DCIT, CIRCLE- 1(2)(1), INTERNATIONAL TAXATION, NEW DELHI V. CONVERGYS CUSTOMER MANAGEMENT GROUP INC., NEW DELHI

ITA 5641/DEL/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 6971 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2019
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 04-09-2017
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI FRIDAY FRIDAY FRIDAY FRIDAY BENCH BENCH BENCH BENCH B BB B : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI PRAMOD KUMAR BEFORE SHRI PRAMOD KUMAR BEFORE SHRI PRAMOD KUMAR BEFORE SHRI PRAMOD KUMAR, ,, , VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND SHRI K. NARASIMHA CHARY SHRI K. NARASIMHA CHARY SHRI K. NARASIMHA CHARY SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER ITA NO. ITA NO. ITA NO. ITA NO. 5641/DEL/2017 5641/DEL/2017 5641/DEL/2017 5641/DEL/2017 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 2012 2012 2012 2012 - -- - 13 1313 13 DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -1 11 1(1)(1), (1)(1), (1)(1), (1)(1), INTERNATIONAL TAXATION, INTERNATIONAL TAXATION, INTERNATIONAL TAXATION, INTERNATIONAL TAXATION, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. VS. VS. VS. VS. M/S CONVERGYS CUSTOMER M/S CONVERGYS CUSTOMER M/S CONVERGYS CUSTOMER M/S CONVERGYS CUSTOMER MANAGEMENT GROUP INC., MANAGEMENT GROUP INC., MANAGEMENT GROUP INC., MANAGEMENT GROUP INC., C/O PRICEWATERHOUSECOOPERS C/O PRICEWATERHOUSECOOPERS C/O PRICEWATERHOUSECOOPERS C/O PRICEWATERHOUSECOOPERS PVT.LTD., PVT.LTD., PVT.LTD., PVT.LTD., 11A, VISHNU DIGAMER MARG, 11A, VISHNU DIGAMER MARG, 11A, VISHNU DIGAMER MARG, 11A, VISHNU DIGAMER MARG, SUCHETA BHAWAN, SUCHETA BHAWAN, SUCHETA BHAWAN, SUCHETA BHAWAN, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 002. 110 002. 110 002. 110 002. PAN : AACCC8989M. PAN : AACCC8989M. PAN : AACCC8989M. PAN : AACCC8989M. (APPELLANT) (RESPONDENT) AP PELLANT BY : SHRI PIYUSH CHAWLA, AR. RESPONDENT BY : MS. NIDHI SHARMA, SENIOR DR. DATE OF HEARING : 26.07.2019 26.07.2019 26.07.2019 26.07.2019 DATE OF PRONOUNCEMENT : 31.07.2019 31.07.2019 31.07.2019 31.07.2019 ORDER ORDER ORDER ORDER PER PRAMOD KUMAR PER PRAMOD KUMAR PER PRAMOD KUMAR PER PRAMOD KUMAR, , , , VP VPVP VP : :: : THE PETITION SEEKING EARLY HEARING OF THIS APPEAL, O N THE GROUND THAT THE ISSUE IN APPEAL HAS ALREADY BEEN RESOLVED UNDE R MAP PROCEEDINGS UNDER SECTION 90 OF THE INCOME-TAX ACT, 1961 READ WITH ARTICLE 27 OF THE INDO US DOUBLE TAXATION AVOIDANCE CONVENTION, CAME UP FOR CONSIDERATION BEFORE US TODAY. ON A PERUSAL OF RECORDS, AND WITH THE CONSENT OF THE PARTIES, WE CONSIDER IT APPROPRIATE TO TAKE UP THE APPEAL, FOR ADJUDICATION, AT THIS STAGE ITSELF. 2. THE APPEAL IS FILED BY THE ASSESSING OFFICER AND IT C ALLS INTO QUESTION CORRECTNESS OF THE ORDER DATED 28 TH JUNE, 2017 PASSED BY THE ITA-5641/DEL/2017 2 CIT(A), IN THE MATTER OF ASSESSMENT UNDER SECTION 14393 ) OF THE INCOME-TAX ACT, 1961, FOR THE ASSESSMENT YEAR 2012-13. 