Cummins Inc., Pune V. Dy. Comm. of Income-tax (Intl. Taxation-I), Pune

ITA 1663/PUN/2011

• Counselvise Citation: 166324514 RSA 2011
• Duration Of Justice: 3 year(s) 1 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 12-02-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 26-12-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A K MODI
• Keywords: Reopening of assessment; Question of law
• Section: 143(3); 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.1663/PN/2011 ASSESSMENT YEAR: 2007-08 CUMMINS INC, C/O CUMMINS INDIA LIMITED, KOTHRUD, PUNE 38 . APPELLANT PAN: AABCC6225D VS. THE DY. DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION-I), PUNE . RESPONDENT APPELLANT BY : RAJAN VORA RESPONDENT BY : A.K. MODI DATE OF HEARING : 12-02-2015 DATE OF PRONOUNCEMENT : 20-02-2015 ORDER PER SUSHMA CHOWLA, JM: THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF DY. DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION-I), PUNE DAT ED 28.10.2011 RELATING TO ASSESSMENT YEAR 2007-08 PASSED U NDER SECTION 143(3) R.W.S. 144C(13) OF THE INCOME-TAX ACT, 1961. 2. THE ASSESSEE HAS RAISED THE GROUNDS OF APPEAL NOS.1 TO 3 AGAINST THE TAXABILITY OF CONSIDERATION RECEIVED FOR FACILITATIN G GRANT OF USER CHARGES IN SOFTWARE TO INDIAN ENTITIES AS PER THE PROVISIONS OF INDIAN-US TAX TREATY. THE ASSESSEE HAD CLAIMED THE SAID RECEIPT AS EXEMPT FROM TAX IN INDIA IN ITS RETURN OF INCOME. HOWEVER, THE ASSESSING OFFICER AND THE DISPUTE RESOLUTION PANEL TREATED THE SAID RECEIPT AS TAXABLE IN INDIA IN THE HANDS OF THE ASSESSEE AS ROYALTY ITA NO.1663/PN/2011 CUMMINS INC. 2 UNDER THE PROVISIONS OF ACT AND ALSO AS WELL UNDER ARTICLE 12 OF DOUBLE TAXATION AVOIDANCE AGREEMENT BETWEEN INDIA AND USA. 3. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSES SEE POINTED OUT THAT SIMILAR ISSUE AROSE BEFORE PUNE BENCH OF THE TRIB UNAL IN ASSESSEES OWN CASE RELATING TO ASSESSMENT YEARS 2004 -05 AND 2006- 07. IT WAS A COMMON POINT BETWEEN THE PARTIES THAT TH E ISSUE RELATING TO THE TAXABILITY IN INDIA OF CONSIDERATION RECEIVED FOR FACILITA TING GRANT OF USER RIGHTS IN SOFTWARE TO INDIAN ENTITIES WAS DECIDED AGAINST THE ASSESSEE BY THE TRIBUNAL IN ITA NO.73/PUN/2011 RELATING TO ASSESSMENT YEAR 2004-05 AND ITA NO.74/PUN/2011 RELATIN G TO ASSESSMENT YEAR 2006-07, VIDE ORDER DATED 08.08.2013. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FURTHER POINT ED OUT THAT IN THE APPEAL FILED BY THE ASSESSEE BEFORE THE HONBLE BOMBA Y HIGH COURT AGAINST THE SAID ORDER OF TRIBUNAL DATED 08.08.2013, A SUBS TANTIAL QUESTION OF LAW HAS BEEN FRAMED, BUT THE DECISION OF THE TR IBUNAL DATED 08.08.2013 HAS NOT BEEN ALTERED BY ANY HIGHER AUT HORITY. THE HONBLE BOMBAY HIGH COURT IN ITA(L) NO.267 OF 2014 RELATIN G TO ASSESSMENT YEAR 2004-05 AND IN ITA(L) NO.268 OF 2014 RELA TING TO ASSESSMENT YEAR 2006-07, VIDE JUDGMENT DATED 29.01.2014 HAD ADMITTED THE APPEAL OF THE ASSESSEE AND FRAMED THE FOLLOW ING SUBSTANTIAL QUESTION OF LAW:- A. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE , THE TRIBUNAL WAS RIGHT IN HOLDING THAT THE INCOME EARNED BY THE APPELLANT WAS TAXABLE AS ROYALTY UNDER ARTICLE 12 OF THE DOUBLE TAXATION AVOIDANCE AGREEMENT BETWEEN INDIA AND THE UNITED STATES OF AMERICA? B. WHETHER IN FACTS AND CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS RIGHT IN NOT DISPOSING OFF THE WITHOUT PREJUDICE ARGUMENT CONSIDERED BY THE APPELLANT THAT THE RELATED SUPPORT SERVICES ARE NOT TAXABLE IN INDIA AS FEE S FOR INCLUDED SERVICES UNDER THE INDIA-US TAX TREATY? ITA NO.1663/PN/2011 CUMMINS INC. 3 4. THE COPY OF THE ORDER OF THE HONBLE BOMBAY HIGH COU RT DATED 29.01.2014 ADMITTING THE AFORESAID QUESTION OF LAW HAS BEEN FILED ON RECORD. FURTHER, IT IS A COMMON POINT BETWEEN BOTH THE AUTHORIZED REPRESENTATIVES THAT IN ASSESSMENT YEAR 2004-05, THE IS SUE OF REOPENING OF ASSESSMENT HAS ALSO BEEN ADMITTED FOR ADJUD ICATION AND QUESTION OF LAW FRAMED, BUT THE SAID ISSUE DOES NOT ARISE IN THE PRESENT APPEAL. IN VIEW OF THE ADMISSION OF QUESTION OF LAW ON THE IS SUE OF TAXABILITY OF CONSIDERATION RECEIVED BY THE ASSESSEE FOR FA CILITATING GRANT OF USER RIGHTS IN SOFTWARE TO INDIAN ENTITIES, THE A SSESSEE FILED AN APPLICATION UNDER SECTION 158A(1) OF THE ACT POINTING OUT TH AT IDENTICAL QUESTION OF LAW WAS PENDING BEFORE THE HONBLE BOMBAY HIGH COURT AND THE FINAL DECISION ON THE SAID ISSUE BE APPLIED, AGAINST W HICH, THE ASSESSEE WOULD NOT RAISE ANY QUESTION OF LAW BEFORE THE H ONBLE BOMBAY HIGH COURT AND / OR HONBLE SUPREME COURT OF IN DIA, IN THE CAPTIONED ASSESSMENT YEAR. THE APPLICATION MADE BY THE ASSESSEE IN FORM NO.8 IS AVAILABLE ON RECORD AND COPIES OF THE SAME W ERE FORWARDED TO THE DEPARTMENT. THE ASSESSING OFFICER VIDE LE TTER DATED 22.12.2014 HAS ON VERIFICATION OF RECORDS, ADMITTED THAT THE QUESTION OF LAW INVOLVED IN THE APPEAL FILED BEFORE THE HONBLE BOMBAY HIGH COURT FOR ASSESSMENT YEARS 2004-05 AND 2006-07 WERE PENDING FOR DECISION AND THE ASSESSEES CLAIM WAS CORRECT. IT WAS FU RTHER POINTED OUT THAT IN ASSESSMENT YEAR 2004-05, THERE WAS ONE M ORE QUESTION OF LAW I.E. RE-OPENING OF ASSESSMENT, WHICH DOES NOT ARISE IN TH E PRESENT ASSESSMENT YEAR. 5. IN VIEW THEREOF, THE ISSUES RAISED BY THE ASSESSEE VIDE GROUNDS OF APPEAL NOS.1 TO 3 ARE DECIDED AGAINST THE ASSESSEE FOLLOW ING THE DECISION OF TRIBUNAL (SUPRA), DATED 08.08.2013 IN ASSESSEES OWN CASE RELATING TO ASSESSMENT YEARS 2004-05 AND 2006-07, SINCE THERE IS NO ITA NO.1663/PN/2011 CUMMINS INC. 4 CHANGE IN THE FACTS AND CIRCUMSTANCES. HOWEVER, IN VIEW OF THE DECLARATION MADE BY THE ASSESSEE IN PRESCRIBED FORM NO.8 IN TERMS OF SECTION 158A(1) OF THE ACT, THE ASSESSING OFFICER IS DIRECTED TO APPLY THE DECISION OF THE HONBLE BOMBAY HIGH COURT AND / OR H ONBLE SUPREME COURT OF INDIA, ON THE SAID ISSUES BEING DECIDED IN ASSESSEES OWN CASE, RELATING TO ASSESSMENT YEARS 2004-05 AND 200 6-07. THE GROUNDS OF APPEAL NOS.1 TO 3 RAISED BY THE ASSESSEE ARE ACCORDINGLY, DISMISSED. 6. THE GROUND OF APPEAL NO.4 IS AGAINST THE LEVY OF INTEREST UNDER SECTIONS 234B AND 234C OF THE ACT, WHICH IS CONSEQUENTIAL AND HENCE, THE SAME IS DISMISSED. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISS ED, SUBJECT TO THE AFORESAID OBSERVATIONS. ORDER PRONOUNCED ON THIS 20 TH DAY OF FEBRUARY, 2015. SD/- SD/- (G.S. PANNU) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 20 TH FEBRUARY, 2015. GCVSR COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE DRP, PUNE; 4) THE CONCERNED CIT(A); 5) THE CIT CONCERNED; 6) THE DR B BENCH, I.T.A.T., PUNE; 7) GUARD FILE. BY ORDER //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T., PUNE