MICHAEL PAGE INTERNATIONAL PTE LIMITED,MUMBAI V. DEPUTY COMMISSIONER OF INCOME TAX (INTERNATIONAL TAXATION ) -3(2)(2), MUMBAI

ITA 1427/MUM/2025

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Michael Page International Pte Ltd., a Singapore-based company, appealed against the final assessment order for the assessment year 2022-23, which included income from management support services taxed as FTS under the India-Singapore DTAA. The Tribunal referenced previous decisions where similar income was not taxed as FTS, leading to the deletion of the impugned addition. The assessee also contested the non-grant of credit for Equalisation Levy and the computation of interest under section 234B, as well as the initiation of penalty proceedings under section 270A. The Tribunal's decision primarily relied on the interpretation of 'make available' clause in the DTAA and the precedents set in earlier years.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 315654 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2022-2023
• Other Referred Cases: Michael Page International Recruitment Private Limited V/s DCIT
• Laws Referred To: Income Tax Act, 1961, Double Taxation Avoidance Agreement between India and Singapore
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SOUMENDU KUMAR DASH
• Assessee Lawyers: HIRALI DESAI
• Keywords: Double taxation relief; Permanent establishment
• Section: 143(3); 234B

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “I” BENCH, MUMBAI BEFORE SHRI SANDEEP SINGH KARHAIL, JUDICIAL MEMBER SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA No.1427/MUM/2025 (Assessment Year 2022-23) Michael Page International Pte Ltd., One Raffles Place, Office Tower -2, #09-61, Singapore ............... Appellant v/s DCIT (IT) -3(2)(2), 16th Floor Air India Building, Nariman Point, Mumbai - 400021 PAN: AAHCM6965A ……………… Respondent Assessee by : Ms. Hirali Desai Tejal Saraf Revenue by : Shri Soumendu Kumar Dash, Sr.DR Date of Hearing – 08/05/2025 Date of Order - 15/05/2025 O R D E R PER SANDEEP SINGH KARHAIL, J.M. The assessee has filed the present appeal against the impugned final assessment order dated 09/12/2024, passed under section 143(3) read with section 144C(13) of the Income Tax Act, 1961 (“the Act”), pursuant to the directions dated 27/11/2024 issued by the learned Dispute Resolution Panel- 3, Mumbai, (“learned DRP”), for the assessment year 2022-23. 2. In this appeal, the assessee has raised the following grounds: – ITA No.1427/Mum/2025 (A.Y. 2022-23) 2 “1. On the facts and in the circumstances of the case and in law, the final assessment order dated 9 December 2024 passed by the Learned Deputy Commissioner of Income-tax (International Taxation) 3(2)(2), Mumbai ('the Ld. AO') under section 143(3) r.w.s 144C(13) of the Income Tax Act, 1961 (the Act) is void-ab-initio, illegal and bad in law and is therefore, liable to be quashed. 2. On the facts and in the circumstances of the case and in law, the Ld. AO and the Ld. Dispute Resolution Panel (Ld. DRP) erred in holding the amount for business support services of INR 15.59,23,979 as 'Fees for technical services' under Article 12 of the Double Taxation Avoidance Agreement entered into between India and Singapore (the DTAA\"). The Appellant hereby prays that the addition of INR 15.59,23,979 to the total income may be deleted in full. 3. On the facts and in the circumstances of the case and in law, the Ld. AO failed to follow the specific directions issued by the Ld. DRP by not granting the credit of taxes paid as Equalisation Levy ('EL') of INR 31,18,480 while computing the tax demand, thereby violating the provisions of section 144C(13) of the Act. The Appellant humbly prays that the Ld. AO be directed to grant the credit of EL of INR 31,18,480 and re-compute the tax demand. 4. On the facts and in the circumstances of the case and in law, the Ld. AO has erred in computing and levying interest of Rs. 47,50,746 under section 234B of the Act. The Appellant prays that the Ld. AO be directed to recompute the interest under section 234B of the Act as per the law and after considering the reliefs to be granted by Your Honours. 5. On the facts and in the circumstances of the case and in law, the Ld. AO has erred in proposing to initiate penalty proceedings under section 270A of the Act without appreciating that none of the provisions of section 270A of the Act gets attracted in the facts of the Appellant's case.” 3. Ground no. 1, raised in assessee’s appeal, was not pressed during the hearing. Accordingly, the same is dismissed as not pressed. 4. The issue arising in ground no. 2, raised in assessee’s appeal, pertains to taxability of income received by the assessee from rendering management support services as Fees for Technical Services (“FTS”) under Article 12 of the India-Singapore Double Taxation Avoidance Agreement (“DTAA”). ITA No.1427/Mum/2025 (A.Y. 2022-23) 3 5. The brief facts of the case pertaining to this issue, as emanating from the record, are: The assessee is a resident of Singapore and incorporated on 30/09/1998. The assessee is engaged in the business of providing executive search and recruitment services, and also provides management support services and referral services to the Page Group entities. For the year under consideration, the assessee filed its return of income on 30/11/2022, declaring a total income of Rs. 72,817 and claimed a refund of Rs. 11,96,118. During the assessment proceedings, it was observed from the computation of income that the assessee, inter alia, earned Rs. 15,59,23,979 as income from management support services. However, the assessee claimed that the said earnings are not taxable in India in the absence of Permanent Establishment under the provisions of the India-Singapore DTAA. Accordingly, during the assessment proceedings, the assessee was asked to show cause as to why the income from rendering management support services should not be taxed as FTS under the provisions of Article 12 of the India-Singapore DTAA. In response, the assessee submitted that the receipts from rendering management support services are not taxable as FTS under Article 12 of the India-Singapore DTAA, as these services do not make available any technical knowledge, skill or know-how to the Indian entity. 6. The Assessing Officer (“AO”), vide draft assessment order dated 30/03/2024 passed under section 144C(1) of the Act, disagreed with the submissions of the assessee and held that the services are highly technical in nature and as a result of the rendition of the services to the Indian entity, there is a transfer of skills or technology. Further, the AO, after noting that ITA No.1427/Mum/2025 (A.Y. 2022-23) 4 there is no change in the facts of the case as compared to the preceding year, wherein the similar addition was made, assessed the income earned by the assessee from the rendition of management support services as FTS under section 9(1)(vii) read with Article 12(4) of the India-Singapore DTAA. 7. The assessee filed detailed objections against the addition made by the AO. Vide directions dated 27/11/2024, issued under section 144C(5) of the Act, the learned DRP , following its directions rendered in assessee’s own case for the assessment year 2018-19 rejected the objections filed by the assessee, even after noting that identical issue in assessee’s own case has been decided in its favour by the coordinate bench of the Tribunal in preceding year, to keep the issue alive and to protect the interest of the Revenue. 8. In conformity with the directions issued by the learned DRP, the AO vide impugned final assessment order dated 09/12/2024, assessed the income received from rendering management support services as FTS under section 9(1)(vii) read with Article 12(4) of the India-Singapore DTAA. Being aggrieved, the assessee is in appeal before us. 9. During the hearing, the learned Authorised Representative (“learned AR”) submitted that a similar issue has been decided in favour of the assessee by the coordinate bench of the Tribunal in assessee’s own case for the preceding years. The learned AR further submitted that the learned DRP did not grant relief to the assessee merely to keep the issue alive. 10. On the other hand, the learned Departmental Representative vehemently relied upon the orders passed by the lower authorities. ITA No.1427/Mum/2025 (A.Y. 2022-23) 5 11. We have considered the rival submissions and perused the material available on record. We find that while deciding a similar issue raised in assessee’s own case in Michael Page International Recruitment Private Limited V/s DCIT, in ITA No. 144/Mum/2021, for the assessment year 2017-18, the coordinate bench of the Tribunal vide its order dated 04/07/2022 held that the income earned by the assessee from rendering management support services is not taxable as FTS under the provisions of Article 12(4) of the India-Singapore DTAA. The relevant findings of the coordinate bench, in the aforesaid decision, are reproduced as follows: – “8. Clearly, therefore, unless the recipient of the services, by virtue of rendition of services by the assessee, is enabled to provide the same services without recourse to the service provider, the services cannot be said to have made available the recipient of services. A mere incidental advantage to the recipient of service is not enough. The test is the transfer of technology, but then it is not even the case of the revenue that there is a transfer of technology, and what is highlighted is the incidental benefit to the assessee, which is treated as an enduring advantage. As observed in the binding judicial precedents referred to above, in order to invoke \"make available' clause, \"to fit into the terminology \"making available\", the technical knowledge and skill must remain with the person receiving the services even after the particular contract comes to an end\" and \"the technical knowledge or skills of the provider should be imparted to and absorbed by the receiver so that the receiver can deploy similar technology or techniques in the future without depending upon the provider\". Technölogy will be considered \"made available\" when the person acquiring the service is enabled to apply the technology. In our considered view, that condition is not satisfied on the facts of the present case. We, therefore, hold that that 'make available' clause in the Indo-Singapore tax treaty cannot be invoked on the facts of the present case- as no case is even made out by the revenue that as a result of rendition of these services to the Indian entity, there is any transfer of skill of technology. Once the taxability fails in terms of the treaty provisions, there is no occasion to refer to the provisions of the Income Tax Act, 1961, as in terms of Section 90(2), \"where the Central Government has entered into an agreement with the Government of any country outside India or specified territory outside India, as the case may be, under sub-section (I) for granting relief of tax, or as the case may be, avoidance of double taxation, then, in relation to the assessee to whom such agreement applies, the provisions of this Act shall apply to the extent they are more beneficial to that assessee\". The taxability of impugned receipts, under section 9, is thus wholly academic. We leave it at that. ITA No.1427/Mum/2025 (A.Y. 2022-23) 6 9. As regards the question regarding a change in the stand of the assessee and the facts of the assessee's offering the same income to tax in the immediately preceding assessment years, nothing really turns on the stand of the assessee in the immediately preceding assessment years. There is no res judicata in the income tax proceedings and the mere fact of an assessee's offering an income to tax in an earlier year can be a reason enough to negate his otherwise lawful claim of non-taxability. The matter in required to be examined on merits, and once we find it to be an acceptable claim on merits, such taxability in the immediately preceding assessment years cannot come in the way of the assessee's lawful claim. This objection of the authorities below, therefore, does not deserve our approval either. 10. In view of the above discussions, as also bearing in mind entirety of the case, we uphold the plea of the assessee, and direct the Assessing Officer to exclude the sum of Rs 3,06,12,630 from his taxable income as fees for technical services. The assessee gets the relief accordingly. In the light of our this conclusion, other issues raised in the appeal are rendered academic and these do not call for any specific adjudication.” 12. We find that similar findings were rendered by the coordinate bench of the Tribunal in assessee’s own case in ITA No. 751/Mum/2022, for the assessment year 2018-19 vide order dated 02/12/2022, following the aforesaid decision for assessment year 2017-18. 13. The learned Departmental Representative could not show any reason to deviate from the aforesaid orders, and no change in facts and law was alleged in the relevant assessment year. The issue arising in the present appeal is recurring in nature and has been decided in favour of the assessee by the decisions of the coordinate bench of the Tribunal for the assessment years 2017-18 and 2018-19. Thus, respectfully following the orders passed by the coordinate bench of the Tribunal in assessee’s own case cited supra, we uphold the plea of the assessee and delete the impugned addition in respect of income earned by the assessee from rendering management support services. As a result, ground no. 2 raised in assessee’s appeal is allowed. ITA No.1427/Mum/2025 (A.Y. 2022-23) 7 14. As regards ground no. 3, raised in assessee’s appeal, the learned AR submitted that the assessee, suo moto, discharged the equalisation levy at the rate of 2% on its income earned from rendering management support services, and the assessee is not claiming any refund of the same. Thus, the learned AR submitted that if the relief is granted to the assessee in respect of ground no. 2, then the assessee wishes not to press ground no. 3 raised in its appeal. Therefore, in view of our decision rendered in respect of ground no. 2 and in light of the submissions of the learned AR, ground no. 3 raised in assessee’s appeal is rendered infructuous and therefore is dismissed. 15. The issue arising in ground no. 4, raised in assessee’s appeal, pertains to the levy of interest under section 234B of the Act, which is consequential in nature. Therefore, ground no. 4 needs no separate adjudication. 16. Ground no. 5 raised in assessee’s appeal pertains to the levy of penalty under section 270A of the Act, which is premature in nature. Accordingly, ground no. 5 raised in assessee’s appeal is dismissed. 17. In the result, the appeal by the assessee is partly allowed. Order pronounced in the open Court on 15/05/2025 Sd/-/- GIRISH AGRAWAL ACCOUNTANT MEMBER Sd/- SANDEEP SINGH KARHAIL JUDICIAL MEMBER MUMBAI, DATED: 15/05/2025 Prabhat ITA No.1427/Mum/2025 (A.Y. 2022-23) 8 Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Mumbai; and (5) Guard file. By Order Assistant Registrar ITAT, Mumbai "