ADIT (IT) 1(1), MUMBAI V. AIRLINE ROTABLES LTD, MUMBAI

ITA 6974/MUM/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71118 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: L
• Next Hearing Date: 04-09-2013
• Assessment Year: 1999-2000
• Appeal Filed On: 14-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS NEERAJA PRADHAN
• Assessee Lawyers: F V IRANI
• Keywords: Business income; Double taxation relief; Permanent establishment
• Section: 143(3); 90

Judgement Text

L IN THE INCOME TAX APPELLATE TRIBUNAL L BENCH, MUMBAI . . , . , BEFORE SHRI B.R. MITTAL, JM AND SHRI D. KARUNAKARA RAO, AM ./ I.T.A. NO. 6973/M/2011 (AY: 1998 - 1999) ./ I.T.A. NO. 6974/M/2011 (AY: 1999 - 2000) ./ I.T.A. NO. 6975/M/2011 (AY: 2000 - 2001) ./ I.T.A. NO. 6976/M/2011 (AY: 2001 - 2002) DDIT (IT) - 1(1), R.NO.117, SCINDIA HOUSE, 1 ST FLO OR,BALLARD ESTATE, N.M. ROAD, MUMBAI 400 038. / VS. M/S. AIRLINE ROTABLES LIMITED, C/O. M/S. BHARAT S. RAUT & CO., LODHA EXCELUS APOLLO MILLS COMPOUND, N.M. JOSHI MARG, MUMBAI 400 011. ./ PAN : AADCA 8054 G ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : MRS. NEERAJA PRADHAN, DR / RESPONDENT BY : MR. F.V. IRANI / DATE OF HEARING : 4.9.2013 / DATE OF PRONOUNCEMENT : 20. 9 .2013 / O R D E R PER D. KARUNAKARA RAO, AM: THERE ARE FOUR APPEALS UNDER CONSIDERATION. ALL THE FOUR APPEALS ARE FILED BY THE REVENUE AGAINST THE DIFFERENT ORDERS OF THE CIT (A) - 10, MUMBAI COMMONLY DATED 29.7.2011 FOR THE ASSESSMENT YEARS 1998 - 19 99 TO 2001 - 2002 RESPECTIVELY. SINCE, THE ISSUES INVOLVED IN ALL THE FOUR ASSESSMENT YEARS ARE IDENTICAL, THEREFORE, FOR THE SAKE OF CONVENIENCE THESE FOUR APPEALS ARE CLUBBED, HEARD COMBINED AND BEING DISPOSED OF IN THIS CONSOLIDATED ORDER. 2. AS THE GROU NDS RAISED IN ALL THE FOUR APPEALS ARE IDENTICAL, THE AN EFFECTIVE GROUND RAISED IN ITA NO.6973/M/2011 FOR THE AY 1998 - 1999 , WHICH IS COMMON FOR THE AYS, UNDER CONSIDERATION READ S AS UNDER: 2 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) HAS ERRED IN HOLDING THAT THE INCOME IS NOT TAXABLE AS ROYALTY AS THE EXPLANATION UNDER WHICH IT IS TAXABLE IS INTRODUCED W.E.F. 1.4.2002 WHICH IS NOT APPLICABLE FOR THE YEAR UNDER CONSIDERATION, IGNORING THE FACT THAT THE ASSESSEES INCOME IS OTHERWISE TAXABLE AS PER THE EXISTING PROVISIONS IN CLAUSE (B) OF SEC . 9(1)(VI) OF I.T. ACT, 19 61 3. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE IS A NON - RESIDENT INCORPORATED IN UNITED KINGDOM (UK) WITH THE MAIN BUSINESS OBJECT OF PROVIDING SPARES AND COMPONENT SUPPORT FOR A IRCRAFT TO AIRCRAFT OPERATORS. THE ASSESSEE - COMPANY ENTERED INTO AN AGREEMENT FOR PROVIDING ROTABLES (AIRCRAFT COMPONENTS) TO JET AIRWAYS (INDIA) PVT. LTD (JA). THE ASSESSEE - COMPANY DELIVERS THE CONSIGNMENT STOC K AT THE DESIGNATED LOCATION FROM TIME TO TIME AS PROVIDED IN THE AGREEMENT AND JET AIRWAYS TAKES THE DELIVERY AS A BAILEE. ASSESSEE FILED THE RETURN OF INCOME DECLARIN G THE TOTAL INCOME OF RS. NIL. AFTER THE SCRUTINY ASSESSMENT U/S 143(3) OF THE ACT, THE TOTAL INCOME WAS DETERMINED AT RS. 2,41,26,040/ - . IN THE ASSESSMENT, AO HELD THAT ASSESSEE HAS A PE IN INDIA WITHIN THE MEANING OF ARTICLE - 5 OF INDO - UK DTAA AND HELD THAT THE 10% OF THE GLOBAL TURNOVER OF THE ASSESSEE FROM INDIAN OPERATIONS IS TAXABLE A S BUSINESS INCOME OF THE ASSESSEE. MATTER TRAVELLED TO THE TRIBUNAL ON THE ISSUES RELATING TO THE PE IN INDIA AND ALSO ABOUT THE QUANTIFICATION OF THE INCOME APPL YING THE 10% AS RATE OF PROFIT. THE ITAT, MUMBAI PASSED AN ORDER VIDE ITA NO.3254/M/2006 (A Y 1998 - 1999) DATED 21.5.2010. IN THE ORDER , THE TRIBUNAL HELD THAT THE ASSESSEE HAS NO PE IN INDIA WITHIN THE MEANING OF ARTICLE - 5 OF INDO - UK DTAA. IN THIS REGARD, TRIBUNAL EXAMINED THE PE ISSUE FROM THE ANGLES OF PHYSICAL LOCATION, SUBJECTIVE CRITERION A ND FUNCTIONAL CRITERION ETC. REFERRING TO THE JUDGMENT OF THE HONBLE HIGH COURT OF ANDHRA PRADESH IN THE CASE OF CIT VS. VISHAKHAPATNAM PORT TRUST (144 ITR 146) AND THE DECISION OF THE SPECIAL BENCH IN THE CASE OF MOTOROLA INC. VS. DCIT (95 ITD 269) (SB) , THE TRIBUNAL HELD THAT THE ASSESSEE DOES NOT HAVE ANY PE IN INDIA. AS PER THE DISCUSSION GIVEN IN PARA 16, THE TRIBUNAL HELD THAT THERE IS NO MATERIAL WHATSOEVER TO ESTABLISH, OR EVEN INDICATE, THAT JET AIRWAYS OR ITS STAFF CONSTITUTE S DEPENDENT AGENT OF THE ASSESSEE COMPANY. 4. FURTHER, TRIBUNAL RULED OUT THE APPLICABILITY OF ARTICLE 5(5) OF THE TREATY TO THE INSTANT CASE. THUS, THE TRIBUNALS CONCLUSIONS WERE GIVEN IN PARA 17 WHICH READ AS UNDER: 3 17. IN VIEW OF THE ABOVE DISCUSSIONS, WE ARE OF TH E CONSIDERED OPINION THAT THE ASSES S EE COMPANY DID NOT HAVE ANY PE IN INDIA, AND, ACCORDINGLY, THE ENTIRE INCOME ATTR IBUTABLE TO THE INDIA OPERATION COULD NOT HAVE BEEN TAXED IN INDIA. THE GRIEVANCES RAISED AGAINST QUALIFICATION OF INCOME ATTRIBUTABLE TO T HE PE, UNDER ARTICLE 7(1), ARE THUS RENDERED IN FRUCTUOUS. TO THAT EXTENT, WE UPHOLD THE GRIEVANCE OF THE ASSESSEE AND VACATE THE ORDERS OF THE AUTHORITIES BELOW. 5. HOWEVER, ON THE TAXABILITY OF THE IMPUGNED PAYMENTS, TRIBUNAL OBSERVED THAT THE ABSENCE OF PE IN INDIA AND CONSEQUENT LY, THE INAPPLICABILITY OF ARTICLE - 7(1) OF THE TREATY, IS NOT THE END OF THE ROAD . THUS, ON THE ASPECT OF THE ABSENCE OF PE, TRIBUNAL GRANTED THE RELIEF TO THE ASSESSEE . HOWEVER, BEFORE PARTING WITH THE ORDER, THE TRIBUNAL OPI NED THAT IT IS POSSIBLE WHILE THE CONSIDERATION FOR USE OR RIGHT TO USE THE CONSIGNMENT STOCK OF EQUIPMENT MAY BECOME TAXABLE UNDER ARTICLE - 7(1) READ WITH ARTICLE - 13. THE TRIBUNAL UNDER LINED THE LACUNAS QUA THE APPLICABILITY OF THE PROVISIONS OF ARTICLE - 1 3(3)(B) OF THE TREATY. IN THIS REGARD, RELEVANT OPINIONS OF THE TRIBUNAL ARE SIGNIFICANT HERE AND SAME READ AS UNDER: 18. WE MAY, HOWEVER, ADD THAT WHILE THE CONSIDERATION FOR USE OF RIGHT TO USE THE CONSIGNMENT STOCK OF EQUIPMENTS IS TAXABLE UNDER ARTIC LE 7(1) READ WITH ARTICLE 13(6). IN A SITUATION WHEN THE ASSESSEE HAS A PE IN THE OTHER CONTRACTING STATE, EVEN WHEN THE ASSESSEE DOES NOT HAVE A PE, ITS TAXABILITY IS STILL REQUIRED TO BE CONSIDERED IN THE LIGHT OF ARTICLE 13(3)(B) ON GROSS BASIS. THERE FORE, OUR FINDING IS THAT THE ASSESSEE DID NOT HAVE A PE IN INDIA, BY ITSELF, WOULD NOT TAKE THE ASSESSEE OUT THE AMBIT OF TAXABILITY IN INDIA. HAVING HELD THAT THE ASSESSEE HAD A PE IN INDIA, THE AUTHORITIES BELOW WERE NOT REQUIRED TO GIVE A FINDING ON TH AT ASPECT OF THE MATTER BECAUSE EVEN IF A PART OF RECEIPTS OF THE ASSESSEE COMPANY WAS FOUND TO BE FOR USE OF OR RIGHT TO USE OF, ANY INDUSTRIAL, SCIENTIFIC OR COMMERCIAL EQUIPMENT COVERED BY THE ARTICLE - 13(3)(B). IN A SITUATION IN WHICH PE CAN BE SAID TO EXIST, SUCH CONSIDERATION WAS TAXABLE, ON NET BASIS, UNDER ARTICLE - 7 AS WAS DONE IN THE PRESENT CASE. 6. FINALLY, FOR THE PURPOSE OF EXAMINING THE APPLICABILITY OF THE PROVISIONS OF ARTICLE - 13 IN GENERAL AND ARTICLE - 13(3)(B) IN PARTICULAR, THE MATTER W AS REMITTED TO THE FILES OF THE CIT (A) FOR LIMITED ADJUDICATION ON THIS ASPECT OF THE MATTER. THE SPECIFIC DIRECTIONS IN THIS REGARD ARE CONTAINING IN PRARA 20 OF THE TRIBUNALS ORDER WHICH READ AS UNDER: 20. FOR THE REASONS SET OUT ABOVE, WE ARE NOT IN CLINED TO UPHOLD THE ORDERS OF THE AUTHORITIES BELOW ON THE ISSUE OF EXISTENCE OF THE PERMANENT ESTABLISHMENT AND FOR QUANTIFICATION OF TAXABLE INCOME. THE MATTER, IS HOWEVER, REMITTED TO THE FILE OF THE CIT (A) FOR ADJUDICATION ON THE QUESTION OF TAXABIL ITY, IF ANY, OF CONSIDERATION FOR USE, OR RIGHT TO USE, OF INDUSTRIAL, SCIENTIFIC OR COMMERCIAL EQUIPMENT CONTAINED IN THE PAYMENTS MADE BY THE AIRLINES TO THE ASSESSEE - COMPANY. WE MAKE IT CLEAR THAT OUR ABOVE OBSERVATIONS SHOULD NOT INFLUENCE THE DECISIO N OF THE CIT (A) ON MERITS OF THIS 4 ISSUE AND THAT THE CIT (A) WILL DECIDE THE MATTER IN ACCORDANCE WITH THE LAW, BY WAY OF A SPEAKING ORDER AND AFTER GIVING DUE AND FAIR OPPORTUNITY OF HEARING TO THE PARTIES. WE DIRECT SO. 