Appeal details
Counselvise Citation
[2018] 125 COUNSELVISE.COM (IT) 9913 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 11 month(s) 22 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
14-03-2018
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
Not Allotted
Assessment Year
2012-2013
Appeal Filed On
23-03-2016
Judgement Text
ITA NO S . 1748 - 1767/MUM/2016 MCKINSEY GR OUP OF COMPANIES ASSESSMENT YEA RS: 2011 - 12 & 2012 - 13 IN THE INCOME TAX APPELLATE TRIBUNAL L BENCH, MUMBAI . , , BEFORE SHRI C.N. PRASAD , JM AND SHRI MANOJ KUMAR AGGARWAL, AM 1 . ./ I.T.A. NO S . 1748 / MUM/ 2016 ( / ASSESSMENT YEAR: 2011 - 12 ) MCKINSEY & COMPANY INC. , UNITED STATES C/O SRBC & ASSOCIATES LLP 14 TH FLOOR, THE RUBY SENAPATI BAPAT MARG DADAR(W) , MUMBAI - 400 028 / VS. DEPUTY COMMISSIONER OF INCOME - TA X (INTERNATIONAL TAXATION) 3(2)(1) SCINDIA HOUSE BALLARD ESTATE MUMBAI - 400 038 ./ ./ PAN/GIR NO.AAACM - 7219 - C ( / APPELLANT ) : ( / RESPONDENT ) & 2. ./ I.T.A. NO. 17 49 / MUM/ 2016 ( / ASSESSMENT YE AR: 2012 - 13 ) MCKINSEY PACIFIC RIM INC. C/O SRBC & ASSOCIATES LLP 14 TH FLOOR, THE RUBY SENAPATI BAPAT MARG DADAR(W) , MUMBAI - 400 028 / VS. DEPUTY COMMISSIONER OF INCOME - TAX (INTERNATIONAL TAXATION) 3(2)(1) SCINDIA HOUSE BALLARD ESTATE MUMBAI - 400 038 ./ ./ PAN/GIR NO.AAACM - 72 33 - N ( / APPELLANT ) : ( / RESPONDENT ) & 3. ./ I.T.A. NO. 17 50 / MUM/ 2016 ( / ASSESSMENT YEAR: 2012 - 13 ) MCKINSEY & COMPANY, INC. THAILAND C/O SRBC & ASSOCIATES LLP 14 TH FLOOR, THE RUBY SENAPATI BAPAT MARG DADAR(W) , MUMBAI - 400 028 / VS. DEPUTY COMMISSIONER OF INCOME - TAX (INTERNATIONAL TAXATION) 3(2)(1) SCINDIA HOUSE BALLARD ESTATE MUMBAI - 400 038 ./ ./ PAN/GIR NO.AA BCM - 0992 - P ( / APPELLANT ) : ( / RESPONDENT ) & 4. ./ I.T.A. NO. 175 1 / MUM/ 2016 2 ITA NO S . 1748 - 1767/MUM/2016 MCKINSEY GROUP OF COMPANIES ASSESSMENT YEA RS: 2011 - 12 & 2012 - 13 ( / ASSESSMENT YEAR: 2012 - 13 ) MCKINSEY & COMPANY, PHILS C/O SRBC & ASSOCIATES LLP 14 TH FLOOR, THE RUBY SENAPATI BAPAT MARG DADAR(W) , MUMBAI - 400 028 / VS. DEPUTY COMMISSION ER OF INCOME - TAX (INTERNATIONAL TAXATION) 3(2)(1) SCINDIA HOUSE BALLARD ESTATE MUMBAI - 400 038 ./ ./ PAN/GIR NO.AA ECM - 3954 - C ( / APPELLANT ) : ( / RESPONDENT ) & 5. ./ I.T.A. NO. 17 52 / MUM/ 2016 ( / ASSESSMENT YEAR: 2012 - 13 ) MCKINSEY & COMPANY, INC. LU XEMBOURG C/O SRBC & ASSOCIATES LLP 14 TH FLOOR, THE RUBY SENAPATI BAPAT MARG DADAR(W) , MUMBAI - 400 028 / VS. DEPUTY COMMISSIONER OF INCOME - TAX (INTERNATIONAL TAXATION) 3(2)(1) SCINDIA HOUSE BALLARD ES TATE MUMBAI - 400 038 ./ ./ PAN/GIR NO.AA ECM - 744 4 - F ( / APPELLANT ) : ( / RESPONDENT ) & 6. ./ I.T.A. NO. 1753 / MUM/ 2016 ( / ASSESSMENT YEAR: 2012 - 13 ) MCKINSEY & COMPANY, INC. FRANCE C/O SRBC & ASS OCIATES LLP 14 TH FLOOR, THE RUBY SENAPATI BAPAT MARG DADAR(W) , MUMBAI - 400 028 / VS. DEPUTY COMMISSIONER OF INCOME - TAX (INTERNATIONAL TAXATION) 3(2)(1) SCINDIA HOUSE BALLARD ESTATE MUMBAI - 400 038 ./ ./ PAN/GIR NO.AAACM - 72 23 - Q ( / APPELLANT ) : ( / RESPONDENT ) & 7. ./ I.T.A. NO. 1754 / MUM/ 2016 ( / ASSESSMENT YEAR: 2012 - 13 ) MCKINSEY INCORPORATED C/O SRBC & ASSOCIATES LLP 14 TH FLOOR, THE RUBY SENAPATI BAPAT MARG DADAR(W) , MUMBAI - 400 028 / VS. D EPUTY COMMISSIONER OF INCOME - TAX (INTERNATIONAL TAXATION) 3(2)(1) SCINDIA HOUSE BALLARD ESTATE MUMBAI - 400 038 ./ ./ PAN/GIR NO.AAACM - 72 21 - N ( / APPELLANT ) : ( / RESPONDENT ) & 8. ./ I.T.A. NO. 1755 / MUM/ 2016 ( / ASSESSMENT YEAR: 2012 - 13 ) MCKINSEY & COMPANY, INC. NORWAY / DE PUTY COMMISSIONER OF INCOME - TAX 3 ITA NO S . 1748 - 1767/MUM/2016 MCKINSEY GROUP OF COMPANIES ASSESSMENT YEA RS: 2011 - 12 & 2012 - 13 C/O SRBC & ASSOCIATES LLP 14 TH FLOOR, THE RUBY SENAPATI BAPAT MARG DADAR(W) , MUMBAI - 400 028 VS. (INTERNATIONAL TAXATION) 3(2)(1) SCINDIA HOUS E BALLARD ESTATE MUMBAI - 400 038 ./ ./ PAN/GIR NO.AAAC N - 72 25 - J ( / APPELLANT ) : ( / RESPONDENT ) & 9. ./ I.T.A. NO. 1758 / MUM/ 2016 ( / ASSESSMENT YEAR: 2012 - 13 ) MCKINSEY & COMPANY, INC. SWITZERLA ND C/O SRBC & ASSOCIATES LLP 14 TH FLOOR, THE RUBY SENAPATI BAPAT MARG DADAR(W) , MUMBAI - 400 028 / VS. DEPUTY COMMISSIONER OF INCOME - TAX (INTERNATIONAL TAXATION) 3(2)(1) SCINDIA HOUSE BALLARD ESTATE MUMBAI - 400 038 ./ ./ PAN/GIR NO.AA ACM - 721 5 - Q ( / APPELLANT ) : ( / RESPONDENT ) & 10. ./ I.T.A. NO. 1759 / MUM/ 2016 ( / ASSESSMENT YEAR: 2012 - 13 ) MCKINSEY & COMPANY, INC. ITALY C/O SRBC & ASSOCIATES LLP 14 TH FLOOR, THE RUBY SENAPATI BAPAT MARG DADAR(W) , MUMBAI - 400 028 / VS. DEPUTY COMMISSIONER OF INCOME - TAX (INTERNATIONAL TAXATION) 3(2)(1) SCINDIA HOUSE BALLARD ESTATE MUMBAI - 400 038 ./ ./ PAN/GIR NO.AAACM - 72 26 - M ( / APPELLANT ) : ( / RESPONDENT ) & 11. ./ I.T.A. NO. 1762 / MUM/ 2016 ( / ASSESSMENT YEAR: 2011 - 12 ) MCKINSEY & COMPANY, INC. JAPAN C/O SRBC & ASSOCIATES LLP 14 TH FLOOR, THE RUBY SENAPATI BAPAT MARG DADAR(W) MUMBAI - 400 028 / VS. DEPUTY COMMISSIONER OF INCOME - TAX (INTERNATIONAL TAX ATION) 3(2)(1) SCINDIA HOUSE BALLARD ESTATE MUMBAI - 400 038 ./ ./ PAN/GIR NO.AAACM - 72 24 - K ( / APPELLANT ) : ( / RESPONDENT ) & 12. ./ I.T.A. NO. 1763 / MUM/ 2016 ( / ASSESSMENT YEAR: 2 012 - 13 ) MCKINS EY ASIA INC. C/O SRBC & ASSOCIATES LLP / DEPUTY COMMISSIONER OF INCOME - TAX (INTERNATIONAL TAXATION) 3(2)(1) 4 ITA NO S . 1748 - 1767/MUM/2016 MCKINSEY GROUP OF COMPANIES ASSESSMENT YEA RS: 2011 - 12 & 2012 - 13 14 TH FLOOR, THE RUBY SENAPATI BAPAT MARG DADAR(W) , MUMBAI - 400 028 VS. SCINDIA HOUSE BALLARD ESTATE MUMBAI - 400 038 ./ ./ PAN / GIR NO.AAACM - 721 4 - R ( / APPELLANT ) : ( / RESPONDENT ) & 13. ./ I.T.A. NO. 1764 / MUM/ 2016 ( / ASSESSMENT YEAR: 2012 - 13 ) MCKINSEY & COMPANY INC. INTERNATIONAL C/O SRBC & ASSOCIATES LLP 14 TH FLOOR, THE RUBY SENAPATI BA PAT MARG DADAR(W) , MUMBAI - 400 028 / VS. DEPUTY COMMISSIONER OF INCOME - TAX (INTERNATIONAL TAXATION) 3(2)(1) SCINDIA HOUSE BALLARD ESTATE MUMBAI - 400 038 ./ ./ PAN/GIR NO.AAD CM - 3493 - K ( / APPELLANT ) : ( / RESPONDENT ) & 14. ./ I.T.A. NO. 1765 / MUM/ 2016 ( / ASSESSMENT YEAR: 2012 - 13 ) MCKINSEY & COMPANY, INC. NETHERLAND C/O SRBC & ASSOCIATES LLP 14 TH FLOOR, THE RUBY SENAPATI BAPAT MARG DADAR(W) , MUMBAI - 400 028 / VS. DEPUTY COMMISSIONER OF INCOME - TAX (INTERNATIONAL TAXATION) 3(2)(1) SCINDIA HOUSE BALLARD ESTATE MUMBAI - 400 038 ./ ./ PAN/GIR NO.AAACM - 72 34 - M ( / APPELLANT ) : ( / RESPONDENT ) & 15. ./ I.T.A. NO. 1766 / MUM/ 2016 ( / ASSESSMENT YEAR: 2012 - 13 ) MCKINSEY & COMPANY, INC. HONG KONG C/O SRBC & ASSOCIATES LLP 14 TH FLOOR, THE RUBY SENAPATI BAPAT MARG DADAR(W) , MUMBAI - 400 028 / VS. DEPUTY COMMISSIONER OF INCOME - TAX (INTERNATIONAL TAXATION) 3(2)(1) SCINDIA HOUSE BALLARD ESTATE MUMBAI - 4 00 038 ./ ./ PAN/GIR NO.AAACM - 72 30 - R ( / APPELLANT ) : ( / RESPONDENT ) & 16. ./ I.T.A. NO. 1767 / MUM/ 2016 ( / ASSESSMENT YEAR: 2012 - 13 ) MCKINSEY KNOWLEDGE CENTRE BELGIUM INC. C/O SRBC & ASSOCIAT ES LLP 14 TH FLOOR, THE RUBY SENAPATI BAPAT MARG / VS. DEPUTY COMMISSIONER OF INCOME - TAX (INTERNATIONAL TAXATION) 3(2)(1) SCINDIA HOUSE BALLARD ESTATE 5 ITA NO S . 1748 - 1767/MUM/2016 MCKINSEY GROUP OF COMPANIES ASSESSMENT YEA RS: 2011 - 12 & 2012 - 13 DADAR(W) , MUMBAI - 400 028 MUMBAI - 400 038 ./ ./ PAN/GIR NO.AAACM - 3489 - P ( / APPELLANT ) : ( / RESPONDENT ) & 17. ./ I.T.A. NO. 1756 / MUM/ 2016 ( / ASSESSMENT YEAR: 2012 - 13 ) MCKINSEY & COMPANY SERVICE AB C/O SRBC & ASSOCIATES LLP 14 TH FLOOR, THE RUBY SENAPATI BAPAT MARG DADAR(W) , MUMBAI - 400 028 / V S. DEPUTY COMMISSIONER OF INCOME - TAX (INTERNATIONAL TAXATION) 3(2)(1) SCINDIA HOUSE BALLARD ESTATE MUMBAI - 400 038 ./ ./ PAN/GIR NO.AAHCM - 6083 - F ( / APPELLANT ) : ( / RESPONDENT ) & 18. ./ I.T.A. NO. 1757 / MUM / 2016 ( / ASSESSMENT YEAR: 2012 - 13 ) MCKINSEY & COMPANY, S .L . C/O SRBC & ASSOCIATES LLP 14 TH FLOOR, THE RUBY SENAPATI BAPAT MARG DADAR(W , MUMBAI - 400 028 / VS. DEPUTY COMMISSIONER OF INCOME - TAX (INTERNATIONAL TAXATION) 3(2)(1) SCINDIA HOUSE BALLARD ESTATE MUMBAI - 400 038 ./ ./ PAN/GIR NO.AAECM - 4285 - A ( / APPELLANT ) : ( / RESPONDENT ) & 19. ./ I.T.A. NO. 1760 / MUM/ 2016 ( / ASSESSMENT YEAR: 2011 - 12 ) MCKINSEY & COMPANY, SINGAPORE PTE. LTD C/O SRBC & ASSOCIATES LLP 14 TH FLOOR, THE RUBY SENAPATI BAPAT MARG DADAR(W) , MUMBAI - 400 028 / VS. DEPUTY COMMISSIONER OF INCOME - TAX (INTERNATIONAL TAXATION) 3(2)(1) SCINDIA HOUSE BALLARD ESTATE MUMBAI - 400 038 ./ ./ PAN/GIR NO.A A E CM - 4465 - A ( / APPELLANT ) : ( / RESPONDENT ) & 20. ./ I.T.A. NO. 1761 / MUM/ 2016 ( / ASSESSMENT YEAR: 2012 - 13 ) MCKINSEY & COMPANY, CANADA C/O SRBC & ASSOCIATES LLP 14 TH FLOOR, THE RUBY SENAPATI BAPAT MARG DADAR(W) , MU MBAI - 400 028 / VS. DEPUTY COMMISSIONER OF INCOME - TAX (INTERNATIONAL TAXATION) 3(2)(1) SCINDIA HOUSE BALLARD ESTATE MUMBAI - 400 038 6 ITA NO S . 1748 - 1767/MUM/2016 MCKINSEY GROUP OF COMPANIES ASSESSMENT YEA RS: 2011 - 12 & 2012 - 13 ./ ./ PAN/GIR NO.AAE CM - 3644 - F ( / APPELLANT ) : ( / RESPONDENT ) REVENUE BY : V. VIDHYADHAR ,LD. D R ASSESSEE BY : PORUS KAKA & DIVESH C HAWLA,LD.ARS / DATE OF HEARING : 23/02 /2018 / DATE OF PRONOUNCEMENT : 14 /03 /2018 / O R D E R PER BENCH 1. THE BUNCH OF CAPTIONED APPEALS BY GROUP OF ASSESSEE C OMPANY FOR ASSESSMENT YEARS [AY] 2011 - 12 & 2012 - 13 CONTEST SEPARATE ORDERS OF LD. FIRST APPELLATE AUTHORITY. SINCE COMMON ISSUES ARE INVOLVED, WE DISPOSE - OFF THE SAME BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE & BREVITY. FIRST, WE TAKE UP ITA NO. 1748/MUM/2016 FOR AY 2011 - 12 AS LEAD CASE WHEREIN THE FOLLOWING GROUNDS OF APPEALS HAVE BEEN RAISED BY THE ASSESSEE: - 1. THE HONBLE DISPUTE RESOLUTION PANEL (DRP) HAS FAILED TO CONSIDER THE DETAILED EVIDENCE FURNISHED AND THE ORDER SHOWS NON - APPLICATION OF MIND, IS ERRONEOUS AND OUGHT TO BE QUASHED. 2. THE LEARNED AO / HONBLE DRP HAS ERRED IN ASSESSING VARIOUS INTER - COMPANY PAYMENTS IGNORING THE DETAILED DOCUMENTATION AND EXPLANATIONS FILED BY THE APPELLANT DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS O N THE BASIS THAT IT DOES NOT HAVE ANY EVIDENTIARY VALUE. 3. THE LEARNED AOS ORDER AND FINDING ON THE EVIDENCE SUBMITTED IS CONTRARY TO THE DETAILS FILED BEFORE HIM AND ALSO THE HONBLE DRP. 4. THE LEARNED AO/HONBLE DRP HAS ERRED IN CONCLUDING THAT THE LOANED S ERVICE FEE RECEIVED ARE IN THE NATURE OF FEES FOR INCLUDED SERVICES AND HENCE, TAXABLE 7 ITA NO S . 1748 - 1767/MUM/2016 MCKINSEY GROUP OF COMPANIES ASSESSMENT YEA RS: 2011 - 12 & 2012 - 13 UNDER ARTICLE 12 OF THE INDIA - US DOUBLE TAXATION AVOIDANCE TREATY (INDIA - US TAX TREATY) AND UNDER SECTION 9(1)(VII) OF THE ACT. 5. THE LEARNED AO/HONBLE DRP HAS ERRED IN NOT APPLYING THE PRINCIPLES ENUNCIATING IN THE EARLIER DECISIONS PRONOUNCED BY THE HONBLE INCOME TAX APPELLATE TRIBUNAL (ITAT) IN APPELLANTS OWN CASE/IN CASE OF GROUP COMPANIES OF THE APPELLANT, WHEREIN IT HAS BEEN HELD THAT BORROWED SERVICE FEE REC EIVED ARE NOT TAXABLE AS FEES FOR INCLUDED SERVICES. 6. THE LEARNED AO/ HONBLE DRP HAS ERRED IN CONCLUDING THAT FIRM FUNCTION SERVICE FEES ARE IN THE NATURE OF FEES FOR INCLUDED SERVICES AND HENCE, TAXABLE UNDER ARTICLE 12 OF THE INDIA - US TAX TREATY AND UNDER SECTION 9(1)(VII) OF THE ACT. 7. THE LEARNED AO/HONBLE DRP HAS ERRED IN CONCLUDING THAT FIRM COMMITTEE CHARGES ARE IN THE NATURE OF ROYALTY AND HENCE, TAXABLE UNDER ARTICLE 12 OF THE INDIAN - US TAX TREATY AND UNDER SECTION 9(1) (VI) OF THE ACT. 8. THE LE ARNED AO/HONBLE DRP HAS ERRED IN CONCLUDING THAT KNOWLEDGE POOL CHARGES ARE IN THE NATURE OF ROYALTY AND HENCE, TAXABLE UNDER ARTICLE 12 OF THE INDIA - US TAX TREATY AND UNDER SECTION 9(1)(VI) OF THE ACT. 9. THE LEARNED AO/HONBLE DRP HAS ERRED IN CONCLUDING THAT REGIONAL CORPORATE FINANCE CHARGES IN THE NATURE OF FEES FOR INCLUDED SERVICES AND HENCE, TAXABLE UNDER ARTICLE 12 OF THE INDIA - US TAX TREATY AND UNDER SECTION 9(1) (VII) OF THE ACT. 10. WITHOUT PREJUDICE TO THE APPELLANTS PRIMARY CONTENTION THAT THE RECEIPTS IN RESPECT OF LOANED SERVICE FEE, FIRM FUNCTION SERVICE FEE, FIRM COMMITTEE CHARGES, KNOWLEDGE POOL CHARGES AND REGIONAL CORPORATE FINANCE CHARGES ARE NOT TAXABLE IN INDIA, THE LEARNED AO/HONBLE DRP HAS ERRED IN ESTIMATING THE NET PROFIT OF THE A PPELLANT IN RESPECT OF THESE RECEIPTS AT THE RATE OF 35.52% OF THE TOTAL RECEIPTS, ON AN ADHOC BASIS, AND TAXING THE SAME ACCORDINGLY UNDER THE PROVISIONS OF THE ACT. 11. WITHOUT PREJUDICE TO THE ABOVE, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED AO/HONBLE DRP HAS FILED TO APPRECIATE AND APPLY THE ORDER PASSED BY THE COMPETENT AUTHORITIES OF INDIA AND UNITED STATES OF AMERICA AS PER ARTICLE 27 OF THE INDIA - US TAX TREATY IN THE CASE OF THE APPELLANT FOR PRIOR YEARS WHEREIN IT HAS B EEN HELD THAT INCOME FROM LOANED SERVICES, KNOWLEDGE POOL, FIRM COMMITTEE SERVICES AND REGIONAL CORPORATE FINANCE SERVICES SHOULD NOT BE TAXABLE IN INDIA IN THE HAND S OF THE APPELLANT. THE APPELLANT PRAYS THAT THE PRINCIPLES UNDERLYING THE ORDER OUGHT TO HAVE BEEN APPLIED AND PRAY ACCORDINGLY. 12. WITHOUT PREJUDICE TO THE ABOVE, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED AO/HONBLE DRP HAS FILED TO APPRECIATE AND APPLY THE ORDER PASSED BY THE COMPETENT AUTHORITIES OF INDIA AND UN ITED STATES OF AMERICA AS PER ARTICLE 27 OF THE INDIA - US TAX TREATY IN THE CASE OF THE APPELLANT FOR PRIOR YEARS WHEREIN IT HAS BEEN HELD THAT ONLY TO THE EXTENT OF THE MARK - UP ELEMENT OF 3 PERCENT. THE APPELLANT PRAYS THAT THE PRINCIPLES UNDERLYING THE O RDER OUGHT TO HAVE BEEN APPLIED AND PRAY ACCORDINGLY. 13. THE FINDING OF THE HONBLE DRP THAT THE APPELLANT HAD NOT FOLLOWED THE ORDER PASSED BY THE COMPETENT AUTHORITIES OF INDIA AND UNITED STATES OF AMERICA AS PER ARTICLE 27 OF THE INDIA - US TAX TREATY, IS ER RONEOUS AND OUGHT TO BE SET ASIDE. 14. THE LEARNED AO HAS ERRED IN CONCLUDING THAT THE REIMBURSEMENT OF OTHER EXPENSES RECEIVED BY THE APPELLANT IS TAXABLE IN INDIA IN THE HANDS OF THE APPELLANT, WITHOUT CONSIDERING THE DETAILED DOCUMENTATION AND EXPLANATIONS FILED BY THE APPELLANT. 15. THE LEARNED AO HAS ERRED IN INITIATING PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT. 8 ITA NO S . 1748 - 1767/MUM/2016 MCKINSEY GROUP OF COMPANIES ASSESSMENT YEA RS: 2011 - 12 & 2012 - 13 2. FACTS LEADING TO THE SAME ARE THAT THE ASSESSEE BEING A FOREIGN ENTITY INCORPORATED IN U NITED STATES OF AMERICA [U SA ] WAS PART OF MCK INSEY GROUP OF COMPANIES . IT WAS ENGAGED IN RENDERING STRATEGIC CONSULTANCY SERVICES IN USA AND PROVIDING CERTAIN SERVICES TO OTHER SUBSIDIARIES AND BRANCHES OF ITS PARENT COMPA N Y . THE ASSESSEE FILED ITS RETURN OF INCOME ON 30/11/2011 AT RS.8.03 CRORES. TH E AGGREGATE RECEIPTS OF ASSESSEE FROM ASSOCIATED ENTERPRISES [AE] IN INDIA AMOUNTED TO RS.157.88 CRORES DURING IMPUGNED AY AND THE ASSESSEE BENCHMARKED THE SAME BY FOLLOWING DIFFERENT METHODS , WHICH W ERE F OUND TO BE AT ARMS LENGTH PRICE . THE DRAFT ASSESSM ENT ORDER U/S 144C(1) READ WITH SECTION 143(3) DATED 31/03/2015 WAS SENT FOR THE DIRECTIONS OF LD. DRP WHERE THE ASSESSEE RAISED OBJECTIONS AGAINST THE DRAFT ASSESSMENT ORDER. THE SERVICES BEING PROVIDED BY ASSESSEE TO ITS AE IN INDIA COULD BE CATEGORI ZED UNDER THE FOLLOWING BROAD HEADS: - NO. HEAD 1. BORROWED SERVICE CHARGES /LOANED SERVICE INCOME 2. FIRM FUNCTION SERVICE CHARGES 3. FIRM COMMIT TEE CHARGES 4. REGIONAL CORPORATE FINANCE CHARGES 5. KNOWLEDGE POOL CHARGES 6. FIRM TRAINING CHARGES 7. REIM BURSEMENT OF OTHER EXPENSES THE ASSESSEE TREATED THE ABOVE RECEIPTS (EXCEPT FIRM TRAINING CHARGES ) AS BUSINESS PROFITS UNDER ARTICLE - 7 OF INDIA - US DOUBLE TAXATION AVOIDANCE AGREEMENT [DTAA / TREATY ] AND IN THE ABSENCE OF ANY PERMANENT 9 ITA NO S . 1748 - 1767/MUM/2016 MCKINSEY GROUP OF COMPANIES ASSESSMENT YEA RS: 2011 - 12 & 2012 - 13 ESTABLISHMENT [ PE ] IN INDIA, CLAIMED THE SAME TO BE NOT CHARGEABLE TO TAX IN INDIA. HOWEVER, LD. AO , IN THE DRAFT ASSESSMENT ORDER, OPINED THAT THE SAME CONSTITUTED ROYALTY / FEES FOR INCLUDED SERVICES UNDER ARTICLE - 12 OF INDIA - US TREATY AND ACCORDINGLY TAXABLE IN THE HANDS OF THE ASSESSEE . THE LD. DRP, ON FACTUAL MATRIX AND RELYING ON THE STAND OF DRP IN EARLIER ASSESSMENT YEARS CONFIRMED THE STAND OF LD. AO VIDE DIRECTIONS DATED 28/12/2015. PURSUANT TO THE SAID DIRECTIONS, FINAL ASSESSMENT ORDER DATED 06/01/2016 U/S 143(3) READ WITH SECTION 144C(13) HAS BEEN PASSED BY LD. AO WHEREIN THE TOTAL INCOME OF THE ASSESSEE HAS BEEN DETERMINED AT RS.150.19 CRORES AFTER CERTAIN ADDITIONS / ADJUSTMENTS , BEING TAXABLE @15%. AGGRIEVED, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 3. THE LD. SENIOR COUNSEL FOR ASSESSEE [AR], AT THE OUTSET, DREW OUR ATTENTION TO THE FACT THAT THE NATURE & TAXABILITY OF THESE SERVICES HAS BEEN SETTLED BY WAY OF AGREEMENT REACHED BY COMPETENT AUTHORITY IN INDIA AND USA UNDER MUTUAL AGREEMENT PROCEDURE [MAP] FOR AYS 2008 - 09 TO 2009 - 10 AND THE SAME PRINCIPLE / APPROACH SHOULD BE APPLIED IN THE PRESENT CASE. O UR ATTENTION IS DRAWN TO VARIOUS JUDICIAL PRONOUNCEMENTS / TRIBUNALS ORDER IN ASSESSEES OWN CASE AND ITS GROUP COMPANIES WHERE THE SAID PLEA HAS BEEN ACC EPTED. THE LD. DEPARTMENTAL REPRESENTATIVE [DR] WHILE CONTENDING THAT THE MAP SETTLEMENT WAS YEAR - SPECIFIC COULD NOT CONTROVERT THE SAME BY ANY BINDING JUDICIAL PRONOUNCEMENT. 4. WE HAVE CAREFULLY HEARD THE RIVAL CONTENTIONS AND PERUSED SEVERAL ORDERS OF THE TRIBUNAL IN ASSESSEES CASE AND IN THE CASE OF ITS GROUP 10 ITA NO S . 1748 - 1767/MUM/2016 MCKINSEY GROUP OF COMPANIES ASSESSMENT YEA RS: 2011 - 12 & 2012 - 13 COMPANIES INCLUDING MAP SETTLEMENT TERMS F ROM AY 2002 - 03 TO 2007 - 08 & FROM AY 2008 - 09 TO 2009 - 10 AS PLACED BEFORE US IN THE PAPER - BOOK . A PERUSAL OF CLAUSE 3.3 OF RESOLUTION U/S 90 READ WITH A RTICLE 26 OF INDIA - USA TREATY REACHED BY COMPETENT AUTHORITY IN INDIA AND USA UNDER MAP OF INDIA - USA DTAC, F.NO.480/02/2008 - FTD - 1 DATED 01/10/2015 FOR AYS 2008 - 09 TO 2009 - 10 AS PLACED ON PAGE NO. 108 OF THE PAPER - BOOK REVEALS THAT KNOWLEDGE POOL CHARGES, B ORROWED SERVICE CHARGES, FIRM COMMITTEE POOL CHARGE & REGIONAL CORPORATE FINANCE CHARGES HA VE BEEN AGREED TO BE NOT TAXABLE IN INDIA AS ROYALTY OR FEES FOR INCLUDED SERVICE . FURTHER, FIR M FUNCTION SERVICE FEES PAYABLE BY MCKINSEY INDIA SHALL NOT BE FURTHER TAXED IN THE HANDS OF US RECIPIENT, EXCEPT FOR A MARK - UP OF 3%. THE SAID SETTLEMENT / AGREEMENT IS WITH RESPECT TO AMOUNT PAID BY MCKINSEY INDIA TO MCKINSEY & CO. INC. OR ANY OTHER MCKINSEY ENTITY INCORPORATED IN US A . PURSUANT TO THIS MAP SETTLEMENT, THE ASSESSEE WITHDREW ITS APPEALS FOR AYS. 2008 - 09 & 2009 - 10 BEFORE THIS TRIBUNAL, WHICH IS QUITE EVIDENT FROM THE ORDERS OF TRIBUNAL ITA NO. 7645/MUM/2012 DATED 29/12/2015 FOR AY 2008 - 09 & ITA NO.1598/MUM/2014 DATED 11/04/2016 FOR AY 2009 - 10 AS PLACED ON PAGE S 171 TO 173 IN THE PAPER - BOOK. THE TERMS OF THE MAP SETTLEMENT FOR 2008 - 09 & 2009 - 10 HAS BEEN GIVEN EFFECT TO BY THE REVENUE VIDE ORDERS DATED 18/12/2015 & 21/12/2015 AS PLACED ON RECORD . 5. PROCEEDING FURTHER, WE FIND THAT TRIBUNAL HAS ACCEPTED THE APPLI CABILITY OF MAP SETTLEMENT FOR AYS 2011 - 12 & 2012 - 13 WITH RESPECT TO PAYMENT 11 ITA NO S . 1748 - 1767/MUM/2016 MCKINSEY GROUP OF COMPANIES ASSESSMENT YEA RS: 2011 - 12 & 2012 - 13 MADE BY MCKINSEY INDIA TO VARIOUS MCKINSEY ENTITIES INCORPORATED IN US A BY WAY OF FOLLOWING JUDICIAL PRONOUNCEMENTS: - (I) MCKINSEY & CO. INC. & OTHERS VS. DCIT [ITA NOS. 702 - 705/M/201 5, ITA NOS. 711 - 713/M/2015 ITA NO. 659/M/2015 DATED 16/12/2016 AYS 2011 - 12 & 2012 - 2013] (II) MCKINSEY INC. & OTHERS VS. DDIT [ITA NOS. 5406 - 5407/MUM/2014 DATED 08/08/2016 AY 2011 - 12] (III) MCKINSEY & CO. INC. & OTHERS VS. D C IT [ITA NOS. 853 - 858/MUM/2015, ITA NOS. 8 60 - 862/MUM/2015 DATED 01/08/2017 AY S 201 0 - 11 & 2011 - 12 ] (IV) MCKINSEY & CO. & OTHERS VS. D C IT [ITA NOS. 660 - 662/MUM/2015 DATED 23/06/2017 AY 2011 - 12 ] THE LD. SENIOR COUNSEL ALSO PLACED ON RECORD DOCUMENTS DATED 27/07/2016 EVIDENCING INITIATION OF MAP SETTLEM ENT FOR AYS 2010 - 11 TO 2012 - 13 WITH RESPECT TO ASSESSEE AND ITS VARIOUS GROUP CONCERNS . UPON PERUSAL OF THE SAME, WE FIND THAT THE ASSESSEE AND ITS VARIOUS CONCERNS HAVE ALREADY APPROACHED COMPETENT AUTHORITIES TO UNDERTAKE MAP SETTLEMENT FOR THESE YEARS. 6. IN VIEW OF THE STATED FACTS AND FOLLOWING THE TRIBUNALS ORDER AS STATED ABOVE, WE H OLD THAT THE TAXABILITY OF THE RECEIPTS WAS TO BE DETERMINED AS PER THE MAP SETTLEMENT. THEREFORE, THE AFORE - SAID RECEIPTS, BEING BUSINESS PROFITS W AS COVERED BY ARTICL E - 7 OF THE TREATY AND W AS NOT IN THE NATURE OF ROYALTY OR FEES FOR INCLUDED SERVICES . THE REVENUE HAS NOWHERE DISPUTED OR ESTABLISHED THAT THE ASSESSEE HAD PE IN INDIA . THEREFORE, THE SA ID RECEIPTS W ERE NOT CHARGEABLE TO TAX IN INDIA EXCEPT FIRM FUNCTION S ERVICE CHARGES OF RS.63.02 CRORES , WHICH WERE TO BE ACCEPTED AT A MARK UP OF 3% AS PER MAP SETTLEMENT OF EARLIER YEARS. NEEDLESS TO SAY THAT THE SAME MAY 12 ITA NO S . 1748 - 1767/MUM/2016 MCKINSEY GROUP OF COMPANIES ASSESSMENT YEA RS: 2011 - 12 & 2012 - 13 SUITABLY BE MODIFIED BY THE REVENUE , IF REQUIRED, ON THE BASIS OF OUTCOME OF MAP SETTLEMENT FOR IMPUGN ED AY S . 7. RESULTANTLY, GROUND NOS. 4,5,7,8,9 ,11 STANDS ALLOWED IN ASSESSEES FAVOUR. GROUND N UMBERS 1 TO 3 ARE GENERAL IN NATURE. GROUND NO. 6 STANDS PARTLY ALLOWED IN THE SENSE THAT FIRM FUNCTION CHARGES WOULD BE CHARGE ABLE T O TAX WITH A MARK - UP OF 3% IN TERMS OF MAP SETTLEMENT , WHICH IS ALSO AN ALTERNATIVE GROUND NO. 12 . GROUND NO. 10 & 13 , BEING ALTERNATIVE GROUND BECOMES INFRUCTUOUS . GROUND NO. 15 CONTEST INITIATION OF PENALTY, WHICH IS PREMATURE AT THIS STAGE AND HENCE DISMISSED. 8 . THE REMAINING GRO UND NO. 14 CONTEST ADDITIONS WITH RESPECT TO REIMBURSEMENT OF FIRM TRAINING CHARGES & OTHER EXPENSES . THE LD. AR , AT THE OUTSET, SUBMITTED THAT THE ISSUE R EQUIRE S RE - APPRECIATION BY LOWER AUTHORITIES SINCE THESE EXPENSES WERE MERE REIMBURSEMENT S IN NATURE WITHOUT ANY PROFIT ELEMENT AND THEREFORE, THE ASSESSEE BE AFFORDED AN OTHER OPPORTUNITY TO DEMONSTRATE THE SAME. THE LD. DR DID NOT RAISE ANY SERIOUS OBJECTIONS AGAINST THE SAME. RESULTANTLY, THE ISSUE STANDS REMITTED BACK TO THE FILE OF LD. AO FOR RE - ADJUD ICAT ION IN THE LIGHT OF SUBMISSIONS MADE BY LD. AR. THIS GROUND OF APPEAL STANDS ALLOWED FOR STATISTICAL PURPOSES. 9 . RESULTANTLY, THE ASSESSEES APPEAL STANDS PARTLY ALLOWED IN TERMS OF OUR ABOVE ORDER . NOW, WE TAKE UP ITA NO. 1749/MUM/2016 AY 2012 - 13 10 . THE ASSESSEE, BEING FOREIGN COMPANY INCORPORATED IN USA, HAS BEEN ASSESSED AT RS. 138.58 LACS VIDE FINAL ASSESSMENT ORDER DATED 06/01/2016, 13 ITA NO S . 1748 - 1767/MUM/2016 MCKINSEY GROUP OF COMPANIES ASSESSMENT YEA RS: 2011 - 12 & 2012 - 13 WHICH COMPRISED OF LOAN ED SERVICE INCOME (FESS FOR INCLUDED SERVICES) OF RS.79.74 LACS AND REIMBURSEMENT OF ROYALTY /FEES FOR INCLUDED SERVICES FOR RS.58.84 LACS. THE LD. DRP HAS HELD THAT FEE FOR BORROWED SERVICE RENDERED BY THE ASSESSEE WERE IN THE NATURE OF ROYALTY / FEES FOR INCLUDED SERVICES UNDER ARTICLE - 12 OF THE TREATY AND FURTHER THE ASSESSEE WAS NOT ENTITLED T O CLAIM TREATY BENEFIT. 11. SO FAR AS THE ISSUE OF REIMBURSEMENT OF ROYALTY / FEES FOR INCLUDED SERVICES IS CONCERNED, LD. AR, ON SIMILAR LINES, SUBMITTED THAT THE ASSESSEE BE PROVIDED WITH ANOTHER OPPORTUNITY TO DEMONSTRATE THAT THE SAME WERE MERE REIMBU RSEMENTS IN NATURE AND HENCE NOT TAXABLE IN THE HANDS OF THE ASSESSEE. THE LD. DR FAIRLY CONCEDED WITH THE SAME. RESULTANTLY, THE ISSUES STANDS REMITTED BACK TO THE FILE OF LD. AO ON SIMILAR LINES F O R RE - ADJUDICAT ION I N THE LIGHT OF THE SUBMISSIONS MADE BY THE LD. AR. THIS GROUND STANDS ALLOWED FOR STATISTICAL PURPOSES. 12. THE LD. SR. AR POINTED OUT THAT LOANED SERVICE INCOME WAS NOTHING BUT BORROWED SERVICE CHARGES AND THE ASSESSEE WAS A FOREIGN COMPANY INCORPORATED IN USA AND THEREFORE, GOVERNED BY INDIA - USA TREATY AND ALSO COVERED BY THE MAP SETTLEMENT IN SIMILAR MANNER . OUR ATTENTION IS DRAWN TO THE ORDER OF TRIBUNAL IN THE CASE OF GROUP CONCERNS FOR AY 2011 - 12 ITA NO. 853 & OTHERS/MUM/2015 DATED 01/08/2017 TO SUBMIT THAT SIMILAR ISSUES STOOD IN ASSESSE ES FAVOR BY THE ORDER OF THE TRIBUNAL. THE LD. DR COULD NOT CONTROVERT THE SAME IN ANY MANNER. 14 ITA NO S . 1748 - 1767/MUM/2016 MCKINSEY GROUP OF COMPANIES ASSESSMENT YEA RS: 2011 - 12 & 2012 - 13 13. UPON DUE CONSIDERATION, WE FIND THAT TRIBUNAL IN THE CITED ORDER, PLACING RELIANCE ON THE ORDER FOR AY 2009 - 10 HELD THAT BORROWED / LOAN SERVICE CHARGES WER E NOT TAXABLE AS FTS / ROYALTY IN INDIA AND DIRECTED THE LD. AO TO FOLLOW THE TERMS OF MAP SETTLEMENT. WE FURTHER FIND THAT THE REVENUE IN AY HAS 2008 - 09 & 2009 - 10 IN ASSESSEES OWN CASE HAS GIVEN EFFECT TO THE TERMS OF THE MAP SETTLEMENT VIDE ORDERS DATED 21/12/2015 WHICH ARE PLACED ON RECORDS. FURTHER, THE LD. AR HAS ALREADY DEMONSTRATED THAT MAP SETTLEMENT FROM AY 2010 - 11 TO 2012 - 13 WITH RESPECT TO THE CAPTIONED ASSESSEE ARE ALREADY IN PROGRESS. THEREFORE, ON FACTUAL MATRIX, APPLYING THE MAP TERMS OF EAR LIER YEARS AND CITED ORDER OF THE TRIBUNAL, WE UPHOLD THE STAND OF THE ASSESSEE THAT LOANED SERVICE INCOME WAS NOT TAXABLE AS FIS / ROYALTY IN TERMS OF ARTICLE - 12 OF THE TREATY AND EXEMPTED AS BUSINESS INCOME IN THE HANDS OF ASSESSEE AS PER ARTICLE - 7 SINCE THE ASSESSEE DO NOT HAVE ANY PE IN INDIA. THIS GROUND OF ASSESSEES APPEAL STANDS ALLOWED. RESULTANTLY, THE ASSESSEES APPEAL STANDS PARTLY ALLOWED IN TERMS OF OUR ABOVE ORDER. APPEAL NOS. 3 TO 16 14. SIMILARLY AGGRIEVED, THE OTHER US BASED GROUP ENTITIES OF THE ASSESSEE ARE IN FURTHER APPEAL BEFORE US WITH IDENTICAL WORDED GROUNDS OF APPEAL AS PER THE FOLLOWING DETAILS : - A PPEAL NO. NAME OF THE ASSESSEE ASSESSMENT YEAR LOANED SERVICE INCOME REIMBURSEMENT OF EXPENSES 1750/MUM/2016 MCKINSEY & COMPANY, INC. THAILAND 2012 - 2013 2,56,83,102/ - NIL 1751/MUM/2016 MCKINSEY & COMPANY, INC. PHILS 2012 - 2013 1,03,89,242/ - NIL 1752/MUM/2016 MCKINSEY & COMPANY, INC. LU XEMBOURG 2012 - 2013 70,72,659/ - NIL 1753/MUM/2016 MCKINSEY & COMPANY, INC. FRANCE 2012 - 2013 5,85,66,36 1/ - 1,93,330/ - 15 ITA NO S . 1748 - 1767/MUM/2016 MCKINSEY GROUP OF COMPANIES ASSESSMENT YEA RS: 2011 - 12 & 2012 - 13 1754/MUM/2016 MCKINSEY INCORPORATED 2012 - 2013 3,43,19,859/ - 25,660/ - 1755/MUM/2016 MCKINSEY & COMPANY INC. NORWAY 2012 - 2013 1,04,31,548/ - NIL 1758/MUM/2016 MCKINSEY & COMPANY INC. SWITZERLAND 2012 - 2013 2,24,59,416/ - 38,370/ - 1759/MUM/201 6 MCKINSEY & COMPANY INC. ITALY 2012 - 2013 1,37,74,860/ - NIL 1762/MUM/2016 MCKINSEY & COMPAN , INC. JAPAN 2011 - 201 2 2,59,87,776/ - 17,016/ - 1763/MUM/2016 MCKINSEY ASIA INC. 2012 - 2013 1,88,08,091/ - NIL 1764/MUM/2016 MCKINSEY & COMPA NY INC. INTERNATIONAL 20 12 - 2013 3,43,19,859/ - 25,660/ - 1765/MUM/2016 MCKINSEY & COMPANY, INC. NETHERLAND 2012 - 2013 1,88,54,072/ - 1,99,870/ - 1766/MUM/2016 MCKINSEY & COMPANY INC. HONG KONG 2012 - 2013 2,19,47,397/ - 9,72,610/ - 1767/MUM/2016 MCKINSEY KNOWLEDGE CENTRE BELGIUM INC. 2 012 - 2013 1,08,00,414/ - 1,07,950/ - FACTS BEING IDENTICAL AS IN ITA 1748 - 1749/MUM/2016, TAKING THE SAME STAND, THE ISSUE OF REIMBURSEMENT OF EXPENSES STANDS REMITTED BACK TO THE FILE OF LD. AO FOR RE - ADJUDICATION WHEREAS THE ADDITION ON ACCOUNT OF LOANED S ERVICE INCOME STANDS DELETED IN TERMS OF MAP SETTLEMENT OF EARLIER YEARS. ALL THESE APPEALS STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES. APPEAL NOS. 17 TO 20 15. THE OTHER NON - US BASED GROUP ENTITIES OF THE ASSESSEE ARE IN FURTHER APPEAL BEFORE US AGAIN ST SIMILAR ADDITIONS IN THE FOLLOWING MANNER: - A PPEAL NO. NAME OF THE ASSESSEE ASSESSMENT YEAR COUNTRY OF INCORPORATION LOANED SERVICE INCOME REIMBURSEMENT OF EXPENSES 1756/MUM/2016 MCKINSEY & COMPANY SERVICE AB 2012 - 2013 SWEDEN 1,20,35,027/ - NIL 1757/MU M/2016 MCKINSEY & COM PANY, S L 2012 - 2013 SPAIN 1,04,97,042/ - NIL 1760/MUM/2016 MCKINSEY & COMPANY SINGAPORE PTE. LTD 2011 - 2012 SINGAPORE 8,20,20,300/ - 17,016/ - 1761/MUM/2016 MCKINSEY & COMPANY INC. CANADA 2012 - 2013 CANADA 1,02,20,012/ - NIL AT THE OUTSET , THE ISSUE OF REIMBURSEMENT OF EXPENSES STANDS REMI TTED BACK TO THE FILE OF LD. AO ON SIMILAR LINES AND THEREFORE, THIS GROUND STANDS ALLOWED FOR STATISTICAL PURPOSES. 16. PROCEEDING FURTHER, A S POINTED OUT BY R ESPECTIVE REPRESENTATIVE S, WE FIND THAT THE ISSUE OF LOANED SERVICE INCOME STOOD IN ASSESSEES FAVOUR BY 16 ITA NO S . 1748 - 1767/MUM/2016 MCKINSEY GROUP OF COMPANIES ASSESSMENT YEA RS: 2011 - 12 & 2012 - 13 SEVERAL ORDERS OF THE TRIBUNAL IN EARLIER YEARS IN ASSESSEES OWN CASE WHERE IT HAS BEEN HELD THAT THE IMPUGNED SERVICES QUALIFIE S AS BUSINESS INCOME UNDER ARTICLE - 7 OF THE TREATY AND NOT TAXABLE SINCE THE ASSESSEE DO NOT HAVE ANY PE IN INDIA. THE RELEVANT PORTION FROM LATEST ORDER OF THE TRIBUNAL RENDERED IN ITA NO. 660 - 662/MUM/2013 DATED 23/06/2017 IS EXTRACTED AS FOLLOWS: - 3. AT THE TIME OF HEARING THE PARTIES ADDR ESSED THE FACTS IN ITA NO. 662/MUM/2015 WHICH IS GOVERNED BY INDIA - CANADA TREATY. THE REMAINING APPEALS NAMELY ITA NO. 660/MUM/2015 AND ITA NO. 661/MUM/2015 ARE GOVERNED BY INDIA - SPAIN AND INDIA - SWEDEN TREATIES RESPECTIVELY. IT WAS A COMMON STAND OF THE PA RTIES THAT THE RELEVANT CLAUSES WERE IDENTICAL TO THE INDIA - US TREATY. REVERTING TO THE FACTS IN ITA NO. 662/MUM/2015 THE ASSESSEE IS A FOREIGN COMPANY INCORPORATED IN CANADA. AS IN THE EARLIER YEARS, IT HAD ENTERED INTO INTERNATIONAL TRANSACTIONS WITH THE ITS ASSOCIATES CONCERN, MCKINSEY & CO., INC. (INDIAN BRANCH) AND HAD PROVIDED ASSISTANCE IN THE FORM OF BORROWED SERVICES TO MCKINSEY INDIA. IN CONSIDERATION FOR WHICH THE ASSESSEE RECEIVED AN AMOUNT FOR RS.7,615,310/ - FROM MCKINSEY INDIA. THIS INCOME WAS NOT OFFERED BY THE ASSESSEE FOR TAX IN THE RETURN OF INCOME FILED BY IT ON THE REASONING THAT THE BORROWED SERVICES FEE EARNED BY THE ASSESSEE WAS IN THE COURSE OF THE BUSINESS AND THEREFORE, IT QUALIFIED AS PROFITS UNDER ARTICLE 7 OF THE INDIA - CANADA TAX TREATY. SINCE THE ASSESSEE DID NOT HAVE A PERMANENT ESTABLISHMENT IN INDIA, ITS INCOME WAS STATED TO BE NOT LIABLE TO TAX IN INDIA. THE ASSESSING OFFICER AFTER GOING THROUGH THE DETAILS OF THE CASE HELD THAT THE BORROWED SERVICE INCOME EARNED BY THE ASSES SEE FROM MCKINSEY INDIA WAS IN THE . NATURE OF FEE FOR TECHNICAL SERVICES. THE OBJECTIONS RAISED BY THE ASSESSEE BEFORE THE DRP WERE ALSO REJECTED FOLLOWING THE VIEW TAKEN IN THE EARLIER YEARS. 4. IN THE SAID BACKGROUND, THE LD. A.R. SUBMITTED THAT BOTH THE A.O. AND THE DRP HAVE FOLLOWED THE VIEW TAKEN IN THE EARLIER YEARS ON SIMILAR SET OF FACTS AND CIRCUMSTANCES. REFERRING TO THE IMPUGNED ORDER DATED 26TH NOVEMBER, 2014 PASSED PURSUANT TO THE DIRECTIONS OF THE DRP BY THE A.O. U/S 143(3) R.W.S. 144C (13) OF THE ACT OUR ATTENTION WAS INVITED TO PARA 5, SO AS TO HIGHLIGHT THIS FACT. IT WAS SUBMITTED THAT THE INDO - CANADIAN TREATY IS IDENTICAL TO THE INDO - US TAX TREATY AND THE ISSUE FIRST AROSE IN A GROUP CONCERN ON SIMILAR SET OF FACTS AND CIRCUMSTANCES IN A.Y. 2001 - 02 AND CONSIDERING IDENTICAL SET OF FACTS THE ITAT DELETED THE ADDITION. COPY OF THE ORDER PLACED AT PAPER BOOK PAGES 59 TO 74 IN THE CASE OF MCKINSEY & CO INC (PHILIPPINES) VS. ASSISTANT DIRECTOR OF INCOME TAX, [2006] 99 LTD 549 (MUM) (SMC) WAS RELI ED UPON. OUR ATTENTION WAS INVITED TO PAPER BOOK PAGE 75 TO 88, WHICH IS A CONSOLIDATED ORDER PASSED IN ASSESSEE'S GROUP CASE WHICH CAME FOR CONSIDERATION FOR DIFFERENT ASSESSMENT YEARS BY THE ITAT WHEREBY THE TRIBUNAL GRANTED RELIEF TO THE ASSESSEE FO LLO W ING THE DECISION OF THE TRIBUNAL FOR AY 2001 - 02. INVITING OUR ATTENTION T O PAPER BOOK PAGE 101 TO 104, THE L D. COUNSEL SUBMITTED THAT THE ISSUE WAS CARRIED IN MAP AND THE TAX AUTHORITIES CONSIDERING THE RESOLUTION ARRIVED AT U/S 90 OF THE INCOME TAX ACT HA D ISSUED DIRECTIONS THAT IN VIEW IN OF MAP 17 ITA NO S . 1748 - 1767/MUM/2016 MCKINSEY GROUP OF COMPANIES ASSESSMENT YEA RS: 2011 - 12 & 2012 - 13 RESOLUTION ORDER DATED 01.10.2015 WITH USA THE APPEALS PENDING IF ANY ON THE ISSUE BE WITHDRAWN. OUR ATTENTION WAS DRAWN TO PAPER BOOK PAGE 107 TO 109 AND IT WAS SUBMITTED THAT CONSIDERING THE SAID DOCUMENTS ALONG WITH 114 OF THE PAPER BOOK, THE DEPARTMENTAL DIRECTIONS TO THE STANDING COUNSEL OF THE MUMBAI HIGH COURT WERE ACTED UPON. REFERRING TO PAPER BOOK PAGE 117 AND 118 IT WAS SUBMITTED THAT THE HONBLE BOMBAY HIGH COURT VIDE ITS ORDER DATED 23 RD JANUARY, 2013 IN I.T.APPEAL NO. 1218 OF 2011 AND OTHERS IN THE CASE OF DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION) V. MCKINSEY & COMPANY INC. DISMISSED THE APPEALS FILED BY THE REVENUE AS WITHDRAWN. IT WAS FURTHER SUBMITTED THAT THE SIMILAR DIRECTIONS WERE GIVEN TO THE CIT - DR IN THE ITAT AND HE WAS REQUESTED TO WITHDRAW THE APPEALS FILED BEFORE THE ITAT IN THE FOLLOWING CASES ON THE BASIS OF MUTUAL AGREEMENT PROCEDURE OF INDIA - USA DTA: - 1. M/S MCKINSEY & COMPANY INC. UNITED STATES A.Y.2004 - 05 2. M/S MCKINSEY INTERNATIONAL, INC. A.Y.2003 - 04 3. M/S MCKINSEY & COMPANY INC. AUSTRIA A.Y.2004 - 05 4.1 THE LD. COUNSEL ALSO INVITED OUR ATTENTION TO THE ORDER OF THE ITAT PLACED AT PAPER BOOK PAGES 120 TO 122 WHEREBY THE APPEALS FILED BY THE REVENUE WERE DISMISSED AS WITHDRAWN. 4.2 IN THE SAID BACKGROUND, OUR ATTENTION WAS INVITED TO PAPER BOOK PAGE 36 TO 45 AND IT WAS SUBMITTED THAT THE ITAT VIDE ITS ORDER DATED 17.4.2015 IN ITA NO. 7646/MUM/2012, ITA NO. 7654 TO 7661/MUM/2012 & ITA NO. 7662 TO 7669/MUM/2012 FOR A. Y.2009 - 10 DECIDED THE APPEALS OF GROUP COMPANIES WHERE THE TAX PAYER IN THE PRESENT PROCEEDINGS WERE ALSO CONSIDERED AND THE ITAT IN THE SAID CONSOLIDATED ORDER TAKING NOTE OF THE AFORESAID MAP PROCEEDINGS ALLOWED IDENTICAL APPEALS OF THE ASSESSEE. INVITIN G OUR ATTENTION TO PAPER BOOK PAGE 1 TO 12 IT WAS SUBMITTED THAT THE TRIBUNAL VIDE ORDER DATED 16.12.2016 CONSIDERING THE CASE COVERED BY THE INDO - CANADIAN TREATY AMONG THE OTHER SIMILAR TREATIES PERTAINING TO ASSESSMENT YEARS 2011 - 12 AND 2012 - 13 ASSESSMEN T YEARS IN IDENTICAL GROUP CASES IN ITA NO. 702/MUM/2015 AND OTHERS ON SIMILAR GROUND, ALLOWED THE APPEALS OF THE ASSESSEE. ACCORDINGLY, IT WAS SUBMITTED THAT THE ISSUE IS FULLY COVERED BY CONSISTENT ORDERS OF THE ITAT IN ITS FAVOUR. 5. THE LD. D.R. DID N OT DISPUTE THE FACTUAL POSITION NOR ANY CONTRARY DECISION WAS REFERRED TO FOR CONSIDERATION. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ISSUE PERTAINING TO BORROWED SERVICES IN THE RESPECTIVE GROUP CASES AND IN THE ASSESSEES BEFORE US HAS BEEN A SUBJECT MATTER FOR CONSIDERATION ON SIMILAR SET OF FACTS AND CONSISTENTLY CONSIDERED Y THE CO - ORDINATE MUMBAI BENC HES OVER A PERIOD OF TIME. APART FROM CONSIDERING THE DOCUMENTS TO WHICH OUR SPECIFIC ATTENTI ON WAS DRAWN AND THE PAGES REFERRED TO IN THE PAPER BOOK DURING THE CURSE OF THE ARGUMENTS, IT IS SEEN THAT COPY OF THE CONSOLIDATED ORDERS PERTAINING TO A.Y.2010 - 11 IN ITA NO. 1572/MUM/2014 A ND OTHER O RDER DATED 21 - 10 - 2016 HAS ALSO BEEN P LACED ON RECORD A T PAPER BOOK PAGE 13 TO 23. APART FROM THAT, THE CONSOLIDATED ORDER DA T ED 19 TH JUNE, 2015 HAS ALSO PLACED ON RECORD VIDE PAPER BOOK PAGES 30 - 35 N A GROUP CASE OF ASSESSEE PERTAINING TO A.Y.2008 - 09 IN ITA NO. 8769/MUM/2011. ACCORDINGLY , IN THE LIGHT OF THE CONSISTENT ORDERS OF THE ITAT AND IN THE ABSENCES OF ANY CONTRARY DECISION HAVING BEEN REFERRED TO BEFORE US OR DISTINCTION ON FACTS AND CIRCUMSTANCES, RESPECTFULLY FOLLOWING THE AFORESAID ORDERS OF THE CO - ORDINATE BENCHES , THE A.O. IS DIRECTED TO GRANT NE CESSARY RELIEF TO THE ASSESSEE. 1 8 ITA NO S . 1748 - 1767/MUM/2016 MCKINSEY GROUP OF COMPANIES ASSESSMENT YEA RS: 2011 - 12 & 2012 - 13 THERE BEING NO CONTRARY FACTS ON RECORDS & IN VIEW OF THE ADMITTED POSITION , FOLLOWING JUDICIAL PRECEDENT, WE DIRECT THE LD. AO TO GRANT RELIEF TO THE ASSESSEE ON SIMILAR LINES. RESULTANTLY, THIS GROUND OF ASSESSEES APPEAL STANDS ALLOWED. ALL THE FOUR APPEALS FILED BY THE ASSESSEE STANDS PARTLY ALLOWED IN TERMS OF OUR ABOVE ORDER. CONCLUSION 17. ALL THE APPEALS STANDS PARTLY ALLOWED IN TERMS OF OUR ABOVE ORDER. OR DER PRONOUNCED IN THE OPEN COURT ON 14 TH MARCH , 2018 . SD/ - SD/ - (C. N. PRASAD) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 14 .03 .2018 SR.PS: - --- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI
