M/s. Bekaert Industries Private Limited, Pune V. Deputy Commissioner of Income tax, Pune

MA 202/PUN/2022

AI Insights

The case involves M/s. Bekaert Industries Private Limited, which filed a Miscellaneous Application against an order of the Income Tax Appellate Tribunal, Pune. The original dispute centered on the taxability of payments made for the use of IT infrastructure facilities, which were considered as 'Royalty' under both the Income-tax Act and the DTAA. The assessee contested the interpretation of the DTAA as applied in the Tribunal's earlier decision, specifically regarding the absence of certain text in the DTAA as considered by the Tribunal. The Tribunal agreed to re-examine the application of the DTAA to the payments in question, while maintaining the decision on other aspects of the case.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 137963 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 4 month(s) 16 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 08-10-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 03-08-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 22-05-2022
• Laws Referred To: Income-tax Act, Double Taxation Avoidance Agreement (DTAA) between India and Belgium
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Double taxation relief

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES “C”, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER Miscellaneous Application No.202/PUN/2022 (arising out of ITA No.1003/PUN/2017) Assessment Year : 2012-13 M/s. Bekaert Industries Private Limited Plot No.127, Sr.No.232/1+2, Friends Co-operative Housing Society, New Airport Road, Sakore Nagar, Vimannagar, Pune – 411014 PAN: AAACB8571E Vs. DCIT, Circle-1(1), Pune Applicant) (Respondent) Assessee by : Shri Alisagar Rampurawala and Shri Amol Mahajan Revenue by : Shri Ramnath P Murkunde Date of Hearing : 06-10-2023 Date of Pronouncement : 09-10-2023 ORDER PER R.S.SYAL, VP : This Miscellaneous application by the assessee is directed against the order passed by the Tribunal on 13-12-2021 in relation to the assessment year 2012-13. 2. The ld. AR submitted that the Tribunal, while passing the order u/s 254(1), held that the payment made for use of the I.T. Infrastructure facility was in the nature of „Royalty‟ both under M.A.No.202/PUN/2022 Bekaert Industries Pvt. Ltd. 2 the Income-tax Act and the Double Taxation Avoidance Agreement (DTAA). He did not raise any objection to the taxability under the Act. It was however submitted that para 10.3 onwards of the order discussed the position under the DTAA by taking note of the para 3(a) of Article 12 of DTAA between India and Belgium for holding that the payment made for use of industrial, commercial or scientific equipment was covered under the DTAA and thereafter concluded against the assessee by observing that the consideration paid for the use of the IT Infrastructure facility was in the nature of payment of industrial royalty. It was pointed out that the contents of para 3(a) of Article 12 of DTAA have been inadvertently taken note of inasmuch as the latter part of para 3, as reproduced in para 10.3 of order, is actually absent in the Comprehensive treaty. It was therefore, prayed that the necessary rectification be made to the order. The ld. DR. supported the impugned order. 3. Having heard the rival submissions and perused the material on record, we find that the taxability of the amount as Royalty under the Act is not challenged. The assail is only to M.A.No.202/PUN/2022 Bekaert Industries Pvt. Ltd. 3 the taxability under the DTAA, which part is contained in para 10.3 onwards of the order passed u/s 254(1). On a prima facie look at the Comprehensive DTAA between India and Belgium, it appears that para 3(a) of Article 12 does not contain the latter part, as has been considered by the Tribunal for holding the payment to be in the nature of industrial royalty. On a specific query, the ld. AR admitted that the para concerning the industrial royalty, as taken note of in the impugned order, is, in fact, a part of the Synthesised Text of the treaty. He, however, contended that the Synthesised Text is the MLI for implementing the measures of base erosion and profit shifting. He stated that the Synthesised Text does not apply to the year under consideration. This issue has an important bearing on the ultimate decision on the point. We, therefore, recall the impugned order to the limited extent of examining the consideration paid for use of the IT infrastructure facility under the correctly applicable portions of the DTAA. On all other aspects, the order passed u/s 254(1) is unchanged. The Registry M.A.No.202/PUN/2022 Bekaert Industries Pvt. Ltd. 4 is directed to fix the appeal for hearing in due course after notice to both the sides. 4. In the result, the Miscellaneous Application is allowed to the above extent. Order pronounced in the Open Court on 09 th October, 2023. Sd/- Sd/- (PARTHA SARATHI CHAUDHURY) (R.S.SYAL) JUDICIAL MEMBER VICE PRESIDENT प ु णे Pune; दिन ांक Dated : 09 th October, 2023 GCVSR आदेश की प्रतिलिपि अग्रेपिि / Copy of the Order is forwarded to : 1. अपील र्थी / The Appellant; 2. प्रत्यर्थी / The Respondent; 3. The concerned CIT, Pune 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण, पुणे “C” / DR „C‟, ITAT, Pune; 5. ग र्ड फ ईल / Guard file आदेशान ु सार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अविकरण ,पुणे / ITAT, Pune M.A.No.202/PUN/2022 Bekaert Industries Pvt. Ltd. 5 Date 1. Draft dictated on 06-10-2023 Sr.PS 2. Draft placed before author 06-10-2023 Sr.PS 3. Draft proposed & placed before the second member JM 4. Draft discussed/approved by Second Member. JM 5. Approved Draft comes to the Sr.PS/PS Sr.PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order. *