3. GRIEVANCES RAISED IN THE APPEAL ARE AS FOLLOWS :- 1. THAT IN FACTS AND CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LD.CIT(A) ERRED IN HOLDING THAT THE ASSESSEE D OES NOT HAVE A DEPENDENT AGENT PE (PERMANENT ESTABLISHMENT) IN INDIA. 2. THAT IN FACTS AND CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LD.CIT(A) ERRED IN HOLDING THAT THE ASSESSEE D OES NOT HAVE A SERVICE PE IN INDIA. 3. THAT IN FACTS AND CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LD.CIT(A) ERRED IN NOT ACCEPTING, AND IN R EDUCING, THE PROFIT ATTRIBUTION DONE BY THE AO. 4. THAT IN FACTS AND CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LD.CIT(A) ERRED IN HOLDING THAT RECEIPTS TO WARDS IPLC/LINK CHARGES ARE NOT TAXABLE AS ROYALTY IN INDIA . THE LD.CIT(A) FURTHER ERRED IN NOT CONSIDERING AO'S FINDI NG THAT RECEIPTS TOWARDS IPLC/LINK CHARGES ARE TAXABLE AS EQUIPMENT ROYALTY, AND ALTERNATIVELY TAXABLE AS PROC ESS ROYALTY IN INDIA. 5. THE APPELLANT CRAVES TO ADD, AMEND, MODIFY, OR AL TER ANY GROUNDS OF APPEAL AT THE TIME OR BEFORE THE HEAR ING OF THE APPEAL. 4. VIDE ORDER DATED 11 TH DECEMBER, 2017, PASSED BY THE INDIAN COMPETENT AUTHORITY, THE RESOLUTION ARRIVED AT BETWE EN INDIAN AND US COMPETENT AUTHORITIES, IN RESPECT OF THIS ASSESSEE AND FOR THE ASSESSMENT YEARS 2002-03 TO 2012-13, HAS BEEN TAKEN ON RE CORD. THIS DOCUMENT RECORDS THE FACT THAT WITHOUT ENTERING INTO DETERMINATION OF WHETHER THE ASSESSEE COMPANY HAS ESTABLISHED AN INDIAN PER MANENT ESTABLISHMENT (PE), SOLELY FOR THE PURPOSE OF SETTLING MULTIPLE YEARS OF DISPUTE, THE COMPETENT AUTHORITIES OF BOTH THE COUNTR IES AGREE WITH THE ITA-5641/DEL/2017 3 FOLLOWING ATTRIBUTION OF PROFITS AS SHOWN IN THE TABL E BELOW. THE TABLE THEN SET OUT, INTER ALIA , INDICATES AS FOLLOWS :- PROFIT ATTRIBUTION ASSESSMENT INCOME OF YEAR CONVERGYS US TAXABLE IN INDIA (AMOUNT IN `) .. .. .. .. 2012-13 (`14,05,56,407) 5. THE STAND OF THE ASSESSEE IS THAT GIVEN THAT COMPETE NT AUTHORITY ASSISTANCE WAS SOUGHT ON ALL THE ADDITIONS MAD E (BY THE ASSESSING OFFICER) .. THIS RESOLUTION BETWEEN THE C OMPETENT AUTHORITIES DETERMINING THE INCOME/LOSS WOULD SUBSUME TH E INCOME DETERMINED IN THE ASSESSMENT ORDER .. THE CROSS APP EAL FILED BY THE ASSESSEE HAS ALREADY BEEN WITHDRAWN BY THE ASSESSEE UNDER RULE 44H. WE ARE THUS URGED TO DISMISS THIS APPEAL A S NOT MAINTAINABLE. IT IS SUBMITTED THAT THE PRESENT APPEA L IS LIABLE TO BE DISMISSED. 6. LEARNED DEPARTMENTAL REPRESENTATIVE LEAVES IT FOR US TO TAKE THE APPROPRIATE CALL ON THE BASIS OF MATERIAL ON RECORD. 7. WE FIND THAT THE RESOLUTION ARRIVED AT UNDER THE MAP PROCEEDINGS PERTAINS TO THE PERMANENT ESTABLISHMENT RELATED ISSUES, A ND THE GROUNDS OF APPEAL BEFORE US DEAL WITH THE ISSUE OF ROYA LTY AS WELL. THE STAND OF THE ASSESSEE TO THE EFFECT THAT THE MAP RESOLUTI ON WOULD SUBSUME THE INCOME DETERMINED IN THE ASSESSMENT ORDER A S ITA-5641/DEL/2017 4 COMPETENT AUTHORITY ASSISTANCE WAS SOUGHT ON ALL THE AD DITIONS IS NOT VERIFIABLE FROM THE MATERIAL ON RECORD BEFORE U S. IN THESE CIRCUMSTANCES, IN OUR HUMBLE UNDERSTANDING, THE RIGHT COURSE OF ACTION FOR US WILL BE TO REMIT THE MATTER TO THE FILE OF TH E ASSESSING OFFICER FOR GIVING EFFECT TO THE MAP RESOLUTION IN ACCORDANCE WI TH THE LAW. WHETHER ADDITION IN RESPECT OF ROYALTY IS COVERED BY THE MAP RESOLUTION OR NOT IS A CALL TO BE TAKEN BY THE ASSESSING OFFICER. AS REGARDS THE WITHDRAWAL OF CROSS APPEAL BY THE ASSESSEE, THAT IS A P RECONDITION FOR GIVING EFFECT TO MAP RESOLUTION, UNDER RULE 44H(4)(I I), AND THAT PERTAINS TO THE ISSUE IN THE MAP PROCEEDINGS. AS THE ASSESSEE HAD A LREADY BEEN SUCCESSFUL IN APPEAL ON THE ISSUE OF ROYALTY, THERE COULD NOT HAVE BEEN ORDINARILY ANY OCCASION FOR THE ASSESSEE TO FILE AP PEAL ON THE ROYALTY ISSUE. THE CROSS APPEAL, THEREFORE, DOES NOT NE CESSARILY IMPLY THAT THIS APPEAL MUST BE TREATED AS WITHDRAWN AS WELL. 8. IN THE LIGHT OF THESE DISCUSSIONS, AND BEARING IN MIN D ENTIRETY OF THE CASE, WE DEEM IT FIT AND PROPER TO REMIT THE MAT TER TO THE FILE OF THE ASSESSING OFFICER FOR GIVING EFFECT TO THE RESOLUTION AR RIVED AT UNDER THE MAP PROCEEDINGS. ORDERED ACCORDINGLY. 9. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATISTICA L PURPOSES IN THE TERMS INDICATED ABOVE. DECISION PRONOUNCED IN THE OPEN COURT ON 31 ST JULY, 2019. SD/- SD/- ( (( ( K. NARASIMHA CHARY K. NARASIMHA CHARY K. NARASIMHA CHARY K. NARASIMHA CHARY ) )) ) (PRAMOD KUMAR (PRAMOD KUMAR (PRAMOD KUMAR (PRAMOD KUMAR ) )) ) JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VK. ITA-5641/DEL/2017 5 COPY FORWARDED TO: - 1. APPELLANT : DEPUTY COMMISSIONER OF INCOME TAX, DEPUTY COMMISSIONER OF INCOME TAX, DEPUTY COMMISSIONER OF INCOME TAX, DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -1(1)(1), INTERNATIONAL TAXATION, 1(1)(1), INTERNATIONAL TAXATION, 1(1)(1), INTERNATIONAL TAXATION, 1(1)(1), INTERNATIONAL TAXATION, NEW DELH NEW DELH NEW DELH NEW DELHI. I.I. I. 2. RESPONDENT : M/S CONVERGYS CUSTOMER MANAGEMENT GROU P INC., M/S CONVERGYS CUSTOMER MANAGEMENT GROUP INC., M/S CONVERGYS CUSTOMER MANAGEMENT GROUP INC., M/S CONVERGYS CUSTOMER MANAGEMENT GROUP INC., C/O PRICEWATERHOUSECOOPERS PVT.LTD., C/O PRICEWATERHOUSECOOPERS PVT.LTD., C/O PRICEWATERHOUSECOOPERS PVT.LTD., C/O PRICEWATERHOUSECOOPERS PVT.LTD., 11A, VISHNU DIGAMER MARG, SUCHETA BHAWAN, 11A, VISHNU DIGAMER MARG, SUCHETA BHAWAN, 11A, VISHNU DIGAMER MARG, SUCHETA BHAWAN, 11A, VISHNU DIGAMER MARG, SUCHETA BHAWAN, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 002. 110 002. 110 002. 110 002. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR