ADIT CIR 2(2), MUMBAI V. UPS SCS (ASIA) LTD, MUMBAI

ITA 7319/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78957 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: L
• Next Hearing Date: 21-05-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 10-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B P K PANDA

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL L BE NCH, MUMBAI , , !'# , $ % BEFORE SHRI VIJAY PAL RAO, JM AND SHRI N.K. BILL AIYA, AM ./ I.T.A. NO.7319/MUM/2012 ( & & & & / ASSESSMENT YEAR :2008-09 THE ADIT(IT)-2(2), SCINDIA HOUSE, BALLARD ESTATE, N.M. ROAD, MUMBAI-400 038 / VS. M/S. UPS SCS (ASIA) LTD., C/O KPMG, LODHA EXCELUS, APPOLO MILLS COMPOUND, N.M. JOSHI MARG, MAHALAXMI, MUMBAI-400 011 ' $ ./ ( ./ PAN/GIR NO. : AAACU 8509M ( ') / APPELLANT ) .. ( *+') / RESPONDENT ) ') , / APPELLANT BY: SHRI B.P.K. PANDA *+') - , / RESPONDENT BY: SHRI PRASHANT MAHESHWARI - ./$ / DATE OF HEARING :21.05.2014 01& - ./$ / DATE OF PRONOUNCEMENT :21.05.2014 2 / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-11, MUMBAI DT.28.9.2012 PERTAINING TO A.Y. 2008-09. 2. THE SOLE GRIEVANCE OF THE REVENUE READS AS UNDER : ITA NO. 7319/M/2012 2 WHETHER ON THE FACT AND IN THE CIRCUMSTANCE OF THE CASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN HOLDING THA T THE RECEIPTS ON ACCOUNT OF TRANSPORTATION FEE OF RS. 48 ,91,349/- IS NOT TAXABLE AS FTS U/S. 9(1)(VII) OF THE INCOM E TAX, 1961. 3. THE ASSESSEE IS IN THE BUSINESS OF FORWARDING SE RVICES. THE ORIGINAL RETURN OF INCOME WAS FILED ON 30.9.2008 DECLARING R S. NIL INCOME. THE SAME WAS REVISED ON 31.3.2010 DECLARING TOTAL INCOM E AT RS. 1,57,680/-. THE RETURN WAS SELECTED FOR SCRUTINY ASSESSMENT AND ACCORDINGLY STATUTORY NOTICES WERE ISSUED AND SERVED UPON THE ASSESSEE. 3.1. THE ASSESSEE IS A COMPANY INCORPORATED UNDER T HE LAWS OF HONG KONG AND IS ENGAGED IN THE BUSINESS OF PROVISION OF SUPPLY CHAIN MANAGEMENT INCLUDING THE PROVISION OF FREIGHT FORWA RDING AND LOGISTICS SERVICES. DURING THE COURSE OF THE SCRUTINY ASSESSM ENT PROCEEDINGS, THE ASSESSING OFFICER CAME ACROSS WITH THE AGREEMENT WI TH UPS SCS (INDIA) PVT. LTD., WITH WHOM THE ASSESSEE ENTERED INTO A RE GIONAL TRANSPORTATION SERVICES AGREEMENT FOR PROVIDING FREIGHT AND LOGIST ICS SERVICES TO EACH OTHER. 3.2. ON PERUSAL OF THE ACCOUNTANTS REPORT IN FORM 3CEB, THE AO NOTICED THAT DURING THE YEAR UNDER CONSIDERATION, T HE ASSESSEE HAS RECEIVED RS. 48,91,349/- AS INTERNATIONAL TRANSPORT ATION FEE UNDER THE TRANSPORTATION AGREEMENT. THE SAID INCOME WAS CLAI MED TO BE NOT TAXABLE IN INDIA UNDER THE PROVISIONS OF EITHER SEC . 5 OR SEC. 9 OF THE ACT AS THE INCOME AROSE FROM SERVICES RENDERED BY THE ASSESSEE OUTSIDE INDIA AS NO OPERATIONS HAVE BEEN CARRIED OUT IN INDIA. I T WAS FURTHER CLAIMED THAT THE RELATIONSHIP BETWEEN THE ASSESSEE AND USIP L IS THAT OF AN INDEPENDENT CONTRACTOR AND THE BUSINESS BETWEEN THE M IS CARRIED ON A ITA NO. 7319/M/2012 3 PRINCIPAL-TO-PRINCIPAL BASIS AND AT ARMS LENGTH. THE AO WAS OF THE FIRM BELIEF THAT THE TERM FEE FOR TECHNICAL SERVICES (FT S) HAS BEEN DEFINED UNDER THE PROVISIONS OF SEC. 9(1)(VII) OF THE ACT A ND IN SO FAR AS RELEVANT TO THE FACTS OF THE CASE, AS ANY CONSIDERATION (IN CLUDING ANY LUMP SUM CONSIDERATION) FOR THE RENDERING OF ANY MANAGERIAL, TECHNICAL OR CONSULTANCY SERVICES (INCLUDING THE PROVISION OF SE RVICES OF TECHNICAL OR OTHER PERSONNEL). THE AO FURTHER OBSERVED THAT IN THE LIGHT OF THE PROVISIONS OF SEC. 9(1)(VII) SERVICES PROVIDED BY T HE ASSESSEE WERE IN THE NATURE OF MANAGERIAL, TECHNICAL OR CONSULTANCY SERV ICES. DRAWING SUPPORT FROM THE FINDINGS OF THE LD. CIT(A) IN THE CASE OF THE ASSESSEE FOR A.Y. 2006-07, WHEREIN A SIMILAR TRANSACTION WAS CONSIDE RED, THE AO CAME TO THE CONCLUSION THAT THE TRANSPORTATION FEES ARE FO R TECHNICAL SERVICES AND THEREFORE, LIABLE TO BE TAXED ON A GROSS BASIS AS FEES FOR TECHNICAL SERVICES AND ADDED RS. 48,91,349/- TO THE RETURNED INCOME O F THE ASSESSEE AND COMPLETED THE ASSESSMENT AT RS. 50,49,029/-. 4. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A). IT WAS POINTED OUT TO THE LD. CIT(A) THAT THE ORDER OF THE LD. CIT(A) FOR A.Y. 2006-07 HAS BEEN REVERSED BY THE TRIBUNAL, MUMBAI B ENCH VIDE ITS ORDER DT. 22.2.2012, WHEREIN THE TRIBUNAL HAS HELD THAT F EES EARNED BY THE ASSESSEE UNDER THE TRANSPORTATION AGREEMENT ARE NOT FTS AND CANNOT BE TAXED U/S. 9(1)(VII) OF THE ACT. TAKING SUPPORT FR OM THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2006-07, T HE LD. CIT(A) HELD THAT THE SERVICES RENDERED BY THE ASSESSEE ARE NOT MANAGERIAL, TECHNICAL OR CONSULTANCY SERVICES AND DELETED THE ADDITION MADE BY THE AO. 5. AGGRIEVED BY THIS, THE REVENUE IS BEFORE US. AT THE VERY OUTSET, THE LD. COUNSEL FOR THE ASSESSEE STATED THAT THE IS SUE STANDS COVERED IN ITA NO. 7319/M/2012 4 FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBU NAL IN ASSESSEES OWN CASE FOR A.Y. 2006-07 VIDE ITA NO. 2426/M/2010 DT. 22.2.2012. 6. THE LD. DEPARTMENTAL REPRESENTATIVE FAIRLY CONCE DED TO THIS. 7. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTH ORITIES BELOW. WE FIND THAT THE AO HAS BASED HIS FINDINGS ON THE DECI SION OF THE LD. CIT(A) FOR A.Y. 2006-07. WE ALSO FIND THAT THE SAID DECIS ION OF THE LD. CIT(A) WAS REVERSED BY THE TRIBUNAL IN ITA NO. 2426/M/10 A T PARA 2.1.5 OF ITS ORDER, WHEREIN THE LD. CIT(A) HAS INCORPORATED THE FINDINGS OF THE TRIBUNAL QUA PARA 17,18 & 19 OF THE TRIBUNALS ORDE R. AS NO DISTINGUISHING FACTS HAVE BEEN BROUGHT BEFORE US A ND THE FINDINGS OF THE LD. CIT(A) IS BEING BASED ON THE DECISION OF THE TR IBUNAL IN ASSESSEES OWN CASE IN ITA NO. 2426/M/10, WE DECLINE TO INTERF ERE. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST MAY, 2014 . 2 - 1& $ 3 45 21.5.2014 1 - 6 SD/- SD/- (VIJAY PAL RAO ) (N.K. BILLAIYA) /JUDICIAL MEMBER $ / ACCOUNTANT MEMBER MUMBAI; 4 DATED 21 ST MAY, 2014 . . ./ RJ , SR. PS ITA NO. 7319/M/2012 5 2 2 2 2 - -- - *. *. *. *. 7&. 7&. 7&. 7&. / COPY OF THE ORDER FORWARDED TO : 1. ') / THE APPELLANT 2. *+') / THE RESPONDENT. 3. 8 ( ) / THE CIT(A)- 4. 8 / CIT 5. 96 *. , , / DR, ITAT, MUMBAI 6. 6: ; / GUARD FILE. 2 2 2 2 / BY ORDER, +. *. //TRUE COPY// < << < / = = = = (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI