DIT (IT) RG 2(1), V. REUTERS LTD,

MA 589/MUM/2012

• Counselvise Citation: [2013] 124 COUNSELVISE.COM (IT) 0958 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 25 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 06-09-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: L
• Next Hearing Date: 06-09-2013
• Assessment Year: 1997-1998
• Appeal Filed On: 11-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Double taxation relief; Permanent establishment
• Section: 12

Judgement Text

, , , , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES L, MUMBAI .. , ! , ' ## $ ! , % BEFORE SHRI R.S.SYAL, AM AND SHRI SANJAY GARG, JM && !' ./ MA NO.589/MUM/2012 ( )*+ , / ARISING OUT OF ITA NO.1325/MUM/2001) ( $' - $' - $' - $' - / / / / ASST.YEAR 1997-98) THE DY.DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION) RANGE 2(1) MUMBAI. M/S.REUTERS LIMITED CONSTRUCTION HOUSE, 3 RD FLOOR WALCHAND HIRACHAND MARG BALLARD ESTATE, MUMBAI 400 038. PAN : JCIT SR 12 / 18-R ( ! / // / APPLICANT) ' ' ' ' / VS. ( ./01/ RESPONDENT) ! 2 22 2 3 3 3 3 / APPLICANT BY : MS.NEERAJA PRADHAN ./01 2 3 2 3 2 3 2 3 / RESPONDENT BY : SHRI NISHANT THAKKAR ' 2 + / / / / DATE OF HEARING : 06.09.2013. 45- 2 + / DATE OF PRONOUNCEMENT : 06.09.2013. !6 !6 !6 !6 / / / / O R D E R PER R.S.SYAL, AM : THIS MISCELLANEOUS APPLICATION U/S.254(2) OF THE IN COME-TAX ACT, 1961 HAS BEEN MOVED BY THE REVENUE PRAYING FOR THE RECTIFICATION OF THE ORDER OF THE TRIBUNAL DATED 29 TH JULY, 2009 PASSED IN ITA NO.1325/MUM/2001 FOR THE CAPTIONED ASSESSMEN T YEAR. MA NO.589/MUM/2012 M/S.REUTERS LIMITED. 2 2. THE LEARNED DEPARTMENTAL REPRESENTATIVE CONTENDE D THAT THE TRIBUNAL ERRED IN NOTING IN PARA 7 OF ITS ORDER THA T THE LEARNED CIT(A)S DECISION ABOUT THE DISTRIBUTION FEES PAID UNDER THE DA AGREEMENT AS NOT BEING ROYALTY OR FTS, WAS NOT CHA LLENGED BEFORE THE TRIBUNAL. IT WAS CONTENDED THAT THE GROUND TAKE N WAS ON WHOLESOME BASIS ENCOMPASSING NOT ONLY THE FINDING O F THE LEARNED CIT(A) ABOUT THE AMOUNT BEING NOT TAXABLE AS `BUSIN ESS PROFITS UNDER ARTICLE 7 BUT ALSO IN THE ALTERNATIVE AS `ROY ALTY OR `FTS. IT WAS, THEREFORE, PRAYED THAT NECESSARY RECTIFICATION BE DONE TO THE IMPUGNED ORDER. IN THE OPPOSITION THE LEARNED AR ST RONGLY CONTENDED THAT NO SUCH ISSUE WAS TAKEN UP OR ARGUED BEFORE TH E TRIBUNAL. HE SUBMITTED THAT THE CONTENTS OF THE PRESENT MISCELLA NEOUS APPLICATION DO NOT ARISE FROM THE GROUND TAKEN ITSELF BY THE RE VENUE BEFORE THE TRIBUNAL. IT WAS, THEREFORE, CONTENDED THAT THERE W AS NO MISTAKE IN THE IMPUGNED ORDER REQUIRING ANY RECTIFICATION. 3. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD, WE FIND THAT THE LEARN ED CIT(A) HELD THAT THE AMOUNT RECEIVED UNDER DA WAS IN THE NATURE OF B USINESS INCOME BUT NOT CHARGEABLE TO TAX BECAUSE OF THE ASSESSEE H AVING NO PERMANENT ESTABLISHMENT IN INDIA. HE FURTHER HELD T HAT THIS AMOUNT COULD NOT BE CONSIDERED AS ROYALTY OR FTS. THE REVE NUE PREFERRED APPEAL BEFORE THE TRIBUNAL WITH THE SOLITARY GROUND AS UNDER:- MA NO.589/MUM/2012 M/S.REUTERS LIMITED. 3 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LEARNED CIT(A) ERRED IN HOLDING THAT THE ASSESSEE H AD NO P.E. IN INDIA, AND THAT THE DISTRIBUTION AGREEMENT PAYMENTS AMOUNTING TO ` 27,64,92,799/- CANNOT BE TAXED IN INDIA IN VIEW OF PROVISIONS OF ARTICLE 7 OF DTAA . 4. FROM THE ABOVE GROUND IT IS APPARENT THAT THE RE VENUE WAS AGGRIEVED ABOUT THE DIRECTION OF THE CIT(A) THAT TH E ASSESSEE HAD NO PE IN INDIA AND FURTHER DA PAYMENT COULD NOT BE TAX ED IN INDIA IN VIEW OF THE PROVISIONS OF ARTICLE 7 OF DTAA BEING BUSINESS PROFITS. THE TRIBUNAL DECIDED THIS GROUND BY REMI TTING THE MATTER TO THE FILE OF A.O. FOR DECIDING THE QUESTION OF EXIST ENCE OR OTHERWISE OF THE PE OF THE ASSESSEE IN INDIA AND THE APPEAL OF T HE REVENUE WAS ALLOWED FOR STATISTICAL PURPOSES. WE FAIL TO APPREC IATE AS TO HOW ANY DECISION CAN BE GIVEN ON THE QUESTION OF SUCH DA BE ING TREATED AS ROYALTY OR FTS IN THE ABSENCE OF ANY SUCH GROUND RA ISED BY THE REVENUE. THE GROUND AS EXTRACTED ABOVE IS CRYSTAL C LEAR THAT IT CHALLENGED THE DECISION OF THE CIT(A) ON ARTICLE 7 OF DTAA READ WITH THE EXISTENCE OR OTHERWISE OF PE OF THE ASSESS EE IN INDIA. WHEN THE REVENUE CHOSE NOT TO RAISE A GROUND BEFORE THE TRIBUNAL QUA THE CONSIDERATION OF THE PAYMENT OF DA AS ROYALTY OR FT S, THERE COULD HAVE BEEN NO POINT IN RENDERING ANY DECISION ON SUC H ISSUE. WE ARE, THEREFORE, OF THE CONSIDERED OPINION THAT THERE IS NO INFIRMITY IN THE IMPUGNED ORDER REQUIRING ANY RECTIFICATION. MA NO.589/MUM/2012 M/S.REUTERS LIMITED. 4 5. 7 +8 ! 2 && !' 7' 2 '+ 9: IN THE RESULT, THE MISCELLANEOUS APPLICATION IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 6 TH SEPTEMBER , 2013. !6 2 45- ;!'8 5 2 # SD/- SD/- (SANJAY GARG) (R.S.SYAL) $ ! $ ! $ ! $ ! / JUDICIAL MEMBER ! ! ! ! / ACCOUNTANT MEMBER MUMBAI ; ;!' DATED : 6 TH SEPTEMBER, 2013. DEVDAS* !6 2 .$+<& =&-+ !6 2 .$+<& =&-+ !6 2 .$+<& =&-+ !6 2 .$+<& =&-+/ COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPLICANT. 2. ./01 / THE RESPONDENT. 3. > () / THE CIT(A) -, MUMBAI. 4. > / CIT 5. &A# .$+$' , , / DR, ITAT, MUMBAI 6. #B C / GUARD FILE. !6' !6' !6' !6' / BY ORDER, /&+ .$+ //TRUE COPY// ) ) ) )/ // /9 ' 9 ' 9 ' 9 ' ( DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI