DTAA characterisation of consulting and recharge receipts remitted for fresh review; tax-rate issue accepted for the assessee.

Receipts from consulting and engineering services, together with common cost recharge, were examined for characterisation as fees for technical services or royalty under the India-UK DTAA. The Tribunal followed its own earlier year decision in the assessee's case and restored these issues to the Assessing Officer for fresh adjudication on merits. The tax-rate dispute was treated as already covered by the earlier year's relief, and the assessee's claim on that aspect was accepted. The overall effect was partial relief, with the DTAA characterisation questions remitted and the rate application issue resolved in the assessee's favour.

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Issues: (i) whether the receipts from consulting and engineering services and from common cost recharge were taxable as fees for technical services or royalty under the India-UK DTAA; (ii) whether the rate of tax applied while computing the tax payable was erroneous.

Issue (i): whether the receipts from consulting and engineering services and from common cost recharge were taxable as fees for technical services or royalty under the India-UK DTAA.

Analysis: The dispute on both receipts was held to be covered by the coordinate bench decision in the assessee's own case for an earlier assessment year. Following that approach, the matter of consulting and engineering receipts, as well as the related common cost recharge, was restored to the Assessing Officer for fresh adjudication on merits. The relief was therefore procedural and dependent on re-examination in light of the earlier decision.

Conclusion: Decided in favour of the assessee to the extent of restoration for fresh adjudication.

Issue (ii): whether the rate of tax applied while computing the tax payable was erroneous.

Analysis: The disputed tax-rate issue was treated as covered by the earlier year's relief and the Tribunal followed that view without disturbing the assessee's claim on this aspect.

Conclusion: Decided in favour of the assessee.

Final Conclusion: The appeal was partly allowed, with the core transfer-pricing-style DTAA characterisation issues sent back for reconsideration and the tax-rate issue accepted in the assessee's favour.

Ratio Decidendi: Where a comparable issue in the assessee's own case has already been decided for an earlier year, the same treatment may be followed and the matter remitted for fresh adjudication; tax computed under a DTAA cannot be enlarged by an erroneous rate application.

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