7. SUBSEQUENTLY, AGAINST THE AB OVE DIRECTIONS OF THE TRIBUNAL, ASSESSEE FILED A MISCELLANEOUS APPLICATION VIDE MA NO.471/M/2010 DATED 23.7.2010. VIDE THE TRIBUNALS ORDER DATED 28.2.2011 THE M A WAS DISMISSED. DURING THE MISCELLANEOUS APPLICATION PROCEEDINGS, IT WAS CONTENDED THAT THE C ONSIDERATION FOR USE OF REPLACEMENT OF COMPONENTS IS DISTINCT AND SEPARATE IS IN CONTRADICTION WITH OUR DIRECTION TO THE CIT (A) TO CONSIDER THE MATTER AFRESH FOR TAXABILITY UNDER ARTICLE - 13, AND IN NOT LIMITING SUCH AN EXAMINATION FOR TAXABILITY UNDER ART ICLE 13 IN RESPECT OF SUCH CONSIDERATION FOR USE OF REPLACEMENT COMPONENTS. THE TR IBUNAL DISMISSED THE SAME. IN THE SET ASIDE PROCEEDINGS , THE CIT (A) HEARD THE ASSESSEE AS PER THE PROCEDURE LAID DOWN AND PASSED THE ORDER DATED 29.7.2011. DURING THE PRO CEEDINGS, CIT (A) RESTRICTED ITS ADJUDICATION TO THE DIREC TIONS OF THE TRIBUNAL I.E., IF THE CONSIDERATION INVOLVED IS TAXABLE AS ROYALTY UNDER THE PROVISIONS OF ARTICLE - 13 OF THE INDO - UK TREATY. DURING THE PROCEEDINGS BEFORE THE CIT (A), ASSESSEE SUBMI TTE D AS UNDER: 3. APPELLANTS CONTENTIONS: THE AR STATED THAT THE RECEIPTS OF THE APPELLANT RE COMPOSITE IN NATURE, IN THAT THEY COVER BOTH THE REPAIRS & OVERHAUL AS ALSO THE REPLACEMENT OF COMPONENTS. A BIFURCATION ON THESE TWO COUNTS WOULD NOT BE POS SIBLE AS THE ENTIRE INCOME OF THE APPELLANT SHOULD BE CATEGORIZED AS BUSINESS INCOME. HENCE, TREATMENT OF A PART OF THE SAID INCOME PERTAINING TO USE OF REPLACED COMPONENTS CANNOT BE TREATED AS ROYALTY UNDER ARTICLE 13(3)(B) OF THE DTAA. SHE FURTHER CONTENDED THAT THE OBSERVATION OF THE HONBLE TRIBUNAL ABOUT NON - CONSIDERATION OF THE ROYALTY MATTER BY THE AO WOULD NOT BE FACTUALLY CORRECT, AS THE DETAILS SUBMISSION WAS STATED TO HAVE BEEN FILED BEFORE THE AO IN THIS REGARD, A COPY OF WHICH HAS NOW BE EN FILED BEFORE ME. 3.1. INSOFAR AS ROYALTY IS CONCERNE D, IT HAS INDEED BEEN DEFINED A S PAYMENT OF ANY KIND RECEIVED AS CONSIDERATION FOR THE USE OF OR THE RIGHT TO USE, ANY INDUSTRIAL , COMMERCIAL OR SCIENTIFIC EQUIPMENT AS PER ARTICLE - 13(3)(B) OF THE DTA A . HOWEVER, THE AR POINTED OUT THAT THE ISSUE OF CHARGEABILITY UNDER THE DTAA, COMES INTO PICTURE ONLY AFTER THE ISSUE OF CHARGEABILITY UNDER THE INCOME TAX ACT, 1961 HAS BEEN DECIDED AGAINST THE APPELLANT. SHE POINTED OUT THAT THERE WAS NO EQUIVALENT PR OVISION IN THE ACT APPLICABLE TO THE ASSESSMEN T YEAR UNDER CONSIDERATION. CL AUSE (IVA) OF EXPLANATION - 2 OF THE SECOND PROVISO TO SECTION 9(1)(VI) OF THE ACT WOULD BE THE RELEVANT PROVISION IN THIS CONTEXT. EXPLANATION - 2 TO SECTION 9(1)(VI) OF THE ACT DEFI NES ROYALTY EXHAUSTIVELY UNDER SEVERAL C LAUSES OF THE SAID EXPLANATION. CLAUSE (IVA) OF THE SAID EXPLANATION SPEAKS OF THE USE OR RIGHT TO USE ANY INDUSTRIAL, COMMER CIAL OR SCIENTIFIC EQUIPMENT. HOWEVER, AS FURTHER POINTED OUT BY THE AR, THE SAID CLAUS E HAS BEEN INSERTED WITH EFFECT FROM 1 ST APRIL, 2002 AND IS AS SUCH NOT APPLICABLE TO AY 2001 - 2002 WHICH IS THE ASSESSMENT YEAR UNDER CONSIDERATION. IN OTHER WORDS, ACCORDING TO HER, 5 THE SAID PAYMENTS MADE BY THE JA TO THE APPELLANT CANNOT BE CHARGED TO TA X AS ROYALTY IN THE ABSENCE OF AN ENABLING PROVISION TO THIS EFFECT IN THE ACT. 8. FROM THE ABOVE, IT IS THE ARGUMENT OF THE ASSESSEE THAT THE IMPUGNED CONSIDERATION PERTAINING TO THE USE OF REPLACED COMPONENTS CANNOT BE TREATED AS ROYALTY UNDER THE ART ICLE - 13(3)(B) OF THE DTAA WITH UK. FURTHER, IT SUBMITTED THAT THESE PROFITS MAY OR MAY NOT ATTRACT THE PROVISIONS OF SECTION 9(1)(VI) OF THE ACT WHERE THE EXPRESSION ROYALTY WAS DEFINED EXHAUSTIVELY. HOWEVER, IT IS CLARIFIED THAT THESE PROVISIONS OF EX P LANATION - 2 ARE INSERTED W.E.F. 1.4.2002 AND THEREFORE, THEY ARE NOT RELEVANT FOR THE AY 2001 - 2002 AND EARLIER AYS. IT IS THE CLAIM OF THE ASSESSEE THAT THE ASSESSEE HAS NOT PREFERRED THE PROVISIONS OF THE IT ACT, 1961. AFTER HEARING THE ASSESSEE AND ANALY ZING THE PROVISIONS OF THE SAID EXPLANATION - 2 TO SECTION 9(1)(VI) OF THE ACT AND ALSO THE EXPLANATORY AMENDMENT IN RESPECT OF THE SAID EXPLANATION - 2, CIT(A) HELD THAT THE SAID EXPLANATION IS NOT APPLICABLE TO THE AY UNDER CONSIDERATION. FURTHER, HE OPINED THAT THE PROVISIONS OF THE ACT SHALL APPLY TO THE EXTENT THAT THEY ARE MORE BENEFICIAL TO THE ASSESSEE , PROVIDED, THERE IS A TREATY B ETWEEN THE COUNTRIES INVOLVED. AT THE END, THE CIT (A) ALLOWED THE APPEAL OF THE ASSESSEE AS PER THE DISCUSSION GIVEN IN P ARA 4.6 AND 4.7 OF HIS ORDER WHICH READ AS UNDER: 4.6. IT IS THUS, CLEAR CHARGEABILITY UNDER THE ACT IS A FUNDAMENTAL PRE - REQUISITE FOR INVOKING THE PROVISIONS OF SECTION 90 AND CONSEQUENTLY THOSE OF THE RELEVANT DTAA. IF A CERTAIN AMOUNT IS NOT CHARGEABL E UNDER THE ACT, IT CANNOT BE SIMPLY CHARGED UNDER THE DTAA. A SIMILAR VIEW HAS BEEN TAKEN BY THE HONBLE DELHI TRIBUNAL IN THE CASE OF INTELSAT CORPORATION VS. ADIT - 1(2), NEW DELHI (2011 - 44 - ITAT - DELHI - INTL). IT HAS ALREADY BEEN HELD THAT THE IMPUGNED P AYMENTS CANNOT BE CHARGED TO TAX UNDER THE ACT. IT IS NOW CLEAR THAT THEY CAN HENCE NOT BE CHARGED TO TAX SOLELY UNDER THE DTAA. 4.7. IN VIEW OF THE DISCUSSION IN THE PRECEDING SUB - PARAGRAPHS, I HOLD THAT THE IMPUGNED PAYMENTS MADE TO THE APPELLANT BY JA CANNOT BE CHARGED TO TAX FOR USE, OR RIGHT TO USE, OF INDUSTRIAL, SCIENTIFIC OR COMMERCIAL EQUIPMENT UNDER ARTICLE - 13 OF THE DTAA. THE SOLE ISSUE ON WHICH THE MATTER HAD BEEN RESTORED BACK TO MY FILE THUS GETS DECIDED IN FAVOUR OF THE APPELLANT. 9. AGGR IEVED WITH THE ABOVE DIRECTIONS OF THE CIT (A), REVENUE RAISED THE ABOVE MENTIONED GROUNDS QUESTIONING THE DECISION OF THE CIT (A) ON THE ISSUE OF TAXING THE SAID CONSIDERATION AS ROYALTY UNDER ARTI CLE - 13(3)(B) OF THE TREATY. THE LIMITED ISSUE RAISED IN THE GROUND RELATES TO THE APPLICABILITY O F THE PROVISIONS OF CLAUSE (B) ( IT IS MENTIONED AS CLAUSE (C) IN THE GROUNDS OF APPEAL WHICH WAS ORALLY RECTIFIED BY THE LD 6 DR DURING THE HEARING PROCEEDINGS BEFORE US) TO SECTION 9(1)(VI) OF THE IT ACT, 1961. 10. DURING THE PROCEEDINGS BEFORE US, MRS. NEERAJA PRADHAN, LD DR BROUGHT OUR ATTENTION TO THE PROVISIONS OF SECTION 9(1)(VI) OF THE ACT AND MENTIONED THAT THE CIT (A) HAS NOT EXAMINED THE ISSUE IN THE LIGHT OF THE PROVISIONS . REFERRING TO THE ORDER OF THE TR IBUNAL, LD DR ASSERTED THAT THE CIT (A) SHOULD HAVE EXAMINED FROM THE POINT OF VIEW OF THE APPLICABILITY OF ALL THE CLAUSES OF ARTICLE - 13 OF THE DTAA AND TOOK OBJECTION TO THE FACT THAT THE CIT (A) EXAMINED THE DIRECTIONS OF THE TRIBUNAL ONLY FROM THE ANGL E OF THE APPLICABILITY OF THE ARTICLE - 13(3)(B). CONSIDERING THE LACUNAS ALLOWED BY THE CIT (A), IT IS THE PRAYER OF THE LD DR THAT THE ISSUE MAY BE REMITTED ONCE AGAIN FOR ADJUDICATION OF THIS ISSUE FROM THE ANGLES OF THE APPLICABILITY OF ALL THE PROVISIO NS OF ARTICLE - 13 OF DTAA WITH UK. 11. PER CONTRA, MR. F.V. IRANI , LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTIO N TO THE CONTENTS OF PARA 18, WHERE THE TRIBUNAL DISCUSSED IN PARTICULAR THE APPLICABILITY OF THE PROVISIONS OF ARTICLE - 13(3)(B) OF THE TREATY . READING THE DIRECTION EMBEDDED IN PARA 13 TO 20 TOGETHER, THE DIRECTION OF THE TRIBUNAL IS RESTRICTED TO THE APPLICABILITY OF THE ARTICLE - 13(3)(B) ONLY AND NOT EXTENDED TO THE PROVISIONS OF THE ARTICLE - 13(3)(A) OF THE TREATY. FURTHER, LD COUNSEL BROUGH T OUR ATTENTION TO THE EXPRESSED USED IN THE CLAUSE (A) OF THE ARTICLE - 13(3) OF THE TREATY AND MENTIONED THAT THE SAID CLAUSE REFERS TO THE PAYMENTS FOR INFORMATION CONCERNING INDUSTRIAL, COMMERCIAL OR SCIENTIFIC EXPERIENCE. REFERRING TO THE FACTS OF TH E PRESENT CASE, WHICH INVOLVE S THE PAYMENT OF CONSIDERATION FOR USE AND RIGHT TO USE OF SPARES AND COMPONENTS FOR AIRCRAFT OPERATORS IN THE LIGHT OF THE AGREEMENT BETWEEN THE ASSESSEE AND THE JET AIRWAYS PVT LTD (JA), LD COUNSEL MENTIONED THAT THE SA ID PRO VISIONS OF ARTICLE - 13(3)(A ) PRIMA FACIE IRRELEVANT TO THE FACTS OF THE PRESENT CASE. REFERRING TO THE CONTENTS OF THE CLAUSE - 4(A) TO EXPLANATION - 2 TO SECTION 9(1)(VI), LD COUNSEL MENTIONED THAT IT IS A DECIDED ISSUE FOR THE SAID AMENDMENT MADE BY THE FIN ANCE ACT, 2001 W.E.F., 1.4.2002 I.E., AY 2002 - 2003. THEREFORE, IT IS THE PRAYER OF THE LD COUNSEL THAT THE ORDER PASSED BY THE CIT (A) IS REASONABLE AND IT SHOULD NOT CALL FOR ANY CHANGES. IT IS ALSO THE PRAYER OF THE LD COUNSEL THAT THE TREATY BETWEEN 7 T HE INDIA AND UK, ASSESSEE IS UNDER STATUTORY OBLIGATION TO AVAIL THE BENEFITS OF THE TREATY IN PREFERENCE TO THE PROVISIONS OF INCOME TAX ACT, 1961. IT IS THE CLAIM OF THE ASSESSEE THAT WHO AVAILED THE TREATY BENEFITS THROUGH THE PROVISIONS OF SECTION 9(1 )(VI) SHOULD NOT HAVE THRUST ON THE ASSESSEE. CONCLUSION: 12. WE HAVE HEARD BOTH THE PARTIES ON THIS ISSUE AND PERUSED THE ORDER OF THE REVENUE AND THE RELEVANT PROVISIONS OF THE TREATY. IT IS THE CASE OF LD DR AND OF COURSE, NOT OF AO / CIT (A) TH AT TH E IMPUGNED PAYMENTS MAY BE TAXABLE AS PER THE EXISTING PROVISIONS OF CLAUSE (B) OF SECTION 9(1)(VI) OF THE ACT. IN ALTERNATE, IT IS THE CLAIM OF THE LD DR THAT THE CIT (A) FAILED TO EXAMINE THE APPLICABILITY OF ARTICLE - 13(3)(A) OF THE ACT TOO. T HEREFORE, THE ISSUE REQUIRES REVISITING OF THE FILE OF THE CIT (A) FOR ONE MORE ROUND OF THE FIRST APPELLATE PROCEEDINGS . ON THE OTHER HAND, IT IS THE CASE OF THE ASSESSEE THAT THE PAYMENTS ARE NOT TAXABLE UNDER THE DOMESTIC LAW FOR ALL THE FOUR AYS AND THEREFORE, T HE TREATY PROVISIONS DO NOT APPLY. AS SUCH, ASSESSEE PREFERS THE TREATY PROVISIONS AS THEY ARE BENEFICIAL QUA THE PROVISIONS OF THE DOMESTIC LAW. FURTHER, IT IS THE CASE OF THE ASSESSEE THAT THE PROVISIONS OF CLAUSE (B) OF ARTICLE - 13(3) DOES NOT RELATE T O THE FACTS OF THE PRESENT CASE AS THEY DEAL WITH THE USE OR RIGHT TO USE OF THE INFORMATION REL ATING TO INDUSTRIAL, COMMERCIAL OR SCIENTIFIC EXPERIENCE. FURTHER, IT IS MENTIONED THAT THE CIT (A) HAS RIGHTLY EXAMINED THE ISSUE AS DIRECTED BY THE TRIBUNAL ONLY I.E., FROM THE ANGLE OF ARTICLE - 13(3)(B) OF THE TREATY . P ARAS 18 TO 20 OF THE ORDER OF THE TRIBUNAL DATED 21.5.2010, WHICH IS CONFIRMED IN THE MISCELLANEOUS APPLICATION PROCEEDINGS, IS RELEVANT. THEREFORE, THERE IS NO NEED FOR REVISITING OR REMANDING THE MATTER TO THE FILES OF THE CIT (A). 13. ON PERUSAL OF THE SAID PARAGRAPHS 18 AND 20 OF THE ORDER OF THE TRIBUNAL IN FIRST ROUND OF THE PROCEEDINGS , WE FIND THE TRIBUNAL IS CATEGORICAL IN MAKING A REFERENCE TO ARTICLE - 13(3)(B) OF THE TREATY IN A RESTR ICTED SENSE. WE FIND TRIBUNAL CORRECTLY OPINED THE SAME CONSIDERING THE SPECIAL PROVISIONS APPLICABLE TO THE IMPUGNED PAYMENTS . RELEVANT PORTIONS FROM THE SAID PARAG RAPHS ARE EXTRACTED AS FOLLOWS: - 8 18. WE MAY HOWEVER, ADD THAT WHILE THE CONSIDERATION FOR USE OR RIGHT TO USE THE CONSIGNMENT STOCK OF EQUIPMENTS IS TAXABLE UNDER ARTICLE 7(1) READ WITH ARTICLE 13(6). IN A SITUATION WHEN THE ASSESSEE HAS A PE IN THE OTHER CONTRACTING STATE, EVEN WHEN THE ASSESSEE DOES NOT HAVE A PE, ITS TAXABILITY IS STILL REQ UIRED TO BE CONSIDERED IN THE LIGHT OF ARTICLE 13(3)(B) ON GROSS BASIS . THEREFORE, OUR FINDING THAT THE ASSESSEE DID NOT HAVE A PE IN INDIA, BY ITSELF, WOULD NOT TAKE THE ASSESSEE OUT OF AMBIT OF TAXABILITY IN INDIA. HAVING HELD THAT THE ASSESSEE HAD A PE IN INDIA, THE AUTHORITIES BELOW WERE NOT REQUIRED TO GIVE A FINDING ON THAT ASPECT OF THE MATTER BECAUSE EVEN IF A PART OF RECEIPTS OF THE ASSESSEE COMPANY WAS FOUND TO BE FOR USE OF OR RIGHT TO USE OF ANY INDUSTRIAL, SCIENTIFIC OR COMMERCIAL EQUIPMENT COVERED BY ARTICLE 13(3)(B), IN A SITUATION IN WHICH PE CAN BE SAID TO EXIST, SUCH CONSIDERATION WAS TAXABLE, ON NET BASIS, UNDER ARTICLE - 7 AS WAS DONE IN THE PRESENT CASE. 19IN THIS VIEW OF THE MATTER, NON - TAXABILITY UNDER ARTICLE 7 WILL STILL ME AN THAT APPLICATION OF ARTICLE 13 IS TO BE CONSIDERED AND ADJUDICATED UPON. HOWEVER, SINCE THE ABOVE ASPECT OF MATTER HAS NOT BEEN HEARD BY ANY AUTHORITIES BELOW, WE DEEM IT FIT AND PROPER TO REMIT THE MATTER TO THE FILE OF THE CIT (A) FOR LIMITED ADJUDIC ATION ON THIS ASPECT OF THE MATTER. 14 . FROM THE ABOVE, IT IS CLEAR THAT THE TRIBUNALS DIRECTION IS RESTRICTED TO THE EXAMINATION OF THE APPLICABILITY OF THE PROVISIONS OF ARTICLE 13 OF THE TREATY, IN GENERAL, AND ARTICLE 13(3)(B), IN PARTICULAR. PRIM A FACIE , WE FIND THAT THE PROVISIONS OF SECTION 13(3) (A) SHALL NOT APPLY TO THE CASE OF THE ASSESSEE AS THE SAID CLAUSE (A) DEALS WITH SITUATION OF PAYMENT FOR INFORMATION CONCERNING INDUS TRIAL, COMMERCIAL OR SCIENTIFIC EXPERIENCE . IT IS ALSO NOT THE CA SE OF THE TRIBUNAL THAT THE PROVISIONS OF SECTION 9(1)(VII) SHOULD ALSO BE EXAMINED. THEREFORE, THE SCO P E OF REMITTING THE MATTER TO THE FILES OF THE CIT (A) IS RESTRICTED TO IN THE SAID ORDER OF THE TRIBUNAL. THUS, WE FIND THE ORDER OF THE CIT(A) IS REASONABL E AND IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUNDS RAISED BY THE REVENUE IN ALL THE FOUR APPEALS ARE DISMISSED . 1 5 . IN THE RESULT, ALL THE FOUR APPEALS OF THE REVENUE ARE DISM ISSED . ORDER IS PRO NOUNCED IN THE OPEN COURT ON 20 TH SEPTEMBER 2013. SD/ - SD/ - (B.R. MITTAL) (D. KARUNAKARA RAO) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 20 .9.2013 9 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI