Consulting and engineering receipts, along with cost recharge income, sent back for fresh tax treatment in line with earlier-year facts.

Consulting and engineering fee and common cost recharge receipts were directed to be reconsidered afresh by the Assessing Officer because the treatment of both items depended on the characterisation adopted in the assessee's earlier year. The Tribunal noted that the consulting and engineering receipts had already been offered to tax for the year under consideration, while the recharge receipts were disputed as not taxable under Article 13 of the India-UK DTAA. As the earlier Tribunal ruling had treated the consulting and engineering receipts as business profits and the recharge as ancillary to those services, the assessee was to be given an opportunity to establish identity of facts before de novo adjudication.

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Issues: Whether the consulting and engineering fee and the common cost recharge receipts should be restored to the Assessing Officer for fresh adjudication in light of the earlier decision in the assessee's own case.

Analysis: The amount relating to consulting and engineering services had already been offered to tax in the year under consideration, while the common cost recharge was disputed as not taxable under Article 13 of the India-UK DTAA. The Tribunal noted that an earlier year decision had treated consulting and engineering receipts as business profits and had also held the cost recharge to be ancillary to those services. Since the additional ground on consulting and engineering fee was admitted, and the treatment of the recharge depended upon the characterisation of those services, both matters were directed to be reconsidered afresh by the Assessing Officer after giving the assessee an opportunity to establish identity of facts with the earlier year.

Conclusion: The issues were restored to the Assessing Officer for de novo adjudication, with directions to decide them in accordance with the earlier Tribunal ruling and after granting reasonable opportunity to the assessee.

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