Vanderlande Industries Private Limited, Pune V. Assistant Commissioner of Income-tax, Circle - 13, Pune

MA 211/PUN/2022

AI Insights

The case involves Vanderlande Industries Private Limited, which filed a Miscellaneous Application against an order of the Income Tax Appellate Tribunal concerning the assessment year 2012-13. The dispute centered on the taxability of payments made to Vanderlande Industries Holding, B.V. Netherlands (VIBV) as 'Royalties' under the Double Taxation Avoidance Agreement (DTAA) between India and the Netherlands. The Tribunal initially erred by not considering a crucial amendment to the definition of 'Royalties' under the DTAA, effective from April 1, 1998, which was relevant to the assessment year in question. The Tribunal acknowledged this oversight and recalled part of its previous order for re-evaluation in light of the correct provisions of the DTAA.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 137842 (ITAT-PUNE)
• Duration Of Justice: 8 month(s) 27 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 19-02-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 16-02-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 22-05-2022
• Laws Referred To: Income-tax Act, 1961, DTAA between India and Netherlands
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Double taxation relief

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH, ‘C’ PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER Miscellaneous Application No.211/PUN/2022 (arising out of ITA No.48/PUN/2018) Assessment Year : 2012-13 Vanderlande Industries Private Limited, 702, Level 7, Pentagon Tower P4, Magarpatta City, Hadapsar, Pune 411 028 PAN : AACCV8546V Vs. ACIT, Circle-13, Pune (Applicant) (Respondent) आदेश / ORDER PER R.S.SYAL, VP : This Miscellaneous Application has been moved by the assessee against the order passed by the Tribunal on 09-02-2022 in relation to the assessment year 2012-13. 2. The ld. AR contended that the Tribunal erred in considering wrong portion of para 4 of Article 12 of the DTAA between India and Netherlands, which led to the incorrect appreciation of facts and Assessee by: Shri Aliasger Rampurawala & Shri Pratik Shah Revenue by: Shri Suhas Kulkarni Date of hearing 17-02-2023 Date of pronouncement 20-02-2023 M.A.No.211/PUN/2022 Vanderlande Industries Private Limited 2 decision on the issue of taxability of the amount as `Royalties’ under the DTAA. 3. We have heard the rival submissions and gone through the relevant material on record. The only issue raised before the Tribunal was confirmation of disallowance u/s.40(a)(ia) of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) on the ground that the assessee failed to deduct tax at source from the payments made to Vanderlande Industries Holding, B.V. Netherlands (VIBV). The Tribunal considered the relevant Agreement between the assessee and VIBV and thereafter came to the conclusion that the Information, Communication Technologies (ICT) charges paid by the assessee were composite payment made towards use of the overall ICT infrastructure, being, the payment for use or right to use of industrial, commercial or scientific equipment and hence covered within section 9(1)(vi)(b) of the Act as `Royalty’. This portion of the Tribunal order is not the subject matter of the rectification application. 4. Thereafter, the Tribunal considered the position under the DTAA between India and Netherlands and discussed para 4 of Article 12 operative from 27-03-1989 and then its substitution vide M.A.No.211/PUN/2022 Vanderlande Industries Private Limited 3 Notification No.11050 dated 30-08-1999 effective from 1.4.1997 for coming to the conclusion that para 4(b) of the Notification covered payment made for use or right to use industrial, commercial or scientific equipment and hence, chargeable as `Royalties’. However, the ld. AR pointed out that an amendment to the definition of `Royalties’ under para 4 of Article 12 was further carried out with effect from 01-04-1998. The assessment year under consideration is 2012-13. The Tribunal while deciding the issue in the context of the DTAA prima facie does not appear to have considered the amendment to the definition of Royalties w.e.f. 01-04-1998 and stopped at considering the definition of Royalties, firstly, under the DTAA as notified on 27-03-1989 in para 12 of its order and thereafter the Notification dated 30-08-1999 effective from 01-04-1997 in para 14 of its order. This amendment appears to have some bearing on the ultimate decision. Under these circumstances, we recall the order of the Tribunal from para 12 onwards for considering the impact of the correct position under DTAA applicable to the facts of the case. However, it is made clear that the taxability of the amount as Royalty u/s.9(1)(vi) of the Act M.A.No.211/PUN/2022 Vanderlande Industries Private Limited 4 will remain intact, which has neither been disputed nor the subject matter of this miscellaneous application. 5. The Registry is directed to fix this appeal for hearing in due course after issuing notice to the parties only to the limited extent of considering the taxability of the amount of ICT charges under the DTAA and its consequential effect. 6. In the result, the Miscellaneous Application is allowed to this extent. Order pronounced in the Open Court on 20 th February, 2023. Sd/- Sd/- ( PARTHA SARATHI CHAUDHURY) (R.S.SYAL) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; िदनांक Dated : 20 th February, 2023 सतीश M.A.No.211/PUN/2022 Vanderlande Industries Private Limited 5 आदेश की ितिलिप अ ेिषत/Copy of the Order is forwarded to: 1. अपीलाथ / The Appellant; 2. थ / The Respondent 3. 4. The Pr. CIT-4, Pune DR, ITAT, ‘C’ Bench, Pune 5. गाड फाईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune Date 1. Draft dictated on 17-02-2023 Sr.PS 2. Draft placed before author 20-02-2023 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. *