DCIT (IT) 3(2)(2), MUMBAI V. MWH CONSULTANTS (S) PTE. LTD, MUMBAI

ITA 960/MUM/2016

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 5970 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 11 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: L
• Assessment Year: 2012-2013
• Appeal Filed On: 26-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: J D MISTRY
• Keywords: Double taxation relief; Tax effect; Set aside
• Section: 201; 115A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH I , MUMBAI BEFORE SHRI C.N. PRASAD , HONBLE JUDICIAL MEMBER AND SHRI G. MANJUNATHA , HONBLE ACCOUNTANT MEMBER ITA NO . 960 /MUM/201 6 ( A.Y: 201 2 - 13) DCIT (IT) - 3(2)(2) R.NO. 11, GROUND FLOOR SCINDIA HOUSE, N.M. ROAD BALLARD ESTATE MUMBAI 400 038 V. M /S. MWH CONSULTANTS (S) PTE LTD C/O DELOITTE HASKINS & SELLS LLP INDIABULLS FINANCE CENTRE 3, 27 TH TO 32 ND FLOOR SENAPATI BAPAT MARG, ELPHINSTONE ROAD (W) MUMBAI 400 013 PAN: AAGCM9041C (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI J.D. MISTRY & SHRI NIRAJ SHETH DEPARTMENT BY : SHRI VAIBHAV JAIN DATE OF HEARING : 21.11.2019 DATE OF PRONOUNCEMENT : 07 .0 2 .2020 O R D E R PER C.N. PRASAD (JM) THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF THE DISPUTE RESOLUTION PANEL - 3, MUMBAI [HEREINAFTER IN SHORT DRP] DATED 29.12.2015 PASSED U/S. 144C(5) OF THE ACT. 2. REVENUE HAS RAISED THE FOLLOWING GROUND S IN ITS APPEAL : - 1. 'WHETHER ON FACTS AND IN CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. DRP IS JUSTIFIED IN HOLDING THAT SERVICES RENDERED BY THE 2 ITA NO. 960/MUM/2016 (A.Y: 2012 - 13) MWH CONSULTANTS (S) PTE LTD ASSESSEE COMPANY ARE BROADLY IN THE NATURE OF 'MANAGERIAL SERVICES' WHICH ARE NOT COVERED WITHIN THE SCOPE OF DEFINITION OF THE TERM 'FEE FOR TECHNICAL SERVICES' AS PER ARTICLE - 12.4 OF INDIA - SINGAPORE DTAA,' 2. ' WHETHER ON FACTS AND IN CIRCUMSTANCES OF THE CASE AND IN LAW AND IN CONTINUATION OF (1) ABOVE, THE SERVICES RENDERED BY THE ASSESSEE COMPANY DO NOT MAKE AVAILABLE ANY TECH NICAL KNOWLEDGE AS HELD BY DRP DESPITE DETAILED ANALYSIS AND OBSERVATION OF THE ASSESSING OFFICER IN THE ORDER OF ASSESSMENT UNDER CONSIDERATION. 3. THE APPELLANT PRAYS THAT THE ORDER OF THE LD. DRP ON THE ABOVE GROUND(S) BE SET ASIDE AND THAT OF THE ASSES SING OFFICER BE RESTORED. 4. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 3. AT THE TIME OF HEARING, L D. S ENIOR C OUNSEL FOR THE ASSESSEE SUBMITTED THAT TAX EFFECT ON THE ISSUE IN THE PRESENT APPEAL IS BELOW 5 0 LAC S AND IN VIEW OF THE CBDT CIRCULAR NO. 17/2019 DATED 08.08.2019 IN F.NO.279/MISC.142/2007 - ITJ (PT) , THE APPEAL OF THE REVENUE IS NOT MAINTAINABLE. IN THE COURSE OF THE HEARING , LD. SENIOR COUNSEL FOR THE ASSESSEE FURNISHED THE CALCULATION OF TAX EFFEC T WHICH IS AS UNDER: - SR.NO. PARTICULARS AMOUNT IN . AMOUNT IN . 1. FEES FOR TECHNICAL SERVICES 4,84,44,048 / - TOTAL IN IINR 4,84,44,048 / - TAX ON AMOUNTS DISPUTED @ 10% AS PER ARTICLE 12 OF THE INDIA - SINGAPORE DTAA 48,44,405 / - ADD: SURCHARGE @ NIL * - ADD: EDUCATION CESS @ NIL * - TAX EFFECT 48,44,405 / - *NO SURCHARGE AND EDUCATION CESS IS LEVIABLE TO TAX RATES AS PER THE DTAA - RELIANCE IN THIS REGARD IS PLACED ON THE FOLLOWING DECISIONS : 4. REFERRING TO THE SAID CALCULATION , LD. SENIOR COUNSEL SUBMITTED THAT THE TAX EFFECT IN THIS CASE IS WORK OUT AT .48,44,405/ - BEING 10% OF TAX ON 3 ITA NO. 960/MUM/2016 (A.Y: 2012 - 13) MWH CONSULTANTS (S) PTE LTD FEES FOR TECHNICAL SERVICES AND THIS TAX RATE IS APPLIED AS PER ARTICLE 12 OF THE DTAA BETWEEN INDIA AND SINGAPORE. LD. SENIOR COUNSEL FOR THE ASSESSEE SUBMITTED THAT SURCHARGE AND EDUCATION CESS ARE NOT APPLICABLE IN THE CASE OF THE ASSESSEE AS THE TAX RATE WAS APPLIED AS PER DTAA. IN SUPPORT OF HIS CONTENTIONS HE PLACED RELIANCE ON THE FOLLOWING DECISIONS: - A. SOREGAM SA V. DDIT [101 TAXMANN.C OM 94 (DELHI - TRIB)] B. R.A.K. CEREMICS, UAE V. DDIT [104 TAXMANN.COM 380 (HYD - TRIB)] C. PARKE DAVIS AND COMPANY LLC V. ACIT [41 TAXMANN.COM 193 (MUM - TRIB)] D. SUNIL V. MOTIANI V. ITO [33 TAXMANN.COM 252 (MUM - TRIB)] 5. LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT IN THIS CASE IF THE SUR C HARGE AND EDUCATION CESS ARE NOT INCLU DED THE TAX EFFECT IS COMING TO .48,44,405/ - . 6. WE HAVE HEARD THE SUBMISSIONS AND PERUSED THE GROUNDS OF APPEAL IN THIS APPEAL. IN THIS CASE THE DRP IN ITS ORDER HAS OBSERVED THAT IN TERMS OF PROVI SIONS OF SECTION 115A OF THE ACT AND ALSO IN TERMS OF ARTICLE 12 OF THE INDIA SINGAPORE DTAA , THE RATE OF TAX FOR FEES FOR TECHNICAL SERVICES IS 10%. ACCORDINGLY, CONSIDERING THE PROVISIONS OF SECTION 115A , THE DRP DIRECTED THE ASSESSING OFFICER TO APP L Y THE RATE OF TAX AS PER THE PROVISIONS OF SECTION 115A OF THE ACT. WE ALSO OBSERVED THAT IN THE DECISIONS RELIED ON BY THE ASSESSEE IT HAS BEEN HELD THAT WHEN THE TAX RATE IS APPLIED AS PER THE DTAA PROVISIONS, SUCH TAX RATE AS SPECIFIED IN DTAA PROVISI ONS IS INCLUSIVE OF SURCHARGE AND EDUCATION CESS. THEREFORE, APPLYING THE RATE 4 ITA NO. 960/MUM/2016 (A.Y: 2012 - 13) MWH CONSULTANTS (S) PTE LTD AS PER DTAA IN THIS CASE AT THE RATE OF 10% FOR THE FEES FOR TECHNICAL SERVICES , THE TAX PAYABLE EXCLUDING SURCHARGE AND EDUCATION CESS WORKS OUT TO .48,44,405/ - WHICH IS BELOW .50,00,000/ - . THUS, SINCE THE TAX EFFECT IN THIS APPEAL IS LESS THAN .50 LAKHS THE APPEAL OF THE REVENUE IS NOT MAINTAINABLE ON ACCOUNT OF LOW TAX EFFECT IN VIEW OF THE CBDT CIRCULAR NO. 17/2019 DATED 08.08.2019. HENCE THIS APPEAL IS DISMISSED. 7. IN THE RESULT, APPEAL OF THE REVENU E IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 0 7 TH FEBRUARY , 2020 S D/ - S D/ - ( G. MANJUNATHA ) (C.N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI / DATED 07 / 0 2 / 2020 GIRIDHAR, SR.PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// BY ORDER, (ASSTT. REGISTRAR) ITAT, MUM