M/s. LINKLATERS, MUMBAI V. DDIT (I.T) - 3(2), MUMBAI

ITA 3250/MUM/2006

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7977 (ITAT-MUMBAI)
• Duration Of Justice: 12 year(s) 10 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-04-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: L
• Next Hearing Date: 09-03-2017
• Assessment Year: 2002-2003
• Appeal Filed On: 23-05-2006
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V SREEKAR
• Assessee Lawyers: J D MISTRY AW SHRI NIRAJ SHETH
• Keywords: Services rendered outside India; Additional evidence; Permanent establishment
• Section: 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER ITA NO. 3250 / MUM . /2006 ( ASSESSMENT YEAR : 200 2 03 ) LINKLATERS C/O DELOITTE HASKINS & SELLS LLP PLOT NO.12, DR. ANNIE BESANT ROAD OPP. SHIVSAGAR ESTATE, WORLI MUMBAI 400 018 PAN AABFL2160M . APPELLANT V/S DY. DIRECTOR OF INCOME TAX (IT) CIRCLE 3 (2), MUMBAI . RESPONDENT ITA NO. 3785 /MUM./2006 ( ASSESSMENT YEAR : 2002 03 ) DY. DIRECTOR OF INCOME TAX (IT) CIRCLE 3(2), MUMBAI . APPELLANT V/S LINKLATERS C/O C.C. CHOKSHI & CO. 12, DR. ANNIE BESANT ROAD OPP. SHIVSAGAR ESTATE, WORLI MUMBAI 400 018 PAN AABFL2160M . RESPONDENT ASSESSEE BY : SHRI J.D. MISTRY A/W SHRI NIRAJ SHETH REVENUE BY : SHRI V. SREEKAR DATE OF HEARING 2 2 .0 1 .201 9 DATE OF ORDER 16.04.2019 2 LINKLATERS O R D E R PER SAKTIJIT DEY. J.M. T HE AFORESAID CROSS APPEAL S ARISE OUT OF THE ORDER DATED 29 TH MARCH 200 6 , PASSED BY THE LEARNED COMMISSIONER (APPEALS) XXI , MUMBAI, PERTAINING TO THE ASSESSMENT YEAR 200 2 03 . ITA NO.3250/MUM./2006 ASSESSEES APPEAL 2 . THE CORE ISSUE ARISING IN THE PRESENT APPEAL , AS RAISED IN GROUNDS NO.1 TO 4, IS WITH REGARD TO EXISTENCE OR OTHERWISE OF PERMANENT ESTABLISHMENT (P E) OF THE ASSESSEE IN INDIA. 3 . BRIEF FACTS ARE, THE ASSESSEE, A PARTNERSHIP FIRM , IS A TAX RESIDENT OF UNITED KINGDOM (UK) AND IS ENGAGED IN THE PRACTICE OF LAW. APART FROM ITS HEAD OFFICE IN UK , THE ASSESSEE HAS OFFICES IN VARIO US OTHER COUNTRIES AROUND THE WORLD. IT IS STATED THAT THE ASSESSEE HAS NOT OPENED ANY BRANCH OFFICE IN INDIA. BE THAT AS IT MAY, THE ASSESSEE WAS APPOINTED AS LEGAL ADVISOR FOR SOME OF THE PROJECTS IN INDIA AND PROVIDED LEGAL CONSULTANCY SERVICES TO THEM. IN CONNECTION WITH RENDERING SUCH LEGAL CONSULTANCY SERVICES, THE ASSESSEE RECEIVED FEES FROM THE CLIENTS IN INDIA. HOWEVER, THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR ON 31 ST OCTOBER 2002, DECLARING NIL INCOME. IN THE STATEM ENT ACCOMPANYING THE RETURN OF 3 LINKLATERS INCOME, IT WAS STATED BY THE ASSESSEE THAT SINCE IT HAD NO BRANCH OFFICE IN INDIA, THE FEE RECEIVED IS NOT CHARGEABLE TO TAX IN INDIA IN THE ABSENCE OF A PE. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER CALL ED UPON THE ASSESSEE TO JUSTIFY ITS CLAIM THAT THE PROFESSIONAL FEE RECEIVED FROM THE CLIENTS IN INDIA IS NO T CHARGEABLE TO TAX IN INDIA. IN RESPONSE, IT WAS SUBMITTED BY THE ASSESSEE THAT SINCE NONE OF ITS EMPLOYEES OR OTHER PERSONNEL HAVE RENDERED SERVIC ES IN INDIA EXCEEDING A PERIOD OF MORE THAN 90 DAYS WITHIN THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YE AR UNDER DISPUTE, THERE IS NO PE IN INDIA. HENCE, THE INCOME IS NOT TAXABLE IN INDIA. THE ASSESSING OFFICER, HOWEVER, DID NOT FIND MERIT IN THE SUBMI SSIONS OF THE ASSESSEE. AFTER PERUSING THE DETAILS FURNISHED BY THE ASSESSEE, HE OBSERVED THAT THE EMPLOYEES / OTHER PERSONNEL OF THE ASSESSEE HAVE RENDERED SERVICES IN INDIA FOR MORE THAN 90 DAYS DURING THE PERIOD FROM 1 ST APRIL 2002 TO 31 ST MARCH 20 01, HE NCE, THE ASSESSEE HAD A PE IN INDIA IN TERMS OF ARTICLE 5(2)(K)(I) OF INDIA UK DOUBLE TAXATION AVOIDANCE AGREEMENT (DTAA). IN THIS CONTEXT, THE ASSESSING OFFICER RELIED UPON CERTAIN JUDICIAL PRECEDENTS AND ULTIMATELY HELD THAT SINCE THE ASSESSEE HAD A PE I N INDIA DURING THE RELEVANT PREVIOUS YEAR, THE INCOME EARNED F ROM RENDERING LEGAL CONSULTANCY SERVICES IN INDIA IS TAXABLE IN INDIA. ACCORDINGLY, HE PROCEEDED TO COMPUTE THE INCOME OF THE ASSESSEE AT ` 20,45,02,707, AFTER MAKING CERTAIN DISALLOWANCE S . BEING AGGRIEVED 4 LINKLATERS WITH THE AFORESAID DECISION OF THE ASSESSING OFFICER, ASSESSEE PREFERRED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 4 . IN THE COURSE OF HEARING BEFORE LEARNED COMMISSIONER (APPEALS), THE ASSESSEE FURNISHED VARIOUS EVIDENCES INCLUDING ADDI TIONAL EVIDENCE S TO JUSTIFY ITS CLAIM THAT THERE IS NO PE IN TERMS OF ARTICLE 5(2)(K)(I) OF INDIA UK TAX TREATY. IT WAS SPECIFICALLY SUBMITTED BY THE ASSESSEE THAT THE EMPLOYEES/ PERSONNEL OF THE ASSESSEE HAVE NOT STAYED IN INDIA FOR RENDERING SERVICES EXCE EDING THE PERIOD OF 90 DAYS. IN THIS CONTEXT, THE ASSESSEE ALSO FURNISHED A CHART SHOWING THE PERIOD OF STAY OF EACH EMPLOYEE IN INDIA. THE ASSESSEE ALSO SUBMITTED THAT THE PERIOD OF STAY OF EMPLOYEES IN INDIA HAVE TO BE TAKEN CUMULATIVELY AND NOT INDIVIDU ALLY. FURTHER, IT WAS SUBMITTED BY THE ASSESSEE THAT THE PERIOD FOR WHICH ONE OF THE EMPLOYEES NAMELY SHRI NARAYAN IYAR HAS AVAILED VACATION DURING HIS STAY IN INDIA SHOULD NOT BE COUNTED FOR COMPUTING THE PERIOD OF 90 DAYS. TO PROVE THE FACT THAT SHRI NAR AYAN IYAR, WAS ON VACATION FOR THE PERIOD FROM 2 ND APRIL 2001 TO 4 TH MAY 2001, THE ASSESSEE FURNISHED CERTAIN DOCUMENTARY EVIDENCE S. LEARNED COMMISSIONER (APPEALS) AFTER ADMITTING THE ADDITIONAL EVIDENCES AND EXAMINING THEM, CALLED FOR A REMAND REPORT FROM THE ASSESSING OFFICER. AFTER PERUSING THE REMAND REPORT OF THE ASSESSING OFFICER, HE OBSERVED THAT THE ASSESSEE FAILED TO CONCLUSIVELY PROVE THAT DURING THE PERIOD OF VACATION, THE CONCERNED EMPLOYEE HAS NOT RENDERED ANY 5 LINKLATERS SERVICES TO THE ASSESSEE. REFERRIN G TO INVOICE NO.SN 200460/2001, DATED 27 TH APRIL 2001, RAISED ON ENRON INTERNATIONAL, LEARNED COMMISSIONER (APPEALS) OBSERVED THAT THIS BILL WAS RAISED FOR WORK DONE IN INDIA DURING THE PERIOD FROM 1 ST APRIL 2001 TO 25 TH APRIL 2001. FURTHER, HE OBSERVED, A S PER THE MATERIAL ON RECORD FROM 17 TH APRIL 2001 TO 25 TH APRIL 2001, SHRI NARAYAN IYAR WAS THE ONLY EMPLOYEE LIVING IN INDIA. THEREFORE , IN ABSENCE OF ANY EVIDENCE FURNISHED BY THE ASSESSEE TO SHOW THAT DURING THAT PERIOD NO SERV ICES WERE RENDERED IN INDI A, ASSESSEES CO NTENTION THAT SHRI NARAYAN IYAR HAS NOT RENDERED ANY SERVICE AS HE WAS IN VACATION CANNOT BE ACCEPTED. AS REGARDS ASSESS EES CONTENTION THAT MULTIPLE COUNTING OF COMMON DAYS FOR COMPUTING THE PERIOD O F 90 DAYS, IS TO BE AVOIDED, LEARNED COM MISSIONER (APPEALS) REJECTED SUCH CONTENTION BY HOLDING THAT THE ACTIVITIES OF THE NATURE OF FURNISHING OF SERVICES BY AN ENTERPRISE THROUGH ITS EMPLOYEES ARE TO BE SEEN EMPLOYEE WISE AND AGGREGATED. FURTHER, HE OBSERVED , SINCE THE EMPLOYEES OF THE ASSESSEE WERE RENDERING SERVICES TO DIFFERENT CLIE NTS IN INDIA AT THE SAME TIME, THE CONTENTION OF MULTIPLE COUNTING WOULD NOT BE APPLICABLE. ACCORDINGLY, HE UPHELD THE DECISION OF THE ASSESSING OF FICER THAT THE ASSESSEE HAD A P E IN INDIA UNDER ARTICLE 5(2)(K)(I) OF INDIA U.K. TAX TREATY. 5 . THE LEARNED SR. COUNSEL, SHRI J.D. MISTRY, APPEARING FOR THE ASSESSEE SUBMITTED , THE EXPRESSION ANY 12 MONTH PERIOD AS USED IN 6 LINKLATERS ARTICLE 5(2)(K)(I) OF INDIA UK TAX TREATY IS THE RELEVANT FINANC IAL YEAR HAS BEEN ACCEPTED BY THE ASSESSING OFFICER. HE SUBMITTED , THE ASSESSING OFF ICER HAS ALSO CONCLUDED THAT ASSESSEE HAS RENDERED SERVICES WHICH ARE NOT IN THE NATURE OF ROYALTY AND FEES FOR TECHNICAL SERVICES IN TERMS OF ARTICLE 5(2)(K)(I) OF IND IA U K TAX TREATY. HE SUBMITTED, THE ONLY FACT WHICH REQUIRE S EXAMINATION IS , WHETHER THE EMPLOYEES/ PARTNERS OF THE ASSESSEE HAVE RENDERED SERVICES IN I NDIA FOR A PERIOD AGGREGATING MORE THAN 90 DAYS WITHIN THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR UND ER DISPUTE. DRAWING OUR ATTENTION TO A STATEMENT S HOWING THE TOTAL NUMBER OF DAYS THE EMPLOYEES OF THE ASSESSEE STAYED IN INDIA DURING THE FINANCIAL YEAR 1 ST APRIL 2001 TO 31 ST MARCH 2002, A COPY OF WHICH IS PLACED AT PAGE 100 OF THE PAPER BOOK, H E SUBMITT ED , IF THE VACATION PERIOD OF SHRI NARAYAN IYAR, FROM 17 TH APRIL 2001 TO 4 TH MAY 2001 IS EXCLUDED AND MULTIPLE COUNTING IS AVOIDED, THE TOTAL NUMBER OF DAYS THE EMPLOYEES OF THE ASSESSEE STAYED IN INDIA FOR RENDERING SERVICES IS 87 DAYS. HENCE, CONDITION O F ARTICLE 5(2)(K)(I) OF INDIA UK TAX TREATY IS NOT SATISFIED. TO DEMONSTRATE THAT DURING THE PERIOD FROM 17 TH APRIL 2001 TO 4 TH MAY 2001, SHRI NARAYAN IYAR, WAS ON STUDY LEAVE AND HA S NOT RENDERED ANY SERVICES, LEARNED SR. COUNSEL DREW OUR ATTENTION TO THE CONFIRMATION OF THE CONCERNED EMPLOYEE DATED 7 TH DECEMBER 2005, A COPY OF WHICH IS PLACED AT PAGE 66 OF THE PAPER BOOK. THE LEARNED SR. COUNSEL 7 LINKLATERS SUBMITTED , THE ASSESSEE MAINTAINS A DAILY LOG OF EACH OF ITS EMPL OYEE RENDERING SERVICES IN INDIA AND REFERRING TO THE DAILY LOG OF SHRI NARAYAN IYAR KEPT BY THE ASSESSEE FROM 2 ND APRIL 2001 TO 4 TH MAY 2001, HE SUBMITTED , SUCH RECORD MAINTAIN ED BY THE ASSESSEE CLEARLY SHOWS THE LEAVE AVAILED BY THE ASSESSEE DURING THE P ERIOD FROM 17 TH APRIL 2001 TO 4 TH MAY 2001. FURTHER , DRAWING OUR ATTENTION TO A STATEMENT CONTAINING THE DETAILS OF AMOUNTS INVOICED BY THE ASSESSEE DURING THE PERIOD FROM 1 ST APRIL 2001 TO 31 ST MARCH 2001, HE SUBMITTED THAT SUCH RECORD MAINTAINED BY THE A SSESSEE WOULD CLEARLY SHOW THAT DURING THE PERIOD FROM 17 TH APRIL 2001 TO 4 TH MAY 2001, SHRI NARAYAN IYAR, HAS NOT RENDERED ANY SERVICES IN INDIA. DRAWING OUR ATTENTION TO THE SAID CHART, HE SUBMITTED , THE INVOICE RAISED TO ENRON INTERNATIONAL VIDE INVOICE NO.SN200460/2001, DATED 27 TH APRIL 2001 IS FOR SERVICES RENDERED OUTSIDE INDIA. TO EMPHASIZE THAT THE FACTS AND FIGURES SHOWN IN THE STATEMENT OF AMOUNT INVOICE PLACED A T PAGE 29 OF THE PAPER BOOK, LEARNED SR. COUNSEL SUBMITTED , THE FIGURES SHOWN TOWARDS AMOUNT RECEIVED FOR SERVICES RENDERED IN INDIA AND OUTSIDE INDIA HAVE BEEN ACCEPTED BY THE ASSESSING OFFICER IN THE ORDER DATED 31 ST DECEMBER 2007, WHILE GIVING EFFECT TO THE ORDER OF LEARNED COMMISSIONER (APPEALS). THUS, HE SUBMITTED , SINCE IT IS PROVED T HAT SHRI NARAYAN IYAR, WAS ON VACATION FROM 17 TH APRIL 2001 TO 4 TH MAY 8 LINKLATERS 2001, HIS PRESENCE IN INDIA CANNOT BE COUNTED FOR COMPUTING THE PERIOD OF 90 DAYS. 6 . AS REGARDS THE ISSUE WHETHER MULTI PLE COUNTING OF EMPLOYEES STAYING ON A PARTICULAR DAY I N INDIA IS PERMITTED OR NOT, LEARNED SR. COUN SEL DRAWING OUR ATTENTION TO ARTICLE 5(2)(K)(I) OF INDIA UK TAX TREATY SUBMITTED , AS PER THE LANGUAGE USED THE EMPLOYEES OR OTHER PERSONNEL OF THE ASSESSEE MUST HAVE RENDERED SERVICES IN INDIA FOR MORE THAN 90 DAYS. THEREF ORE, MULTIPLE COUNTING OF EMPLOYEE ON A SINGLE DAY HAS TO BE AVOIDED. IN SUPPORT OF SUCH CONTENTION, LEARNED SR. COUNSEL RELIED UPON THE FOLLOWING DECISIONS: I ) CLIFFORD CHANCE V/S DCIT, [2002] 82 ITD 106 (MUM.); II ) ADIT V/S VALENTINE MARITIME ( MAURITIUS ) LTD. [2011] 45 SOT 34 ( MUM ) ; AND III ) J RAY MCDERMOTT EASTERN HEMISPHERE LTD. V/S JCIT , [2010] 39 SOT 240 (MUM.); 7 . THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED , NEITHER BEFORE THE ASSESSING OFFICER NOR BEFORE LEARNED COMMISSIONER (APPEALS), THE ASSESSEE HAS FURNISHED PROPER DOCUMENTARY EVIDENCES TO PROVE THAT SHRI NARAYAN IYAR HAS NOT RENDERED ANY SERVICES IN INDIA DURING THE ALLEGED PERIOD OF HIS VACATION. HE SUBMITTED , ABSENCE OF NECESSARY AND REQUIRED DETAILS RELATING TO THE CONCERNED EMPLOYEE PREVENTED TH E DEPARTMENTAL AUTHORITIES FROM COMING TO A PROPER 9 LINKLATERS CONCLUSION REGARDING THE CLAIM OF THE ASSESSEE THAT THE CONCERNED EMPLOYEE WAS ON VACATION FOR A PARTICULAR PERIOD. THUS, HE SUBMITTED , THE ISSUE MAY BE RESTORED TO THE ASS ESSING OFFICER FOR VERIFYING ASSESSEES CLAIM. 8 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. WE HAVE ALSO APPLIED OUR MIND TO THE DECISIONS RELIED UPON. FROM THE ORDERS OF THE DEPARTMENTAL AUTHORITIES AS WELL AS OTHER MATERIALS ON RECORD, IT IS EVIDENT , THE FA CT THAT THE AMOUNT RECEIVED BY THE ASSESSEE FROM THE CLIENTS IN INDIA IS NOT IN THE NATURE OF EITHER ROYALTY OR FEES FOR TECHNICAL SERVICES HAS BEEN ACCEPTED BY T H E ASSESSING OFFICER SINCE HE HAS TREATED IT AS FEE FOR SERVICES OF THE NATURE AS PROVIDED UND ER ARTICLE 5(2)(K)(I) OF INDIA UK TAX TREATY WHICH DEFINES THE TERM OF P E. FURTHER, THE ASSESSING OFFICER HAS HELD THAT THE ASSESSEE HAD A PE DURING THE ASSESSMENT YEAR 2002 03 IN TERMS O F ARTICLE 5(2)(K)(I) OF INDIA UK TAX TREATY. THEREFORE, THE ONLY ISSU E WE ARE REQUIRED TO EX AMINE IS, WHETHER THE EMPLOYEES/ OTHER PERSONNEL OF THE ASSESSEE HAVE STAYED AND RENDERED SERVICES IN INDIA DURING THE FINANCIAL YEAR 2001 02 EXCEEDING THE PERI OD OF 90 DAYS TO CONSTITUTE A PE IN INDIA. IN THIS CONTEXT, THE CONTENTION OF THE LEARNED SR. COUNSEL IS TWOFOLD . FIRSTLY, IF THE VACATION PERIOD OF ONE OF THE EMPLOYEES SHRI NARAYAN IYAR IS EXCLUDED , THE PERIOD OF STAY OF THE EMPLOYEES OF THE ASSESSEE IN INDIA WOULD BE 87 DAYS. SECONDLY, HE 10 LINKLATERS HAS CONTENDED THAT MULTIPLE COUNTING OF EMPLOYEES IN A SINGLE DAY IS NOT PERMITTED. THEREFORE, THE FIRST ISSUE WHICH WE HAVE TO DECIDE IS, WHETHER SHRI NARAYAN IYAR, HAD RENDERED SERVICES FOR THE PERIOD FROM 17 TH APRIL 2001 TO 4 TH MAY 2001. WHILE THE ASSESSING OFFICER HAS NOT MADE MUCH DISCUS SION ON THIS ASPECT IN TH E ASSESSMENT ORDER, HOWEVER, LEARNED COMMISSIONER (APPEALS) ON THE BASIS OF REMAND REPORT FURNISHED BY THE ASSESSING OFFICER HAS OBSERVED THAT DURING THE ALLEGED PERIOD OF VACATION FROM 17 TH APRIL 2001 TO 4 TH MAY 2001 , SHRI NARAYAN IYAR HAS RENDERED SERVICE TO THE ASSESSEES CLIENTS IN IN DIA. TO EMPHASIZE SUCH FACT, LEARNED COMMISSIONER (APPEALS) HAS SPECIFICALLY REFERRED TO INVOICE NO.SN 200460/2001, DATED 27 TH APRIL 2001, RAISED ON ENRON INTERNATIONAL FOR AN AMOUNT OF US $ 68,220. 42. RE FERRING TO THE SAID INVOICE, LEARNED COMMISSIONER (APPEALS) HAS REASON ED THAT SINCE SUCH INVOICE IS FOR ON SHORE SERVICES IN INDIA AND THE PERIOD FO R WHICH SUCH INVOICE WAS RAISED THERE WAS NO OTHER EMPLOYEE WORKING IN INDIA EXC EPT SHRI NARAYAN IYAR, IT PROVES THAT DURING THE ALLEGED PERIOD OF VACATION, SHRI NARAYAN IYAR, WAS RENDERING SERVICES TO THE CLIENTS OF THE ASSESSEE IN INDIA. IT IS RELEVANT TO OBSERVE , IT IS THE SPECIFIC CLAIM OF THE A SS ESSEE THAT SHRI NARAYAN IYAR HAD A VAILED STUDY LEAVE FROM 17 TH APRIL 2001 TO 4 TH MAY 2001, HENCE, HAS NOT RENDERED ANY SERVICE TO THE ASSESSEES CLIENT IN INDIA. IT IS OBSERVED , THE CONCERNED EMPLOYEE HAS ALSO CONFIRMED THE 11 LINKLATERS AFORESAID FACT THROUGH CONFIRMATION DATED 7 TH DECEMBER 2005, A COP Y OF WHICH IS PLACED AT PAGE 66 OF THE PAPER BOOK. FURTHER, THE DAILY LOG KEPT BY THE ASSESSEE IN RESPECT OF SHRI NARAYAN IYAR, COPY OF WHICH IS PLACED AT PAGE S 67 TO 99 OF THE PAPER BOOK, ALSO SHOW THAT DURING THE PERIOD FROM 17 TH APRIL 2001 TO 4 TH MAY 20 01, SHRI NARAYAN IYAR HAS BEEN SHOWN TO BE ON LEAVE AND NO CHARGEABLE HOURS HAVE BEEN SHOWN. FURTHER, THE STATEMENT SHOWING AMOUNTS INVOICED DURING THE PERIOD FROM 1 ST APRIL 2001 TO31ST MARCH 2002, A COPY OF WHICH IS PLACED AT PAGE 25 OF THE PAPER BOOK, CL EARLY DEMONSTRATE S THAT INVOICE NO.SN 200460/2001, DATED 27 TH APRIL 2001 RAISED ON ENRON INTERNATIONAL, AS REFERRED TO BY THE LEARNED COMMISSIONER (APPEALS) , CLEARLY DEMONSTRATE THAT THE SAID BILL ENTIRELY RELATES TO SERVICES RENDERED OUTSIDE INDIA. EVEN A PERUSAL OF THE SAID BILL, A COPY OF WHICH IS PLACED AT PAGE 29 OF THE PAPER BOOK, CLEARLY SHOWS THAT IN THE HEADING OF THE SAID BILL IT HAS BEEN MENTIONED AS OFFSHORE . HOWEVER, WHILE DESCRIBING THE NATURE OF PROFESSIONAL CHARGES, IT HAS BEEN SHOWN AS O NSHORE . ASSESSEES CLAIM THAT DUE TO AN INADVERTENT ERROR IT WAS SHOWN AS ONSHORE IS BELIEVABLE, S INCE , THE STATEMENT SHOWING THE INVOICE AMOUNT CLEARLY SHOWS THAT I NVOICE NO.SN 200460/2001, DATED 27 TH APRIL 2001, WAS RAISED FOR THE SERVICES RENDERING O UTSIDE INDIA. THIS F A CT IS FURTH ER PROVED FROM THE BREAKDOWN OF THE DISBURSEMENT AMOUNT OF US $ 1432 RAISED IN THE SAID INVOICE WHICH DOES NOT SHOW 12 LINKLATERS ANY AMOUNT TOWARDS HOTEL AND TRAVELLING EXPENSES WHICH IS A RELEVANT FACTOR FOR ONSHORE SERVICES AS CAN BE SEEN FROM INVOICE NO.SN 200460/2001, DATED 27 TH APRIL 2001, RAISED ON ENRON INTERNATIONAL WHICH IS RAISED FOR ONSHORE SERVICES AND IN THE SAID BILL DISBURSEMENT FOR HOTEL ACCOMMODATION AND TRAVEL HAS BEEN BILLED. FURTHER, FROM THE STATEMENT OF AMOUNTS INVO ICED, THE SAID BILL CLEARLY DEPICTS THAT IT WAS RAISED FOR SERVICES RENDERED IN INDIA BY AN EMPLOYEE MATHEW GLYNN. THUS, FROM THE AFORESAID FACTS AND MATERIALS AVAILABLE ON RECORD, THE AUTHENTICITY OF WHICH HAS NOT BEEN DISPUTED, IT IS PROVED THAT SHRI NAR AYAN IYAR, HAS NOT RENDERED ANY SERVICES IN INDIA FROM 17 TH APRIL 2001 TO 4 TH MAY 2001, AS HE WAS AVAILING STUDY LEAVE. THEREFORE, THE PERIOD BEGINNING FROM 17 TH APRIL 2001 TO 4 TH MAY 2001, HAVE TO BE EXCLUDED FOR COMPUTING THE PERIOD OF 90 DAYS AS NO OTHE R EMPLOYEE OF THE ASSESSEE WAS RENDERING SERVICES IN INDIA. 9 . THE NEXT ISSUE WHICH REQUIRES CONSIDERATION IS, WHETHER MULTIPLE COUNTING OF EMPLOYEES ON A SINGLE DAY IS PERMISSIBLE. A CAREFUL READING OF ARTICLE 5(2)(K)(I) OF INDIA UK TAX TREATY MAKES CLEAR T HAT AS PER THE EXPRESSION USED THEREIN IF THE EMPLOYEE S OR OTHER PERSONNEL HAVE STAYED IN INDIA FOR A PERIOD EXCEEDING 90 DAYS IN ANY 12 MONTH PERIOD, IT WILL CONSTITUTE A P E. IN THE FACTS OF THE PRESENT CASE, UNDISPUTEDLY, THE ASSESSING OFFICER HAS RECKON ED ANY 12 MONTH PERIOD TO BE THE FINANCIAL YEAR BEGINNING FROM 1 ST APRIL 2001 TO 31 ST M ARCH 2002. 13 LINKLATERS THEREFORE, AS PER THE MEANING OF ARTICLE 5(2)(K)(I) OF INDIA UK TAX TREATY , I F THE EMPLOYEES OF THE ASSESSEE HAD STAYED IN INDIA FOR RENDERING SERVICES FOR A PERIOD EXCEEDING 90 DAYS, T HEN ONLY IT WILL CONSTITUTE A PE. THEREFORE , THE STAY OF EMPLOYEE S IN INDIA ON A PARTICULAR DAY HAS TO BE TAKEN CUMULATIVELY AND NOT INDEPENDENTLY. THAT BEING THE CASE, MULTIPLE COUNT ING OF EMPLOYEE IN A SINGLE DAY, AS WAS DONE BY THE DEPARTMENTAL AUTHORITIES , IS IMPERMISSIBLE UNDE R ARTICLE 5(2)(K)(I) OF INDIA UK TAX TREATY. THE AFORESAID VIEW HAS BEEN EXPRESSED BY THE TRIBUNAL IN CASE OF CLIFFORD CHANCE (SUPRA) . IN FACT , IN THE REMAND RE PORT DATED 27 TH FEBRUARY 2006, A COPY OF WHICH IS AT PAGE 110 OF THE PAPER BOOK, THE ASSESSING OFFICER HAS ACCEPTED THE AFORESAID LEGAL POSITION IN PARA 9. THUS, IF THE PERIOD DURING WHICH SHRI NARAYAN IYAR WAS ON LEAVE IS EXCLUDED AND THE MULTIPLE COUNTIN G OF EMPLOYEES IN A SINGLE DAY IS AVOIDED , THE AGGREGATE PERIOD OF STAY OF ASSESSEES EMPLOYEE S IN INDIA DURING THE PERIOD FROM 1 ST APRIL 2001 TO 31 ST MARCH 2002, IS 87 DAYS AS PER THE STATEMENT PLACED AT PAGE 100 OF THE PAPER BOOK. THEREFORE, THERE WAS NO PE OF THE ASSESSEE IN INDIA DURING THE IMPUGNED ASSESSMENT YEAR. THAT BEING THE CASE, THE FEES RECEIVED BY THE ASSESSEE FROM LEGAL CONSULTANCY SERVICES RENDERED IN INDIA IS NOT TAXABL E IN INDIA. THE ADDITION MADE , THEREFORE, DESERVES TO BE DELETED. THIS G ROUND IS ALLOWED. 14 LINKLATERS 10 . IN VIEW OF OUR AFORESAID DECISION, GROUNDS NO.4 TO 14 RAISED BY THE ASSESSEE ON COMPUTATION AL ASPECT AND OTHER ISSUES HAVE BECOME ACADEMIC, HENCE, NOT REQUIRED TO BE ADJUDICATED. 11 . IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ITA NO.3785/MUM./2006 REVENUES APPEAL 12 . IN GROUND NO.1, THE REVENUE HA S CHALLENGED THE DECISION OF LEARNED COMMISSIONER (APPEALS) IN HOLDING THAT THE INCOME RECEIVED BY THE ASSESSEE RELATING TO WORK RENDERED OUTSIDE INDIA IS NOT TAXABLE. 13 . AS SUBMITTED BY L EARNED COUNSELS APPEARING FOR THE RIVAL PARTIES, THIS ISSUE HAS BEEN DECIDED IN FAVOUR OF THE A SS ESSEE CONSISTENTLY BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 1997 98 IN M.A. NO.392/MUM./2014, DATED 20 TH FEBRUARY 2015, FOR ASSESSMENT YE AR 1998 99 TO 2001 02 IN ITA NO.1335 TO 1357/ MUM./2004, DATED 7 TH SEPTEMBER 2015 AND FOR ASSESSMENT YEAR 2003 04 AND 2007 08 IN ITA NO.897/MUM./2007 & ORS., DATED 16 TH DECEMBER 2015. FACTS BEING IDENTICAL, FOLLOWING THE CONSISTENT VIEW OF THE TRIBUNAL IN ASSESSEES OWN CASE , AS REFERRED TO ABOVE , WE UPHOLD THE DECISION OF LEARNED COMMISSIONER (APPEALS) ON THIS ISSUE. GROUND IS DISMISSED. 15 LINKLATERS 14 . IN GROUND NO.2, THE REVENUE HA S CHALLENGED THE DECISION OF LEARNED COMMISSIONER (APPEALS) IN RESTRICTING THE DISALLOWAN CE ON ACCOUNT OF REIMBURSEMENT OF EXPENDITURE TO THE EXTENT OF 15%. 15 . AT THE TIME OF HEARING, THE L EARNED COUNSELS APPEARING FOR THE RIVAL PARTIES HAVE SUBMITTED BEFORE US THAT THIS ISSUE HAS ALSO BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL HOLDING THAT REIMBURSEMENT OF EXPENDITURE CANNOT BE TREATED AS INCOME OF THE ASSESSEE. IN THIS CONTEXT, THE ORDERS OF THE TRIBUNAL FOR ASSESSMENT YEAR 1995 96 IN ITA NO.4896/MUM./2003 AND ITA NO. 5085/MUM./2003, DATE 16 TH JULY 2010, FOR ASSESSMENT YEAR 1996 97 IN ITA NO.5730/MUM./2003 AND ITA NO.6557/MUM./2003, DATED 7 TH MAY 2014, FOR ASSESSMENT YEAR 1997 98 IN ITA NO.17 11/MUM./2004 AND ITA NO.1354/MUM./2004, DATED 8 TH AUGUST 2014, FOR ASSESSMENT YEAR 1998 99 TO 2001 02 IN ITA NO.1355 TO 1357/MUM./2004, DATED 7 TH SEPTEMBER 2015, AND FOR ASSESSMENT YEAR 2003 04 AND 2007 08 IN ITA NO.897/MUM./2007 AND OTHERS DATE 16 TH DECEM BER 2015. ON A PERUSAL OF THE AFORESAID ORDERS OF THE CO ORDINATE BENCH, WE FIND THAT THE TRIBUNAL HAS CONSISTENTLY HELD THAT REIMBURSEMENT OF EXPENDITURE CANNOT BE TREATED AS INCOME OF THE ASSESSEE. IN ANY CASE O F THE MATTER, WHILE DECIDING ASSESSEES APP EAL, WE HAVE HELD THAT T HE ASSESSEE DOES NOT HAVE ANY PE IN INDIA DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER DISPUTE. THAT BEING THE CASE, 16 LINKLATERS THE AMOUNT IS ALSO NOT TAXABLE OTHERWISE. IN VIEW OF THE AFORESAID, THE GROUND RAISED BY THE REVE NUE DESERVES TO BE DISMISSED. 16 . IN THE RESULT, REVENUES APPEAL IS DISMISSED. 17 . TO SUM UP, ASSESSEES APPEAL IS PARTLY ALLOWED AND REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 16.04.2019 SD/ - MAJOJ KUMAR AGGARWAL ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 16.04.2019 COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (SR. PRIVATE SECRETARY) ITAT, MUMBAI