DDIT, New Delhi V. M/s. KLM Royal Dutch Airlines, New Delhi

ITA 1259/DEL/2009

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 2760 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-01-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 30-10-2015
• Assessment Year: 2001-2002
• Appeal Filed On: 02-04-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: R S NEGI
• Keywords: Reopening of assessment; Double taxation relief; Earning of tax free income; Permanent establishment; Tangible material; Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 234B; 147; 148; 90

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELID BENCH 'D', NEW DELHI BEFORE SHRI J.S.REDDY, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER I.T.A. NO. 1259/DEL/2009 (ASSESSMENT YEAR: 2000-01) DCIT, CIRCLE 3(1) & 3(2), VS. M/S. KLM ROYAL DUTCH AIRLINES INTERNATIONAL TAXATION PRAKASH DEEP BUILDING, NEW DELHI 7, TOLSTOY MARG, NEW DELHI GIR I PAN :AABCK3950H I.T.A. NO. 1392/DE1/2009 (ASSESSMENT YEAR 2000-01) M/S. KLM ROYAL DUTCH AIRLINES, VS. ADIT, INTL.TAX ATION, PRAKASH DEEP BUILDING, CIRCLE 1(2), 7, TOLSTOY MARG, NEW DELHI. NEW DELHI (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R. S. NEGI, SR. DR RESPONDENT BY : SHRI SALIL AGARWAL, SHRI SHAILESH GUPTA, CA DATE OF HEARING: 05.11.2015 DATE OF PRONOUNCEMENT: 04.01.2016 ORDER PER KULDIP SINGH, JM: TO AVOID REPETITION OF DISCUSSION, AFORESAID APPEAL AS WELL AS CROSS OBJECTIONS BEARING COMMON QUESTION TO BE DECI DED ARE DISPOSED OF BY WAY OF A SINGLE ORDER WITH THE CONCURRENCE OF LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES. 2 I.T.A.NO.1259,1392/DEL/2009 2. THE APPELLANT, DDIT, CIRCLE 3(1) & 3(2), INTERNA TIONAL TAXATION, NEW DELHI (HEREINAFTER REFERRED TO AS 'THE REVENUE' ) BY FILING THE PRESENT APPEAL, I.T.A. NO.1259/DE1L2009, SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 18.12.2008 PASSED BY LD. CIT(A ) XXIX, NEW DELHI QUA THE ASSESSMENT YEAR 2000-2001 ON THE GROU ND THAT: 'IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CIT(A) HAS ERRED IN DIRECTING THE ASSESSING OFFICER TO TAX FESS FOR TECHNICAL SERVICES (FTS) AS PER THE DT AA IGNOR ING THE FACT THAT THE FTS IS EFFECTIVELY CONNECTED TO THE P E OF THE ASSESSEE IN INDIA AND THEREFORE TAXABLE UNDER THE ACT. ' 3. ON THE OTHER HAND APPELLANT M/S. KLM ROYAL DUTC H AIRLINES, NEW DELHI (HEREINAFTER TO BE REFERRED AS 'THE ASSES SEE') BY FILING CROSS APPEAL, I.T.A. NO. 13921DE1L2009, SOUGHT TO SET ASI DE THE IMPUGNED ORDER PASSED BY LD. CIT(A) XXIX, NEW DELHI QUA THE ASSESSMENT YEAR 2000-2001 ON THE GROUNDS INTER ALIA THAT: '1. THAT THE LD. COMMISSIONER OF INCOME TAX,' FAILE D TO APPRECIATE THE TRUE LEGAL POSITION OF LAW BEFORE OR DER. INCOME TAX (APPEAL) HAS AND CORRECT FACTS AND PASSING THE IMPUGNED ORDER. 2. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEAL) HAS FAILED TO APPRECIATE THAT LD ASSESSING HAD GROSSLY ERRED I N ASSUMING JURISDICTION U/S 148 WHICH COULD NOT HAVE BEEN DONE AS THE THERE EXISTED NO REASONS BY VIRTUE OF WHICH THE LD. ASSESSING OFF LEER COULD HAVE FORMED AN OPINION THAT THERE HAD BE EN INCOME ESCAPING ASSESSMENT. 3. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEAL) HAS FAILED TO APPRECIATE THAT LD ASSESSING HAD GROSSLY ERRED I N ASSUMING JURISDICTION U/S 148 AS ALL FACTS HAD BEEN DECLARED IN THE ORIGINAL RETURN OF INCOME AND NO FRESH FACTS HAD EM ERGED SO AS TO ALLOW THE ASSESSING OFFICER TO ASSUME JURISDICTI ON U/S 148. 4. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEAL) HAS FAILED TO APPRECIATE THAT LD. ASSESSING HAD GROSSLY ERRED IN NOT APPRECIATING THAT THE LD. ASSESSING OFFICER HAD FAI LED TO PASS AN 3 I.T.A.NO.1259,1392/DEL/2009 SPEAKING ORDER TO THE OBJECTIONS FILED BY THE ASSES SEE CHALLENGING THE VALIDITY OF THE NOTICE ISSUED U/S 1 471148. NOT PRESSED. 5. THAT THE LD COMMISSIONER OF INCOME TAX (APPEAL) HAS FAILED TO APPRECIATE THAT THE LD. ASSESSING OFFICER HAD FRAMED THE ASSESSMENT ORDER WITHOUT ISSUANCE OF THE STATUT ORY NOTICE U/S 143 (2) TO THE ASSESSEE AND MERELY BECAUSE THE COUNSELS FOR THE ASSESSEE HAD PARTICIPATED IN THE ASSESSMENT PRO CEEDING IT COULD NOT HAVE BEEN SAID THAT THE REQUIREMENT OF SE CTION 143(2) HAD BEEN COMPLIED WITH AND HAD BEEN SATISFIED. 6. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEAL ) HAS FAILED TO APPRECIATE THAT LD. ASSESSING HAD GROSSLY ERRED IN NOT APPRECIATING THAT THE SERVICES RENDERED BY THE ASSE SSEE WERE DIRECTLY CONNECTED WITH THE OPERATION OF AIRCRAFT I N INTERNATIONAL TRAFFIC COVERED UNDER ARTICLE 8 OF TH E DT AA AND COULD BE SAID TO BE IN THE NATURE OF FEE FOR TECHNI CAL SERVICES UNDER ARTICLE 12 OF THE DT AA BETWEEN INDIA AND NET HERLANDS. 7. THAT THE LD COMMISSIONER OF INCOME TAX (APPEAL) HAS ERRED IN HOLDING THAT THE REVENUE EARNED BY THE WAS FEE FOR TECHNICAL SERVICES AND WAS TO BE TAXED UNDER ARTICL E 12 OF THE DT AA INDIA AND NETHERLANDS ALTHOUGH THE SAME WAS C OVERED UNDER ARTICLE 8 OF THE DTAA. 8. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEAL ) HAS GROSSLY ERRED IN ALLOWING CHARGING OF INTEREST UIS 234 AND MERELY DIRECTING RE-COMPUTATION THEREOF ALTHOUGH TH E SAME COULD NOT HAVE BEEN CHARGED AT ALL. 9. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEAL ) GROSSLY ERRED IN UPHOLDING THE INITIATION OF PENALT Y PROCEEDING US 271 (1)(C). ' 4. BRIEFLY STATED, THE FACTS OF THIS CASE ARE: DUR ING THE PROCESSING OF RETURN OF INCOME FILED BY THE ASSESSEE QUA THE ASSE SSMENT YEAR 200-01 DECLARING 'NIL' INCOME AND CLAIMING REFUND OF RS.7, 21,0001-, ESCAPEMENT OF INCOME WAS NOTICED AND AFTER RECORDIN G THE REASONS, NOTICE VIS 148 OF THE ACT DATED 19.01.2004 WAS SERV ED UPON THE ASSESSEE, THE CASE WAS SELECTED FOR SCRUTINY AND NO TICE VIS 143(2) WAS SERVED UPON AND IN RESPONSE THERETO, SHRI SANJEEV J AIN, CA AND SHRI 4 I.T.A.NO.1259,1392/DEL/2009 ANIL MAKHIJA, AR OF THE ASSESSEE ATTENDED THE PROCE EDINGS, FILED NECESSARY DETAILS, THE CASE WAS ALSO DISCUSSED WITH THEM. 5. THE ASSESSEE COMPANY ENTERED INTO AN AGREEMENT WITH JET AIRWAYS VIDE AGREEMENT DATED 01.09.1995 FOR A PERIO D OF TWO YEARS FOR PROVIDING TECHNICAL & PROFESSIONAL SERVICES IN THE AREA OF GROUND HANDLING IN-FLIGHT SERVICES, AIRPORT PROCEDURE SYST EM TO IMPROVE OVER ALL SERVICES IN THE FLIGHT OPERATION AT THE FEE OF RS.US$50,0001- PER ANNUM AND RECEIVED US$ L,00,000/- FOR TWO YEARS DUR ING THE RELEVANT FINANCIAL YEAR 1999-2000. THE ASSESSEE WAS CALLED T O EXPLAIN AS TO WHY THE SUM RECEIVED FORM JET AIRWAYS BE NOT TAXABL E. ASSESSEE FILED COMPREHENSIVE REPLY BY TAKING SHELTER UNDER ARTICLE 8(1) OF DOUBLE TAXATION AVOIDANCE AGREEMENT (DTAA) BETWEEN INDIA A ND NETHERLANDS. FINDING THE EXPLANATION OF THE ASSESSE E NOT TENABLE, THE FEE RECEIVED BY THE ASSESSEE HAS BEEN TAXED U/S 44B READ WITH SECTION 150A OF THE ACT AND COMPUTED THE TAX THEREON @ 30% AMOUNTING TO RS.I0,81,500/-. 6. THE ASSESSEE CARRIED THE MATTER BEFORE LD. CIT( A), CHALLENGING THE ASSESSMENT ORDER, WHO PARTLY ALLOWED THE APPEAL BY WAY OF THE IMPUGNED ORDER. FEELING AGGRIEVED, BOTH THE REVENUE AS WELL AS THE ASSESSEE HAVE FILED APPEAL AS WELL AS CROSS APPEAL RESPECTIVELY. 7. WE HAVE HEARD LD. AUTHORIZED REPRESENTATIVES OF BOTH THE PARTIES, GONE THROUGH MATERIAL PLACED ON RECORD IN THE LIGHT OF FACTS AND CIRCUMSTANCES OF THE CASE AND ORDERS OF TAX AUT HORITIES BELOW. 