JC Bamford Excavators Ltd., England V. ACIT, Circle- 2(1)(2), Intl. Taxation, New Delhi

ITA 6787/DEL/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0892 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 10-11-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G K DHALL
• Keywords: Transfer pricing; Rectification of order; Double taxation relief; Opportunity of being heard; Principle of natural justice; International transaction; Permanent establishment
• Section: 143(3); 244A; 142(1); 5(2); 234B; 154

Judgement Text

1 ITA NO. 6787/DEL/2017 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: B NEW DELHI BEFORE SHRI N. K. SAINI, ACCOUNTANT MEMBER AND MS SUCHITRA KAMBLE, JUDI CIAL MEMBER ITA NO. 6787/DEL/201 7 ( A.Y 2013-14) J C BAMFORD EXCAVATORS LTD. ROCESTER, UTTOXETER, ST 14 5JP, STAFFORDSHIRE, ENGLAND UNITED KINGDOM ENGLAND (APPELLANT) VS ACIT CIRCLE-2(1) (2), NEW DELHI (RESPONDENT) APPELLANT BY SH. KANCHAN KAUSHAL, ADV RESPONDENT BY SH. G. K. DHALL, CIT DR ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER DATED 26/09/2017 PASSED BY ACIT, CIRCLE-2 (1)(2), INTERNATIONAL TAXA TION U/S 144C (13) READ WITH SECTION 143(3) OF THE INCOME TAX ACT, 1961. 2. THE GROUNDS FOR APPEAL ARE AS UNDER:- 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LEARNED DISPUTE RESOLUTION PANEL (LD. DRP) AND LEARNED AS SESSING OFFICER (LD. AO) HAS ERRED IN PASSING THE ASSESSMENT ORDER WITHOUT G IVING DUE CONSIDERATION TO THE SUBMISSIONS OF THE APPELLANT. 2. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LD. DRP AND LD. AO HAS ERRED IN HOLDING THAT APPELLANT HAS A SERVICE PERMANENT ESTABLISHMENT (PE) IN INDIA WITHIN THE MEANING OF ARTICLE 5 OF INDIA UK DATE OF HEARING 23.08.2018 DATE OF PRONOUNCEMENT 11.09.2018 2 ITA NO. 6787/DEL/2017 DOUBLE TAXATION AVOIDANCE AGREEMENT (DTAA). 3. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LD. AO ERRED IN PROPOSING THAT THE APPELLANT HAS A SERVICE PE IN INDIA UNDER ARTICLE 5(2) (K) OF THE DTAA WITHOUT APPRECIATING THAT: 3.1. TECHNOLOGY TRANSFER AGREEMENT (TTA) DATED MA RCH 5, 2004 AND INTERNATIONAL PERSONNEL ASSIGNMENT AGREEMENT (IPAA ) DATED DECEMBER 5, 2005 ARE INDEPENDENT CONTRACTS FOR MATERIALLY DIFFE RENT PURPOSES. 3.2. IPAA BETWEEN JCB EXCAVATORS (JCBE) AND JCB I NDIA LIMITED (JCB INDIA) PROVIDES FOR EMPLOYEES SENT BY JCBE TO JCB INDIA ON DEPUTATION (SECONDMENT) WHICH IS ADMITTEDLY AS PER SPECIFIC RE QUIREMENTS OF JCB INDIA AND NOT FOR SERVICES IN RELATION TO TTA. 3.3. SECONDED EMPLOYEES SENT AS PER ARRANGEMENT UND ER IPAA ARE EMPLOYEES OF JCB INDIA. 