Mc KINSEY KNOWLDGE CENTRE BELGIUM INC., MUMBAI V. ADIT 4(1), MUMBAI

ITA 8770/MUM/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92994 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: L
• Next Hearing Date: 26-02-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 27-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PORUS KAKA SMT VANDANA SAGAR
• Keywords: Double taxation relief
• Section: 260A

Judgement Text

MCKINSEY & COMPANY INC ITALY ITA NO. 8769 / M UM /20 11 & 1 1 OTHER GROUP APPEALS 1 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH L , MUMBAI . . , , , BEFORE SHRI B R BASKARAN , ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA , JUDICIAL MEMBER ITA ITA NO. : 8769 /MUM/20 11 (ASSESSMENT YEAR: 2008 - 09 ) MCKINSEY & COMPANY INC ITALY, C/O. S R BATLIBOI & CO, 14 TH FLOOR, THE RUBY, SENAPATI BAPAT MARG, DADAR (WEST), MUMBAI - 400 028 .: PAN: AAA CM 7226 M VS ASST . DIRECTOR OF IN COME TAX (INTERNATIONAL TAXATION) - 4 (1), SCINDIA HOUSE, BALLARD ESTATE, MUMBAI - 400 001 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PORUS KAKA RESPONDENT BY : SMT VANDANA SAGAR ITA NO. : 8770 /MUM/20 11 (ASSESSMENT YEAR: 2008 - 09 ) MCKINSEY KNOWLEDGE CENTRE BELGIUM INC, C/O. S R BATLIBOI & CO, 14 TH FLOOR, THE RUBY, SENAPATI BAPAT MARG, DADAR (WEST), MUMBAI - 400 028 .: PAN: AADCM 3489 P VS ASST. DIRECTOR OF INCOME TAX (INTERNATION AL TAXATION) - 4(1), SCINDIA HOUSE, BALLARD ESTATE, MUMBAI - 400 001 ITA NO. : 8771 /MUM/20 11 (ASSESSMENT YEAR: 2008 - 09 ) MCKINSEY & COMPANY INC THAILAND, C/O. S R BATLIBOI & CO, 14 TH FLOOR, THE RUBY, SENAPATI BAPAT MARG, DADAR (WEST), MUMBAI - 400 028 .: PAN: AABCM 0992 P VS ASST. DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION) - 4(1), SCINDIA HOUSE, BALLARD ESTATE, MUMBAI - 400 001 ITA NO. : 8772 /MUM/20 11 (ASSESSMENT YEAR: 2008 - 09 ) MCKINSEY & COMPANY INC HONGKONG, C/O. S R BATLIBOI & CO, 14 TH FLO OR, THE RUBY, SENAPATI BAPAT MARG, DADAR (WEST), MUMBAI - 400 028 .: PAN: AAACM 7230 R VS ASST. DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION) - 4(1), SCINDIA HOUSE, BALLARD ESTATE, MUMBAI - 400 001 MCKINSEY & COMPANY INC ITALY ITA NO. 8769 / M UM /20 11 & 1 1 OTHER GROUP APPEALS 2 ITA NO. : 8773 /MUM/20 11 (ASSESSMENT YEAR: 2008 - 09 ) MCKINSEY & COMPANY INC THE NETHERLANDS, C/O. S R BATLIBOI & CO, 14 TH FLOOR, THE RUBY, SENAPATI BAPAT MARG, DADAR (WEST), MUMBAI - 400 028 .: PAN: AAACM 7234 M VS ASST. DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION) - 4(1), SCINDIA HOU SE, BALLARD ESTATE, MUMBAI - 400 001 ITA NO. : 8774 /MUM/20 11 (ASSESSMENT YEAR: 2008 - 09 ) MCKINSEY INCORPORATED, C/O. S R BATLIBOI & CO, 14 TH FLOOR, THE RUBY, SENAPATI BAPAT MARG, DADAR (WEST), MUMBAI - 400 028 .: PAN: AAACM 7221 N VS ASST. DIREC TOR OF INCOME TAX (INTERNATIONAL TAXATION) - 4(1), SCINDIA HOUSE, BALLARD ESTATE, MUMBAI - 400 001 ITA NO. : 8775 /MUM/20 11 (ASSESSMENT YEAR: 200 7 - 0 8 ) MCKINSEY & COMPANY SINGAPORE PTE LTD, C/O. S R BATLIBOI & CO, 14 TH FLOOR, THE RUBY, SENAPATI BAPAT MARG, DADAR (WEST), MUMBAI - 400 028 .: PAN: AA CEM 4465 A VS ASST. DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION) - 4(1), SCINDIA HOUSE, BALLARD ESTATE, MUMBAI - 400 001 ITA NO. : 8777 /MUM/20 11 (ASSESSMENT YEAR: 2008 - 09 ) MCKINSEY & COMPANY INC . BELGIUM, C/O. S R BATLIBOI & CO, 1 4 TH FLOOR, THE RUBY, SENAPATI BAPAT MARG, DADAR (WEST), MUMBAI - 400 028 .: PAN: AA A CM 7232 P VS ASST. DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION) - 4(1), SCINDIA HOUSE, BALLARD ESTATE, MUMBAI - 400 001 ITA NO. : 8778 /MUM/20 11 (ASSESSMENT YE AR: 2008 - 09 ) MCKINSEY & COMPANY INC. SWEDEN, C/O. S R BATLIBOI & CO, 14 TH FLOOR, THE RUBY, SENAPATI BAPAT MARG, DADAR (WEST), MUMBAI - 400 028 .: PAN: AAACM 7213 J VS ASST. DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION) - 4(1), SCINDIA HOUSE, BA LLARD ESTATE, MUMBAI - 400 001 ITA NO. : 8779 /MUM/20 11 (ASSESSMENT YEAR: 2008 - 09 ) MCKINSEY & COMPANY INC. FRANCE, C/O. S R BATLIBOI & CO, 14 TH FLOOR, THE RUBY, SENAPATI BAPAT MARG, DADAR (WEST), MUMBAI - 400 028 .: PAN: AAACM 7223 Q VS ASST. D IRECTOR OF INCOME TAX (INTERNATIONAL TAXATION) - 4(1), SCINDIA HOUSE, BALLARD ESTATE, MUMBAI - 400 001 MCKINSEY & COMPANY INC ITALY ITA NO. 8769 / M UM /20 11 & 1 1 OTHER GROUP APPEALS 3 ITA NO. : 8780 /MUM/20 11 (ASSESSMENT YEAR: 2008 - 09 ) MCKINSEY & COMPANY INC. INTERNATIONAL, C/O. S R BATLIBOI & CO, 14 TH FLOOR, THE RUBY, SENAPATI BAPAT M ARG, DADAR (WEST), MUMBAI - 400 028 .: PAN: AADCM 3403 K VS ASST. DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION) - 4(1), SCINDIA HOUSE, BALLARD ESTATE, MUMBAI - 400 001 ITA NO. : 8781 /MUM/20 11 (ASSESSMENT YEAR: 2008 - 09 ) MCKINSEY PACIFIC RIM. INC., C/O. S R BATLIBOI & CO, 14 TH F LOOR, THE RUBY, SENAPATI BAPAT MARG, DADAR (WEST), MUMBAI - 400 028 .: PAN: AAACM 7233 N VS ASST. DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION) - 4(1), SCINDIA HOUSE, BALLARD ESTATE, MUMBAI - 400 001 /DATE OF HEARING : 09 - 06 - 201 5 / DATE OF PRONOUNCEMENT : 19 - 0 6 - 201 5 ORDER PER BENCH : THE ABOVE CAPTIONED APPEAL S HAVE BEEN FILED BY THE SEPARATE ASSESSE E S AGAINST SEPARATE IMPUGNED ORDERS ALL RELATING TO THE ASSESSMENT YEAR 2008 - 09 AND ONE CASE FOR THE AY 2007 - 08 . THE SOLE ISSUE RAISED IN ALL THE APPEALS IS WITH REGARD TO THE TAXABILITY OF BORROWED SERVICE CHARGES AND THE APPLICABILITY TREATY BENEFITS UNDER INDIA - US TAX TREATY. 2. BEFORE US, THE LD. SENIOR COUNSEL SHRI PORUS KAKA SUBMITTED THAT OUT O F THE TWELVE MATTERS, IN THE ELEVEN MATTERS, ALL THE ASSESSEE S COMPAN IES INCORPORATED A N D TAX RESIDENCE OF US AND ARE ELIGIBLE F O R THE CLAIM OF BENEFITS UNDER I NDO - US DTAA. ALL T HESE ASSESSES ARE PART OF MCKINSEY GROUP, WHICH ARE ENGAGED IN PROVIDING S TRAT EGIC C ONSULTANCY S ERVICES TO THEIR CLIENTS. HE FURTHER SUBMITTED THAT THE SIMILAR ISSUE HAD COME - UP FOR CONSIDERATION, NOT ONLY IN THE EARLIER YEARS BUT ALSO IN THE SUBSEQUENT YEARS, BEFORE THE TRIBUNAL IN SEVERAL CASES OF THE CONCERNED ASSESSEES . THE TRIB UNAL IN ALL THE CASES INVARIABLY HAD HELD THAT, FIRSTLY, SUCH MCKINSEY & COMPANY INC ITALY ITA NO. 8769 / M UM /20 11 & 1 1 OTHER GROUP APPEALS 4 SERVICES DO NOT FALL WITHIN THE AMBIT OF FEES FOR SERVICES UNDER ARTICLE 12 OF THE I NDO - US DTAA AND MOREOVER, THIS ISSUE HAS BEEN SETTLED UNDER THE MAP PROCEEDINGS SETTLED BETWEEN GOVERNMENT TO GOVERNMENT, WHICH MUST BE HONOURED AND FOLLOWED. FURTHER, IN CASE OF MCKINSEY & COMPANY SINGAPORE PTE . LTD INDIA IN ITA NO. 8775/MUM/2011, HE SUBMITTED THAT THE SAME IS ALSO COVERED BY THE DECISION OF THE TRIBUNAL, WHEREIN, SIMILAR VIEW HAS BEEN TAKEN THAT THE SERVICES RENDERED DO NOT FALL WITHIN THE AMBIT OF FTS AS CONTEMPLATED IN THE INDO SINGAPORE TREATY. 3. LD. DR ALSO ADMITTED TO THE AFORESAID FACTS THAT THE ISSUE STANDS SQUARELY COVERED . 4. IN VIEW OF THE ADMITTED FACT THAT THE ISSUE HAS BEEN SETTLED UNDER THE MAP PROCEEDINGS ARRIVED AT SETTLEMENT BETWEEN GOVERNMENT TO GOVERNMENT LEVEL AND THEREFORE , HONOURING THE SAME, WE HOLD THAT SUCH A BORROWED SERVICES IS NOT PART OF FTS/FIS AND HENCE NOT TAXABLE IN INDIA. NOT ONLY THIS , THE DEPARTMENT IN THE APPEAL FILED BEFORE THE HIGH COURT IN THE EARLIER YEARS U/S 260A HAVE LATER ON WITHDRAWN THE APPEAL ON THE GROUND THAT THE ISSUE HAS BEEN SETTLED UNDER MAP . FURTHER, THE TRIBUNAL INVARIABLY IN THE CASE S OF THE ASSESSEE HAVE BEEN CONSISTENTLY HOLDING THAT THE SERVICES RENDERED BY THE ASSESSEE DO NOT FALL WITHIN THE AMBIT OF FTS AS DEFINED IN ARTICLE 12(4) OF I NDO - US DTAA. TH E S E O R DERS HA VE BEEN FOLLOWED IN THE SUBSEQUENT YEAR IN AY 2009 - 10 BY THE TR IBUNAL VIDE ORDER DATED 17 TH APRIL, 2015 A COPY OF WHICH HAVE BEEN FILED IN THE PAPER BOOK PAGE S 1 TO 9. ACCORDINGLY, RESPECTFULLY FOLLOWING THE JUDICIAL PRECEDENTS AND ALSO THE FACT THAT IN THE PRESENT CASE S , THE ISSUE HAS BEEN SETTLED UNDER THE MAP PROCE EDINGS, WE HOLD THAT THE SERVICES RENDERED BY THE ASSESSEE S ARE NOT TAXABLE IN INDIA UNDER ARTICLE 12 AND ALSO IT IS AN ADMITTED FACT THAT THE ASSESSEE DO NOT HAVE A NY PE IN INDIA AND THEREFORE, THE SAME IS NOT TAXABLE UNDER THE TREATY . MCKINSEY & COMPANY INC ITALY ITA NO. 8769 / M UM /20 11 & 1 1 OTHER GROUP APPEALS 5 5. NOW COMING TO THE MCKINSEY & COMPANY SINGAPORE , PTE LTD, WE FIND THAT THIS ISSUE HAS BEEN DECIDED BY THE TRIBUNAL IN THE ASSESSMENT YEAR 2006 - 07 , WHEREIN , THE TRIBUNAL HAVE GRANTED RELIEF AFTER OBSERVING AND HOLDING AS UNDER: THUS, IT IS CLEAR THAT THE ISSUE INVOLVED R EGARDING BORROWED SERVICE CHARGES WAS DECIDED BY THIS TRIBUNAL IN FAVOUR OF THE ASSESSEE AND FURTHER THE DEPARTMENT HAS RESOLVED THAT THE ISSUE UNDER MAP AND CONSEQUENTLY WITHDRAWN THE APPEALS FILED BEFORE THE HONBLE HIGH COURT. FURTHER, THE ASSESSEE HAS FILED A LETTER DATED 12/02/2014 THEREBY STATED THAT THE ISSUE RELATING TO TAXABILITY OF FIRM FUNCTION CHARGES DOES NOT ARISE IN CASE OF THESE THREE APPEALS AND THE ONLY ISSUE INVOLVED IN THESE APPEALS IS THE TAXABILITY OF BORROWED SERVICE CHARGES, WHICH HA S BEEN DECIDED IN FAVOUR OF THE ASSESSEE UNDER THE MUTUAL AGREEMENT PROCEDURE. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, WHEN THE ISSUES INVOLVED IN THESE APPEALS HAVE ALREADY RESOLVED UNDER THE MUTUAL AGREEMENT PROCEDURE, WE DIRECT THE AO TO GRANT THE RELIEF ACCORDINGLY TO THE ASSESSEE AFTER VERIFICATION OF FACT THAT THE ISSUES HAVE ALREADY BEEN RESOLVED UNDER THE MUTUAL AGREEMENT PROCEDURE. 6. ACCORDINGLY, FOLLOWING THE SAME, WE DIRECT THE AO TO GRANT THE RELIEF ACCORDINGLY. 7. IN THE RESULT, ALL T HE APPEALS OF THE ASSESSEE S ARE TREATED AS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH JUNE , 2015. SD/ - SD/ - ( . . ) ( ) ( B R BASKARAN ) ( AMIT SHUKLA ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 19 TH JUNE , 2015 MCKINSEY & COMPANY INC ITALY ITA NO. 8769 / M UM /20 11 & 1 1 OTHER GROUP APPEALS 6 / COPY TO: - 1) / THE APPELLANT. 2) / THE RESPONDEN T. 3) THE CIT (A) - ______CONCERNED , MUMBAI / DRP - II, MUMBAI. 4) THE CIT /DIT CONCERN___/DIT(INTERNATIONAL TAXATION) , MUMBAI. 5) , , / THE D.R. L BENCH, MUMBAI. 6) COPY TO GUARD FILE. / BY ORDER / / TRUE COPY / / / , DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI * . . *CHAVAN, SR.PS