DDIT, Intl. Taxation, Circle-2(2), V. Thales e-Transaction CGA SA,

ITA 1215/DEL/2006

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 4634 (ITAT-DELHI)
• Duration Of Justice: 12 year(s) 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 01-08-2017
• Assessment Year: 2002-2003
• Appeal Filed On: 12-04-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURENDER PAL SINGH
• Assessee Lawyers: S D KAPILA
• Keywords: Double taxation relief; Tax effect

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER & SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER I.T.A. NO.1215/DEL/2006 ASSESSMENT YEAR: 2002-03 DY. DIRECTOR OF INCOME TAX, INTL. TAXATION, CIRCLE 2(2), NEW DELHI. V. M/S. THALES E-TRANSACTION CGA SA, 6 TH FLOOR, LE MERIDIAN COMM. TOWER, RAISENA ROAD, NEW DELHI, NEW DELHI. TAN/PAN: AACFT 2697Q (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI SURENDER PAL SINGH, SR.D.R. RESPONDENT BY: SHRI S.D. KAPILA, ADV. DATE OF HEARING: 26 07 2018 DATE OF PRONOUNCEMENT: 07 08 2018 O R D E R 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 AS SESSMENT 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 TH AT PAYMENT RECEIVED BY THE ASSESSEE ON SUPPLY OF DESIGN AND DR AWING 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% I.T.A. NO.1215/DEL/2006 2 SHOULD HAVE BEEN TAXED IN INDIA IN VIEW OF THE PROV ISION OF SECTION OF SECTION 115A. NOW THE REVENUE HAS REVISE D THE GROUND STATING THAT THE SAID PAYMENT AMOUNTS TO RO YALTY. THE RELEVANT GROUND NOW REVISED BY THE DEPARTMENT R EADS AS UNDER: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS ERRED IN HOLDING THAT THE AMOUN T OF RS.1,21,25,556/- RECEIVED BY THE ASSESSEE FROM M/S. DELHI METRO RAIL CORP. LTD. (DMRC) ON ACCOUNT OF OFF-SHORE DESI GN 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 R OYALTY, FAILING TO APPRECIATE THAT THE RECEIPT IS LIABLE TO TAX IN IND IA AS ROYALTY U/S.9(1)(VI) READ WITH ARTICLE 12(3) OF THE INDIA-F RANCE DOUBLE AVOIDANCE AGREEMENT (DTAA) AS THE PAYMENTS UNDER CO NSIDERATION WERE FOR THE USE OF OR FOR TRANSFER OF RIGHTS IN DR AWINGS, DESIGN ETC. TO DMRC. 2. IT IS UNDISPUTED THAT THE TAX RATE FOR CHARGING OF ROYALTY U/S.9(1)(VI) READ WITH ARTICLE 12(3) OF THE INDIA-F RANCE DTAA, IS @10%; AND ACCORDINGLY, THE TAX EFFECT WOULD BE RS.12,12,555/-. THIS TAX EFFECT IS MUCH BELOW THE M ONETARY LIMIT OF RS.20 LACS AS NOW PRESCRIBED BY CBDT CIRCU LAR NO.03/2008 [F.NO.279/MISC.142/2007-ITJ (PT)] DATED 11 TH JULY, 2018. 3. LEARNED DEPARTMENT REPRESENTATIVE, ADMITTED THAT THE TAX EFFECT INVOLVED IN THE APPEAL FILED BY THE REVE NUE IS BELOW RS. 20 LACS, THEREFORE, IN VIEW OF THE AFORESAID CI RCULAR RAISING THE MONETARY LIMITS FOR FILING OF APPEALS BY THE DE PARTMENT I.T.A. NO.1215/DEL/2006 3 BEFORE THE ITAT HAS BEEN INCREASED TO RS.20 LACS, T HE DEPARTMENTS APPEAL IS TO BE DISMISSED AS WITHDRAWN . 4. FURTHER WE FIND THAT, AS PER PARA 3 OF THE SAID CIRCULAR, IT HAS BEEN CLARIFIED THAT THE PENDING APPEALS OF T HE REVENUE BEFORE THE ITAT HAVING MONETARY LIMIT OF RS.20 LAC WILL BE TREATED AS WITHDRAWN. SINCE IN THE INSTANT CASE, TH E TAX EFFECT IS ADMITTEDLY BELOW RS.20 LAC, THEREFORE, IN VIEW O F THE LATEST CBDT CIRCULAR (SUPRA) RAISING THE MONETARY LIMITS F OR FILING OF THE APPEALS BEFORE THE TRIBUNAL WHICH IS APPLICABLE EVEN TO PENDING APPEALS, THE APPEAL FILED BY THE REVENUE IS DISMISSED. 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH AUGUST, 2018. SD/- SD/- [PRASHANT MAHARISHI] [AMIT SHUKLA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 7 TH AUGUST, 2018 PKK: