PERFETTI VAN MELLE ICT B.V,HARYANA V. ASST. COMMISSIONER OF INCOME TAX, INTERNATIONAL TAX, GURGAON, GURGAON

MA 377/DEL/2024

AI Insights

The case involves Perfetti Van Melle ICT B.V., Netherlands, which provided IT services to its Indian associate, Perfetti Van Melle India Pvt. Ltd., during the assessment year 2021-22. The income received from these services was not offered to tax in India, citing the India-Netherlands DTAA. However, the Assessing Officer treated these receipts as Fee for Technical Services under Section 9(1)(vii) of the Income Tax Act and Article 12 of the India-Netherlands DTAA. The Tribunal initially did not address the applicability of the 'make available' clause from the India-USA DTAA to the India-Netherlands DTAA due to the academic nature of the issue at the time of the decision, influenced by a Supreme Court decision. The applicant sought rectification of this oversight, leading to the current decision to restore the appeal for a fresh examination of the disputed ground.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 47276 (ITAT-DELHI)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 09-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2021-2022
• Other Referred Cases: Nestle SA vs CIT [2023] 155 taxmann.com 384 (SC), Inder Singh V ITO Ward 26(3) Delhi MA No. 791/Del/2018
• Laws Referred To: Income Tax Act 1961, Double Taxation Avoidance Agreement between India and the Netherlands, India-USA Double Taxation Avoidance Agreement
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR
• Keywords: Transfer pricing; Double taxation relief
• Section: 254(2); 90; 13

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES :D: NEW DELHI BEFORE SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER AND SHRI ANUBHAV SHARMA, JUDICIAL MEMBER Miscellaneous Application No.377/Del/2024 (ITA No.3328/Del/2023) Assessment Year : 2021-22 Perfetti Van Melle ICT B.V. Netherlands C/o Perfetti Van Melle India Private Limited Global Business Park 1st Floor, Tower-A, MG Road, Gurgaon-122002 Haryana PAN-AAICP1554F Vs. Asst.CIT International Tax Gurgaon (Applicant) (Respondent) Applicant by : Shri Deepak Chopra, Ms Manasvini Bajpai, Advocates Department by : Shri Rajesh Kumar, Sr. DR Date of Hearing : 14.02.2025 Date of Pronouncement : 09.04.2025 ORDER PER ANUBHAV SHARMA, JM: Heard and perused the records. The application is filed u/s 254(2) of the Income Tax Act 1961 and indulgence is sought to rectify / recall order dated MA No.377/Del/2024 2 18.09.2024,only to the extent pertaining to grounds 11 to 13(d) of the grounds of appeal. 2. The brief background of the case are that during the assessment year under consideration, the Applicant had provided IT services under an Agreement dated 28.04.2015 to its Indian Associated Enterprise i.e, Perfetti Van Melle India Pvt. Ltd. (“PVM India”). During the year under consideration, the Applicant had received of a sum of INR 7,95,71,627 for the provision of the said services from PVM India. No portion of the said amount was offered to tax by the Applicant in India since the same was not taxable in terms of Double Taxation Avoidance Agreement between India and the Netherlands (“India-Netherlands DTAA”). The AO, however, treated the said receipts on account of IT Support Services (being ICT Services charges) as Fee for Technical Services under Section 9(1)(vii) of the Act and Article 12 of the India- Netherlands DTAA. While concluding so, the AO, while examining the nature of services under the agreement, specifically examined the impact and applicability of the term “make available” as contained in Article 12 of the India-Netherlands DTAA. 3. When the matter reached this Tribunal by way of its ground no. 13(b) the Applicant had specifically raised the issue of conditions of Article 12(5)(b) regarding the qualification of “make available” not being satisfied in the present case. The Applicant had also raised the plea of the applicability of the MFN clause as well as the applicability of India-Portugal DTAA. However, by the MA No.377/Del/2024 3 time the appeal was heard and disposed of, the benefit of the Hon’ble Supreme Court decision in case of Nestle SA vs CIT [2023] 155 taxmann.com 384 (SC) was available and this ground was not pressed, the same having become academic. In the earlier years this ground had been pressed to clarify the restrictive scope of the term “make available” more so in context of the India Portugal DTAA since it qualified the term with the expression “which enables the person acquiring the services to apply the technology contained therein”. 4. Ld. AR has submitted that while arguing the case of applicant it was submitted before the bench that the Hon’ble Apex Court’s decision in Nestle (supra) would not pose any impediment to the case at hand since the benefit of restrictive covenant of “make available” as contained in Article 12 of India-USA Double Taxation Avoidance Agreement (India- USA DTAA) had in any case been extended to Original India- Netherlands DTAA, through an amendment vide Notification No. S.O. 693(E), dated 30.08.1999, issued under section 90 (1) of the Act. The restrictive application of the term “make available” was already explained in the Protocol to the India USA DTAA and hence, the same would in any case apply, such protocol already having been notified by the Government of India. This was also in conformity with the decision of the Hon’ble Apex Court in Nestle (Supra). It was accordingly submitted that the restrictive application of the term “make available as per the India USA DTAA would be applicable and MA No.377/Del/2024 4 hence, the payments received for rendition of ICT services would not partake the character of Fee for Technical Services and accordingly not taxable in India. 5. It was further submitted that while adjudicating grounds 11 to 13(d) of the grounds of appeal, the bench in para 13 of its order held that the contentions stated above raised by the Applicant could not be sustained, without there being an opportunity with the AO to examine the factual aspects involved about the nature of Agreements and Services in terms of the Amendment dated 30.08.1999, in the India Netherlands DTAA with regard to restricted scope of “make available”. We also find that in these para we also held that the issue of applicability of the India USA DTAA was never raised before the AO. 6. Ld. AR for the applicant has submitted that these are factual errors which have crept in the order which require rectification. To substantiate the afore stated error, our attention was invited to the submission dated 16.12.2022 filed before the AO (at page 117 of the Paper book ; relevant page 149 ), wherein, the Applicant has specifically raised the averment of the applicability of the amendment brought in the India- Netherland DTAA and the applicability of the restrictive covenants of the India USA DTAA. By way of the said submission, the Applicant submitted that in light of such amendment vide Notification No. S.O. 693(E), dated 30.08.1999 issued under section 90(1) of the Act, the condition of “make available” as stipulated under Article 12(5)(b) of the India- Nether land DTAA being imported from the India-US DTAA, was not satisfied. MA No.377/Del/2024 5 The our attention was also invited to the Final order dated 30.10.23 (at pages 8- 60 of the appeal set) wherein the AO has himself referred to the submissions dated 16.12.2022. 7. Then with regard to the observations of bench in Para 12 that the Applicant has not raised the question of the applicability of term “make available” in terms of Article 12(5)(b) in the Grounds of Appeal, attention was drawn to the Ground no. 13(a) which ground is specifically on this issue. 8. Ld. DR has relied the order dated 25.11.2024 of co-ordinate bench in Inder Singh V ITO Ward 26(3) Delhi MA No. 791/Del/2018 to contend that the jurisdiction of Tribunal is limited while dealing case of review. However, here is a case where ld. AR has established that the factual findings are contrary to the facts on record and cited in hearing of appeal. Thus, in view of the above we are of the considered view that factual errors have crept in the order dated 18.09.2024, leading to mistake apparent on record. Accordingly the findings on ground no. 13 of the grounds deserve to be recalled to the aforesaid extent and appeal deserves to be restored to its original number, for afresh decision on this ground. 9. In the result, the Miscellaneous Application is allowed. The registry is directed to restore the appeal to original number for a fresh hearing and disposal MA No.377/Del/2024 6 of ground no. 13. Notice of date of hearing be issued to both parties in due course. Order pronounced in the open court on 09.04.2025. Sd/- Sd/- (S. RIFAUR RAHMAN) (ANUBHAV SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 09th April, 2025. dk Copy forwarded to: 1. Applicant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asstt. Registrar, ITAT, New Delhi "