DDIT, New Delhi V. M/s. JC Bamford Investment, England

CO 161/DEL/2014

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 0398 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 11 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 27-02-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 16-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: D S BHARDWAZ
• Keywords: Double taxation relief
• Section: 145; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: D : NEW DELHI BEFORE SH. P.K. BANSAL , ACCOUNTANT MEMBER AND SMT. DIVA SINGH, JUDICIAL MEMBER ITA NO. 1539 /DEL/ 2014 ASSESSMENT YEAR: 2009 - 10 JC BAMFORD INVESTMENTS VS. DEPUTY DIRECTOR OF INCOME - TAX, ROCESTER, UTTOXETER, ST 145JP CIRCLE - 3(1), INTERNATIONAL TAXATION, STAFFORDSHIRE, ENGLAND. NEW DELHI (PAN: AACCJ0726B ) (APPELLANT) (RESPONDENT) WITH C.O. NO. 161/DEL/2014 [IN ITA NO. 1539/DEL/2014] ASSESSMENT YEAR: 2009 - 10 DEPUTY DIRECTOR OF INCOME - TAX, VS. JC BAMFORD INVESTMENT ROCESTER, CIRCLE - 3(1), INTERNATIONAL UTTOXETER, ST 145 , JP, STAFFORDSHIRE, TAXATION, NEW DELHI ENGLAND. ASSESSEE BY : SH. G.C. SRIVASTAVA, ADV.; SH. SAURABH SRIVASTAVA, CA & SH. D.S. BHARDWAZ DEPARTMENT BY: SH. BINOD KUMAR, SR. DR DATE OF HEARING: 25.02.2015 DATE OF PRONOUNCEMENT: 27.02.2015 ORDER PER P.K. BANSAL , AM : ITA NO. 1539/DEL /2014 THIS APPEAL AS WELL AS THE CROSS OBJECTION ARISE OUT OF THE ORDER OF THE ASSESSING OFFICER (IN PURSUANCE OF THE DIRECTION DATED 20.12.2013 OF THE DISPUTES RESOLUTION PANE L) FOR THE IMPUGNED ASSESSMENT YEAR. 2 ITA NO. 1539/DEL/2014 & C.O. NO. 161/DEL/2014 2. THE GROUND NO. 1 IS GENERAL IN NATURE WHICH DOES NOT REQUIRED ANY ADJUDICATION. 3. THE GROUND NOS. 2 AND 3 ARE AGAINST THE FINDINGS OF THE ASSESSING OFFICER THAT THE ASSESEE HAS AS A SERVICE PE ESTABLISHMENT IN INDIA WITHIN THE MEANING OF ARTICLE 5 OF INDO - U K DOUBLE TAXATION AVOIDANCE AGREEMENT . BOTH THE PARTIES AGREED THAT THIS ISSUE IS DULY COVERED BY A DECISION OF THE TRIBUNAL PASSED IN ITA NO. 80/DEL/2013 FOR A.Y. 2008 - 09, DATED 4 TH JULY, 2014 AGAINST THE ASSESSEE WHEREIN THE TRIBUNAL HAS HELD AS UNDER: 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THAT IN THE EARLIER YEARS, JCBE LICENSED INTELLECTUAL PROPERTY RIGHTS FOR MANUFACTURE OF EXCAVATORS UNDER THE BRAND NAME 3DX TO JCBI. HOWEVER, BY VIRTUE O F NEW AGREEMENT ENTERED ON 17.12.07 W.E.F. 01.04.07 AMONGST THE ASSESSEE, JCBE AND JCBI, THE INTELLECTUAL PROPERTY RIGHTS CAME TO BE SUB - LICENSED TO THE ASSESSEE WITHOUT INTERFERING IN ANY MANNER ITS ACTUAL EXPLOITATION BY JCBI. ALL THE TERMS AND CONDITION S FOR THE USE OF SUCH RIGHTS BY JCBI UNDER TTA AND IPAA ARE SAME. THE ONLY DIFFERENCE THAT CAME INTO THE HITHERTO ARRANGEMENT WAS THAT WHEREAS EARLIER JCBI WAS PAYING ROYALTY DIRECTLY TO JCBE, NOW IT IS BEING ROUTED THROUGH THE ASSESSEE WITH THE DEDUCTION OF 0.05%. THE QUESTION OF A SERVICE PE OF JCBE IN INDIA CAME UP FOR CONSIDERATION BEFORE THE TRIBUNAL FOR ASSESSMENT YEARS 2006 - 07 AND 2007 - 08. VIDE ITS ORDER FOR THE AY 2006 - 07, THE TRIBUNAL CATEGORIZED EMPLOYEES OF JCBE ON DEPUTATION TO INDIA ON ASSIGNME NT BASIS IN THE FIRST CATEGORY AND THOSE DOING STEWARDSHIP ACTIVITIES AND INSPECTION AND TESTING IN THE SECOND CATEGORY. JCBI HAS BEEN HELD TO BE CONSTITUTING A SERVICE PE OF JCBE IN INDIA BECAUSE OF THE EMPLOYEES OF THE FIRST CATEGORY. THE MATTER OF THE E STABLISHMENT OF PE FOR THE CURRENT YEAR WOULD HAVE BECOME A COVERED MATTER FOR THE CURRENT YEAR IF THERE HAD NOT BEEN THE NEW FACTOR OF THE TRIPARTITE AGREEMENT DATED 17.12.2007, UNDER WHICH JCBE SUB - LICENSED THE INTELLECTUAL PROPERTY RIGHT TO THE ASSESSEE TO MANAGE THE LICENSING OF JCB UK S INTELLECTUAL PROPERTY TO JCB INDIA GOING FORWARD. . TO BUTTRESS THE VIEW THAT THE EMPLOYEES OF JCBE CONSTITUTED SERVICE PE OF THE ASSESSEE IN INDIA, THE AO HAS OBSERVED THAT THE EMPLOYEES OF JCBE, EARLIER SECONDED TO J CBI, CONTINUED TO RENDER SERVICES TO JCBI DURING THE YEAR IN QUESTION IN THE SAME WAY AS THEY WERE DOING IN THE PAST. THIS POSITION WAS NOTICED 3 ITA NO. 1539/DEL/2014 & C.O. NO. 161/DEL/2014 BY VIRTUE OF CLAUSE (D) OF THE NEW AGREEMENT AND CLAUSE 4.2 OF THIS AGREEMENT WHICH CLARIFIES THAT THE DELIVERY OF TECHNICAL DOCUMENTATION AND MAKING AVAILABLE OF TECHNICAL PERSONNEL AS SET OUT IN EARLIER CLAUSES III AND IV OF THE TECHNOLOGY AGREEMENT SHALL REMAIN UNAFFECTED BY THIS AGREEMENT AND SHALL CONTINUE AS RIGHTS AND OBLIGATIONS BETWEEN JCBE AND JCBI UNDER THE TECHNOLOGY AGREEMENT. THE AO HELD THAT THE ABOVE DETAILS COUPLED WITH THE FACT THAT JCBE RECEIVED 99.5% OF ROYALTY FROM THE ASSESSEE LEFT NOTHING TO DOUBT THAT THERE WAS SERVICE PE OF THE ASSESSEE AS PER ARTICLE 5(2)(K) OF THE DTAA COVERED WITHIN THE AMBIT OF OTHER PERSONNEL . SINCE THIS POSITION HAS BEEN CANDIDLY ACCEPTED BY THE LD. AR AS WELL, WE, THEREFORE, REFRAIN FROM ANY INDEPENDENT EVALUATION OF THIS ASPECT. THE LD. AR ACCENTUATED THAT HIS OBJECTIONS AGAINST THE HOLDING OF THE SERVICE PE OF THE ASSESSEE IN INDIA WERE PRACTICALLY THE SAME WHICH WERE TAKEN FOR THE EARLIER YEARS. THE TRIBUNAL HAS DISCUSSED AND JETTISONED SUCH OBJECTIONS IN ITS ORDER FOR THE A.Y. 2006 - 07. UNDER SUCH CIRCUMSTANCES AND FOLLOWING THE PRECEDENT, WE HOLD THAT ALL THE REQUISITE CONDITIONS FOR ATTRACTING THE MANDATE OF ARTICLE 5(2)(K) ARE SATISFIED INASMUCH AS (I) THERE IS FURNISHING OF SERVICES INCLUDING MANAGERIAL SERVICES; (II) SUCH SERVICES ARE OTHER THAN THOSE TAXABLE UNDER ARTICLE 13 (ROYALTIES AND FEES FOR TECHN ICAL SERVICES); (III) SUCH SERVICES ARE RENDERED OUT OF INDIA; (IV) SUCH SERVICES ARE RENDERED BY OTHER PERSONNEL ; AND (V) SUCH ACTIVITIES CONTINUED FOR A PERIOD OF MORE THAN 90 DAYS WITHIN 12 MONTHS PERIOD. IT IS THUS HELD THAT THE SERVICE PE OF THE A SSESSEE IS ESTABLISHED IN INDIA. THESE GROUNDS ARE, THEREFORE, NOT ALLOWED. 3.1 RESPECTFULLY FOLLOWING THE AFORESAID ORDER OF THE TRIBUNAL, WE DISMISS GROUND NOS . 2 AND 3 TAKEN BY THE ASSESSEE. 4. GROUND NOS. 4, 5 AND 6 RELATE TO THE ISSUE THAT THE ROYALTY EARNED BY THE ASSESSEE IS EFFECTIVELY CONNECTED WITH THE SERVICE PE OF THE ASSESSEE IN INDIA. BOTH THE PARTIES AGREED THAT THE ISSUES INVOLVED IN THESE GROUNDS ARE DULY COVERED BY THE DECISION OF THE TRIBUNAL IN ITA NO. 80/DEL/2013 FOR A.Y. 2008 - 0 9 IN WHICH THE TRIBUNAL VIDE ORDER DATED 4 TH JULY, 2014 HAS HELD AS UNDER: 5. THE NEXT MAJOR ISSUE RAISED THROUGH VARIOUS GROUNDS IS AGAINST THE HOLDING BY THE AO THAT THE ROYALTY EARNED BY THE ASSESSEE WAS EFFECTIVELY CONNECTED WITH THE SERVICE PE OF THE ASSESSEE IN INDIA. WE FIND THAT SIMILAR ISSUE WAS THERE AND HAS BEEN ELABORATELY DISCUSSED IN THE AFORE - 4 ITA NO. 1539/DEL/2014 & C.O. NO. 161/DEL/2014 STATED ORDER OF THE TRIBUNAL FOR THE EARLIER YEARS. THE TRIBUNAL HAS HELD THAT THE TOTAL AMOUNT CONSISTING LUMPSUM LICENCE/KNOW - HOW FEES AND ALSO ROYA LTY AS MENTIONED IN PARA 2.2 OF TTA WAS CONSIDERATION FOR THE TRANSFER OF IP RIGHTS SIMPLICITOR AND ALSO THE SERVICE RENDERED BY THE EMPLOYEES OF THE SECOND CATEGORY. THE TRIBUNAL FURTHER HELD THAT IN SO FAR AS THE QUESTION OF ROYALTY REPRESENTING CONSIDE RATION FOR THE TRANSFER OF IP RIGHTS SIMPLICITOR WAS CONCERNED, THE SERVICE PE REPRESENTING THE DEPUTATIONISTS HAD NO ROLE TO PLAY EITHER IN CREATING OR MAKING IT AVAILABLE TO JCB INDIA. THAT IS HOW THE TRIBUNAL CAME TO HOLD THAT THE SAME WAS NOT EFFECTIV ELY CONNECTED WITH THE SERVICE PE OF THE ASSESSEE IN INDIA. THE AMOUNT OF ROYALTY AND CONSIDERATION FOR RENDERING OF SERVICES BY THE EMPLOYEES OF SECOND CATEGORY HAS BEEN HELD TO BE NOT FALLING IN PARA 6 OF ARTICLE 13 AND HENCE CHARGEABLE TO TAX AS PER PAR A 2 OF ARTICLE 13 OF THE DTAA. HOWEVER, AS REGARDS THE FEES FOR TECHNICAL SERVICES RESULTING FROM THE RENDERING OF SERVICES BY THE EMPLOYEES OF THE SECOND CATEGORY, THE TRIBUNAL HAS HELD THAT THE SAME DID NOT FALL IN PARA 6 OF ARTICLE 13 AND WAS, HENCE, C HARGEABLE TO TAX AS PER PARA 2 OF THE ARTICLE 13 OF THE DTAA. AS REGARDS THE CONSIDERATION FOR THE EMPLOYEES OF THE FIRST CATEGORY, THE TRIBUNAL HAS HELD THAT THE FEES FOR TECHNICAL SERVICES IN RELATION TO SUCH EMPLOYEES WAS COVERED WITHIN PARA 6 OF ARTIC LE 13 OF THE DTAA. THAT IS HOW, THE TRIBUNAL CONCLUDED THAT THE CONSIDERATION FOR RENDERING OF SERVICES BY THE EMPLOYEES OF FIRST CATEGORY WAS CHARGEABLE TO TAX UNDER ARTICLE 7 OF THE DTAA. THE AO WAS DIRECTED TO DETERMINE THE AMOUNT OF INCOME IN TERMS OF ARTICLE 7. AS THE FACTS FOR THE INSTANT YEAR ARE ADMITTEDLY SIMILAR TO THOSE OF THE PRECEDING YEARS ON THIS ISSUE, RESPECTFULLY FOLLOWING THE PRECEDENT FOR A.Y. 2006 - 07, WE SET ASIDE THE IMPUGNED ORDER AND SEND THE MATTER BACK TO THE FILE OF AO FOR DETER MINING INCOME IN CONSONANCE WITH THE DIRECTIONS GIVEN FOR THE EARLIER YEAR. 4.1 RESPECTFULLY FOLLOWING THE AFORESAID DECISION, WE SET ASIDE THE IMPUGNED ORDER WITH REGARD TO THESE ISSUES AND RESTORE THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER FOR DETERMINING THE INCOME IN ACCORDANCE WITH THE DIRECTION GIVEN BY THE TRIBUNAL IN THE EARLIER YEAR. ACCORDINGLY , GROUND NOS. 4, 5 & 6 ARE ALLOWED FOR STATISTICAL PURPOSES. 5. GROUND NO. 7 READ S AS UNDER: 5 ITA NO. 1539/DEL/2014 & C.O. NO. 161/DEL/2014 UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED DRP AND LEARNED A.O. ERRED IN NOT FOLLOWING THE DECISION OF THE HON BLE CIT(APPEALS) FOR A.Y. 2006 - 07, A.Y. 2007 - 08 AND A.Y. 2008 - 09 IN THE CASE OF JCBE WHERE ON IDENTICAL FATS IT HAS B EEN HELD THAT THE ASSIGNMENT OF THE EMPLOYEES OF THE JCBE DOES NOT RESULT IN CREATION OF A PE OF THE ASSESSEE IN INDIA. 5.1 AFTER HEARING THE RIVAL SUBMISSIONS AND PERUSING THE ORDER OF THE AUTHORITIES BELOW, WE NOTED THAT THIS GROUND HAS BECOME INFRUC TUOUS AS THIS TRIBUNAL HAS ALREADY DECIDED THE SAME IN THE CASE OF THE ASSESSEE ITSELF IN ITA NO. 80/DEL/2013 & C.O. NO. 160/DEL/2014 FOR A.Y. 2008 - 09, V I D E O R D E R DATED 4 TH JULY, 2014, WHILE DISPOSING OF GROUND NOS. 2 AND 3 THAT THE ASSESSEE HAS ESTABLISHED A SERVICE PE IN INDIA. THIS GROUND, THEREFORE, HAS BECOME INFRUCTUOUS AND IS DISMISSED ACCORDINGLY. 