JAS Forwarding Worldwide Pvt. Ltd., New Delhi V. DCIT, New Delhi

MA 28/DEL/2022

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 4669 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 18 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 21-04-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: I1
• Assessment Year: 2009-2010
• Appeal Filed On: 02-02-2022
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Transfer pricing

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH, ‘I-1’: NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND Dr. B.R.R. KUMAR, ACCOUNTANT MEMBER MA No.28/DEL/2022 (Arising out of ITA No.2484/DEL/2014) [Assessment Year: 2009-10] JAS Forwarding Worldwide Pvt. Ltd, 1st Floor, A-Wing, Commercial Complex, Radisson Hotel, New Delhi DCIT, Circle-4(1), New Delhi PAN: AABCJ5564A Assessee Revenue MA No.29/DEL/2022 (Arising out of ITA No.1687/DEL/2016) [Assessment Year: 2011-12] JAS Forwarding Worldwide Pvt. Ltd, 1st Floor, A-Wing, Commercial Complex, Radisson Hotel, New Delhi DCIT, Circle-4(1), New Delhi PAN: AABCJ5564A Assessee Revenue Assessee by Sh.Vaibhav Kulkarni & Sh. Himanshu Agarwa. Adv. Revenue by Sh. Mrinal Kr. Das, Sr. DR Date of Hearing 22.04.2022 Date of Pronouncement 22.04.2022 ORDER PER AMIT SHUKLA, JM, By way of the present Miscellaneous Applications, the applicant assessee is challenging the observation and the direction of the Tribunal in deleting the disallowance u/s 40(a)(i) of the Act which has been remanded back to the file of the AO as per 2 MA Nos.28 & 29/Del/2022 observation made by the Tribunal in para 25, which reads as under:- “25. We have carefully examined the facts before us. Firstly the claim of the assessee that these are the reimbursement of the expenditure. If these are the reimbursement and it is the duty of the assessee to show that assessee had an authority to incur these expenditure on behalf of the other parties and same would be reimbursed to the assessee. Thereafter if this expenditure is incurred they need to be passed on to the principal and then only the assessee can claim that these are the reimbursement of the expenditure. There is no such evidence available before us. Further in that particular case for assessment year 2007 – 08 the claim of the assessing officer was that that there is a business connection in India of the recipient of the income and the assessee has an agency agreement with the associated enterprises. Further there was an argument by the assessee that the about transaction is at arm’s-length is no further attribution were made even if the permanent establishment is established. However the case before us is that the learned assessing officer has taxed it as fees for technical services. Further the assessee has also relied upon the provisions of Section 172 of the income tax act and stated that it is a code itself . We find that the provisions of Section 172 of the income tax act do not apply to the nature of income on by the assessee for its associated enterprise. For applying the provisions of Section 172 of the income tax act there has to be a ship belonging to or chartered by a non- resident which is not the case before us. Similarly the reliance placed by the assessee on the circular of the CBDT also does not apply that in case of a non-resident charterers of the ship no tax is required to be deducted. Here neither the assessee nor the associated enterprise is of the assessee operate any ship. They are merely the service providers. Therefore the issue arises is whether the services provided to the assessee by the associated enterprises is management services, technical services or consultancy services. At the end of the argument of the learned authorised representative he submitted that the issue may be set-aside to the file of the learned assessing officer for determination whether the above sum paid to the associated enterprises can be chargeable to tax as fees for technical services or not. He further submitted that he does not have any objection if the issue is set-aside to the file of the learned assessing officer with all issues left open to be decided afresh. The learned departmental representative did not have any objection to the above request. In view of this we set-aside ground number 5 of the appeal of the assessee back to the file of the learned 3 MA Nos.28 & 29/Del/2022 assessing officer to decide about the chargeability of income in the hands of the associated enterprise and consequent tax deduction at source on such payments vis-avis applicability of the double taxation avoidance agreements of the respective countries of the residence of recipient of income. The assessee is also directed to place before the learned assessing officer the arguments on this issue. The learned assessing officer may examine the same and then decide the issue afresh. Accordingly ground number 5 of the appeal of the assessee is allowed with above direction for statistical purposes.” 2. One of the key issue which has been argued before us at the time of hearing that it is incorrect on part of the Tribunal that in so far as the observation of the Tribunal that ld. Authorized Representative had given a concession the matter should be set- aside to the file of the AO for determination whether the sum paid to the Associate Enterprises can be chargeable to tax as fees for technical services or not and he does not have any objection to the issue is set-aside to the file of the AO with all issues left open to be decided afresh. The Tribunal has also noted that even the ld. DR has no objection. The ld. Counsel for the assessee pointed that there was no such concession given by the ld. counsel for the assessee at the time of hearing and in support, an affidavit has been filed by one Shri Deepak Gupta, Director Finance of appellant company stating that there was no such concession given. Thus, he submitted that this remark should be expunged from the order. 3. He also pointed out that similar matter had arose in the Tribunal in Assessment Years 2007-08 and 2008-09 also, wherein 4 MA Nos.28 & 29/Del/2022 the issue was decided in favour holding that it was in the nature of business activity. 4. However, the Ld. DR submitted that the Tribunal has recorded its finding and given detailed reason that what was the case of the AO and read out the relevant portion of the aforesaid order of the Tribunal, wherein, the Tribunal has categorically recorded that no such evidence was available before this Tribunal and whether these reimbursements are in the nature of FTS or not. Further, he submitted that the Tribunal after considering the entire material placed before it deem fit that this issue needs to be decided by the AO after examining all the material on record whether the payment is in the nature of FTS or not. Thus, the Miscellaneous Applications filed by the applicant should be rejected. 5. After considering the aforesaid submission and perusal of the impugned applications, the only argument placed by the ld. counsel for the assessee before us is that there was no concession given by the then ld. AR for remaining back to the file of the AO. First of all such contention cannot be accepted, because it was open court proceeding, wherein, after detailed discussion, it was decided by the Court in front of both the parties that in lack of proper material placed on record in support of the contention raised by the assessee, it should be restored back to the file of the 5 MA Nos.28 & 29/Del/2022 AO for which both the parties had agreed. Thus, now to content that there was no such argument or concession given by the party cannot be upheld. We do not find any merits in such a contention raised. This direction has to be seen in the context of observation and finding given in entirety which has been reproduced vide para 25. Accordingly, both the Miscellaneous Applications filed by the applicant are rejected. 6. In the result, Miscellaneous Applications filed by the applicant are dismissed. Oder pronounced in the open court on 22.04.2022. Sd/- Sd/- [Dr. B.R.R. KUMAR] [AMIT SHUKLA] ACCOUNTANT MEMBER JUDICIAL MEMBER Delhi; Dated: 22.04. 2022. f{x~{tÜ? f{x~{tÜ?f{x~{tÜ? f{x~{tÜ? Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi