Grupo Antolin Irausa S.A., Pune V. Deputy Direcotr of Income tax, Pune

MA 360/PUN/2022

AI Insights

The case involves Grupo Antolin Irausa S.A., a Spanish resident, who contested the taxability of certain services provided to an Indian entity under the India-USA DTAA for the assessment years 2010-11 to 2012-13. The assessee argued that the nature of services and the applicable DTAA were misinterpreted in the original Tribunal decision. The Tribunal, after reviewing the submissions and the relevant materials, dismissed the Miscellaneous Applications, affirming that the services provided fell under the scope of the India-USA DTAA and were correctly interpreted in the original decision.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 137964 (ITAT-PUNE)
• Duration Of Justice: 7 month(s) 1 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 05-06-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 01-06-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 03-11-2022
• Other Referred Cases: Buro Happold Ltd. Vs. DCIT
• Laws Referred To: DTAA between India-USA, DTAA between India-Portugal, DTAA between India-Spain
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Double taxation relief
• Section: 254(2); 113; 13

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 Nos.360 to 362/PUN/2022 (arising out of ITA Nos.1442 to 1444/PUN/2017) Assessment Years : 2010-11 to 2012-13 Grupo Antolin Irausa S.A. C/o. B-25, MIDC, Ranjangaon, Shirur, Pune – 412 220 PAN : AADCG9626L Vs. DDIT (International Taxation)-1, Pune (Applicant) (Respondent) Assessee by : Shri. J.D. Mistri, Sr. Advocate & Shri Ketan Ved Revenue by : Shri Ajay Modi Date of Hearing : 02-06-2023 Date of Pronouncement : 06-06-2023 ORDER PER R.S.SYAL, VP : These Miscellaneous applications by the assessee are directed against the orders passed by the Tribunal on 28-07-2022 in relation to the assessment years 2010-11 to 2012-13. A.Y. 2010-11 : 2. The learned Senior Counsel submitted that the impugned order suffers from mistakes apparent from record inasmuch as the true nature of services was not properly considered; the contention of the assessee for applicability of the DTAA with M.A.Nos.360 to 362/PUN/2022 Grupo Antolin Irausa 2 Portugal was impliedly not accepted; and further Article 13 of the DTAA between India-USA has been wrongly interpreted. These contentions were opposed by the learned Departmental Representative. 3. Having heard the rival submissions and gone through the relevant material on record, it is seen that the Tribunal took note of the nature of services rendered at paras 5.2 and 5.3 of its order passed u/s 254(1) of the Act. Thereafter, it also noted the assessee’s contentions made before the ld. CIT(A) giving narration of the rendition of actual services as reproduced on page 11 of the ld. CIT(A)’s order. Such services, as stated by the assessee before the ld. CIT(A) to have been rendered, have been reproduced at page 18 of the Tribunal order u/s 254(1). Thereafter, the Tribunal analysed all the services at paras 6.10, 6.11, 6.12 and 6.13 of its order for reaching a conclusion that the services as claimed before the ld. CIT(A) qua the three services, actually consisted of development and transferring technical plans and also Managerial and supervising the applications. It is on the strength of the analysis of the services from the e-mail exchanges between the assessee and the Indian entity along with the assessee’s own account of rendition of M.A.Nos.360 to 362/PUN/2022 Grupo Antolin Irausa 3 services before the ld. CIT(A) that the Tribunal deduced the true nature of services for its decision. The ld. Senior Counsel submitted that the assessee, by mistake, gave a wrong narration of services to the ld. CIT(A). On a specific query, if any rectification application was filed with the ld. CIT(A) on this score, the answer was given in negative. Now, when a decision has been taken by the Tribunal in the backdrop of all this, which does not fully suit the assessee, we can’t permit it to come out with a changed stand that there was some mistake on its part in stating the nature of services before the ld. CIT(A), more so, when neither such argument of the alleged mistake was made during the course of proceedings before the Tribunal u/s.254(1) of the Act nor there is any corroboration except bald statement about the wrong mentioning of nature of services. It goes without saying that scope of proceedings u/s 254(2) is confined to rectifying a mistake apparent from record. No party can be allowed to set up a new case in these proceedings. We, therefore, find no merit in this argument and dismiss it. 4. The ld. Senior Counsel submitted that India-Portuguese DTAA should have been considered for examining the taxability instead of India-USA DTAA. M.A.Nos.360 to 362/PUN/2022 Grupo Antolin Irausa 4 5. The assessee is a resident of Spain governed by India-Spain DTAA. Protocol to this DTAA provides for adoption of a relevant favourable article between India and any other member country of the OECD for taxation of Royalty or Fees for Technical services at a lower rate or scope more restricted than the rate or scope provided in the DTAA between India and Spain. The assessee invoked the protocol at the material time and exercised the option of invoking India-USA DTAA. The Tribunal upheld the assessee’s invocation of the India-USA DTAA and decided the matter accordingly. Now the ld. Senior Counsel is arguing to change the option once again from India- USA DTAA to India-Portugal DTAA. On one hand, the assessee exercised the option under the Protocol and chose to be governed by the India-USA DTAA at the material time and the assessment got finalized accordingly on 24.5.2013; and on the other, the assessee is now seeking assistance from the India Portuguese DTAA dated 11.9.2018 (copy placed at page 341 of the paper book), which was not in existence when the assessee filed its return; the assessment got concluded and the order of the ld. CIT(A) passed on 23.3.2017. Quite naturally, there could have been no occasion for any authority to test the facts M.A.Nos.360 to 362/PUN/2022 Grupo Antolin Irausa 5 of the case in the hue of the India Portuguese DTAA, which itself came into existence much after that. In our opinion, this line of argument cannot be countenanced to set up an altogether new case at the stage of the Tribunal. 6. The ld. Senior Counsel argued that there can be no restraint on the assessee to take support from India-Portuguese DTAA. He bolstered this proposition by relying on certain decisions holding that if there is a retrospective amendment of law germane to the issue under consideration, the Tribunal is supposed to be guided by such amended provision and cannot go with the unamended law prevalent at the time of passing of the order by the AO. 7. We are in full agreement with the proposition propounded by the ld. Senior Counsel. However, such proposition is not applicable to the facts of the case. The obvious reason is that we are not confronted with a situation in which the assessee chose India-USA DTAA by exercising the option under the Protocol and thereafter some change took place in India-USA DTAA also applying to the year under consideration. In that case, the ratio of such decisions would have applied requiring the Tribunal to examine the amended DTAA and decide the M.A.Nos.360 to 362/PUN/2022 Grupo Antolin Irausa 6 issue accordingly. In view of the foregoing discussion, we are satisfied that the argument of the ld. Senior Counsel does not merit acceptance, which is hereby repelled. 8. Focussing on India-USA DTAA itself, the ld. Senior Counsel submitted that the Tribunal erred in reading the Article 12(4) by making two broader segments, namely, first, where such services “make available Technical knowledge, experience, skill, know-how or processes” and second, where such services “consist of the Development and Transfer of a Technical plan or Technical design”. His further contention was that the term `make available’ in the India USA DTAA also applies to the second segment, viz., where such services “consist of the Development and Transfer of a Technical plan or Technical design”. For this proposition, he relied on an order passed by the Mumbai Benches of the Tribunal in Buro Happold Ltd. Vs. DCIT (2019) 113 taxmann.com 344 (Mumbai- Trib.). 9. The Tribunal, after discussing the ambit of Article 12(4) and interpreting it in a manner indicated in its order, reached the conclusion that some of the expenses fall in the second segment for which matter was restored to the AO for computing M.A.Nos.360 to 362/PUN/2022 Grupo Antolin Irausa 7 the amount accordingly. At the same time, the Tribunal also categorically held in para 6.14 on page 21 of its order that in view of this position,: `we desist from examining if the above services are also making available any technical knowledge, experience, skill, know-how, or processes covered under the first segment of the Article. The raison d’etre is that the answer to this can be found out only after examining the detailed nature of the defined Quality and Environment strategy; the defined research procedures and policies on the subject of technological policies; and the defined group information systems policy, strategy, planning and management tools and then seeing, how they were actually used by the Indian entity to find out if they make available any technical knowledge, experience, skill, know-how, or processes. No such detail is available on record.’ The probable reason for the ld. Senior Counsel’s attempt to get rid of India USA DTAA and get covered in India Portuguese DTAA is the narrower scope of the Article covering only `make available’ clause in the latter DTAA in contrast to the `development and transfer of technical plan or technical design’ also in the former. The Tribunal in the impugned order has not only held that some of the services M.A.Nos.360 to 362/PUN/2022 Grupo Antolin Irausa 8 provided directly fall under the second segment but also did not go deep into the applicability of `make available’ clause because of the lack of relevant material available on record before it, as reproduced above from the order u/s 254(1). The issue is now open at large before the AO and the assessee is entitled to put forth any submission in support of its case, as it considers expedient. Similar proposition is true for the Revenue also. 10. The ld. Senior Counsel further argued that the Tribunal did not confront the assessee with the second segment of Article 12(4) of the DTAA and applied it suo motu to the facts of the case. In our considered opinion, this contention is bereft of any force. It is only the Article 12(4), as one unit, which was under consideration by the Tribunal, which covers both the broader segments. It was incumbent on the part of the assessee to state as to how the second segment was not applicable. If the arguments were restricted only to the first segment of Article 12(4) and did not mention anything about the second segment, which the Tribunal found to be directly applicable, no fault can be found in passing the order in that manner. It is further pertinent to note that the Tribunal nowhere held that the first M.A.Nos.360 to 362/PUN/2022 Grupo Antolin Irausa 9 segment is not applicable and the services rendered by the assessee did not `make available’ technical knowledge etc. Rather, this aspect was not gone into because the case was found to be directly falling under the second segment and the applicability of the first segment required further material, which was not available on record. A specific mention of this position was made in the order u/s 254(1) of the Act. Further, no reference to the Tribunal order in Buro Happold Ltd.(supra) was ever made at the time of proceedings u/s.254(1) of the Act. It is for the first time that the ld. Senior Counsel has relied on this order in support of his contention during the proceedings u/s.254(2) to contend that the view taken by the Tribunal in the impugned order is erroneous. 11. In our considered opinion, the above contentions do not stand anywhere in the scope of rectification proceedings because the Tribunal thoroughly examined the factual position in the light of Article 12(4) and thereafter reached a particular conclusion. The assessee cannot be allowed to reargue the matter in the garb of rectification proceedings with an attempt to convince the bench to deviate from its well considered decision taken in the original order passed on merits. M.A.Nos.360 to 362/PUN/2022 Grupo Antolin Irausa 10 A.Yrs. 2011-12 and 2012-13 : 12. Both the sides are in agreement that the facts and circumstances of the other two years are mutatis mutandis similar inasmuch as the Tribunal also followed its order for the A.Y. 2010-11 while deciding the issue for the A.Yrs. 2011-12 and 2012-13. We follow our reasoning and conclusion drawn for the A.Y. 2010-11 and apply the same to the two years currently under consideration. 13. In the result, all the Miscellaneous Applications stand dismissed. Order pronounced in the Open Court on 06 th June, 2023. Sd/- Sd/- (PARTHA SARATHI CHAUDHURY) (R.S.SYAL) JUDICIAL MEMBER VICE PRESIDENT प ु णे Pune; दनांक Dated : 06 th June, 2023 Satish M.A.Nos.360 to 362/PUN/2022 Grupo Antolin Irausa 11 आदेश क त ल प अ े षत / Copy of the Order is forwarded to : 1. अपीलाथ / The Appellant; 2. यथ / The Respondent; 3. The Pr. CIT-5, Pune 4. िवभागीय ितिनिध, आयकर अपीलीय अिधकरण, पुणे “C” / DR ‘C’, ITAT, Pune; 5. गाड फाईल / Guard file आदेशान ु सार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune Date 1. Draft dictated on 02-06-2023 Sr.PS 2. Draft placed before author 06-06-2023 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. *