Appeal details
Counselvise Citation
[2018] 118 COUNSELVISE.COM (IT) 9790 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 year(s) 5 month(s) 4 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
05-12-2018
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
Not Allotted
Assessment Year
2011-2012
Appeal Filed On
01-07-2016
Judgement Text
IN THE INCOME-TAX APPELLATE TRIBUNAL I BENCH MUMB AI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO. 4533/MUM/2016 (ASSESSMENT YEAR 20 11-12 ) ITA NO. 4534/MUM/2016 (ASSESSMENT YEAR 20 11-12 ) ACIT-16(2), R NO. 440, 4 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020. VS. BSR & COMPANY LLP, BSR & ASSOCIATES LODHA EXCELUS, 1 ST FLOOR, APOLLO MILLS COMPOUND, N M JOSHI MARG, MAHALAKSHMI, MUMBAI-400011. PAN: AAAFB9852F APPELLANT RESPONDE NT ITA NO. 4535/MUM/2016 (ASSESSMENT YEAR 2011-12 ) ITA NO. 4536/MUM/2016 (ASSESSM ENT YEAR 2010-11 ) ACIT-16(2), R NO. 440, 4 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020. VS. BSR & COMPANY LLP, BSR & ASSOCIATES LODHA EXCELUS, 1 ST FLOOR, APOLLO MILLS COMPOUND, N M JOSHI MARG, MAHALAKSHMI, MUMBAI-400011. PAN: AAAFB9852F APPELLANT RESPONDE NT REVENUE BY : SHRI NISHANT SAMAIYA (DR) ASSESSEE BY : SHRI ABHISHEK TILAK (AR) DATE OF HEARING : 05.12.2018 DATE OF PRONOUNCEMEN T : 05.12.2018 ORDER UNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. THESE GROUP OF FOUR APPEALS BY TWO ASSESSEES ARE D IRECTED AGAINST THE ORDER OF LD. CIT(A)-5, MUMBAI DATED 02.03.2016 FOR ASSESSMENT YEARS 2010-11 & 2011-12. IN ALL APPEALS, THE REVENUE HAS RAISED COMMON GROUNDS OF APPEAL EXCEPT THE DIFFERENCE OF AMOUNT I N FIGURE IN BOTH THE ITA NO. 4533 TO 4536 MUM 2016-BSR & COMPANY LLP. 2 ASSESSMENT YEARS, THEREFORE, WITH THE CONSENT OF PA RTIES, ALL APPEALS WERE CLUBBED, HEARD AND ARE DECIDED BY A COMMON ORDER TO AVOID THE CONFLICTING DECISION. IN ITA NO. 4533/MUM/2016, APP EAL FOR ASSESSMENT YEAR 2011-12 IN, THE REVENUE HAS RAISED THE FOLLOWI NG GROUNDS OF APPEAL: 1. 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE PAYMENTS M ADE BY THE ASSESSEE TO ITS ASSOCIATE CONCERNS BASED IN COUNTRIES APART FRO M PHILIPPINES, MAURITIUS, INDONESIA CONSTITUTE PAYMENTS FOR INDEPENDENT PERSO NAL SERVICES INSTEAD OF 'FEES FOR TECHNICAL SERVICES' AS DEFINED UNDER ARTI CLE 12/13 OF THE RESPECTIVE3 DTAAS ? 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE PAYMENTS M ADE BY THE ASSESSEE TO ITS ASSOCIATE CONCERNS BASED IN PHILIPPINES, MAURIT IUS, INDONESIA CONSTITUTE PAYMENTS FOR INDEPENDENT PERSONAL SERVICES INSTEAD OF 'ROYALTY' AS DEFINED UNDER ARTICLE 12/13 OF THE RESPECTIVE DTAAS ? 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE SERVICES R ENDERED BY THE ASSOCIATE CONCERNS TO THE ASSESSEE CONSTITUTE 'INDEPENDENT PE RSONAL SERVICES' UNDER DTAAS NOT APPRECIATING THAT ONLY THOSE SERVICES PER FORMED BY AN INDEPENDENT NON-RESIDENT ALIEN CONTRACTOR WOULD CON STITUTE - ' INDEPENDENT PERSONAL SERVICES' UNDER DTAA WHICH IS NOT THE CASE HERE AS IN THIS CASE, THE SERVICES WERE RENDERED BY THE GROUP ENTITIES TO AN INDIAN ENTITY WHICH WERE CLOSELY WORKING WITH EACH OTHER? 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, WHETHER THE LD. CIT(A) ERRED IN HOLDING THAT THE KPMGI CO-OPERA TIVE, SWITZERLAND, IS A MUTUAL ASSOCIATION AND ITS RECEIPTS WOULD NOT CONST ITUTE INCOME CHARGEABLE TO TAX AND IS NOT OBLIGED TO WITHHOLD AND ANY TAX W ITHOUT APPRECIATING THE FACTS, THEREBY DELETING THE DISALLOWANCE OF RS. 4,7 0,80,932/- U/S 40(A)(I). 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, WHETHER THE LD. CIT(A) ERRED IN HOLDING THAT THE PAYMENTS MADE BY THE ASSESSEE TO KPMGI FOR NAMES, MARK AND OTHER FACILITIES WERE IN THE NATURE OF ROYALTY AND CHARGEABLE TO TAX IN INDIA. ITA NO. 4533 TO 4536 MUM 2016-BSR & COMPANY LLP. 3 6. THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED . 2. AT THE OUTSET OF HEARING THE LD. AUTHORIZED REPRESE NTATIVE (AR) OF THE ASSESSEE SUBMITTED THAT THE GROUNDS NO. 1 TO 3 RAIS ED BY REVENUE ARE COVERED IN FAVOUR OF ASSESSEE IN ASSESSEES OWN CAS E FOR ASSESSMENT YEAR 2008-09 & 2009-10 IN ITA NO. 2843/MUM/2014 AND IN I TA NO. 1917/MUM/2013. SIMILARLY GROUND NO. 4 IS ALSO COVER ED IN FAVOUR OF ASSESS BY THE DECISION OF TRIBUNAL IN DCIT VS KPMG (2017) 81 TAXMANN.COM 118 (MUM), ACIT VS BSR & COMPANY [ ITA NO. 4842 TO 4844 & 4556 DATED 04.01.2018 FOR AY 2011-12 & 2012- 13] AND ACIT VS KPMG (ITA NO. 4479 & 4503/M/2013 DATED 16.11.201 7. THE LD. AR OF THE ASSESSEE FURNISHED THE FACTS SHEET SHOWING T HE NATURE OF SERVICES RENDERED BY EACH OF THE RECIPIENT COUNTRY-WISE AND THE PAYMENT OF PROFESSIONAL FEES PAID TO THEM. THE LD. AR OF THE A SSESSEE ALSO FILED COPY OF THE ORDER OF TRIBUNAL IN ASSESSEES OWN CASE AND IN CASE OF KPMG, RELIED BY HIM. 3. ON GOING THROUGH THE FACTS SHEET WHICH CONSIST OF N AME OF RECIPIENT COUNTRY-WISE, NATURE OF SERVICES RENDERED AND THE P AYMENT MADE AS WELL AS THE ORDER OF TRIBUNAL, THE LD. DR FOR THE REVENU E FAIRLY CONCEDED THAT THE GROUNDS OF APPEAL RAISED BY REVENUE ARE SQUAREL Y COVERED IN FAVOUR OF ASSESSEE. ITA NO. 4533 TO 4536 MUM 2016-BSR & COMPANY LLP. 4 4. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PAR TIES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE ASSESS EE IS A REGISTERED CHARTERED ACCOUNTANT FIRM. DURING THE RELEVANT PER IOD THE ASSESSEE MADE PAYMENT OF PROFESSIONAL FEE OF RS. 2,51,89,093 /- TO NON- RESIDENTS ENTITIES AS DETAILED IN PARA 3 OF THE ASSESSMENT O RDER ON ACCOUNT OF PROFESSIONAL FEES. THE ASSESSING OFFICER ISSUED SHO W-CAUSED AS TO WHY THE REQUISITE TAX WAS NOT DEDUCTED AT SOURCE. THE ASSE SSEE FIRM EXPLAINED THAT THE PAYMENTS WERE MADE TO VARIOUS NON-RESIDENT S AND IT IS NOT IN THE NATURE OF INCOME CHARGEABLE TO TAX IN INDIA AND THU S, TAX WAS NOT REQUIRED TO BE DEDUCTED IN TERMS OF SECTION 195 OF THE ACT. THE ASSESSING OFFICER HOWEVER, DID NOT ACCEPT THE SUBMISSIONS OF THE ASSE SSEE AND INSTEAD HELD THAT TAX WAS REQUIRED TO BE DEDUCTED TAX AT SOURCE AND ON THE FAILURE TO DO DISALLOWED IN TERMS OF SECTION 40(A)(I) OF THE AC T. ON APPEAL BEFORE CIT (A) THE ASSESSEE CONTENDED THAT INVOKING OF PROVISI ONS OF SECTION 40(A)(I) WAS NOT JUSTIFIED. ASSESSEE FURTHER CONTENDED THAT THE PAYMENTS MADE TO VARIOUS NON- RESIDENT ENTITIES WAS GOVERNED BY THE PROVISIONS OF DOUBLE TAXATION AVOIDANCE AGREEMENT (DTAA) WITH THE RESPEC TIVE COUNTRIES, IN TERMS OF WHICH SUCH PAYMENTS WERE NOT INCOME CHARGE ABLE TO TAX IN INDIA. THE LD CIT (A) ACCEPTED THE CONTENTION OF TH E ASSESSEE AND ALLOWED THE APPEAL AND ACCORDINGLY DELETED THE DISA LLOWANCE MADE UNDER SECTION 40(A)(I) OF THE ACT. THE LD. CIT(A) WHILE A LLOWING RELIEF TO THE ASSESSEE ALSO FOLLOWED DECISION OF HIS PREDECESSOR IN ASSESSEES GROUP ITA NO. 4533 TO 4536 MUM 2016-BSR & COMPANY LLP. 5 CASE FOR A.Y. 2009-10 AND THE DECISION OF TRIBUNAL IN KPMG IN ITA NO. 2497/MUM/2009.THUS, AGGRIEVED BY THE ORDER OF LD. C IT(A), THE REVENUE HAS FILED THE PRESENT APPEAL BEFORE US. 5. WE HAVE CONSIDERED THE SUBMISSION OF LD. REPRESENT ATIVE OF THE PARTIES AS REFERRED ABOVE AND THE DECISION OF TRIBUNAL IN ASSE SSEES GROUP CASE FOR A.Y. 2008-09 & 2009-10. WE HAVE SEEN THAT ON SIMILA R GROUND OF APPEAL, TRIBUNAL IN ASSESSEES GROUP CASE IN ACIT VS. BSR & CO. IN ITA NO. 1917/MUM/2013 FOR ASSESSMENT YEAR 2009-10 PASSED TH E FOLLOWING ORDER: 4. AT THE TIME OF HEARING, LD. REPRESENTATIVE FOR THE ASSESSEE HAS FURNISHED A FACT SHEET, WHICH BRINGS OUT THE NATURE OF SERVICES RENDERED BY EACH OF THE RECIPIENTS OF INCOME. PRIMARILY, IT IS REVEALED THA T PROFESSIONAL SERVICES HAVE BEEN RENDERED BY SUCH ENTITIES FOR ASSISTANCE IN AU DIT, TAXATION, IT SERVICES, PROFESSIONAL SERVICES IN RELATION TO TRANSFER PRICI NG, VAT, ETC. LD. REPRESENTATIVE FOR THE ASSESSEE HAS ALSO TABULATED THE RECIPIENT ENTITIES COUNTRY-WISE AND MADE REFERENCE TO THE RESPECTIVE C LAUSES IN THE DOUBLE TAXATION AVOIDANCE AGREEMENTS. IN SUM AND SUBSTANCE , THE DISCUSSION MADE BY THE CIT(APPEALS) ON EACH OF THE PAYMENTS, IN PAR A 1.3 TO 1.3.4 BY THE CIT(APPEALS) HAS BEEN RELIED UPON. 5. IN THE ABOVE BACKGROUND, WE HAVE CAREFULLY CONSIDE RED THE RIVAL SUBMISSIONS. PERTINENTLY, THE ISSUE REVOLVES AROUND THE PAYMENTS MADE BY THE ASSESSEE TO CERTAIN NON-RESIDENT ENTITIES FOR PROFE SSIONAL SERVICES RENDERED BY THEM OUTSIDE INDIA. IT HAS BEEN CONSISTENTLY EXPLAI NED BY THE ASSESSEE THAT THE SERVICES OF SUCH ENTITIES WERE AVAILED DURING THE C OURSE OF THE EXECUTION OF ENGAGEMENTS OF ASSESSEE FIRM. THE ASSESSEE FIRM DID NOT DEDUCT THE TAX AT SOURCE AND, THEREFORE, THE ASSESSING OFFICER INVOKE D THE PROVISIONS OF SECTION 40(A)(I) OF THE ACT AND DISALLOWED SUCH EXPENDITURE . THE DETAILS OF THE ENTITIES ALONGWITH THE AMOUNTS PAID HAVE BEEN CULLED OUT BY THE ASSESSING OFFICER IN PARA-3 OF THE ASSESSMENT ORDER AND THE SAME IS NOT BEING REPEATED FOR THE SAKE OF BREVITY. THE PAYMENTS HAVE BEEN MADE TO 12 DIFFE RENT PROFESSIONAL ENTITIES BASED IN 10 DIFFERENT COUNTRIES. IN SO FAR AS THE P AYMENTS THAT ARE MADE TO KPMG LLP, USA AND KPMG LLP, CANADA ARE CONCERNED, T HE SAME HAS BEEN MADE ON ACCOUNT OF PROFESSIONAL SERVICES RENDE RED IN RELATION TO TAXATION AND TRANSFER PRICING. UNDISPUTEDLY, THE PROFESSIONA L SERVICES HAVE BEEN RENDERED BY THE AFORESAID ENTITIES OUTSIDE INDIA. T HE STAND OF THE REVENUE IS THAT SUCH SERVICES ARE IN THE NATURE OF 'FEE FOR TE CHNICAL SERVICES' AND, THEREFORE, TAX WAS LIABLE TO BE DEDUCTED AT SOURCE IN INDIA. FACTUALLY SPEAKING, ITA NO. 4533 TO 4536 MUM 2016-BSR & COMPANY LLP. 6 THE AFORESAID STAND OF THE REVENUE IS DEVOID OF ANY SUPPORT BECAUSE THERE IS NO MATERIAL TO ESTABLISH THAT ANY TECHNICAL KNOWLED GE, SKILL, ETC. HAS BEEN MADE AVAILABLE TO THE ASSESSEE SO AS TO CONSIDER IT AS FALLING WITHIN THE PURVIEW OF ARTICLE-12 OF INDO-US DOUBLE TAXATION AV OIDANCE AGREEMENT. IT IS ALSO AN ESTABLISHED FACT THAT SUCH NON-RESIDENT RECIPIENTS DO NOT HAVE PERMANENT ESTABLISHMENT IN INDIA AND, THEREFORE, IN THE SAID BACKGROUND THE SAME CAN, AT BEST, BE TREATED AS INDEPENDENT PERSON AL SERVICES COVERED BY ARTICLE-15 OF THE INDO-US DOUBLE TAXATION AVOIDANCE AGREEMENT. AS A CONSEQUENCE AND IN THE ABSENCE OF ANY FIXED BASE IN INDIA, SUCH INCOME CANNOT BE HELD CHARGEABLE TO TAX IN INDIA SO AS TO REQUIRE DEDUCTION OF TAX AT SOURCE. THEREFORE, INVOKING OF SECTION 40(A)(I) OF THE ACT TO DISALLOW SUCH EXPENDITURE IS NOT TENABLE. 5.1 IN SO FAR AS PAYMENTS TO KPMG LLP, UK AND KPMG USM CG LTD. UK ARE CONCERNED, HEREIN ALSO THE SAID ENTITIES DO NOT HAVE PERMANENT ESTABLISHMENT IN INDIA. THE CIT(APPEALS) HAS FOUND THAT SUCH ENTITIES ARE ELIGIBLE FOR THE BENEFIT OF ARTICLE-15 OF INDO-US D OUBLE TAXATION AVOIDANCE AGREEMENT DEALING WITH INDEPENDENT PERSONAL SERVICE S AND HENCE, PAYMENTS ARE NOT CHARGEABLE TO TAX IN INDIA SO AS TO REQUIRE DEDUCTION OF TAX AT SOURCE. THE AFORESAID FINDINGS HAVE NOT BEEN DISPUTED BEFOR E US ON THE BASIS OF ANY COGENT MATERIAL AND, THEREFORE, WE HEREBY AFFIRM TH E SAME. CONSEQUENTLY, INVOKING OF SECTION 40(A)(I) IN THE CONTEXT OF AFOR ESAID PAYMENTS IS ALSO NOT JUSTIFIED. 5.2 IN THE CONTEXT OF PAYMENTS MADE TO KPMG TAX SERVIC ES PVT. LTD., SINGAPORE, KPMG LLP, SINGAPORE AND KPMG TAX ADVISOR , BELGIUM, THE CIT(APPEALS) NOTED THAT THEY ARE COMPANIES REGISTER ED IN THE RESPECTIVE COUNTRIES, WHO HAVE RENDERED SERVICES OUTSIDE INDIA . SUCH SERVICES RELATED TO ASSISTANCE IN AUDIT, TAXATION, INFORMATION TECHNOLO GY SERVICES, CONDUCING BACKGROUND CHECKS, ETC. CONSIDERING THE NATURE OF T HE SERVICES RENDERED, WHICH IS NOT DISPUTED BY THE REVENUE, IN OUR VIEW, THE CIT(APPEALS) MADE NO MISTAKE IN HOLDING THAT THE PAYMENTS ARE NOT 'FEE F OR TECHNICAL SERVICES'. THE AFORESAID SERVICES HAVE BEEN RIGHTLY HELD TO BE OUT SIDE THE PURVIEW OF ARTICLE- 12 AND/OR ARTICLE-13 OF THE RESPECTIVE TAX TREATIES , AND INSTEAD SUCH INCOME FALLS WITHIN THE SCOPE OF ARTICLE-7 THEREOF I.E. IN THE NATURE OF 'BUSINESS PROFITS'. IT HAS ALSO NOT BEEN DISPUTED THAT SUCH E NTITIES DO NOT HAVE A PERMANENT ESTABLISHMENT IN INDIA, THEREFORE, SUCH I NCOMES ARE NOT CHARGEABLE TO TAX IN INDIA SO AS TO REQUIRE DEDUCTION OF TAX A T SOURCE. ON THIS ASPECT ALSO, WE AFFIRM THE STAND OF THE CIT(APPEALS) THAT SUCH P AYMENTS ARE NOT LIABLE FOR DISALLOWANCE UNDER SECTION 40(A)(I) OF THE ACT. 5.3 WITH REGARD TO THE PAYMENTS TO KPMG, MAURITIUS, KP MG HAZEN HASSAN, EGYPT, KPMG DUBAI, UAE AND KPMG, SRI LANKA ARE CONC ERNED, THE CIT(APPEALS) HAS NOTICED THAT THE TAX TREATIES WITH THE RESPECTIVE COUNTRIES DO NOT HAVE ANY ARTICLE DEFINING 'FEE FOR TECHNICAL SE RVICES'; AND THAT THE SERVICES WERE BEING RENDERED IN RELATION TO TAXATION MATTERS . IN THIS BACK GROUND, THE CIT(APPEALS) HELD THAT THE PAYMENTS FOR SUCH SERVIC ES FALL WITHIN THE SCOPE OF ARTICLE 14/15 OF THE RESPECTIVE TREATIES DEALING WI TH INDEPENDENT PERSONAL SERVICES AND IN THE ABSENCE OF ANY FIXED PLACE OF B USINESS OF THE RECIPIENT IN INDIA, INCOME FROM SUCH SERVICES WAS NOT CHARGEABLE TO TAX IN INDIA. THEREFORE, THERE WAS NO REQUIREMENT TO DEDUCT TAX A T SOURCE AND ACCORDINGLY THE INVOKING OF SECTION 40(A)(I) OF THE ACT HAS BEE N SET-ASIDE BY THE ITA NO. 4533 TO 4536 MUM 2016-BSR & COMPANY LLP. 7 CIT(APPEALS). THE AFORESAID FACTUAL MATRIX BROUGHT OUT BY THE CIT(APPEALS) HAS NOT BEEN ASSAILED BY THE REVENUE BEFORE US ON T HE BASIS OF ANY COGENT MATERIAL AND, THUS, THE SAME IS HEREBY AFFIRMED. 5.4 THE LAST ITEM REMAINING IS PAYMENT MADE BY ASSESSE E TO KPMG, MALAYSIA FOR AUDIT SERVICES. IT IS NOT IN DISPUTE THAT THE S AID SERVICES HAVE BEEN RENDERED OUTSIDE INDIA AND THE SAME CANNOT BE CONSTRUED AS M ANAGERIAL OR TECHNICAL SERVICES SO AS TO BE GOVERNED BY ARTICLE-13 OF INDI A-MALAYSIA TAX TREATY, AS CONTENDED BY THE REVENUE. CLEARLY, THEY ARE IN THE NATURE OF INDEPENDENT PERSONAL SERVICES FALLING FOR CONSIDERATION UNDER A RTICLE-14 OF INDO-MALAYSIA TAX TREATY AND, THEREFORE, IN THE ABSENCE OF ANY FI XED PLACE OF BUSINESS OF THE RECIPIENT IN INDIA, THE IMPUGNED INCOME IS NOT CHAR GEABLE TO TAX IN INDIA. THEREFORE, IN SUCH A SITUATION, ASSESSEE IS NOT LIA BLE FOR DEDUCTION OF TAX AT SOURCE IN INDIA SO AS TO INVOKE THE PROVISIONS OF S ECTION 40(A)(I) OF THE ACT. THE STAND OF THE CIT(APPEALS) ON THIS ASPECT IS ALS O AFFIRMED BY US ON THE BASIS OF HIS FINDINGS, WHICH HAVE REMAINED UNCONTRO VERTED BEFORE US BY THE REVENUE. 5.5 APART THEREFROM, EVEN IF WE WERE TO ACCEPT, FOR TH E SAKE OF ARGUMENT, THAT THE SERVICES BY THE AFORESAID ENTITIES ARE IN THE N ATURE OF TECHNICAL SERVICES AND ARE RENDERED AND UTILIZED IN INDIA SO AS TO BE TAXA BLE IN TERMS OF SECTION 9(1)(VII) OF THE ACT, EVEN THEN THE DISALLOWANCE IS NOT WARRANTED AS THE FOLLOWING DISCUSSION WOULD SHOW. OSTENSIBLY, THE RE QUIREMENT OF RENDERING SERVICES IN INDIA IN ORDER TO ATTRACT SECTION 9(1)( VII) OF THE ACT WAS REMOVED BY INSERTION OF EXPLANATION BY THE FINANCE ACT, 201 0 WITH RETROSPECTIVE EFFECT FROM 1/4/1976. THIS HAS BEEN UNDERSTOOD BY THE REVE NUE TO SAY THAT INSPITE OF THE SERVICES HAVING BEEN RENDERED BY THE RECIPIENTS OUTSIDE INDIA, THE SAME IS TAXABLE IN INDIA BY APPLYING THE AFORESAID AMENDMEN T. IN OUR VIEW, SUCH RETROSPECTIVE AMENDMENT WOULD BE DETERMINATIVE OF T HE TAX LIABILITY IN THE HANDS OF THE RECIPIENTS OF INCOME. SO HOWEVER, IN T HE PRESENT CASE, WHAT IS HELD AGAINST THE ASSESSEE IS THE FAILURE TO DEDUCT TAX AT SOURCE AT THE TIME OF PAYMENT OF SUCH INCOME. OSTENSIBLY, DEHORS THE AFOR ESAID AMENDMENT, THE IMPUGNED INCOME WAS NOT SUBJECT TO TAX DEDUCTION AT SOURCE IN INDIA AS PER THE PREVAILING LEGAL POSITION. TAXABILITY OF A SUM IN THE HANDS OF RECIPIENT, ON ACCOUNT OF A SUBSEQUENT RETROSPECTIVE AMENDMENT WOU LD NOT EXPOSE THE ASSESSEE-PAYER TO AN IMPOSSIBLE SITUATION OF REQUIR ING DEDUCTION OF TAX AT SOURCE ON THE DATE OF PAYMENT. THEREFORE, ON THIS C OUNT ALSO THE ASSESSEE CANNOT BE HELD TO BE IN DEFAULT IN NOT DEDUCTING TA X AT SOURCE SO AS TO TRIGGER THE DISALLOWANCE UNDER SECTION 40(A)(I) OF THE ACT. LD. REPRESENTATIVE FOR THE ASSESSEE HAS RELIED UPON THE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF CHANNEL GUIDE INDIA LTD. V. ASSTT. CIT [2012] 25 TAXMANN.COM 25/139 ITD 49 (MUM.) IN SUPPORT OF THE ABOVE SAID PROPOSITION. IN THE ABSENCE OF ANY CONTRARY DECISION, THE SAID PLEA OF THE ASSESSEE IS ALSO LIABLE TO BE UPHELD AND THE DISALLOWANCE MADE BY THE ASSESSIN G OFFICER UNDER SECTION40(A)(I) OF THE ACT IS UNTENABLE. THE DISALL OWANCE HAS BEEN RIGHTLY DELETED BY THE CIT(APPEALS), WHICH WE HEREBY AFFIRM . ITA NO. 4533 TO 4536 MUM 2016-BSR & COMPANY LLP. 8 6. CONSIDERING THE DECISION OF TRIBUNAL IN ASSESSEES OWN CASE, THE GROUND NO. 1 TO 3 OF THE APPEAL RAISED BY REVENUE ARE DISM ISSED WITH SIMILAR DIRECTION. 7. GROUND NO.4 RELATES TO DELETING THE DISALLOWANCE UN DER SECTION 40(A)(I) ON ACCOUNT OF PAYMENT MADE TO KPMGI CO-OPERATIVE, SWIT ZERLAND. THE ASSESSING OFFICER DISALLOWED THE PAYMENT MADE TO KP MGI CO-OPERATIVE, SWITZERLAND HOLDING THAT PAYMENT IS MADE FOR USE OF NAME, THE ASSESSEE DERIVES SUBSTANTIAL BENEFIT BEING A PART OF KPMG GR OUP AND THE PAYMENT IS TOWARDS THE ACQUIRING RIGHT TO USE THE NAME OF K PMG IS IN THE NATURE OF ROYALTY. THE LD. CIT(A) DELETED THE ADDITION HOLDIN G THAT KPMGI CO- OPERATIVE IS A MUTUAL ASSOCIATION AND ITS RECEIPTS WOULD NOT CONSTITUTE INCOME CHARGEABLE TO TAX. 8. WE HAVE NOTED THAT IN ASSESSEES GROUP CASE IN ACI T VS. BSR & CO. IN ITA NO. 4842 TO 4844 & 4556/MUM/2016 DATED 04.01.20 18 FOR A.Y. 2011-12 & 2012-13, ON SIMILAR GROUNDS OF APPEAL, TH E COORDINATE BENCH OF TRIBUNAL AFTER RELYING UPON THE DECISION IN DCI T VS. KPMG (81 TAXMANN.COM 118) PASSED THE FOLLOWING ORDER: 12. UPON CAREFUL CONSIDERATION WE FIND THAT IDENTIC AL ISSUE WAS CONSIDERED BY THIS TRIBUNAL IN ASSESSEE'S OWN CASE IN ITA NO. 249 3/MUM/2012 & CO NO. 97/MUM/2013 DATED 07.04.2017 VERY ELABORATELY AND T HE CONCLUSION READ AS UNDER: 19. WITH THE ABOVE DISCUSSION WE MAY CONCLUDE THAT IN THE CASE IN HAND, THERE IS A COMPLETE IDENTITY BETWEEN THE CONTRIBUTORS AND PART ICIPATORS; THE ACTIONS OF THE PARTICIPATORS AND CONTRIBUTORS ARE IN FURTHERANCE O F THE MANDATE OF THE ASSOCIATION. THERE SEEMS BE NO ELEMENT OF PROFIT BY THE CONTRIBU TORS FROM A FUND MADE BY THEM, WHICH COULD ONLY BE EXPENDED OR RETURNED TO THEMSEL VES. BASED ON THESE CONDITIONS ITA NO. 4533 TO 4536 MUM 2016-BSR & COMPANY LLP. 9 AND RESPECTFULLY RELYING ON THE CASE LAWS AS THE HO N'BLE APEX COURT AND VARIOUS HIGH COURTS LAID DOWN THAT THE CASE OF THE ITA NOS. 4842 TO 4844 & 455 6/MUM/2016 ASST. CIT VS. M/S. BSR AND COMPANY ASSESSEE FALLS WITHIN THE FOUR CORNER OF THE AMBIT OF THE 'PRINCIPLE OF MUTUALITY' . THUS, WE DO NOT FIND ANY REASON OR GROUND TO INTERFERE IN THE ORDER PASSED BY LEARN ED COMMISSIONER (APPEALS) HENCE THE APPEAL FILED BY THE REVENUE IS DISMISSED. 9. CONSIDERING THE DECISION OF TRIBUNAL WHEREIN THE SI MILAR ISSUE HAS BEEN DECIDED IN FAVOUR OF ASSESSEE AND AGAINST THE REVEN UE, THEREFORE, WE DO NOT FIND ANY MERITS IN THE GROUNDS OF APPEAL RAISED BY REVENUE. 10. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ITA NO. 4534/MUM/2016 11. GROUND NO.1 TO 3 RELATES TO DELETING THE DISALLOWA NCE OF PROFESSIONAL FEE PAID TO VARIOUS PROFESSIONAL ENTITIES. WE HAVE NOTE D THAT THESE GROUNDS OF APPEAL ARE IDENTICAL TO THE GROUNDS OF APPEAL RAISE D BY THE REVENUE IN ITA NO. 4533/MUM/2016, WHICH WE HAVE ALREADY DISMISSED, THEREFORE, FOLLOWING THE PRINCIPLE OF CONSISTENCY; THIS GROUND OF APPEAL IS ALSO DISMISSED WITH SIMILAR OBSERVATION. CONSIDERING OUR DECISION IN ITA NO. 4533/MUM/2016 THESE GROUNDS OF APPEAL ARE ALSO DISM ISSED WITH SIMILAR FINDINGS. 12. GROUND NO. 4 & 5 RELATES TO DELETING THE DISALLOWAN CE OF RECEIPT TO KPMGI CO-OPERATIVE, SWITZERLAND. WE HAVE SEEN THAT THESE GROUNDS OF APPEAL ARE IDENTICAL TO THE GROUND NO.4 OF REVENUE S APPEAL IN ITA NO. 4533/MUM/2016, WHICH WE HAVE ALREADY DISMISSED, THE REFORE, FOLLOWING THE PRINCIPLE OF CONSISTENCY; THIS GROUND OF APPEAL IS ALSO DISMISSED WITH SIMILAR OBSERVATION. ITA NO. 4533 TO 4536 MUM 2016-BSR & COMPANY LLP. 10 13. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ITA NO. 4535/MUM/2016 14. GROUND NO.1 TO 3 RELATES TO DELETING THE DISALLOWAN CE OF PROFESSIONAL FEE PAID TO VARIOUS PROFESSIONAL ENTITIES. WE HAVE NOTE D THAT THESE GROUNDS OF APPEAL ARE IDENTICAL TO THE GROUNDS OF APPEAL RAISE D BY THE REVENUE IN ASSESSEES GROUP CASE IN ITA NO. 4533/MUM/2016, WHI CH WE HAVE ALREADY DISMISSED. CONSIDERING OUR DECISION IN ITA NO. 4533/MUM/2016 THESE GROUNDS OF APPEAL ARE ALSO DISMISSED WITH SIM ILAR FINDINGS. 15. GROUND NO. 4 & 5 RELATES TO DELETING THE DISALLOWAN CE OF RECEIPT TO KPMGI CO-OPERATIVE, SWITZERLAND. THIS GROUND OF APP EAL IS IDENTICAL TO THE GROUND NO.4 OF REVENUES APPEAL IN ASSESSEES G ROUP CASE IN ITA NO. 4533/MUM/2016, WHICH WE HAVE ALREADY DISMISSED, THE REFORE, FOLLOWING THE PRINCIPLE OF CONSISTENCY; THIS GROUND OF APPEAL IS ALSO DISMISSED WITH SIMILAR OBSERVATION. 16. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ITA NO. 4536/MUM/2016 17. GROUND NO.1 TO 3 RELATES TO DELETING THE DISALLOWAN CE OF PROFESSIONAL FEE PAID TO VARIOUS PROFESSIONAL ENTITIES. WE HAVE NOTE D THAT THESE GROUNDS OF APPEAL ARE IDENTICAL TO THE GROUNDS OF APPEAL RAISE D BY THE REVENUE IN ITA NO. 4533/MUM/2016., WHICH WE HAVE ALREADY DISMISSED BY DETAIL ORDER. CONSIDERING OUR DECISION IN ITA NO. 4533/MUM/2016 T HESE GROUNDS OF APPEAL ARE ALSO DISMISSED WITH SIMILAR FINDINGS. ITA NO. 4533 TO 4536 MUM 2016-BSR & COMPANY LLP. 11 18. IN THE RESULT, APPEAL THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 0 5/12/2018. SD/- S D/- G.S. PANNU PAWAN SINGH VICE-PRESIDENT J UDICIAL MEMBER MUMBAI, DATE: 05.12.2018 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR I BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI
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