8. GROUNDS NO.1, 2,3 & 5 OFI.T.A. NO. 13921DE1L2009: TO DECIDE THE MOOT POINT, THE FIRST QUESTION ARISES FOR DETERMINATION IN THIS CASE IS, 'AS TO WHETHER THE A SSESSING OFFICER HAS NO REASON/TANGIBLE MATERIAL TO ASSUME JURISDICTION U/S 148 OF THE 5 I.T.A.NO.1259,1392/DEL/2009 ACT'. UNDISPUTEDLY, REOPENING OF THE ASSESSMENT OF THE ASSESSEE'S CASES OF PRECEDING AND SUCCEEDING YEARS, EXCEPT ASS ESSMENT YEAR 2000-01 HAVE ALREADY BEEN DROPPED THE ASSESSMENT OR DER DATED 31.03.2005 FOR ASSESSMENT YEAR 2000-01 HAS BEEN PA SSED BY THE ASSESSING OFFICER BY REOPENING THE ASSESSMENT ON TH E BASIS OF ORIGINAL RETURN FILED ON 25.02.2004; THE ASSESSEE HAS SHOWN ITS ENTIRE INCOME AS EXEMPT INCOME AND A NOTE TO THE EFFECT THAT 'ENTIRE INCOME IS EXEMPT FROM TAXATION U/S 90 OF THE I. T. ACT READ WITH ART ICLE 8 OF DTAA BETWEEN INDIA AND NETHERLANDS' HAS BEEN GIVEN ON RE LEVANT RETURN OF INCOME . 9. LD. D .R. CHALLENGING THE IMPUGNED ORDER, CONTE NDED INTER ALIA THAT LD. CIT(A) HAS ERRED IN DIRECTING THE ASSESSIN G OFFICER TO TAX FEE FOR TECHNICAL SERVICES (FTS) AS PER DT AA BY IGNORI NG THE FACT THAT FTS IS EFFECTIVELY CONNECTED TO THE PERMANENT ESTAB LISHMENTS (PE) OF THE ASSESSEE IN INDIA AND AS SUCH TAXABLE UNDER THE ACT. 10. ON THE OTHER HAND, LD. A.R. REPELLED THE ARGUM ENTS ADDRESSED BY LD. D.R. BY CONTENDING INTER ALIA THAT THE ASSUM PTION OF JURISDICTION BY THE ASSESSING OFFICER IS BAD IN LAW AS THERE IS NO MENTION IN THE ORDER THAT OBJECTIONS FILED BY THE A SSESSEE HAS BEEN DISPOSED OF; THAT REOPENING IN THE CASE OF ASSESSEE FOR THE PRECEDING AND THE SUCCEEDING YEAR EXCEPT ASSESSMENT YEAR 2000 -01, UNDER APPEAL, HAS ALREADY BEEN DROPPED; THAT THERE IS NO TANGIBLE MATERIAL ON RECORD FOR REOPENING THE ASSESSMENT AND RELIED UPON THE JUDGMENTS CITED AS CIT VS ATUL KUMAR SWAMI, 362 ITR 693 PASSED BY HON'BLE JURISDICTIONAL HIGH COURT AND CIT VS TUPPER WARE INDIA PVT. LTD., I.T.A. NO. 415/2015 (DEL.) ORDER DATED 1 0.08.2015 . 11. NOW, ADVERTING TO THE CASE AT HAND, A BARE PER USAL OF ASSESSMENT ORDER UNDER CHALLENGE GOES TO SHOW THAT THE ASSESSM ENT HAS BEEN 6 I.T.A.NO.1259,1392/DEL/2009 REOPENED TO REVIEW THE APPLICABILITY OF ARTICLE 8(1 ) OF DTAA BETWEEN INDIA AND NETHERLANDS. HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE CITED AS ATUL KUMAR SWAMI (SUPRA), RELIED UPON BY T HE ASSESSEE, DECIDED THE IDENTICAL ISSUE AND THE OPERATIVE PART OF THE JUDGEMENT IS REPRODUCED AS UNDER FOR READY REFERENCE: 'REASSESSMENT-NOTICE-MUST BE BASED ON TANGIBLE MATERIAL-NOTE FORMING PART OF RETURN MENTIONING AND DESCRIBING THE NATURE OF RECEIPT UNDER A NON- COMPETE AGREEMENT- NOTICE NOT MENTIONING ANY OTHER FRESH MATERIAL WARRANTING REOPENING OF ASSESSMENT-NOTICE NOT VALID-INCOME-TAX ACT, 1961, SS.147, 148. A VALID REOPENING OF ASSESSMENT HAS TO BE BASED ONL Y ON TANGIBLE MATERIAL TO JUSTIFY THE CONCLUSION THAT TH ERE IS ESCAPEMENT OF INCOME. HELD ACCORDINGLY, DISMISSING THE APPEAL, THAT THE NOTE FORMING PART OF THE RETURN FILED FOR THE ASSESSMENT YEAR 19 99-2000 CLEARLY MENTIONED AND DESCRIBED THE NATURE OF THE R ECEIPT UNDER A NON- COMPETE AGREEMENT. THE REASONS FOR THE NOTIC E UNDER SECTION 147 OF THE INCOME-TAX ACT, 1961, NOWHERE ME NTIONED THAT THE REVENUE CAME UP WITH ANY OTHER FRESH MATER IAL WARRANTING REOPENING OF ASSESSMENT. THEREFORE, MERE CONCLUSION OF THE PROCEEDINGS UNDER SECTION 143(1) IPSO FACTO DID NOT PERMIT INVOCATION OF POWERS FOR REOPENING T HE ASSESSMENT. ' 12. IDENTICAL ISSUE HAS BEEN DECIDED BY THE HONBLE JURISDICTIONAL HIGH COURT IN CASE OF MADHUKAR KHOSLA VS ACIT 354 ITR 356 WHEREIN THE HONBLE JURISDICTIONAL HIGH COURT HAS A LSO FOLLOWED ITS OWN DECISION RENDERED IN THE CASE ENTITLED CIT VS ORIENT CRAFT LTD ., THE OPERATIVE PART OF THE JUDGEMENT (SUPRA) IS REPR ODUCED AS UNDER: THE ARGUMENT OF THE REVENUE THAT AN INTIMATION CAN NOT BE EQUATED TO AN ASSESSMENT, RELYING UPON CERTAIN OBSE RVATIONS OF THE SUPREME COURT IN RAJESH JHAVERI (SUPRA) WOULD A LSO APPEAR TO BE SELF-DEFEATING, BECAUSE IF AN 'INTIMATION' IS NOT AN 7 I.T.A.NO.1259,1392/DEL/2009 'ASSESSMENT' THEN IT CAN NEVER BE SUBJECTED TO SECT ION 147 PROCEEDINGS, FOR, THAT SECTION COVERS ONLY AN 'ASSE SSMENT' AND WE WONDER IF THE REVENUE WOULD BE PREPARED TO CONCE DE THAT POSITION. IT IS NOBODY'S CASE THAT AN 'INTIMATION' CANNOT BE SUBJECTED TO SECTION 147 PROCEEDINGS; ALL THAT IS C ONTENDED BY THE ASSESSEE, AND QUITE RIGHTLY, IS THAT IF THE REV ENUE WANTS TO INVOKE SECTION 147 IT SHOULD PLAY BY THE RULES OF T HAT SECTION AND CANNOT BOG DOWN. IN OTHER WORDS, THE EXPRESSION 'REASON TO BELIEVE' CANNOT HAVE TWO DIFFERENT STANDARDS OR SET S OF MEANING, ONE APPLICABLE WHERE THE ASSESSMENT WAS EARLIER MAD E UNDER SECTION 143(3) AND ANOTHER APPLICABLE WHERE AN INTI MATION WAS EARLIER ISSUED UNDER SECTION 143(1). IT FOLLOWS THA T IT IS OPEN TO THE ASSESSEE TO CONTEND THAT NOTWITHSTANDING THAT T HE ARGUMENT OF 'CHANGE OF OPINION' IS NOT AVAILABLE TO HIM, IT WOULD STILL BE OPEN TO HIM TO CONTEST THE REOPENING ON THE GROUND THAT THERE WAS EITHER NO REASON TO BELIEVE OR THAT THE ALLEGED REASON TO BELIEVE IS NOT RELEVANT FOR THE FORMATION OF THE BE LIEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. IN DOING SO, IT IS FURTHER OPEN TO THE ASSESSEE TO CHALLENGE THE REASO NS RECORDED UNDER SECTION 148(2) ON THE GROUND THAT THEY DO NOT MEET THE STANDARDS SET IN THE VARIOUS JUDICIAL PRONOUNCEMENT S.' 13. FOLLOWING THE LAW LAID DOWN BY HON'BLE JURISDI CTIONAL HIGH COURT IN THE JUDGEMENT (SUPRA) DISCUSSED ABOVE, WE ARE OF THE CONSIDERED VIEW THAT ASSUMING OF JURISDICTION BY TH E ASSESSING OFFICER IN THIS CASE, IS BAD IN LAW FOR THE REASONS INTER A LIA THAT WHEN THE ASSESSEE HAS SPECIFICALLY CLAIMED EXEMPTION OF ITS ENTIRE INCOME FOR TAXATION U/S 90 OF THE 1. T. ACT READ WITH ARTICLE 8 OF DTAA BETWEEN INDIA AND NETHERLANDS BY GIVING A NOTE ON THE ORIGI NAL INCOME TAX RETURN, THERE WAS NO TANGIBLE MATERIAL WITH THE ASS ESSING OFFICER TO REOPEN THE ASSESSMENT. APART FROM NOTE GIVEN ON T HE ORIGINAL RETURN OF INCOME BY THE ASSESSEE, NO TANGIBLE MATERIAL HAS BEEN BROUGHT ON RECORD BY THE ASSESSING OFFICER TO REOPEN THE ASSES SMENT; THAT LD. CIT(A) HAS LOST SIGHT OF THE FACT THAT THE ASSESSIN G OFFICER HAS NO 8 I.T.A.NO.1259,1392/DEL/2009 JURISDICTION TO REOPEN THE ASSESSMENT WITHOUT BRING ING ON RECORD ANY TANGIBLE MATERIAL AND AS SUCH, FINDINGS OF LD. CIT( A) ARE NOT SUSTAINABLE IN THE EYES OF LAW. FURTHER THE ASSESSI NG OFFICER HAS PROCEEDED FOR REASSESSMENT OF THE CASE WITHOUT ISSU ING A NOTICE U/S 143(2) OF THE ACT AND LD. CIT(A) HAS ALSO LOST SIGH T OF THIS FACT WHILE PASSING THE IMPUGNED ORDER. IN THE LIGHT OF FACTUAL MATRIX DISCUSSED IN THE PRECEDING PARAGRAPHS, IT IS PROVED ON RECORD TH AT THE ASSESSING OFFICER DOES NOT HAVE JURISDICTION TO REOPEN THE AS SESSMENT. SO, WE HEREBY DECIDE GROUNDS NO.1, 2, 3 AND 5 IN FAVOUR OF THE ASSESSEE. 14. GROUNDS NO.1 OF L.T.A. NO. 1250/DEL/2009 AND GROUND S NO.6 & 7 OF I.T.A. NO. 13921DEI/2009: TO DECIDE THE ISSUE IN CONTROVERSY, THE ASSESSING O FFICER DURING THE REASSESSMENT PROCEEDINGS, CAME TO THE CONCLUSIO N AS UNDER: ' ... THE SERVICES RENDERED ARE IN THE NATURE OF TE CHNICAL AND PROFESSIONAL AND THE SAME ARE COVERED UNDER ARTICLE 12 OF DT AA BETWEEN INDIA AND NETHERLANDS. THE SERVICE RENDE RED IS ALSO COVERED U/S 9(J)(VII) OF THE INCOME TAX ACT, 1961. DURING THE RELEVANT F. Y. THE ASSESSEE COMPANY HAS PERMANENT ESTABLISHMENT IN INDIA. ALSO THE SERVICES WERE REND ERED IN TERRITORY OF INDIA IN THE NORMAL COURSE OF BUSINESS ACTIVITY. THEREFORE, RELYING ON THE DECISION OF AAR IN THE CA SE OF MIS. ERICSSON TELEPHONE CORPORATION INDIA, AB VS CIT (19 96), THE FEE RECEIVED WILL BE TAXED U/S 44D READ WITH SECTIO N 115A OF THE ACT. AS THE AGREEMENT WAS ENTERED PRIOR TO 3FT MAY, 1997 THE FEE RECEIVED WAS LIABLE TO TAX @ 30% ON GROSS B ASIS. ' 15. LD. A.R. RELIED UPON THE ORDER DATED 19.11.201 0 PASSED BY INCOME TAX APPELLATE TRIBUNAL DELHI BENCH 'D', NEW DELHI IN THE CASE ENTITLED AS CIT VS KLM ROYAL DUTCH AIRLINES IN I.T. A. NOSA03 AND 404IDE1L2010 AND CONTENDED THAT THE ISSUE IN CONTRO VERSY IS DULY COVERED UNDER THE SAME. TO REPEL THIS ARGUMENT, LD. D.R. HAS FAILED TO 9 I.T.A.NO.1259,1392/DEL/2009 BRING ON RECORD ANY DECISION CONTRARY TO IT. THE SO LE ISSUE REQUIRED TO BE DETERMINED IN THIS CASE IS, 'AS TO WHETHER THE R EVENUE EARNED BY THE ASSESSEE WAS TO BE TREATED AS FTS AS PER DTAA'. 16. LD. CIT(A) BY OVERTURNING THE FINDINGS RETURNE D BY THE ASSESSING OFFICER, CAME TO THE CONCLUSION THAT, 'EV EN THOUGH THE KLM ROYAL DUTCH AIRLINES HAS PERMANENT ESTABLISHMENT (P E) IN INDIA THE SERVICES BEING RENDERED TO THE JET AIRWAYS ARE NOT PART AND PARCEL OF THE PE AND, THEREFORE, THEY COULD NOT BE CONSIDERED TO BE CONNECTED TO THE P E OF THE APPELLANT IN INDIA. ACCORDINGLY, THI S INCOME FROM SERVICES IS LIABLE TO BE TAXED ONLY UNDER ARTICLE 1 2 OF THE INDO- NETHERLAND DT AA AND RATE OF TAX WILL ACCORDINGLY B E GOVERNED AS PER THE PROVISIONS OF THE INDO-NETHERLAND DT AA. THE AS SESSING OFFICER IS, THEREFORE REQUIRED TO TAX THE FEE FOR TECHNICAL SERVICES AT THE RATE PROVIDED UNDER THE DTAA'. IDENTICAL ISSUE HAS COME UP BEFORE COORDINATE BENCH OF INCOME TAX APPELLATE TRIBUNAL I N THE JUDGEMENT SUPRA IN ASSESEE'S OWN CASE PERTAINING TO I.T.A. NO. 403 & 403/DEL/2010 FOR ASSESSMENT YEAR 2004-05 AND 2005-0 6 , WHICH IS DECIDED AS UNDER: '5. DISSATISFIED WITH THE ACTION OF THE ASSESSING OFFICER, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LE ARNED CIT(APPEALS). LEARNED CIT(A) HAS ALLOWED THE APPEAL S OF THE ASSESSEE AND DELETED THE ADDITION. LEARNED CIT(APPE ALS) ON APPRECIATION OF ARTICLE 8 OF INDO-NETHERLANDS DT AA HAS HELD THAT THESE TWO ACTIVITIES ARE TO BE CONSIDERED AS A PART OF OPERATION OF AIR- CRAFT IN INTERNATIONAL TRAFFIC. 6. LEARNED DR WHILE IMPUGNING THE ORDER OF THE LEA RNED CIT(APPEALS), CONTENDED THAT THE SERVICES RENDERED FOR GROUND HANDLING AND TECHNICAL HANDLING ARE NOT TO BE CONSI DERED AS A PART OF OPERATION OF AIR-CRAFT IN INTERNATIONAL TRA FFIC. THESE ARE SEPARATE ACTIVITIES AND THEY HAVE NOTHING TO DO WIT H OPERATION 10 I.T.A.NO.1259,1392/DEL/2009 OF AIR-CRAFT IN INTERNATIONAL TRAFFIC. HE POINTED O UT THAT GECD IN ITS LATEST UPDATE OF THE COMMENTARY ON ARTICLE 8 HAS OBSERVED SUCH SERVICES AS ANCILLARY FOR OPERATION OF AIR-CRA FT IN INTERNATIONAL TRAFFIC BUT CONCLUDED OUT THAT THESE ARE TO BE CONSTRUED AS A PART OF OPERATION OF AIR-CRAFT IN IN TERNATIONAL TRAFFIC: HE EMPHASIZED THAT INDIA IS NOT A PARTY TO THE COUNTRIES WHO CONCUR ON COMMENTARY FOR INTERPRETATION OF CLAU SES IN THE DTAA. HE REFERRED PARAGRAPH 10.1 FROM GECD COMMENTA