The Assistant Commissioner of Income Tax, Circle-2 (1), Panaji., Panaji V. M/s V. M. Salgaocar & Brothers (P) Ltd., Vasco

ITA 75/PAN/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2066 (ITAT-PANAJI)
• Duration Of Justice: 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-07-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 12-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANAND S MARATHE
• Keywords: Double taxation relief; Services rendered outside India
• Section: 12; 10; 2; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI N.S. SAINI , HONBLE ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, HONBLE JUDICIAL MEMBER ITA NO. 62 TO 65 /P A N/201 6 (ASST. YEAR S : 200 9 - 1 0 ) AND ITA NO. 66 TO 6 8 /P A N/201 6 (ASST. YEAR S : 20 1 0 - 1 1 ) AND ITA NO. 69 & 70 /P A N/201 6 (ASST. YEAR S : 20 11 - 1 2 ) AND ITA NO. 72 TO 75 /P A N/201 6 (ASST. YEAR S : 20 12 - 1 3 ) AND ITA NO. 78 , 80 TO 87 /P A N/201 6 (ASST. YEAR S : 20 13 - 1 4 ) ACIT, CIRCLE - 2(1), PANAJI GOA VS. M/S. V.M. SALGAOCAR & BROTHERS (P) LTD., SALGAOCAR HOUSE, F.L.GOMES ROAD, VASCO - DA - GAMA, GOA . PAN NO. AAACV 5950 B (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S. VEERARA G HAVAN (MANAGER TAXATION) DEPARTMENT BY : SHRI ANAND S. MARATHE - DR DATE OF HEARING : 21 / 0 7 /201 6 . DATE OF PRONOUNCEMENT : 21 / 0 7 /201 6 . 2 ITA NO S . 62 - 70, 72 - 75, 78 & 80 - 87 /P A N/201 6 O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER THESE ARE THE APPEALS FILED BY THE REVENUE AGAINST THE SEPARATE ORDERS PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) , PANAJI - 1 IN APPEAL NO S . 267, 268, 269, 270 , 271, 272, 273, 274, 275, 277 , 278, 279, 280 , 283 , 285, 286, 287, 288, 289 , 290, 291, 292 /MRG/13 - 14 , ALL DATED 16/02/2016 , FOR THE ASSESSMENT YEAR S 2009 - 10, 2010 - 11, 2011 - 12 , 2012 - 13 & 2013 - 14 IN RESPECT OF THE APPEALS FILED BY THE ASSESSEE UNDER SECTION 248 OF THE ACT. 2. SHRI ANAND S. MARATHE , DEPARTMENTAL REPRESENTATIVE REPRESENTED ON BEHALF OF THE REVENUE AND SHRI S. VEERARAGHAVAN , MANAGER TAXATION OF THE ASSESSEE COMPANY REPRESENTED ON BEHALF OF THE ASSESSEES . 3 . IT WAS SUBMITTED BY THE DEPARTMENTAL REPRESENTATIVE THAT THE ONLY ISSUE IN THE REVENUES APPEAL WAS AGAINST THE ACTION OF THE COMMISSIONER OF INCOME TAX (APPEALS) IN HOLDING THAT THE PAYMENTS MADE BY THE ASSESSEE TOWARDS THE SALES AND MARKETING SERVICES RENDERED OUTSIDE INDIA ARE NOT LIABLE FOR DEDUCTION OF TDS BY THE ASSESSEE . IT WAS THE SUBMISSION THAT THE ISSUE WAS IN RESPECT OF REMITTANCE MADE TO MARRIOTT IN PURSUANCE TO AN AGREEMENT ENTERED INTO BETWEEN THE ASSESSEE AND M/S. MARRIOTT INTERNATIONAL INC., USA DATED 05/02/2008 . IT WAS THE SUBMISSION THAT THE ASSESSEE WAS OF THE VIEW THAT THE REMITTANCE MAD E TO MARRIOTT ARE NEITHER IN THE NATURE OF ROYALTIES OR FEES FOR TECHNICAL SERVICES AS DEFINED IN SECTION 9(1)( VI ) AND 9(1)(VII) RESPECTIVELY . IT WAS THE SUBMISSION THAT THE ASSESSEE W AS OF THE VIEW THAT THE PAYMENTS WERE REIMBURSEMENT OF THE COSTS TO MARRIOTT. IT WAS FAIRLY AGREED BY BOTH THE SIDES THAT THE ISSUE WAS NOW SQUARELY COVERED BY THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO. 206/PNJ/2013 , DATED 3 ITA NO S . 62 - 70, 72 - 75, 78 & 80 - 87 /P A N/201 6 23 /12/2013 FOR THE ASSESSMENT YEAR 2006 - 07 AND IN ITA NO . 207/PNJ/2013 DATED 23/12/2013 FOR THE ASSESSMENT YEAR 2007 - 08 WHEREIN THE COORDINATE BENCH OF THIS TRIBUNAL IN PARA 5.3, 5.3 . 1 & 5.3.2 HAS HELD AS FOLLOWS: - 5.3 WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME. WE NOTED THAT TWO TYPES OF PAYMENTS HAVE BEEN MADE BY THE ASSESSEE TO MARRIOTT INTERNATIONAL; ONE RELATES TO THE SERVICES RENDERED BY MARRIOTT INTERNATIONAL OUTSIDE INDIA AND THE OT HER RELATES TO THE REIMBURSEMENT OF THE EXPENSES. 5.3.1 THE SERVICES RELATE TO SALES AND MARKETING SERVICES. SALES AND MARKETING SERVICES CANNOT BE REGARDED TO BE ROYALTY U/S 9(1)(VI). SEC. 9(1)(VI) DEFINES THE ROYALTY TO INTER ALIA INCLUDE CONSIDERATION FOR TRANSFER OF ALL OR ANY RIGHTS (INCLUDING GRANTING OF A LICENCE) AND THE USE OF ANY PATENT, INVENTION, MODEL, DESIGN, SECRET FORMULA OR PROCESS OR TRADE MARK OR SIMILAR PROPERTY AND THE TRANSFER OF ALL OR ANY RIGHTS IN RESPECT OF ANY COPYRIGHT, LITERAR Y, ARTISTIC OR SCIENTIFIC WORK AS WELL AS CONSIDERATION FOR RENDERING OF ANY SERVICES IN CONNECTION WITH THE ACTIVITIES REFERRED TO IN SUB - CLAUSES (I) TO (V) TO EXPLANATION 2 TO SEC. 9(1)(VI). IN VIEW OF THE AFORESAID DEFINITION, THE SALES AND MARKETING SE RVICES RENDERED OUTSIDE INDIA CANNOT BE REGARDED TO BE ROYALTY. 5.3.2 FEES FOR TECHNICAL SERVICES IS ALSO DEFINED U/S 9(1)(VII) TO INTER ALIA MEAN ANY CONSIDERATION FOR RENDERING OF ANY MANAGERIAL, TECHNICAL OR CONSULTANCY SERVICES (INCLUDING THE PROVISION OF SERVICES OF TECHNICAL OR OTHER PERSONNEL). THE SERVICES RENDERED BY MARRIOTT INTERNATIONAL DOES NOT INVOLVE RENDERING OF ANY MANAGERIAL, TECHNICAL OR CONSULTANCY SERVICES RENDERED IN INDIA AND THEREFORE IT CANNOT BE REGARDED TO BE FEES FOR TECHNICAL SERVICES. IN VIEW OF THIS, THE INCOME RECEIVED BY MARRIOTT INTERNATIONA L CANNOT BE DEEMED TO ACCRUE AND ARISE IN INDIA. UNDER THE INDO - US DTAA AS PER ARTICLE 12, FEES FOR INCLUDES SERVICES IS DEFINED TO INTER ALIA MEAN PAYMENT OF ANY KIND TO ANY PERSON IN CONSIDERATION FOR RENDERING OF ANY TECHNICAL OR CONSULTANCY SERVICES IF SUCH SERVICES MAKE AVAILABLE TECHNICAL KNOWLEDGE, EXPERIENCE, SKILL, KNOW - HOW OR TECHNICAL DESIGN. THIS IS A FACT THAT MARRIOTT INTERNATIONAL WAS NOT MAKING AVAILABLE THE SALES AND MARKETING SERVICES TO THE ASSESSEE AS PER THE INTERPRETATION GIVEN BY TH E BOMBAY TRIBUNAL IN THE CASE OF RAYMOND LTD. (SUPRA) FOR THE TERM MAKE AVAILABLE. THIS DECISION HAS BEEN FOLLOWED SUBSEQUENTLY EVEN BY THE SPECIAL BENCH OF THE BOMBAY TRIBUNAL IN MAHINDRA & MAHINDRA LTD., 313 ITR 263 (AT). NO CONTRARY DECISION AS BROUGH T TO OUR KNOWLEDGE. IN VIEW OF THIS, IN OUR OPINION, NO INTERFERENCE IS CALLED FOR IN THE ORDER OF CIT(A). EVEN THE COPY OF THE AGREEMENT DT. 5.2.1998 WAS NOT PLACED BY THE REVENUE BEFORE US SO AS TO STRESS PART OF THE GROUND RELATING TO PARAGRAPH 2.01, 2. 02 & 2.03 OF THE AGREEMENT DT. 5.2.1998 ENTERED INTO BETWEEN THE ASSESSEE AND MARRIOTT INTERNATIONAL. IN VIEW OF THIS, WE DISMISS GROUND NO. 4 IN ASSESSMENT YEAR 2006 - 07 AND GROUND NO. 3 IN ASSESSMENT YEAR 2007 - 08 TAKEN BY THE REVENUE. 4 ITA NO S . 62 - 70, 72 - 75, 78 & 80 - 87 /P A N/201 6 4 . WE HAVE CONSIDE RED THE RIVAL SUBMISSIONS. AS IT IS NOTICED THAT THE ISSUE IS NOW SQUARELY COVERED BY THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL AND AS IT IS NOTICED THAT THE FACTS IN THE PRESENT APPEALS ARE ALSO IDENTICAL AND NO DISTINGUISHING FEATURES HAVE B EEN PLACED BEFORE US , AS ALSO ON THE GROUND THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS FOLLOWED THE JUDICIAL DISCIPLINE AND HAS FOLLOWED THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL, WE FIND NO REASON TO INTERFERE WITH THE ORDERS OF THE COM MISSIONER OF INCOME TAX (APPEALS) ON THIS ISSUE. 5. IN THE RESULT, APPEALS FILED BY THE REVENUE STAND DISMISSED. ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF THE HEARING ON THURSDAY , THE 21 ST DAY OF JULY , 201 6 AT GOA . S D / - S D / - (N.S.SAINI) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 21 ST JU LY , 201 6 . VR/ - COPY TO: 1 . THE ASSESSEE. 2 . THE REVENUE. 3 . THE CIT 4 . THE CIT(A) 5 . THE D.R . 6 . GUARD FILE. BY ORDER ASSISTANT REGISTRAR I.T.A.T., PANAJI