6. GROUND NO. 8 IS CONSEQUENTIAL IN NATURE AND RELATE S TO THE CHARGING OF INTEREST UNDER SECTIONS 234A, 234B, 234C & 234D OF THE INCOME - TAX ACT, 1961 (FOR SHORT T HE ACT ) . W E , ACCORDINGLY , DIRECT THE ASSESSING OFFICER TO RE - COMPUTE THE INTEREST UNDER SECTIONS 234A, 234B, 234C & 234D OF THE ACT AFTER GIVING EFFECT TO OUR ORDER. 7. GROUND NO. 9 RELATE S TO THE INITIATION OF THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE LEARNED AR W A S F A I R ENOUGH TO CONCEDE THAT THERE IS SEPARATE APPEAL LIES IN RESPECT OF THE ORDER PASSED UNDER SECTION 271(1)(C) OF THE ACT AND THE GROUND TAKEN IS PREMATURE. WE, THEREFORE, DISMISS THE SAME AS BEING PREMATURE D . 6 ITA NO. 1539/DEL/2014 & C.O. NO. 161/DEL/2014 C.O. NO. 161/DEL/2014 [IN ITA NO . 1539/DEL /2014] 8. REVENUE HAS TAKE N THE FOLLOWING CROSS OBJECTION : CONSIDERING THE FACT THAT ARTICLE 13(2) IS NOT APPLICABLE IN THIS CASE AND THE DATE OF ROYALTY AGREEMENT AS 05.03.2004, ROY ALTIES ARE SUBJECT TO TAX @ 20% PLUS SURCHARGE, EDUCATION CESS UNDER THE PROVISIONS OF SECTION 115A(1)(B) OF THE INCOME TAX ACT, 1961. 9. BOTH THE PARTIES WERE FAIR E NOUGH TO CONCEDE THAT THE ISSUE INVOLVED IN THE CROSS OBJECTION IS DULY COVERED BY TH E DECISION OF THE TRIBUNAL IN ITA NO . 80/DEL/2013 & C.O. NO. 161/DEL/2014 FOR A.Y. 2008 - 09 WHEREIN THE TRIBUNAL VIDE ORDER DATED 4 TH JULY, 2014, DISMISSED THE CROSS OBJECTION TAKEN BY THE REVENUE. 10. WE HAVE HEARD THE RIVAL SUBMI SSIONS AND AFTER CAREFULLY CONSIDERING THE SAME, WE NOTED THAT THE SIMILAR CROSS OBJECTION HAS BEEN TAKEN BY THE REVENUE BEFORE THIS TRIBUNAL AS TAKEN FOR THE A.Y. 2008 - 09 (SUPRA) WHICH THE TRIBUNAL HAS DISMISSED BY OBSERVING AS UNDER: 10. THE FIRST REASON IS THAT THE CO OF THE REVENUE IS NOT MAINTAINABLE AS PER LAW. SECTION 253(1) OF THE ACT DEALS WITH THE FILING OF APPEALS BY THE ASSESSEE BEFORE THE TRIBUNAL AGAINST THE ORDERS SPECIFIED THEREIN. SUB - SECTION (2) OF SECTION 253 EMPOWE RS THE REVENUE TO FILE APPEAL BEFORE THE TRIBUNAL. THIS SECTION PROVIDES THAT THE CIT MAY, IF HE OBJECTS TO ANY ORDER PASSED BY THE CIT(A) U/S 154 OR 250, DIRECT THE ASSESSING OFFICER TO APPEAL TO THE APPELLATE TRIBUNAL AGAINST THE ORDER. THIS SECTION DOE S NOT EMBRACE CASES WHERE THE FIRST APPEAL LIES TO THE TRIBUNAL AGAINST THE ORDER PASSED BY THE ASSESSING OFFICER U/S 144C(13) PURSUANT TO THE DIRECTION GIVEN BY THE DISPUTE RESOLUTION PANEL (DRP) U/S 144C(5) OF THE ACT. THIS IS IN A SHARP CONTRAST TO THE SPECIFIC ENTITLEMENT OF THE ASSESSEE UNDER CLAUSE (D) OF SECTION 253(1) TO APPEAL AGAINST THE ORDER PASSED BY THE ASSESSING OFFICER IN PURSUANCE OF THE DIRECTIONS OF THE DRP. THE REASON APPEARS TO BE THAT WHEN THE DRP HAS SCRUTINIZED THE DRAFT ORDER OF TH E ASSESSING OFFICER AND GIVEN THE APPROPRIATE DIRECTION TO MODIFY IT, IF 7 ITA NO. 1539/DEL/2014 & C.O. NO. 161/DEL/2014 NECESSARY, THEN THERE IS NO LOGIC IN EMPOWERING THE CIT TO RESCRUTINIZE SUCH ORDER OF THE ASSESSING OFFICER AND HAVE ANY GRIEVANCE AGAINST THE SAME. IT IS MORE SO BECAUSE THE ORDER OF THE AO HAS ALREADY BEEN CHECKED BY A GROUP OF THREE CITS CONSTITUTING THE DRP. HOWEVER, LATER IT WAS REALIZED THAT THE INTEREST OF THE REVENUE WAS SUFFERING BECAUSE OF CERTAIN DIRECTIONS GIVEN BY THE DRP PREJUDICIAL TO THE INTEREST OF THE REVENUE, WHICH T HE ASSESSING OFFICER CANNOT TINKER WITH AND BECOME BINDING ON HIM. WITH A VIEW TO EMPOWER THE CIT TO CHALLENGE SUCH ADVERSE DIRECTIONS GIVEN BY THE DRP PURSUANT TO WHICH THE ASSESSING OFFICER HAS PASSED ORDER U/S 144C, THE LEGISLATURE STEPPED IN BY INTRODU CING SUB - SECTION (2A) TO SECTION 253 W.E.F. 1.7.2012, WHICH PROVIDES THAT THE : THE COMMISSIONER MAY, IF HE OBJECTS TO ANY DIRECTION ISSUED BY THE DISPUTE RESOLUTION PANEL UNDER SUB - SECTION (5) OF SECTION 144C IN RESPECT OF ANY OBJECTION FILED ON OR AFT ER THE 1ST DAY OF JULY, 2012, BY THE ASSESSEE UNDER SUB - SECTION (2) OF SECTION 144C IN PURSUANCE OF WHICH THE ASSESSING OFFICER HAS PASSED AN ORDER COMPLETING THE ASSESSMENT OR REASSESSMENT, DIRECT THE ASSESSING OFFICER TO APPEAL TO THE APPELLATE TRIBUNAL AGAINST THE ORDER. SUB - SECTION (4) OF SECTION 253 EMPOWERING THE ASSESSEE OR THE ASSESSING OFFICER TO FILE CROSS OBJECTION WAS ALSO SUITABLY AMENDED BY THE FINANCE ACT, 2012 TO, INTER ALIA, PROVIDE THAT THE ASSESSING OFFICER MAY, ON RECEIPT OF NOTICE TH AT AN APPEAL AGAINST THE ORDER OF THE ASSESSING OFFICER IN PURSUANCE OF THE DIRECTIONS OF THE DISPUTE RESOLUTION PANEL HAS BEEN PREFERRED BY THE ASSESSEE UNDER SUB - SECTION (1), FILE A CROSS - OBJECTIONS AGAINST ANY PART OF THE ORDER OF THE ASSESSING OFFICER (IN PURSUANCE OF THE DIRECTIONS OF THE DISPUTE RESOLUTION PANEL). WHEN WE READ SUB - SECTION (1) OF SECTION 253 IN JUXTAPOSITION TO SUB - SECTION (2A) OF SECTION 253, THE POSITION WHICH EMERGES IS THAT WHEREAS THE ASSESSEE WAS EARLIER ALSO ENTITLED TO FILE AP PEAL AGAINST THE ORDER PASSED BY THE AO PURSUANT TO THE DIRECTION OF THE DRP, THE REVENUE HAS BEEN CLOTHED WITH SUCH POWER BY THE FINANCE ACT, 2012, PROVIDED THE OBJECTION WAS FILED BY THE ASSESSEE BEFORE THE DRP ON OR AFTER 01.07.12. THUS, IT BECOMES PAL PABLE THAT THE DEPARTMENT HAS NO POWER TO FILE APPEAL OR OBJECT TO THE ANY DIRECTION ISSUED BY THE DRP IN PURSUANCE OF WHICH THE ASSESSING OFFICER PASSED ORDER U/S 144C, IF THE ASSESSEE FILED OBJECTION BEFORE THE DRP BEFORE THIS CUT - OFF DATE OF 1.7.2012. A DVERTING TO THE FACTS OF THE INSTANT CASE, WE FIND THAT THE ASSESSEE FILED OBJECTION AGAINST THE DRAFT ASSESSMENT ORDER BEFORE THE DRP ON 30.01.2012. SINCE THE OBJECTION IN THIS CASE WAS FILED BY THE ASSESSEE BEFORE THE DRP PRIOR TO 01.07.12, THE REVENUE COULD HAVE NEITHER FILED APPEAL NOR CROSS OBJECTION AGAINST THE ORDER OF THE ASSESSING OFFICER. WE, THEREFORE, HOLD THAT THE CROSS OBJECTION FILED BY THE REVENUE IS NOT MAINTAINABLE AS PER LAW. 8 ITA NO. 1539/DEL/2014 & C.O. NO. 161/DEL/2014 11. THE SECOND REASON FOR WHICH THE CO OF THE REVENUE DESERV ES THE FATE OF DISMISSAL IS THE LANGUAGE OF SECTION 253 OF THE ACT WHICH PERMITS THE CIT TO AUTHORIZE THE ASSESSING OFFICER TO FILE APPEAL U/S SUB - SECTION (2A) IF HE OBJECTS TO ANY DIRECTION ISSUED BY THE DISPUTE RESOLUTION PANEL UNDER SUB - SECTION (5) OF SECTION 144C . IN THE LIKE MANNER, CROSS OBJECTION CAN BE FILED UNDER SUB - SECTION (4) OF SECTION 253 OF THE ACT WHICH PROVIDES THAT : THE ASSESSING OFFICER . ON RECEIPT OF NOTICE THAT AN APPEAL AGAINST THE ORDER OF THE ASSESSING OFFICER IN PURSUANCE O F THE DIRECTIONS OF THE DISPUTE RESOLUTION PANEL HAS BEEN PREFERRED UNDER SUB - SECTION (1) . HE MAY FILE A MEMORANDUM OF CROSS - OBJECTIONS AGAINST ANY PART OF THE ORDER OF THE ASSESSING OFFICER (IN PURSUANCE OF THE DIRECTIONS OF THE DISPUTE RESOLUTION P ANEL) . THE CRUX OF THE MATTER IS THAT THE APPEAL OR THE CROSS OBJECTION CAN BE FILED BY THE REVENUE ONLY IF THE CIT OBJECTS TO ANY DIRECTION ISSUED BY THE DRP OR AGAINST ANY PART OF THE ORDER OF THE ASSESSING OFFICER (IN PURSUANCE OF THE DIRECTION S OF THE DRP) . THUS IT IS MANIFEST THAT THE APPEAL CAN BE FILED ONLY AGAINST DIRECTION ISSUED BY THE DRP AND THE CO CAN BE FILED AGAINST ANY PART OF THE ORDER OF THE ASSESSING OFFICER PASSED IN PURSUANCE TO THE DIRECTION OF THE DRP. THE NITTY - GRITTY OF TH E MATTER IS THAT REVENUE SHOULD HAVE OBJECTION EITHER AGAINST THE DIRECTION OF THE DRP OR AGAINST THE ORDER PASSED BY THE ASSESSING OFFICER. IN OTHER WORDS, THE SCOPE OF THE APPEAL OR CROSS OBJECTION BY THE REVENUE IS CONFINED TO THE SOME ADVERSE FINDING R ENDERED BY EITHER OF THE AUTHORITIES, AS THE CASE MAY BE. 12. LET US BRIEFLY RECAPITULATE THE FACTS OF THE EXTANT CASE. THE ASSESSEE DERIVED INCOME IN THE NATURE OF ROYALTIES AND OFFERED THE SAME TO TAX @ 15% ON GROSS BASIS AS PER SUCH LOWER RATE OF TA X PROVIDED UNDER ARTICLE 13(2) OF THE DTAA. THE AO HELD THAT THE ASSESSEE HAS A SERVICE PE IN INDIA AND SINCE SUCH ROYALTY WAS EFFECTIVELY CONNECTED WITH THE PE, THE ENTIRE INCOME WOULD FALL UNDER ARTICLE 7 AS THE CASE WAS COVERED UNDER PARA 6 OF THE AR TICLE 13. AFTER ALLOWING DEDUCTION AT THE RATE OF 20% OF THE ROYALTY INCOME, HE DETERMINED TOTAL INCOME AND CHARGED TAX AT THE RATE OF 40% PLUS SURCHARGE AND EDUCATION CESS. THE DRP UPHELD THE DRAFT ASSESSMENT ORDER ON SUCH ISSUE EXCEPT NOT ALLOWING THE GR OSSING UP OF THE ROYALTY INCOME. NOW, THE DEPARTMENT IS CONTENDING THROUGH ITS CO THAT ARTICLE 13(2) IS NOT APPLICABLE BECAUSE THE ASSESSEE IS NOT THE BENEFICIAL OWNER OF THE ROYALTY RECEIVED BY IT FROM JCBI. IT CAN BE NOTICED FROM THE ABOVE JOTTED FACTS T HAT NEITHER THE ASSESSING OFFICER NOR THE DRP HAS HELD THAT THE ASSESSEE IS A BENEFICIAL OWNER OF THE ROYALTY AND HENCE THE SAME SHOULD BE CHARGED TO TAX AT THE LOWER RATE OF 15% AS PROVIDED UNDER THE DTAA. WHEN THE POSITION IS SO, WE FAIL TO SEE AS TO HOW THE REVENUE CAN RAKE UP SUCH ISSUE THROUGH THE CO. IT GOES WITHOUT SAYING THAT RIGHT TO 9 ITA NO. 1539/DEL/2014 & C.O. NO. 161/DEL/2014 APPEAL IS A STATUTORY RIGHT PROVIDED TO THE AGGRIEVED PARTY. THE SAME CAN BE EXERCISED STRICTLY IN ACCORDANCE WITH AND AS PER THE TERMS OF THE RELEVANT PROVISION. IF T HE LAW DOES NOT SPECIFICALLY OR GENERALLY CONFER SUCH A RIGHT AGAINST A PARTICULAR ACTION OF THE AUTHORITIES, THEN THE SAME CANNOT BE INFERRED. TURNING TO THE FACTS OF THE INSTANT CASE, WE FIND THAT THE SECTION 253 OF THE ACT DOES NOT GIVE ANY RIGHT TO THE REVENUE TO APPEAL AGAINST A NON - FINDING OF THE ASSESSING OFFICER OR THE DRP, AS THE CASE MAY BE. THE NATURAL COROLLARY WHICH ERGO FOLLOWS IS THAT THE INSTANT CO OF THE REVENUE LACKS THE NECESSARY MANDATE SO AS TO BECOME ELIGIBLE FOR CONSIDERATION AND ADJ UDICATION. 13. WE, THEREFORE, HOLD THAT THE CO FILED BY THE REVENUE IS NOT MAINTAINABLE. THE SAME IS LIABLE TO BE AND IS HEREBY DISMISSED. 11. RESPECTFULLY FOLLOWING THE AFORESAID ORDER OF THIS TRIBUNAL, WE DISMISS THE CROSS OBJECTION FILED BY TH E REVENUE. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AND THE CROSS OBJECTION FILED BY THE REVENUE IS DISMISSED. THE DECISION IS PRONOUN CED IN THE OPEN COURT ON 2 7 T H FEBRUARY , 2015. S D / - S D / - ( DIVA SINGH ) ( P.K. BANSAL ) JUDICIAL MEMBER ACCOUNTANT MEMBER D ATED: 2 7 T H FEBRUARY , 2015. RK/ - COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI