ASST CIT 16(2), MUMBAI V. BSR AND COMAPANY, MUMBAI

ITA 5023/MUM/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5492 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 24-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHISHEK TILAK LD
• Assessee Lawyers: MANOJ KUMAR LD
• Keywords: Double taxation relief; Permanent establishment
• Section: 143(3); 2

Judgement Text

1 ITA 5023/MUM/2017 BSR & COMPANY ASSESSMENT YEAR-2013-14 IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI , $ , & BEFORE HONBLE SHRI SAKTIJIT DEY, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.5023/MUM/2017 ( / ASSESSMENT YEAR: 2013-14) ASSISTANT COMMISSIONER OF INCOME TAX - 16(2) R.NO.479, 4 TH FLOOR AAYKAR BHAWAN, M.K.ROAD MUMBAI- 400 020 / VS. BSR & COMPANY LODHA EXCELUS, 1 ST FLOOR APPOLLO MILLS COMPOUND N.M.JOSHI MARG, MAHALAKSHMI MUMBAI 400 011 ./ ./PAN/GIR NO. AAIFB-0630-K ( '( /APPELLANT ) : ( )*'( / RESPONDENT ) '(+, / APPELLANT BY : ABHISHEK TILAK, LD. AR )*'(+, / RESPONDENT BY : MANOJ KUMAR, LD. DR + -% / DATE OF HEARING : 16/01/2019 + -% / DATE OF PRONOUNCEMENT : 05/02/2019 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER):- 1. AFORESAID APPEAL BY REVENUE FOR ASSESSMENT YEAR [AY] 2013-14 CONTEST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-5, MUMBAI [CIT(A)], APPEAL NO. IT-54/16-17/23/17-18 DATED 06/04/2017 QU A CERTAIN RELIEF PROVIDED TO THE ASSESSEE. THE ASSESSEE BEING RESIDENT CHARTERED ACCOUNTANT FIRM WAS ASSESSED IN SCRUTINY ASSESSMENT U/S 143(3) ON 2 ITA 5023/MUM/2017 BSR & COMPANY ASSESSMENT YEAR-2013-14 08/03/2016 BY LD. ASSISTANT COMMISSIONER OF INCOME TAX-16(2), MUMBAI [AO] WHEREIN THE INCOME OF THE ASSESSEE WAS DETERMI NED AT RS.774.23 LACS AFTER CERTAIN DISALLOWANCES AS AGAINST RETURNE D INCOME OF RS.692.94 LACS E-FILED BY THE ASSESSEE ON 28/09/2013. 2.1 THE FIRST ADDITION OF RS.6.71 LACS U/S 40(A)(I) STEM FROM THE FACT THAT THE ASSESSEE PAID CERTAIN PROFESSIONAL FEES TO KPMG, LLP, USA, A NON- RESIDENT WITHOUT DEDUCTION OF TAX AT SOURCE. THE ASSESSEE SU BMITTED THAT THE FEES DID NOT FALL WITHIN THE AMBIT OF FEES FOR INCLUDED SERVICES UNDER ARTICLE-12 OF DTAA OF INDIA WITH USA RATHER THE SAME BEING INDEPENDENT PERSONAL SERVICES FALL WITHIN ARTICLE-15 AND SINCE PAYEE DID NOT HAVE FIXED BASE IN INDIA, THE INCOME WAS NOT CHARGEABLE TO TAX IN INDIA. HOWEVER, LD. AO TREATING THE SAME TO BE OF NATURE COVERED BY ARTICLE-12, DISALLOWED THE SAME U/S 40(A)(I). 2.2 THE ROOT OF SECOND ADDITION OF RS.74.57 LACS LI ES IN THE FACT THAT THE ASSESSEE PAID THAT AMOUNT TO KPMG INTERNATIONAL CO-OPERATIVE, SWITZERLAND WITHOUT DEDUCTION OF TAX AT SOURCE. THE ASSESSEE SU BMITTED THAT THE PAYEE WAS A MUTUAL ASSOCIATION OF WHICH KPMG, A PARTNERSHIP FIRM REGISTERED IN INDIA, WAS A MEMBER AND ASSESSEE WAS A SUB-LICENSEE. THE RIGHTS & OBLIGATIONS OF KPMG AS WELL AS SUB-LICENSEE WERE STATED TO BE THE SAME. THEREFORE, THE PAYEE BEING A MUTUAL ASSOCIATI ON, THE CONTRIBUTIONS RECEIVED BY IT WERE NOT SUBJECTED TO TAX AND HENCE, NO TDS WAS REQUIRED AGAINST THE PAYMENT. ALTERNATIVELY, IT WAS ALSO PLE ADED THAT REMITTANCE WERE IN THE NATURE OF REIMBURSEMENT OF COSTS AND FURTHER , THE PAYMENT WAS IN THE NATURE OF MEMBERSHIP CONTRIBUTIONS AND HENCE, NOT T AXABLE UNDER ARTICLE-7 3 ITA 5023/MUM/2017 BSR & COMPANY ASSESSMENT YEAR-2013-14 IN THE ABSENCE OF ANY PERMANENT ESTABLISHMENT OF PA YEE IN INDIA. HOWEVER, LD. AO, TREATING THE SAME AS ROYALTIES DISALLOWED THE SAME U/S 40(A)(I). 3. AGGRIEVED, THE ASSESSEE AGITATED BOTH THE ADDITI ONS BEFORE FIRST APPELLATE AUTHORITY VIDE IMPUGNED ORDER DATED 06/04 /2017 WHEREIN BOTH THE DISALLOWANCES WERE DELETED BY PLACING RELIANCE ON T HE DECISION OF FIRST APPELLATE AUTHORITY IN ASSESSEES OWN CASE FOR AY 2 012-13. AGGRIEVED, THE REVENUE IS IN FURTHER APPEAL BEFORE US. 4. THE LD. AR, DREW OUR ATTENTION TO THE FACT THAT THE REVENUES APPEAL FOR AY 2012-13 HAS BEEN DISMISSED BY THE TRIBUNAL V IDE ITA NO. 4842-44, 4556/MUM/2016 DATED 04/01/2018 . SIMILAR VIEW HAS BEEN TAKEN IN ASSESSEES GROUP CONCERNS NAMELY BSR & COMPANY LLP ITA NOS.4533- 36/MUM/2016 DATED 05/12/2018 FOR AY 2009-10 TO 2011 -12 & ALSO IN ACIT VS. KPMG ITA NOS. 2843-45, 5178/MUM/2017 DATED 28/1 1/2018 FOR AY 2009-10 TO 2011-12. 5. THOUGH LD. DR SUPPORTED THE STAND OF LD. AO, YET NOTHING CONTRARY COULD BE BROUGHT ON RECORD TO SUBMIT THAT THE AFORE SAID RULINGS WERE NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE, IN ANY MANNER. THIS BEING THE CASE, RESPECTFULLY FOLLOWING THE DECISIONS OF THE C O-ORDINATE BENCH OF THE TRIBUNAL, WE DISMISS ALL THE GROUNDS RAISED UNDER T HE APPEAL. 6. RESULTANTLY, THE APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 05 TH FEBRUARY, 2019. 4 ITA 5023/MUM/2017 BSR & COMPANY ASSESSMENT YEAR-2013-14 SD/- SD/- (SAKTIJIT DEY) (MANOJ KUMAR AGGARWAL) 0 00 0 / JUDICIAL MEMBER 0 00 0 / ACCOUNTANT MEMBER 0 MUMBAI; DATED : 05.02.2019 SR.PS:-JAISY VARGHESE / 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