DCIT, CIR 16(2), MUMBAI V. M/S KPMG ASSURANCE AND CONSULTING SERVICES LLP, MUMBAI

ITA 1974/MUM/2023

AI Insights

The case involves the Deputy Commissioner of Income Tax Circle 16(2) as the appellant and KPMG Assurance & Consulting Services LLP as the respondent. The primary issues in the appeal pertained to the payment of ₹ 434,019,511 to KPMG corporate Switzerland and the deduction of tax at source on professional fees paid to outside consultants. The Tribunal referenced a coordinate bench's decision in the assessee's own case for a previous assessment year, which favored the assessee, and upheld the CIT-A's decision on the matter. Regarding the tax deduction at source, the Tribunal agreed with the CIT-A's application of judicial precedents that services provided by foreign consultants did not 'make available' those services to the assessee, thus no tax deduction was required.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 299594 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2023
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 22-08-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 25-05-2023
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: SAILESH
• Keywords: Double taxation relief

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “I” BENCH, MUMBAI BEFORE SHRI PRASHANT MAHARISHI, AM & SHRI RAHUL CHAUDHARY, JM ITA No. 1974/Mum/2023 (Assessment Year 2018-19) The D eput y C om m i ssi oner of Inc om e t ax Ci rc l e 16 ( 2) R oom N o 625, A ya kar B hav an M K R oad Mum bai 400020 Vs. KPMG Assurance & consulting Services LLP 8 th Floor Tower B DLF Building No 10 Gurgaon, Haryana (Appellant) (Respondent) PAN No. AAAFK1415H Appellant by : Shri Anil Sant, SR DR Respondent by : Shri Ajit Jain & Sailesh Nayampalli, ARs Date of hearing: 23.08.2023 Date of pronouncement : 30.10.2023 Date of Corrigendum 29.11.2023 CORRIGENDUM ORDER 01. Order dated 31.10.2023 passed in the above matter has some typographical errors as under :- a) On page 9, last line of para 9, the word “allowed” to be substituted by “upheld”. b) On page 11, last line of para 12, the word “allowed” to be substituted by “dismissed.” 02. Accordingly, Para No 9 and 12 are read as under :- Page | 2 9. With respect to the second issue in the appeal of payment of ₹ 434,019,511 paid to KPMG corporate Switzerland he submitted that this issue has been decided by the coordinate bench in assessee‟s own case for assessment year 2001 – 02 is per order dated 7 April 2017 and therefore this issue is also squarely covered in favour of the assessee, same has not been challenged by the learned assessing officer before the higher forum. Accordingly, he submitted that the order of the learned CIT – A on the second issue also deserves to be allowed upheld 12. We have carefully considered the rival contention and perused the orders of the lower authorities. We find that ground number 1 – 4 of the appeal of learned assessing officer is with respect to the deduction of tax at source on professional fees paid to various outside consultants outside India amounting to ₹ 79,915,590/– on which the tax has not been deducted by the assessee and therefore same has been disallowed. While deciding the issue the learned CIT – A has referred to the several judicial precedent of BSR and Co LLP on identical issue wherein it has been held that no tax is required to be deducted at source on various payments to the foreign consultant because of the reason that the services do not „make available‟ those services to the assessee. Wherever the Double Taxation Avoidance Agreement did not contain the article of Fees For Technical Services, we are of the opinion that it cannot go to the article of „other income‟ only because of the reason that FTS article is not there in the Double Taxation Avoidance Agreement. To bring it under article “ other Income “ , it has to be established first that income stream does not fall in any other article Page | 3 of DTAA. Undisputedly, all the recipient are in the business of the services. Therefore there income first classify under article of Business income. In absence of permanent Establishment, it cannot be taxed in source country [India]. Therefore it goes out of the residuary article of „Other income‟. Revenue could not point out that those entities income is not business income. Revenue also could not show that why those decisions do not apply to the facts of the case of the assessee wherein the identical jurisdiction and identical services are involved. In view of this ground number 1 – 4 of the appeal of learned AO is allowed dismissed. The Order dated 31.10.2023, is modified to this extent only. Sd/- Sd/- (RAHUL CHAUDHARY) (PRASHANT MAHARISHI) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Mumbai, Dated: 29. 11.2023 Sudip Sarkar, Sr.PS Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. BY ORDER, True Copy// Asst. Registrar Income Tax Appellate Tribunal, Mumbai