Deduction Allowed for GSU Agreement Payments Despite No Claim in Original or Revised Return Under Section 139(5)

The ITAT Kolkata allowed the assessee's claim for deduction related to amounts received under the GSU agreement, despite the claim not being made in the original return or a revised return under section 139(5). The tribunal relied on its earlier decision for the preceding assessment year and accepted that the services did not "make available" any technical knowledge or skill, referencing the Supreme Court ruling in Goetz India Ltd. The bench followed precedent set in Howrah Mills Co. Ltd., where a similar claim raised during assessment proceedings was allowed. Consequently, the AO was directed to accept the revised claim, and the assessee's grounds were allowed.

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1. ISSUES:

1.1 Whether the amount received under the Global Service Unit Agreement (GSU) from Indian entities is taxable in India when the assessee does not have a Permanent Establishment (PE) in India.

1.2 Whether the services provided under the GSU "make available" technical knowledge, skills, or experience to the Indian entities, thereby attracting taxation under Article 12(5) of the India-Netherlands Double Taxation Avoidance Agreement (DTAA).

1.3 Whether an additional claim for non-taxability made during the course of assessment proceedings, but not in the original or revised return filed under section 139(5) of the Income Tax Act, 1961, can be entertained by the Assessing Officer.

2. RULINGS / HOLDINGS:

2.1 The Tribunal held that the payments received under the GSU are not taxable in India as the services rendered do not "make available" any technical knowledge, skills, or experience to the Indian entities, consistent with findings in the immediately preceding assessment year.

2.2 The Tribunal ruled that the Assessing Officer cannot entertain an additional claim for deduction or non-taxability made during assessment proceedings unless such claim is made in a revised return filed within the prescribed time under section 139(5) of the Act; however, appellate authorities including the Tribunal have the power to consider such claims despite the absence of a revised return, as clarified by the Supreme Court in Goetze (India) Ltd.

2.3 The Tribunal allowed the claim made during assessment proceedings, directing the Assessing Officer to accept it, relying on the consistent approach taken in the immediately preceding year and judicial precedents.

3. RATIONALE:

3.1 The Tribunal applied the provisions of the Income Tax Act, 1961, and the India-Netherlands DTAA, specifically Article 12(5), which taxes fees for technical services only if such services "make available" technical knowledge or experience.

3.2 The Tribunal relied on the Supreme Court decision in Goetze (India) Ltd., which restricts the Assessing Officer's power to entertain claims not made in the original or revised return but does not limit the appellate authorities' powers under section 254 of the Act to consider such claims.

3.3 The Tribunal followed its own Coordinate Bench's precedent for the immediately preceding assessment year, which had accepted the claim on identical facts and held that the services did not "make available" technical knowledge or skills, thus not taxable in India.

3.4 The Tribunal noted that the Assessing Officer had accepted in a remand report that the services were technical in nature but did not involve transfer or making available of technical knowledge, supporting the non-taxability claim.

3.5 The Tribunal emphasized a consistent approach in tax treatment across assessment years on identical issues and upheld the appellate authorities' authority to entertain claims made during assessment proceedings even if not filed via revised returns.

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