DCIT (IT) 3.1.2, INCOME TAX OFFICE, KAUTILIYA BHAWAN V. .LINKLATERS AND PAINES, MUMBAI

ITA 5119/MUM/2024

AI Insights

The case involves the Income Tax Department appealing against the decision of the Learned Commissioner of Income Tax (Appeals)-57, Mumbai, which pertained to the assessment year 2013-14. The primary issues revolved around the tax residency status of the assessee, Linklaters and Paines, and the taxability of its income in India under the Double Taxation Avoidance Agreement (DTAA) between India and the UK. The department contested the CIT(A)'s findings that the assessee was a resident of the UK and that its income was not taxable in India due to the absence of a permanent establishment and the nature of the income as consultancy services rather than fees for technical services. However, the department's appeal was rendered infructuous following a circular that raised the monetary threshold for such appeals.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 34685 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-12-2024
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Tax effect; Double taxation relief; Permanent establishment
• Section: 250; 115A

Judgement Text

"Page | 1 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “A”, MUMBAI BEFORE SHRI B R BASKARAN, ACCOUNTANT MEMBER AND SHRI RAJ KUMAR CHAUHAN, JUDICIAL MEMBER ITA NO. 5119/MUM/2024 (A.Y: 2013-14) DCIT(IT) 3(1)(2) Room No. 603, 6th floor, Kautilya Bhavan, Mumbai-400 051 Vs. Linklaters and Paines C/o- Deloitte Haskins & Sells, Tower 3, 28th -30th floor, Indiabulls Finance Centre, Senapati Bapat Marg, Mumbai. PAN: AABFL2160M (Appellant) (Respondent) Assessee Represented by : Shri Abdulkadir Jawadwala, Ld. AR Department Represented by : Shri Sunil Shinde, Ld. DR Date of conclusion of Hearing : 14.11.2024 Date of Pronouncement : 26.12.2024 O R D E R PER RAJ KUMAR CHAUHAN (J.M.): 1. This appeal is filed by the appellant/assessee against the order dated 22.07.2024 of Learned Commissioner of Income Tax (Appeals)-57, Mumbai [hereinafter referred to as the “CIT(A)”], passed under section ITA No. 5119/Mum/2024 Linklaters and Paines Page | 2 250 of the Income Tax Act, 1961 [hereinafter referred to as “the Act”] for the A.Y. 2013-14. 2. The department is in appeal before us and has raised following grounds of appeal: Whether on the fact and in the circumstances of the case and in law the Ld. CIT(A) is justified in holding that assessee can be treated as resident of United Kingdom within the meaning of DTAA between India and UK despite the fact that it is fiscally transparent entity in UK and hence not taxable in the UK? ii. Whether on the fact and in the circumstances of the case and in law the Ld. CIT(A) is justified in holding that the income of the assessee is not taxable in India as it is not having any permanent establishment in term of Article 5(2)(k)(i), without considering that the receipts of the assessee is fees for technical services as per meaning of section 9(1)(vil). Explanation 2 and therefore is taxable on gross basis under section 115A of the Income Tax Act. iii. Whether on the fact and in the circumstances of the case and in law the CII(A) is justified in holding that receipts from consultancy services does not fall in the category of fee for technical services under India-UK DTAA, without considering that the provision of DTAA between India and UK are not available to the assessee as it is not a 'person' as per Article 3(1)(f) of the DTAA and is not a resident of any of the two contracting States within the meaning of Article 4(1) of the DTAA and was not Hable to taxation in the UK iv. Whether on the fact and in the circumstances of the case and in law the CIT(A) is justified in holding that the income from services earned by the ITA No. 5119/Mum/2024 Linklaters and Paines Page | 3 assessee is not taxable due to absence of PE despite the provision of Explanation to section 9. 3. During the arguments, the Ld. DR very fairly submitted that the department appeal has become infructuous by virtue of circular no. 9/2024 dated 17.09.2024, wherein the monetary limit for tax effect for filing appeal before Income Tax Appellate Tribunal has been raised upto Rs. 60 lacs. It is submitted that the tax effect in this appeal is below 60 lacs and as such the appeal has become infructuous and same may be disposed off accordingly. 4. We have also heard the Ld. AR on behalf of the assessee, who has supported the submissions of the Ld. DR, and stated that since the appeal is not maintainable and has become infructuous. 5. We have considered the submissions and examined the record. In view of the enhancement of the monetary limit for filing the departmental appeal wherein the tax effect for filing the appeal should be Rs. 60 Lacs or above and the tax effect in this appeal are below. In view of these facts and the submissions made by the Ld. DR, the appeal filed by the department is accordingly dismissed having become infructuous. ITA No. 5119/Mum/2024 Linklaters and Paines Page | 4 6. In the result, appeal filed by the department is accordingly dismissed having become infructuous. Order pronounced in the open court on 26.12.2024 Sd/- Sd/- (B R BASKARAN) (RAJ KUMAR CHAUHAN) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) Mumbai / Dated 26.12.2024 Dhananjay, Sr. PS Copy of the Order forwarded to: 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// BY ORDER (Asstt. Registrar) ITAT, Mumbai "