2021 (9) TMI 913 - AT - Income Tax

Income assessment appeal dismissed under India-UK DTAA: fees for technical services upheld

The appeal challenging the assessment of income under section 144C(5) for A.Y. 2017-18 was dismissed by the Tribunal. The receipts were taxed as fees for ... Income taxable in India - balance receipts not attributable to PE in India - whether the balance receipts not attributable to permanent establishment of the assessee can be taxed as fees for technical services under Article-13 of the India-UK Tax Treaty - HELD THAT:- As issue raised in the present appeal is identical to the issues raised in the assessee's own case for A.Ys. 2010-11 to 2016-17 and in those years the issues has been decided against the assessee. In the absence of any distinguishing feature in the facts of the case in the year under consideration and that of the earlier years, we following the decision of the Co-ordinate Bench of Tribunal in assessee's own case for A.Y. 2010-11 [2016 (11) TMI 65 - ITAT DELHI] and for similar reasons dismiss the appeal of the assessee. Thus the appeal of the assessee is dismissed. Issues:1. Assessment of income under section 144C(5) of the Act for A.Y. 2017-18.2. Taxation of receipts under Article 13 of the India-UK DTAA.3. Characterization of receipts as business income or fees for technical services.4. Application of make available principle under Article 13(4)(c) of the India-UK DTAA.Analysis:Issue 1: Assessment of income under section 144C(5) of the Act for A.Y. 2017-18The appeal was filed against the order of the Asstt. Commissioner of Income Tax, Circle-2(1)(1), New Delhi under section 144C(5) of the Act for Assessment Year 2017-18. The assessee, a UK company, initially declared income of Rs. 8,43,18,751/- which was later revised to Rs. 10,67,32,840/-. The assessment was framed under section 143(3) r.w.s. 144C(13) of the Act, resulting in total income determination at Rs. 18,34,89,850/-. The appeal challenged this assessment.Issue 2: Taxation of receipts under Article 13 of the India-UK DTAAThe primary issue raised in the appeal was whether the balance receipts not attributable to the permanent establishment of the assessee could be taxed as fees for technical services under Article 13 of the India-UK Tax Treaty. The appellant argued that the receipts were effectively connected with the admitted Permanent Establishment (PE) and should be taxed as business income under Article 13(6) of the DTAA.Issue 3: Characterization of receipts as business income or fees for technical servicesThe appellant contended that the receipts of Rs. 7,67,57,010/- were to be taxed as business income due to their connection with the admitted PE. However, the authorities characterized these receipts as fees for technical services under Article 13(4)(c) of the India-UK DTAA. This disagreement formed a crucial part of the appeal.Issue 4: Application of make available principle under Article 13(4)(c) of the India-UK DTAAThe appellant further argued that the principle of make available under Article 13(4)(c) of the India-UK DTAA was misconstrued by the authorities. They contended that the receipts did not satisfy the make available principle and should not be taxed as Fees for Technical Services (FTS) under the DTAA. This aspect was pivotal in determining the tax treatment of the receipts.The Tribunal, after considering the submissions and the precedent set in the assessee's earlier cases, dismissed the appeal, citing lack of distinguishing features between the current case and previous years' decisions. The appeal was dismissed, upholding the tax authorities' characterization and taxation of the receipts as fees for technical services.