4. WITHOUT PREJUDICE TO GROUND NO. 3, UNDER THE FAC TS AND CIRCUMSTANCES OF THE CASE AND UNDER LAW, THE LD. DRP AND LD. AO HAS GROSSLY ERRED IN HOLDING THAT ROYALTY EARNED BY THE APPELLANT IS EFFECTIVELY CONNECTED TO ALLEGED SERVICE PE OF THE APPELLANT IN INDIA AND HAS FAILED TO APPR ECIATE THAT: 4.1. INTANGIBLE PROPERTY IN RESPECT OF WHICH ROYALT Y HAS BEEN PAID WAS WHOLLY DEVELOPED OUTSIDE INDIA: 4.2. NO FUNCTIONS, ASSETS, OR RISK ASSOCIATED WITH SUCH INTANGIBLE PROPERTY IS UNDERTAKEN OR PRESENT IN INDIA. 4.3. THE LD. AO ERRED IN INADVERTENTLY INCLUDING TH E ROYALTY RECEIVED BY THE APPELLANT TOWARDS BACKHOE-LOADER P-106 UNDER A DIFF ERENT TTA DATED OCTOBER 21, 2010 AMOUNTING TO RS. 2,55,62,494/- AS ALSO EFF ECTIVELY CONNECTED WITH THE ALLEGED SERVICE PE WITHOUT ASSIGNING ANY REASON FOR THE SAME. 5. WITHOUT PREJUDICE TO ABOVE GROUNDS, UNDER THE F ACTS AND CIRCUMSTANCES OF THE CASE, THE LD. DRP AND LD. AO HAS ERRED IN NOT A PPLYING THE DESIRED COMPUTATION MECHANISM FOR CHARGEABILITY OF ROYALTY INCOME ALLEGED TO BE COVERED UNDER PROVISIONS OF ARTICLE 7 OF THE DTAA B ETWEEN INDIA AND UK. THE LD. DRP AND LD. AO FAILED TO APPRECIATE THAT: 5.1 UNDER ARTICLE 7(1) READ WITH ARTICLE 7(2) AND 7 (3) OF THE DTAA BETWEEN INDIA AND UK, THE ENTIRE ROYALTY RECEIVED FROM INDI A CANNOT BE SUBJECTED TO TAX IN INDIA SINCE NO FUNCTIONS, ASSETS AND RISKS A RE ASSOCIATED WITH THE ALLEGED PE IN INDIA; 3 ITA NO. 6787/DEL/2017 5.2.ROYALTY INCOME ALLEGED TO BE CONSIDERED AS BUSI NESS INCOME UNDER ARTICLE 7 OF THE DTAA BETWEEN INDIA AND UK CAN BE TAXED ONL Y TO THE EXTENT OF PROFITS ATTRIBUTABLE TO INDIAN OPERATIONS. THE LD. DRP AND LD. AO THUS GROSSLY ERRED IN DETERMINING THE TAXABILITY APPLYING ARBITRARY ME CHANISM UNDER RULE IO(III) OF THE INCOME TAX RULES, 1962 AND IGNORING THE PRIN CIPLE OF APPORTIONMENT AS LAID DOWN UNDER RULE IO(II) OF THE INCOME TAX RULES , 1962 WHICH IS CONSISTENT WITH THE PROVISIONS OF ARTICLE 7(3) OF THE DTAA BET WEEN INDIA AND UK. 6. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, WITHOUT PREJUDICE TO THE ABOVE GROUNDS, THE LD. DRP AND LD. AO HAS FAILED TO APPRECIATE THAT THE INDIAN COMPANY I.E. JCB INDIA I S A PROFITABLE COMPANY AND AS LONG AS THE SAME IS EARNING PROFIT AT ARMS LENGTH, NO FURTHER ATTRIBUTION IS POSSIBLE EVEN IN CASE OF AN ALLEGED PE. 7. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LD. DRP AND LD. AO HAS ERRED IN NOT FOLLOWING THE HONBLE I NCOME TAX APPELLATE TRIBUNAL ORDER IN APPELLANTS CASE FOR AY 2006-07 W HERE IT HAS BEEN HELD THAT ROYALTY EARNED BY THE APPELLANT IS NOT EFFECTIVELY CONNECTED TO ALLEGED SERVICE PE OF THE APPELLANT IN INDIA. 8. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW: 8.1 THE LD. A.O HAS ERRED IN LEVYING INTEREST U/S 2 34B OF THE ACT. 8.2. THE LD. A.O ERRED IN GRANTING LOWER CREDIT OF TAX DEDUCTED AT SOURCE AMOUNTING TO RS.18,65,04,610/- INSTEAD OF RS.26,71, 90,946/-, THEREBY LEVYING INTEREST U/S 234B OF THE ACT ON A HIGHER AM OUNT. 9. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LD. A.O ERRED IN LAW: 9.1. IN CHARGING THE INTEREST AMOUNTING TO RS. 18,6 3,010/- UNDER SECTION 234C OF THE ACT. 9.2. IN LEVYING THE INTEREST UNDER SECTION 234A AND 234D OF THE ACT. 9.3. IN WITHDRAWING THE INTEREST UNDER SECTION 244A OF THE ACT. 10. THE LD. AO ERRED IN INITIATING PENALTY PROCEE DINGS UNDER SECTION 271(I)(C) OF THE ACT FOR FURNISHING INACCURATE PART ICULARS OF INCOME. THAT THE ABOVE GROUNDS OF APPEAL ARE WITHOUT PREJUD ICE TO EACH OTHER THAT THE APPELLANT RESERVES ITS RIGHT TO ADD, ALTER , AMEND OR WITHDRAW ANY GROUND OF APPEAL EITHER BEFORE OR AT THE TIME OF HE ARING OF THIS APPEAL. 4 ITA NO. 6787/DEL/2017 3. JC BAMFORD EXCAVATORS LTD., U.K. (JCBE HEREAFT ER), IS A COMPANY INCORPORATED UNDER THE LAWS OF THE UNITED KINGDOM A ND HAS ITS PRINCIPAL OFFICE AT ROCESTER STAFFORDSHIRE ENGLAND ST 14 5JP. IT IS A NON-RESIDENT COMPANY FOR THE PURPOSES OF THE INDIAN TAX LAWS AND IS A TAX RESIDENT OF U.K. UNDER ARTICLE 4 OF THE TAX TREATY ENTERED INTO BETWEEN INDIA AND U.K. IT IS THE FLAGSHIP COMPANY OF JCB IN U.K. WHICH DEV ELOPS AND MANUFACTURES EXCAVATORS. THE RETURN OF INCOME WAS F ILED BY THE ASSESSEE ON 29.11.2013 DECLARING TOTAL INCOME OF RS. 1,81,07 ,24,365/-. THE CASE WAS SELECTED FOR SCRUTINY AND INITIAL NOTICE U/S 14 3(2) OF THE INCOME TAX ACT, 1961 WAS ISSUED TO THE ASSESSEE ON 16.09.2014 BY DDIT(I.T.), CIRCLE 3(1), NEW DELHI. AFTER INTERNAL RESTRUCTURING OF TH E INCOME-TAX DEPARTMENT, THE JURISDICTION OF THE CASE WAS TRANSF ERRED TO CIRCLE 2(1)(2), NEW DELHI. ACCORDINGLY, NOTICE U/S 142(1) AND 143(2 ) OF THE ACT ALONGWITH A DETAILED QUESTIONNAIRE DATED 26.08.2016 WAS ISSUED TO THE ASSESSEE. THE CASE WAS REFERRED TO TPO FOR COMPUTAT ION OF ARM'S LENGTH PRICE U/S 92CA OF THE ACT. AS PER TPO ORDER DATED 3 1.08.2016, NO ADVERSE INTERFERENCE HAS BEEN DRAWN BY THE TPO OFFI CER IN RESPECT OF ARM'S LENGTH PRICE OF THE INTERNATIONAL TRANSACTION FOR THE YEAR UNDER CONSIDERATION. ON MARCH 5, 2004 JCBE ENTERED INTO T ECHNOLOGY TRANSFER AGREEMENT ('TTA') WITH JCB INDIA LTD. (HEREAFTER JC B INDIA) TO LICENCE THE KNOW-HOW AND RELATED TECHNICAL DOCUMENTS CONSISTING OF ALL DRAWINGS AND DESIGNS WITH AN EXCLUSIVE RIGHT TO MANUFACTURE AND MARKET THE 'EXCAVATOR LOADER (P-92 VERSION) IN THE TERRITORY OF INDIA UNDER THE BRAND NAME 3DX. ON OCTOBER 21, 2010, JCBE AND JCB INDIA ENTERED INT O ANOTHER TECHNOLOGY TRANSFER AGREEMENT PURSUANT TO L ICENCE THE KNOW- HOW AND RELATED TECHNICAL DOCUMENTS CONSISTING OF A LL DRAWINGS AND DESIGNS WITH AN EXCLUSIVE RIGHT TO MANUFACTURE THE 'BACKHOE LOADER (P106) IN THE TERRITORY OF INDIA. JCBE AND JCB IND IA HAD ALSO ENTERED INTO AN IPAA DATED DECEMBER 5, 2005 PURSUANT TO WHI CH JCBE SENT SOME 5 ITA NO. 6787/DEL/2017 OF ITS EMPLOYEES ON DEPUTATION TO JCB INDIA TO MANA GE THE OVERALL OPERATIONS OF JCB LNDIA. ON DECEMBER 17, 2007, JCB E, JCB INDIA AND JC BAMFORD INVESTMENTS LIMITED (HEREAFTER JCB) ENTE RED INTO AN INTELLECTUAL PROPERTY AGREEMENT ('IPA') PURSUANT TO WHICH THE HEAD LICENCE (PERTAINING TO TTA) UNDER ITS INTELLECTUAL PROPERTY TO MANUFACTURE AND MARKET 3DX WAS TRANSFERRED BY JCBE TO JCBI IN C ONSIDERATION OF THE PAYMENT OF ROYALTY BY JCBI TO JCBE. IN OTHER WORDS, JCBE LICENSED ITS TECHNOLOGY TO JCBI WHICH IN TURN SUB-LICENSED IT TO JCB INDIA. THIS SUB- LICENSING WAS DULY AUTHORISED BY CLAUSE 2.2 OF THE 1PA. FURTHER, WITH EFFECT FROM JULY 1, 2011, JCBI HAD AGREED TO BE REL EASED AND DISCHARGED FROM ITS OBLIGATIONS UNDER THE IPA AND ROYALTY ACCR UED TO THE JCBE. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE H AS EARNED ROYALTY INCOME AND 'FEE FOR TECHNICAL SERVICES' FROM JCB I NDIA AMOUNTING TO RS. 1,73,77,77,504/- AND RS.7,29,46,861/-RESPECTIVELY. THE SAID RECEIPTS ARE SUBJECT TO TAX @ 15%/10.506% OF THE GROSS AMOUNT AS 'ROYALTY & FEE FOR TECHNICAL SERVICES', BEING THE TAX RATE PROVIDED UN DER ARTICLE 13(2) OF DOUBLE TAXATION AVOIDANCE AGREEMENT ENTERED BETWEEN INDIA AND UK ('DTAA') AND SECTION 115A OF THE ACT, AS THE CASE M AY BE. THE DETAILS OF THE ROYALTY INCOME EARNED FORM JCB INDIA ARE AS UND ER:- S. NO. PARTICULARS AMOUNT IN INR 1 ROYALTY RECEIVED FROM MODEL 3DX 1,71,22,15,010/ - 2 ROYALTY RECEIVED OTHER THAN MODEL 3DX 2,55,62,494/ - TOTAL 1,73,77,77,504/ - IT IS NOTEWORTHY THAT JCBE USED TO RECEIVE ROYALTY IN THE EARLIER YEARS, I.E. A.Y. 2006-07 & A.Y. 2007-08, IT WAS HELD BY THE ASSESSIN G OFFICER IN THE CASE OF JCBE THAT THE SECONDMENT OF EMPLOYEES BY JCBE TO IN DIA RESULTED IN ESTABLISHMENT OF A PERMANENT ESTABLISHMENT (PE) OR A 'SERVICE PE OF THE JCBE 6 ITA NO. 6787/DEL/2017 AS PER ARTICLE 5(2)(K)(I) OF THE DTAA BETWEEN INDIA AND UK. AND FURTHER TO IT, BASED ON THE FACTS OF THE CASE, IT WAS HELD THAT TH E PAYMENT OF ROYALTY MADE BY JCB INDIA TO THE JCBE IN RESPECT OF THE RIGHTS GRAN TED BY THE JCBE TO JCB INDIA UNDER THE TTA, IS EFFECTIVELY CONNECTED WITH THE SUCH 'SERVICE PE' OF THE ASSESSEE IN INDIA. AND ACCORDINGLY, THE TAXATION OF SUCH ROYALTIES WAS HELD TO BE GOVERNED BY ARTICLE 7 OF THE TREATY AND WAS TAXE D ACCORDINGLY. 3. THE LD. AR SUBMITTED THAT GROUND NO. 1 IS GENERA L IN NATURE. THE LD. AR FURTHER SUBMITTED THAT GROUND NOS. 2, 3, 3.1 , 3.2, 3.3 ARE DECIDED AGAINST THE ASSESSEE IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2006-07 BY THE TRIBUNAL BEING ITA NO. 540/DEL/2011 ORDER DATED 14 TH MARCH 2014 AS WELL AS FOR A.Y. 2012-13 BEING ITA NO . 1700/DEL/2017 ORDER DATED 31.07.2017. 4. THE LD. DR RELIED UPON THE ASSESSMENT ORDER. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL T HE RELEVANT MATERIAL AVAILABLE ON RECORD. GROUND NO. 1 IS GENERAL IN NAT URE HENCE DISMISSED. AS REGARDS GROUND NO. 2, 3, 3.1, 3.2, AND 3.3 IN ASSES SEES OWN CASE FOR A.Y. 2006-07 AS WELL AS 2012-13, THE TRIBUNAL DISMISSED THESE GROUNDS. THE RELEVANT EXTRACT OF THE TRIBUNALS DECISION FOR A.Y . 2012-13 ARE AS UNDER: 6. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSE E BOTH THE PARTIES AGREED BEFORE US THAT THERE IS NO CHANGE IN THE FACTS AND CIRCUMSTANCES OF THE CASE COMPARED TO THE AY 2006-07 WHEREIN, THIS ISSUE HAS BEEN DECIDED AGAINST THE ASSESSEE IN THE PRECEDING YEAR VIDE AFORESAID REFER RED TO ORDER DATED 14.03.2014 WHEREIN RELEVANT FINDINGS HAVE BEEN GIVE N IN PARA 7 WHICH READ AS UNDER: 7. IT IS THUS SEEN THAT ALL THE REQUISITE CONDITIO NS FOR ATTRACTING THE MANDATE OF ART. 5(2)(K)(I) STAND SATISFIED INASMUCH AS I, THERE IS FURNISHING OF SERVICES INCLUDING MANAGERIAL SERVICES; II. SUCH SERVICES ARE OTHER THAN 7 ITA NO. 6787/DEL/2017 THOSE TAXABLE UNDER ARTICLE 13 (ROYALTIES AND FEES FOR TECHNICAL SERVICES); III. SUCH SERVICES ARE RENDERED WITHIN INDIA; IV. S UCH SERVICES ARE RENDERED BY THE ASSESSEE THROUGH ITS EMPLOYEES; AND V. SUCH ACTIVITIES CONTINUED FOR A PERIOD OF MORE THAN NINETY DAYS WITHIN TWELVE MON THS PERIOD. EX CONSEQUENTI, WE HOLD THAT JCB INDIA CONSTITUTED A S ERVICE P.E OF THE ASSESSEE IN INDIA. THE IMPUGNED ORDER ON THIS SCORE IS SET ASIDE AND THE VIEW TAKEN BY THE AO IS RESTORED. 7. THEREFORE, RESPECTFULLY FOLLOWING THE AFORESAID ORDER IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2006-07, THE ISSUE AGI TATED VIDE GROUND NOS. 1 TO 3 IS DECIDED AGAINST THE ASSESSEE BY HOLDING THA T THE ASSESSEE HAS A SERVICE PE IN INDIA. IN THE RESULT GROUND NOS 1 TO 3 OF THE APPEAL OF THE ASSESSEE ARE DISMISSED. THUS, THE ISSUE IS SQUARELY COVERED AGAINST THE ASS ESSEE AS THE FACTS ARE IDENTICAL IN THE PRESENT ASSESSMENT YEAR. HENCE GRO UND NO. 2, 3, 3.1, 3.2, AND 3.3 ARE DISMISSED. 6. AS REGARDS GROUND NO.4, 5 & 7, THE LD. AR SUBMIT TED THAT THE SAME ARE DECIDED IN FAVOUR OF THE ASSESSEE BY THE DECISI ON OF THE TRIBUNAL FOR ASSESSMENT YEAR 2006-07 AS WELL AS FOR A.Y. 2012-13 BEING ITA NO. 1700/DEL/2017 ORDER DATED 31.07.2017. 7. THE LD. DR RELIED UPON THE ASSESSMENT ORDER. 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL T HE RELEVANT MATERIAL AVAILABLE ON RECORD. AS REGARDS GROUND NO. 4, 5 & 7 , IN ASSESSEES OWN CASE FOR A.Y. 2006-07 AS WELL AS 2012-13, THE TRIBUNAL ALLOW ED THESE GROUNDS IN FAVOUR OF THE ASSESSEE. THE RELEVANT EXTRACT OF THE TRIBUN ALS DECISION FOR A.Y. 2012-13 ARE AS UNDER: 10. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENT IONS AND ALSO PERUSED THE ARGUMENTS OF THE PARTIES THAT ISSUE IS SQUARELY COVERED BY ORDER OF THE 8 ITA NO. 6787/DEL/2017 COORDINATE BENCH AND THERE IS NO CHANGE IN THE FACT S AND CIRCUMSTANCES OF THE CASE. THE COORDINATE BENCH VIDE ORDER DATED 14.03.2 014 IN ITA NO. 540/DEL/2011 WHEREIN RELEVANT FINDINGS HAVE BEEN GI VEN IN PARA 16.5 & 18 WHICH READ AS UNDER: 16.5 IN SO FAR AS THE QUESTION OF ROYALTY REPRESEN TING CONSIDERATION FOR THE TRANSFER OF IP RIGHTS SIMPLICITOR IS CONCERNED, IT IS CLEAR THAT THE SERVICE PE REPRESENTING EIGHT DEPUTATIONISTS HAD ABSOLUTELY NO ROLE TO PLAY EITHER IN CREATING OR MAKING IT AVAILABLE TO JCB INDIA. IT IS NOT EVEN THE CASE OF THE A.O. THAT THESE EIGHT DEPUTATIONISTS HAD ANYTHING T O DO IN THE GRANT OF IP RIGHTS TO JCB INDIA. THE SERVICE PE, AS THE VERY NA ME SUGGESTS AND THE ACTUAL POSITION INDICATES, IS CONCERNED ONLY WITH T HE ACTIVITIES OF RENDERING SERVICES AFTER THE GRANT OF IP RIGHTS. THE LD. DR W AS ALSO FAIR ENOUGH TO CANDIDLY ACCEPT THIS POSITION. THUS, IT FOLLOWS THA T ALBEIT THE AMOUNT OF ROYALTY RECEIVED BY THE ASSESSEE ARISES OUT OF IP R IGHTS WHICH ARE IN THE NATURE OF RIGHT OR PROPERTY BUT THE SAME CANNOT BE CONSIDERED UNDER PARA 6 OF ARTICLE 13 BECAUSE IT IS NOT EFFECTIVELY CONNECT ED WITH THE SERVICE PE OF THE ASSESSEE IN INDIA. 18 11. THEREFORE, RESPECTFULLY FOLLOWING THE AFORESAID DECISION REGARDING WHETHER ROYALTY IS EFFECTIVELY COLLECTED TO THE PE OF THE ASSESSEE IS DECIDED IN FAVOUR OF THE ASSESSEE THUS, THE ISSUE IS SQUARELY COVERED IN FAVOUR OF TH E ASSESSEE AS THE FACTS ARE IDENTICAL IN THE PRESENT ASSESSMENT YEAR. THERE FORE, GROUND NO. 4, 5 & 7 ARE ALLOWED. 9. THE LD. AR FURTHER SUBMITTED THAT GROUND NO. 6 H AS TO BE SET ASIDE IN LIGHT OF TRIBUNALS DECISION IN THE ASSESSEES O WN CASE FOR A.Y. 2006-07 AND 2012-13 AND ALSO IN LIGHT OF APPEAL EFFECT ORDE R DATED 16 TH DECEMBER 9 ITA NO. 6787/DEL/2017 2016 FOR ASSESSMENT YEAR 2006-07. 10. THE LD. DR RELIED UPON THE ASSESSMENT ORDER. 11. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE RELEVANT MATERIAL AVAILABLE ON RECORD. GROUND NO. 6 REGARDING ATTRIBU TION OF INCOME HAS ALREADY DECIDED IN ASSESSEES OWN CASE FOR A.Y. 2006-07 AS WELL AS 2012-13, THE TRIBUNAL SET ASIDE THIS ISSUE TO THE FILE OF THE AS SESSING OFFICER. THE RELEVANT EXTRACT OF THE TRIBUNALS DECISION FOR A.Y. 2012-13 ARE AS UNDER: 10. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENT IONS AND ALSO PERUSED THE ARGUMENTS OF THE PARTIES THAT THE ISSUE IS SQUA RELY COVERED BY ORDER OF THE COORDINATE BENCH AND THERE IS NO CHANGE IN THE FACT S AND CIRCUMSTANCES OF THE CASE. THE COORDINATE BENCH VIDE ORDER DATED 14.03.2 014 IN ITA NO.540/DEL/2011 WHEREIN RELEVANT FINDINGS HAVE BEEN GIVEN IN PARA 16.5 & 18 WHICH READ AS UNDER: 16.5 18. .SINCE SEPARATE DETAILS OF SUCH RECEIPTS AND A CTUAL EXPENSES INCURRED FOR EARNING THEM ARE NOT AVAILABLE ON RECO RD, WE REMIT THIS MATTER TO THE FILE OF ASSESSING OFFICER FOR FRESH DETERMIN ATION OF THE AMOUNT OF INCOME IN TERMS OF ARTICLE 7 AS PER OUR ABOVE DISCU SSION AFTER ALLOWING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. 11. THEREFORE, RESPECTFULLY FOLLOWING THE AFORESAID DECISION REGARDING WHETHER ROYALTY IS EFFECTIVELY COLLECTED TO THE PE OF THE ASSESSEE IS DECIDED IN FAVOUR OF THE ASSESSEE. FURTHER, THE ISSUE OF DETER MINATION INCOME OF THE SERVICE OF PE OF THE ASSESSEE IS SET ASIDE TO THE F ILE OF THE LD ASSESSING OFFICER AND DECIDE IT, IN ACCORDANCE WITH THE LAW AND AS DI RECTED BY PARA NO. 18 IN THE IMPUGNED ORDER OF THE COORDINATE BENCH FOR AY 2 006-07. IN RESULT GROUND NOS. 4, 5 AND 6 OF THE APPEAL OF THE ASSESSEE ARE D ECIDED ACCORDINGLY. 10 ITA NO. 6787/DEL/2017 IN LIGHT OF THE ABOVE FINDINGS AND ALSO THE FACTS A RE SIMILAR IN THE PRESENT YEAR, WE SET ASIDE THIS ISSUE TO THE FILE OF THE AS SESSING OFFICER WITH THE DIRECTION TO DECIDE THIS ISSUE FOR FRESH DETERMINAT ION AFTER FOLLOWING THE PRINCIPLES OF NATURAL JUSTICE GIVEN TO THE ASSESSEE . GROUND NO. 6 IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. 12. AS REGARDS GROUND NO. 8 AND 9 OF THE APPEAL, TH E LD. AR SUBMITTED THAT THE ASSESSEE MOVED A RECTIFICATION APPLICATION UNDER SECTION 154 OF THE ACT BEFORE THE ASSESSING OFFICER FOR GRANTING C OMPLETE CREDIT OF TAX DEDUCTED AT SOURCE (TDS) AND TO RECTIFY THE INTERES T INADVERTENTLY LEVIED UNDER SECTION 234A OF THE ACT. ACCORDINGLY, THE ASS ESSING OFFICER PASSED THE RECTIFICATION ORDER WHEREIN COMPLETE CREDIT OF TDS WAS GRANTED TO THE ASSESSEE AND CONSEQUENTIAL INTEREST UNDER SECTION 2 34B OF THE ACT WAS ACCORDINGLY RECTIFIED. ALSO, THE ASSESSING OFFICER RECTIFIED THE INTEREST INADVERTENTLY LEVIED UNDER SECTION 234A OF THE ACT AND THE SAME WAS REDUCED TO NIL. FURTHER, INTEREST UNDER SECTION 234 B, 234C, 234D & 244A OF THE ACT ARE CONSEQUENTIAL IN NATURE. 13. THE LD. DR RELIED UPON THE ASSESSMENT ORDER. 14. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS RELATES TO GROUND NO. 8 AND 9, THE ASSESSEE MOVED A RECTIFICATION APPLICATION UNDER SE CTION 154 OF THE ACT BEFORE THE ASSESSING OFFICER FOR GRANTING COMPLETE CREDIT OF TAX DEDUCTED AT SOURCE (TDS) AND TO RECTIFY THE INTEREST INADVER TENTLY LEVIED UNDER SECTION 234A OF THE ACT. ACCORDINGLY, THE ASSESSING OFFICER PASSED THE RECTIFICATION ORDER WHEREIN COMPLETE CREDIT OF TDS WAS GRANTED TO THE ASSESSEE AND CONSEQUENTIAL INTEREST UNDER SECTION 2 34B OF THE ACT WAS ACCORDINGLY RECTIFIED. ALSO, THE ASSESSING OFFICER RECTIFIED THE INTEREST INADVERTENTLY LEVIED UNDER SECTION 234A OF THE ACT AND THE SAME WAS REDUCED TO NIL. FURTHER, INTEREST UNDER SECTION 234 B, 234C, 234D & 244A OF THE ACT ARE CONSEQUENTIAL IN NATURE. HENCE, GROUND NO. 8 AND 9 11 ITA NO. 6787/DEL/2017 ARE ALLOWED FOR STATISTICAL PURPOSE. 15. AS REGARDS GROUND NO. 10, THE LD. AR SUBMITTED THAT THE ASSESSING OFFICER ERRED IN INITIATING PENALTY PROCEEDINGS UND ER SECTION 271(1)(C) OF THE ACT FOR FURNISHING INACCURATE PARTICULARS OF INCOME. TH E SAME IS PREMATURE IN NATURE. GROUND NO. 10 IS DISMISSED. 16. IN RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALL OWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH SEPTEMBER, 2018 . SD/- SD/- (N. K. SAINI) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 11/09/2018 R. NAHEED COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 12 ITA NO. 6787/DEL/2017 DATE OF DICTATION 27.08.2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 27.08.2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 11.09.2018 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 11 .09.2018 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 11 .09.2018 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER