.

We have considered the submissions of both the parties and carefully gone through the material available on the record. In the present case it is an admitted fact that the assessee furnished a letter dated 23/01/2014 to the Deputy Director of the Income Tax, Circle 2(1), International Taxation, New Delhi, informing him that MAP proceedings under Article 27 of the Double Taxation Avoidance Agreement had concluded and effect to that conclusion was to be given. In the instant case, it is also clear that the said letter was not available to the ld. CIT(A) at the time of passing the impugned order dated 15/02/2009. 3.1 To resolve the present controversy it is relevant to discuss the provisions Rule 44H of the Income Tax Rules, 1962 contained in Part IX C of the IT Rules, 1962 inserted by the IT(XIIth Amendment) Rules, 2014 effective from 28/11/2014 which read as under: “Action by the Competent Authority of India and procedure for giving effect to the decision under the agreement. 44H. (1) Where a reference has been received from the competent authority of a country outside India under any agreement with that country with regard to India shall call for and examine the