RY ON ARTICLE 8. ' 17. NOW, ADVERTING TO THE CASE AT HAND, UNDISPUTEDL Y, THE ASSESSEE ENTERED INTO AN AGREEMENT DATED 01.09.1995 FOR A PE RIOD OF TWO YEARS, WITH JET AIRLINES. JET AIRLINES RENDERED TECHNICAL 1 PROFESSIONAL SERVICES IN THE AREAS OF GROUND HANDLING, IN-FLIGHT SERVICES, AIRPORT PROCEDURES AND SYSTEMS, SO AS TO IMPROVE THE OVERAL L SERVICES IN FLIGHT OPERATION AND RECEIVED FEE OF US$ 1,00,0001- FOR TW O YEARS UNDER THE AGREEMENT DURING THE RELEVANT FINANCIAL YEAS 1998-9 9 AND 1999-2000. ASSESSING OFFICER TAXED THE AMOUNT OF US$ 1,00,000/ - U/S 44D READ WITH SECTION 1L5A OF THE ACT, WHEREAS LD. CIT(A) DI RECTED THE ASSESSING OFFICER TO TAX FTS AS PER DTAA. 18. THE COORDINATE BENCH IN ASSESSEE'S OWN CASE, I N THE LIGHT OF THE PROVISIONS CONTAINED UNDER DTAA CAME TO THE CONCLUS ION THAT GROUND HANDLING SERVICES AND TECHNICAL SERVICES RENDERED B Y ANOTHER AIRLINE AT INDIAN AIRPORT, WOULD BE CONSIDERED A PART OF OPERA TION OF AIRCRAFT IN THE INTERNATIONAL TRAFFIC. THE AFORESAID DECISION O F THE COORDINATE BENCH SQUARELY APPLIES TO THE FACTS AND CIRCUMSTANC ES OF THE PRESENT CASE. LD. D.R. HAS FAILED TO BRING ON RECORD ANY RE ASON TO DEVIATE FROM THE ORDER PASSED BY THE TRIBUNAL IN ASSESSEE'S OWN CASE IN THE SUBSEQUENT YEAR. 11 I.T.A.NO.1259,1392/DEL/2009 19. GROUND NO.8 OF APPEAL NO.1392/DEL/2009: THE ASSESSING OFFICER VIDE ASSESSMENT ORDER DATED 3 1.03.2005 QUA ASSESSMENT YEAR 2000-01 ASSESSED THE TOTAL INCO ME AT RS.36,05,000/- AND TAXED @ 30% I.E. RS.1 0,81 ,5001 -, TO BE RECOVERED ALONG WITH INTEREST U/S 234 OF THE ACT AND THESE FI NDINGS HAVE BEEN AFFIRMED BY LD. CIT(A) TO THE EXTENT THAT SECTION 2 34A, 234B AND 234D BE APPLIED AFTER COMPUTING THE CHARGEABLE TAX. SINCE, THIS ISSUE IS CONSEQUENTIAL, IN VIEW OF OUR FINDINGS IN RESPEC T OF GROUNDS NO.1, 2, 3 & 5 BY WHICH ASSESSMENT ORDER FOR REOPENING HAS B EEN QUASHED, THIS GROUND HAS ALSO BEEN DECIDED IN FAVOUR OF THE ASSES SEE. 20. GROUND NO.9: I.T.A. NO. 1392/DEL/2009: THIS GROUND IS PREMATURE, HENCE NEEDS NO ADJUDICAT ION BY THE TRIBUNAL. 21. AS A SEQUEL TO THE ABOVE DISCUSSION, WE HEREBY DISMISS THE APPEAL BEARING I.T.A. NO.1259/DEL/2009 FILED BY THE REVENUE AND HEREBY ALLOW THE APPEAL BEARING I.T.A. NO.1392/DEL/ 2009 FILED BY THE ASSESSEE. 22. ORDER PRONOUNCED IN THE OPEN COURT ON 04 JAN., 2016. SD./- SD./- (J. S. REDDY) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 04 TH JAN., 2016. SP. COPY FORWARDED TO:- THE APPELLANT THE RESPONDENT THE CIT THE CIT (A)-, NEW DELHI. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI.