WNS GLOBAL SERVICES (UK) LTD., MUMBAI V. D.D.I.T. (I.T.) 2(1), MUMBAI

ITA 2620/MUM/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 8145 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-10-2014
• Appeal Filed By: Assessee
• Bench Allotted: L
• Next Hearing Date: 28-08-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 18-04-2012
• Court: TRIBUNAL
• Department Lawyers: NARENDRA KUMAR
• Keywords: Double taxation relief; Opportunity of being heard; Permanent establishment
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL L BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER ./I.T.A. NO.2621/M/2012 ( AY: 2007 - 2008 ) M/S. WNS NORTH AMERICA INC. C/O. WNS GLOBAL SERVICES PVT LTD., GATE 4, GODREJ & BOYCE COMPLEX, PIROJSHANAGAR, VIKHROLI (W), MUMBAI 400 079. / VS. DY. DIRECTOR OF INCOME TAX (IT) - 2(1), SCINDIA HOUSE, N.M. ROAD, BALLARD ESTATE, MUMBAI 400079. ./ PAN : AAACW5493Q ( / APPELLANT) .. ( / RESPONDENT ) ./I.T.A. NO.2620/M/2012 ( AY: 2007 - 2008 ) M/S. WNS GLOBAL SERVICES (UK) LIMITED, C/O. WNS GLOBAL SERVICES PVT LTD., GATE 4, GODREJ & BOYCE COMPLEX, PIROJSHANAGAR, VIKHROLI (W), MUMBAI 400 079. / VS. DY. DIRECTOR OF INCOME TAX (IT) - 2(1), SCINDIA HOUSE, N.M. ROAD, BALLARD ESTATE, MUMBAI 400038 . ./ PAN : AAACW5544Q ( / APPELLANT) .. ( / RESPONDENT ) / ASSESSEE BY : SHRI PORUS KAKA & MANISH KANTH / REVENUE BY : SHRI NARENDRA KUMAR / DATE OF HEARING : 28 .8.2014 / DATE OF PRONOUNCEMENT : 13 . 10 .2014 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 18.4.2012 IS AGAINST THE ORDER OF THE CIT (A) - 11, MUMBAI DATED 27.01.2012 FOR THE ASSESSMENT YEAR 2007 - 2008. 2. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. ON THE FACTS , AND IN THE CIRCUM STANCES OF THE CASE , AND IN LAW , THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS ) [ ' CIT ( A )' ] LEGALLY ERRED IN NOT FOLLOWING THE 2 ORDERS OF THE HON ' BLE MUMBAI TRIBUNAL IN APPELLANT ' S OWN CASE FOR A Y 2003 - 04 AND A Y 2004 - 05 , AND HIS PREDECESSORS CIT(A ) FOR A Y 2003 - 04 , A Y 2004 - 05 AND A Y 2005 - 06 AND TA X ED THE RECEIPT OF REIMBURSEMENT OF INTERNATIONAL TELECOM CONNECTIVITY CHARGES AMOUNTING TO RS.7 , 48 , 42 , 672 AND RS . 2 , 58 , 42 , 320 (INCLUDED IN REIMBURSEMENT OF OTHER EXPENSES ) AS ROYALTY . 2. ON THE FACTS , AND IN THE CIRCUMSTANCES OF THE CASE , AND IN LAW , THE LEARNED CIT(A) LEGALLY ERRED IN CONFIRMING THE ACTION OF THE LEARNED ASSESSING OFFICER ( 'AO') OF TAXING THE RECEIPT OF REIMBURSEMENT OF INTERNATIONAL TELECOM CONNECTIVITY CHARGES AMOUNTING TO RS.7 , 48,42 , 672 AND RS .2 , 58 , 42 , 320 (INCLUDED IN REIMBURSEMENT OF OTHER EXPENSES) AS ROYALTY . 3. ON THE FACTS , AND IN THE CIRCUMSTANCES OF THE CASE , AND IN LAW, THE LEARNED CIT(A ) LEG ALLY ERRED IN CONFIRMING THE ACTION OF THE LEARNED AO OF TAXING T HE RECEIPT OF REIMBURSEMENT OF OTHER EXPENSES AMOUNTING TO RS . 3 , 69 , 71 , 744 AS FEES FOR INCLU DED SERVICES UNDER THE INDIA - US DOUBLE TAXATION AVOIDANCE AGREEMENT 4. ON THE FACTS , AND IN THE CIRCUMSTANCES OF THE CASE , AND IN LAW , THE LEARNED CIT(A) LEGALLY ERRED IN NOT DIRECTING THE LEARNED AO TO TAX THE RECEIPT OF RE IMBURSEMENT OF EXPENSES AT 10% UNDER THE INCOME - TAX , ACT , 1961 ('THE ACT') . 5. ON THE FACTS , AND IN THE CIRCUMSTANCES OF THE CASE , AND IN LAW , THE LEARNED CIT(A) LEGALLY ERRED IN NOT FOLLOWING THE ORDERS OF THE HON ' BLE MUMBAI TRIBUNAL IN APPELLANT ' S OWN CASE FOR A Y 2003 - 04 AND A Y 2004 - 05, AND HIS PREDECESSORS CIT(A) FOR A Y 2003 - 04 , A Y 2004 - 05 AND A Y 2005 - 06 AND CONFIRMING THE ACTION OF THE LEARNED AO OF LEV Y ING INTEREST UNDER SECTION 234B OF THE ACT BY TREATING THE SAME AS CONSEQUENTIAL IN NATURE. 6. ON THE FACTS, AND IN THE CIRCUMSTANCES OF THE CASE , AND IN L AW, THE LEARNED CIT(A) LEGALLY ERRED IN CONFIRMING THE ACTION OF THE LEARNED AO OF LEVYING INTEREST UNDER SECTION 234B OF THE ACT BY TREATING THE SAME AS CONSEQUENTIAL I N NATURE. 3. AT THE OUTSET, SHRI PORUS KAKA & MANISH KANTH, LD COUNSELS FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE ABOVE GROUNDS AND MENTIONED THAT ALL THE ISSUES RAISED IN THE PRESENT APPEAL STAND COVERED BY THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE OF THE AY 2006 - 2007 VIDE ITA NO.8621/MUM/2010, DATED 14.12.2012. 4. REFERRING TO GROUND NOS. 1 & 2, LD COUNSELS MENTIONED THAT THE ISSUE RAISED IN THESE GROUNDS RELATES TO THE TAXABILITY OF THE RECEIPTS OF REIMBURSEMENT OF INTERNATIONAL TELECOM CO NNECTIVITY CHARGES. IN THE YEAR UNDER CONSIDERATION, AO TAXED THE SAME BY HOLDING THAT THE REVENUE HAS NOT ACCEPTED THE DECISION OF THE CIT (A) FOR THE AYS 2004 - 05 AND 2005 - 06 AND PARA 14 OF THE ASSESSMENT ORDER DATED 28.1.2011 IS RELEVANT AND THE SAME R EADS AS UNDER: 14. THE ASSESSEE COMPANY HAS SUBMITTED THAT THE AFORESAID ISSUE ON THE TAXABILITY OF LEASED LINE CHARGES HAS ALREADY BEEN CONSIDERED AND DECIDED IN FAVOUR OF THE ASSESSEE BY HONBLE CIT (A) IN ASSESSEES OWN CASE FOR AY 2004 - 05 AND AY 2005 - 06. THE HONBLE CIT (A) XXXI, MUMBAI VIDE ORDER DATED JANUARY 22, 2009 AND 30 NOVEMBER, 2009 HAS HELD THAT RECEIPT OF INTERNATIONAL TELECOM CONNECTIVITY CHARGES / LEASED LINE CHARGES BY ASSESSEE COMPANY ARE NOT TAXABLE IN INDIA. THE RELIANCE PLACED BY TH E ASSESSEE COMPANY ON THE ORDER PASSED BY HONBLE CIT (A) XXXI, WHO HAD HELD THAT THE RECEIPT OF INTERNATIONAL TELECOM CONNECTIVITY CHARGES ARE TAXABLE IS REJECTED AS THE DEPARTMENT HAS NOT ACCEPTED THE ORDER OF THE HONBLE CIT (A) AND HAS PREFERRED A SECO ND APPEAL BEFORE THE HONBLE ITAT APPEAL. 3 5. IN THIS REGARD, LD COUNSEL BROUGHT OUR ATTENTION TO THE ORDER OF THE TRIBUNAL FOR THE AY 2006 - 07 (SUPRA) AND MENTIONED THAT SIMILAR ADDITION IS MADE IN THIS YEAR AND THE TRIBUNAL ADJUDICATED THE ISSUE BY HOLD ING THAT THE SAID REIMBURSEMENT OF ACTUAL EXPENSES COULD NOT BE TREATED AS ROYALTY INCOME CHARGEABLE TO TAX. THE FACT THAT THE EXISTENCE OF THE SIMILAR ISSUE IN THE EARLIER YEARS WAS ALSO DISCUSSED BY THE TRIBUNAL VIDE PARA 3.3 OF THE SAID ORDER OF THE TR IBUNAL (SUPRA), DATED 14.12.2012. THE SAID ADDITION WAS NOT SUSTAINABLE IN VIEW OF THE OTHER ARGUMENTS IN THE LIGHT OF EXPLANATION 5 TO SECTION 9(1)(VI) OF THE ACT AND THE ABSENCE OF CORRESPONDING AMENDMENT TO DTAA WAS ALSO DEMONSTRATED BY THE LD COUNSEL BY REFERRING TO THE CONTENTS OF PARA 3.10, 4.1 AND 5.1 OF THE SAID ORDER OF THE TRIBUNAL (SUPRA). LD COUNSEL ALSO BROUGHT OUR ATTENTION TO THE CONTENTS OF PARA 5.4 AND 5.5 OF THE SAID TRIBUNALS ORDER (SUPRA) TO DEMONSTRATE THAT THE INTERNATIONAL TELECOM CONNECTIVITY CHARGES ARE NOT RELATED TO RENDERING OF MARKETING AND MANAGEMENT CHARGES. HE ALSO DEMONSTRATED THAT WHEN SUCH RECEIPTS CANNOT CONSTITUTE INCOME AS THEY DO NOT HAVE ANY MARKUP OF PROFITS. THESE AMOUNTS ARE MERELY REIMBURSED ON MEMBER BASIS, T HEREFORE, THE ISSUE NOW STANDS COVERED IN FAVOUR OF THE ASSESSEE BY THE SAID ORDER OF THE TRIBUNAL (SUPRA). FURTHER, LD COUNSEL BROUGHT OUR ATTENTION TO THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN ASSESSEES OWN CASE VIDE INCOME TAX APPEAL NO.1557 OF 2012 AND INCOME TAX APPEAL NO.1130 OF 2012 DATED 13.2.2013 , WHICH IS BELONGING TO ANOTHER SISTER CONCERN NAMELY WNS GLOBAL SERVICES (UK) LIMITED AND MENTIONED THAT THE REFERENCE WITH REGARD TO REIMBURSEMENT OF LEASE LINE CHARGES IS GIVEN AT POINTS 4 AND 5 OF THE SAID HIGH COURTS ORDER (SUPRA), WHEREIN IT WAS HELD THAT THE LEASE LINE CHARGES ARE HELD TO BE NOT QUALIFIED AS ROYAL TY UNDER ARTICLE 12 OF THE UK TREATY AND THEY ARE NOT ATTRIBUTABLE TO THE PERMANENT ESTABLISHMENT (PE) IN INDIA. THE CONTENTS OF PARA 5 OF THE HIGH COURTS DECISION (SUPRA), DATED 13.2.2013 ARE RELEVANT IN THIS REGARD AND THE SAME READ AS UNDER: 5. SO FAR AS QUESTIONS (4) & (5) ARE CONCERNED, THE TRIBUNAL BY IMPUGNED ORDER FOLLOWED ITS ORDER IN THE MATTER OF WNS NORTH AMERICA INC RENDERED ON 25 TH NOVEMBER, 2011. THE TRIBUNAL WHILE UPHOLDING THE ORDER OF THE CIT (A) HELD THAT THE AMOUNT OF RS. 2.93 CRS WAS RECEIVED BY THE RESPONDENT ASSESSEE AS REIMBURSEMENT OF LEASE LINE CHARGES AND WOULD NOT CLASSIFY EITHER AS ROYALTY OR AS INC OME ATTRIBUTED TO A PERMANENT ESTABLISHMENT INDIA. THE RESPONDENT - ASSESSE HAS OBTAINED FROM THE INTERNATIONAL TELECOM OPERATOR LEASE LINE ON PAYMENT OF CHARGES. THESE LEASE LINE FACILITY IN TURN IS PROVIDED TO WNS INDIA ON COST TO COST BASIS SO AS TO HAV E 4 INTERNATIONAL CONNECTIVITY. FOR THIS PURPOSE, THE INTERNATIONAL TELECOMMUNICATION OPERATOR CHARGES THE RESPONDENT - ASSESSEE AND THE RESPONDENT - ASSESSEE RECOVERS THE SAME FROM WNS INDIA. THE TRIBUNAL HAS COME TO FINDING OF THE FACT THAT THE REIMBURSEMENT OF LEASE LINE CHARGES RECEIVED BY THE RESPONDENT - ASSESSEE IS THE ACTUAL AMOUNT WHICH IS INCURRED BY IT ON MAKING PAYMENT TO THE INTERNATIONAL TELECOM OPERATOR. THUS, ON THE ABOVE FINDING OF THE FACT, THE TRIBUNAL CONCLUDED THAT THERE IS NO INCOME EARNED BY RESPONDENT - ASSESSEE WHICH IS SUBJECT TO TAX BUT IS ONLY A REIMBURSEMENT OF LEASE LINE CHARGES PAID BY IT TO INTERNATIONAL TELECOM OPERATOR. ACCORDINGLY, AS THE DECISION OF THE TRIBUNAL IS BASED ON FINDING OF FACT, WE SEE NO REASON TO ENTERTAIN QUESTION (4) AND (5). 6. IT IS THE ARGUMENT OF THE LD COUNSEL THAT FROM EVERY ANGLE, THE SAID RECEIPTS OF REIMBURSEMENT OF LEASE LINE CHARGES ARE NOT CHARGEABLE TO TAX. THUS, THE ISSUE IS NOW SETTLED AT THE LEVEL OF THE HONBLE HIGH COURT IN THE CASE OF M/S. WNS GLOBAL SERVICES (UK) LTD (SUPRA). 7. ON THE OTHER HAND, LD DR RELIED ON THE ORDERS OF THE AO AND THE CIT (A). 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS CITED DECISIONS OF THE HIGH COURT AND THE RELEVANT MATERIAL PLACED BEFORE US. CONSIDERING THE SETTLED PRINCIPLES IN THE MATTER UNDER CONSIDERATION, WE ARE OF THE OPINION THAT THE RECEIPTS OF REIMBURSEMENT OF LEASE LINE CHARGES ARE NOT TAXABLE. ACCORDINGLY, THE RELEVANT GROUND NOS.1 AND 2 RAISED BY THE A SSESSEE ARE ALLOWED. 9. THE ISSUE RAISED IN GROUND NOS.3 & 4 RELATES TO THE TAXABILITY OF RECEIPTS OF REIMBURSEMENT OF OTHER EXPENSES. BEFORE US, AT THE OUTSET, LD COUNSEL FOR THE ASSESSEE MENTIONED THAT AN IDENTICAL ISSUE WAS DECIDED BY THE TRIBUNAL FOR THE ASSESSMENT YEAR 2006 - 2007 VIDE ITS ORDER DATED 14.12.2012 (SUPRA). IN THIS REGARD, HE BROUGHT OUR ATTENTION TO PARA NOS.6.1 AND 6.2 OF THE SAID ORDER OF THE TRIBUNAL (SUPRA) TO DEMONSTRATED THAT THE ISSUE UNDER CONSIDERATION SHOULD REVISIT THE FILE OF THE AO FOR DECIDING THE MATTER AFRESH. LD COUNSEL TRIED TO REASON OUT THAT THIS YEAR, THE CASE IS NOT REQUIRED TO BE SET ASIDE CONSIDERING THE FACT THAT THE ASSESSEE HAS FURNISHED REQUISITE DETAILS UNLIKE IN EARLIER YEARS. 10. ON THE OTHER HAND, LD DR REL IED ON THE ORDERS OF THE REVENUE AUTHORITIES. 11. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL THE CITED ORDER OF THE TRIBUNAL (SUPRA) AND THE RELEVANT MATERIAL PLACED BEFORE US. AFTER HEARING BOTH THE PARTIES , WE FIND, THE SIMILAR ISSUE WAS 5 RAISED BEFORE THE ITAT AND THE TRIBUNAL ADJUDICATED THE SAME VIDE PARAS 6.1 AND 6.2 OF ITS ORDER DATED 14.12.2012 (SUPRA). FOR THE SAKE OF COMPLETENESS OF THIS ORDER, THE SAID PARAS 6.1 AND 6.2 ARE REPRODUCED HERE UNDER: 6.1 NEXT ISSUE RAISED IN THIS APPEAL IS AGAINST TAXABILITY OF REIMBURSEMENT OF OTHER EXPENSES AMOUNTING TO S. 4,10,70,798/ - FROM WNS INDIA. THIS AMOUNT REPRESENTS REIMBURSEMENT OF EXPENSES INCURRED ON EMPLOYEES OF WNS INDIA ON THEIR VISITS ABROAD. THE AS SESSEE CLAIMED THAT SINCE THESE AMOUNTS WERE PURE REIMBURSEMENT AND HENCE NOT TAXABLE. THE AO HELD SUCH AMOUNT S TAXABLE UNDER ARTICLE 12 AS FEES FOR INCLUDED SERVICES. 6.2. HAVING HEARD THE RIVAL SUBMISSIONS ON THISISSUE AND PERUSED THE RELEVANT MATERI AL ON RECORD, IT IS THE COMMON SUBMISSION BY BOTH THE SIDES THAT SIMILAR ISSUE WAS INVOLVED IN THE APPEAL FOR SOME OTHER YEAR AND THE TRIBUNAL HAS RESTORED THIS MATTER TO THE LOWER AUTHORITIES FOR DECIDING IT AFRESH AFTER VERIFYING THE RELEVANT DETAILS. AS THE ISSUE STANDS COVERED BY THE EARLIER ORDER OF THE TRIBUNAL, TO WHICH BOTH THE SIDES ARE AGREEABLE, WE SET ASIDE THE IMPUGNED ORDER ON THIS ISSUE AND REMIT THE MATTER TO THE FILE OF AO FOR DECIDING IT AFRESH AS PER THE LAW AFTER ALLOWING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 12. CONSIDERING THE SIMILARITY OF THE ISSUE INVOLVED IN THE INSTANT GROUNDS WITH THAT OF THE ISSUE DECIDED BY THE TRIBUNAL (SUPRA), WE ARE OF THE OPINION THAT THE GROUND NOS.3 AND 4 OF THE PRESENT APPEAL SHOULD BE SET ASIDE TO THE FILE OF THE AO FOR DECIDING THE ISSUE AFRESH IN THE SAME LINES AS PER THE SAID TRIBUNALS ORDER (SUPRA) AFTER AFFORDING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY, GROUND NOS.3 AND 4 ARE ALLOWED FOR STATISTICA L PURPOSES. 13. GROUND NOS.5 AND 6 RELATES TO THE LEVY OF INTEREST U/S 234B OF THE ACT. IN THIS REGARD, LD COUNSEL RELIED ON PARA 7 OF THE SAID ORDER OF THE TRIBUNAL (SUPRA), FOR THE AY 2006 - 07, DATED 14.12.2012 AND MENTIONED THAT CONSIDERING THE IDENTICA LNESS OF THE GROUNDS RAISED IN THE PRESENT APPEAL WITH THAT OF THE ISSUE DECIDED BY THE TRIBUNAL (SUPRA), THE SAME HAS TO BE ALLOWED IN FAVOUR OF THE ASSESSEE. 14. ON THE OTHER HAND, LD DR RELIED ON THE ORDERS OF THE REVENUE AUTHORITIES. 15. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE CITED ORDER OF THE TRIBUNAL (SUPRA). ON PERUSAL OF THE SAID ORDER OF THE TRIBUNAL DATED 14.12.2012 (SUPRA), WE FIND, PARA 7 IS RELEVANT IN THIS REGARD. CONSIDERING ITS IMPO RTANCE FOR DECIDING THE INSTANT GROUND NOS.5 AND 6, WE FIND IT RELEVANT TO REPRODUCE THE SAID PARA HERE AND THE SAME READS AS UNDER: 7. THE LAST ISSUE IS ABOUT THE LEVY OF INTEREST U/SS 234B AND 234C. HAVING HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RE LEVANT MATERIAL ON RECORD, WE FIND 6 THAT THE ISSUE OF CHARGING OF INTEREST U/SS 234B AND 234C IN THE PRESENT CAS E IS NO MORE RES INTEGRA IN VIEW OF THE JUDGMENT F THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF DIRECTOR OF INCOME TAX (INTERNATIONAL TAX ATION) VS. NGC NETWORK ASIA LLC [(2009) 313 ITR 187 (BOM.)] IN WHICH IT HAS BEEN HELD THAT WHEN THE DUTY IS CAST ON THE PAYER O F DEDUCT TAX AT SOURCE, ON THE PRAYER TO DEDUCT TAX AT SOURCE, ON FAILURE OF THE PAYER TO DO SO, NO INTEREST CAN BE CHARGED FROM THE PAYEE ASSESSEE U/S 234B. THE SAME VIEW HAS BE E N REITERATED IN DIT (IT) VS. KRUPP UDHE GMBH (2010) 38 DTR (BOM) 251). AS THE ASSESSEE BEFORE US IS A NON - RESIDENT, NATURALLY ANY AMOUNT PAYABLE TO IT WHICH IS CHARGEABLE TO TAX UNDER THE ACT, IS OTHERWIS E LIABLE FOR DEDUCTION OF TAX AT SOURCE. IN THAT VIEW OF THE M A TTER AND RESPECTFULLY FOLLOWING THE ABOVE PRECEDENTS, WE HOLD THAT NO INTEREST CAN BE CHARGES U/SS 234B AND 234C OF THE ACT. THIS GROUND IS ALLOWED. 16. CONSIDERING THE ABOVE SETTLED NATURE OF THE ISSUE AS WELL AS RESPECTFULLY FOLLOWING THE SAID ORDER OF THE TRIBUNAL (SUPRA), WE ARE OF THE OPINION THAT THE NO INTEREST CAN BE CHARGED U/S 234B OF THE ACT. ACCORDINGLY, GROUND NOS.5 AND 6 RAISED BY THE ASSESSEE ARE ALLOWED. 17. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ./I.T.A. NO.2621/M/2012 ( AY: 2007 - 2008) 18. THIS APPEAL FILED BY THE ASSESSEE ON 18.4.2012 IS AGAINST THE ORDER OF THE CIT (A) - 11, MUMBAI DATED 27.01.2012 FOR THE ASSES SMENT YEAR 2007 - 2008. 1 ON THE FACTS , AND IN THE CIRCUMSTANCES OF THE CASE , AND IN LAW , THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS ) [ ' CIT ( A )' ] LEGALLY ERRED IN NOT FOLLOWING THE ORDERS OF HIS PREDECESSORS CIT(A ) FOR A Y 2004 - 0 5 AND A Y 2005 - 06 AND TA X ED THE RECEIPT OF REIMBURSEMENT OF INTERNATIONAL TELECOM CONNECTIVITY CHARGES AMOUNTING TO RS. 5,66,36,514/ - AS ROYALTY . 2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , AND IN LAW , THE LEARNED CIT(A) LEGALLY ERRED IN CONFIRMING THE ACTION OF THE LEARNED ASSESSING OFFICER ( 'AO') OF TAXING THE RECEIPT OF REIMBURSEMENT OF INTERNATIONAL TELECOM CONNECTIVITY CHARGES AMOUNTING TO RS. 5,66,36,514/ - AS ROYALTY . 3 ON THE FACTS , AND IN THE CIRCUMSTANCES OF THE CASE , AND IN LAW, THE LEARNED CIT(A ) LEG ALLY ERRED IN CONFIRMING THE ACTION OF THE LEARNED AO OF TAXING THE RECEIPT OF REIMBURSEMENT OF OTHER EXPENSES AMOUNTING TO RS . 4,29,94,187/ - AS FEES FOR INCLU DED SERVICES UNDER THE INDIA - US DOUBLE TAXATION AVOIDANCE AGREEMENT . 4 ON THE FACTS , AND IN THE CIRCUM STANCES OF THE CASE , AND IN LAW , THE LEARNED CIT(A) LEGALLY ERRED IN NOT DIRECTING THE LEARNED AO TO TAX THE RECEIPT OF REIMBURSEMENT OF EXPENSES AT 10% UNDER THE INCOME - TAX , ACT , 1961 ('THE ACT') . 5 ON THE FACTS , AND IN THE CIRCUMSTANCES OF THE CASE , AND I N LAW , THE LEARNED CIT(A) LEGALLY ERRED IN NOT FOLLOWING THE ORDERS OF HIS PREDECESSORS CIT(A) FOR A Y 2004 - 05 AND A Y 2005 - 06 AND CONFIRMING THE ACTION OF THE LEARNED AO OF LEV Y ING 7 INTEREST UNDER SECTION 234B OF THE ACT BY TREATING THE SAME AS CONSEQUENTIAL IN NATURE. 6 ON THE FACTS, AND IN THE CIRCUMSTANCES OF THE CASE , AND IN L AW, THE LEARNED CIT(A) LEGALLY ERRED IN CONFIRMING THE ACTION OF THE LEARNED AO OF LEVYING INTEREST UNDER SECTION 234B OF THE ACT BY TREATING THE SAME AS CONSEQUENTIAL IN NATURE. 19. AT THE VERY OUTSET, LD COUNSEL FOR THE ABOVE BROUGHT OUT ATTENTION TO THE ABOVE GROUNDS AND MENTIONED THAT THE GROUNDS RAISED IN THIS APPEAL ARE EXACTLY IDENTICAL TO THAT OF THE GROUNDS RAISED BY THE ASSESSEE VIDE ITA NO.2621/M/2012 AND PRAYED THAT CONSIDERING THE IDENTICALNESS OF THE ISSUES RAISED IN THE PRESENT APPEAL TO THAT OF THE SAID ITA NO.2621/M/2012 (SUPRA), THE INSTANT APPEAL MAY BE DECIDED IN THE SAME LINES. 20. ON PERUSAL OF THE IS SUES RAISED IN THE PRESENT APPEAL, WE FIND, THE ISSUES ARE EXACTLY IDENTICAL TO THAT OF THE GROUNDS RAISED BY THE ASSESSEE VIDE ITA NO.2621/M/2012, WHICH IS ADJUDICATED BY US IN ABOVE PARAGRAPHS OF THIS ORDER. SINCE, THE ISSUES RA ISED IN THE PRESENT APPEA L ARE SIMILAR TO THAT OF THE APPEAL ADJUDICATED BY US IN THE ABOVE PARAS OF THIS ORDER, THEREFORE, THE DECISION GIVEN BY US THEREIN SQUARELY APPLIES TO THE PRESENT APPEAL TOO. CONSIDERING THE SAME, GROUND NOS.1, 2, 5 & 6 ARE ALLOWED IN FAVOUR OF THE ASSES SEE AND GROUND NOS.3 AND 4 ARE ALLOWED FOR STATISTICAL PURPOSES. 21. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH OCTOBER , 2014. SD/ - SD/ - ( VIVEK VARMA ) (D. KARUNAKARA RAO ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; 13 /10 /2014 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, 8 ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI