AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2016 (1) TMI 1075
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.... has erred in directing the Assessing Officer to tax fess for technical services (FTS) as per the DT AA ignoring the fact that the FTS is effectively connected to the P E of the assessee in India and therefore taxable under the Act. " 3. On the other hand appellant M/s. KLM Royal Dutch Airlines, New Delhi (hereinafter to be referred as 'the assessee') by filing cross appeal, I.T.A. No. 13921De1l2009, sought to set aside the impugned order passed by Ld. CIT(A) XXIX, New Delhi qua the assessment year 2000-2001 on the grounds inter alia that: "1. That the Ld. Commissioner of Income Tax,' failed to appreciate the true legal position of law before order. Income Tax (Appeal) has and correct facts and passing the impugned order. 2. That the Ld. Commissioner of Income Tax (Appeal) has failed to appreciate that Ld Assessing had grossly erred in assuming jurisdiction U/S 148 which could not have been done as the there existed no reasons by virtue of which the Ld. Assessing off leer could have formed an opinion that there had been Income Escaping assessment. 3. That the Ld. Commissioner of Income Tax (Appeal) has failed to appreciate that Ld Assessing had grossly erred i....
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.... and in response thereto, Shri Sanjeev Jain, CA and Shri Anil Makhija, AR of the assessee attended the proceedings, filed necessary details, the case was also discussed with them. 5. The assessee company entered into an agreement with Jet Airways vide agreement dated 01.09.1995 for a period of two years for providing technical & professional services in the area of ground handling in-flight services, airport procedure system to improve over all services in the flight operation at the fee of Rs.US$50,0001- per annum and received US$ l,00,000/- for two years during the relevant financial year 1999-2000. The assessee was called to explain as to why the sum received form Jet Airways be not taxable. Assessee filed comprehensive reply by taking shelter under Article 8(1) of Double Taxation Avoidance Agreement (DTAA) between India and Netherlands. Finding the explanation of the assessee not tenable, the fee received by the assessee has been taxed U/S 44B read with Section 150A of the Act and computed the tax thereon @ 30% amounting to Rs.I0,81,500/-. 6. The assessee carried the matter before Ld. CIT(A), challenging the assessment order, who partly allowed the appeal by way of the impugn....
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....ility of Article 8(1) of DTAA between India and Netherlands. Hon'ble Jurisdictional High Court in the case cited as Atul Kumar Swami (supra), relied upon by the assessee, decided the identical issue and the operative part of the judgement is reproduced as under for ready reference: "REASSESSMENT-NOTICE-MUST BE BASED ON TANGIBLE MATERIAL-NOTE FORMING PART OF RETURN MENTIONING AND DESCRIBING THE NATURE OF RECEIPT UNDER A NON- COMPETE AGREEMENTNOTICE NOT MENTIONING ANY OTHER FRESH MATERIAL WARRANTING REOPENING OF ASSESSMENT-NOTICE NOT VALID-INCOME-TAX ACT, 1961, ss.147, 148. A valid reopening of assessment has to be based only on tangible material to justify the conclusion that there is escapement of income. Held accordingly, dismissing the appeal, that the note forming part of the return filed for the assessment year 1999-2000 clearly mentioned and described the nature of the receipt under a non- compete agreement. The reasons for the notice under section 147 of the Income-tax Act, 1961, nowhere mentioned that the Revenue came up with any other fresh material warranting reopening of assessment. Therefore, mere conclusion of the proceedings under section 143(1) ipso facto d....
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....note on the original income tax return, there was no tangible material with the Assessing Officer to reopen the assessment. Apart from note given on the original return of income by the assessee, no tangible material has been brought on record by the Assessing Officer to reopen the assessment; that Ld. CIT(A) has lost sight of the fact that the Assessing Officer has no jurisdiction to reopen the assessment without bringing on record any tangible material and as such, findings of Ld. CIT(A) are not sustainable in the eyes of law. Further the Assessing Officer has proceeded for reassessment of the case without issuing a notice U/S 143(2) of the Act and Ld. CIT(A) has also lost sight of this fact while passing the impugned order. In the light of factual matrix discussed in the preceding paragraphs, it is proved on record that the Assessing Officer does not have jurisdiction to reopen the assessment. So, we hereby decide grounds No.1, 2, 3 and 5 in favour of the assessee. 14. Grounds No.1 of l.T.A. No. 1250/Del/2009 and grounds No.6 & 7 Of I.T.A. No. 13921DeI/2009: To decide the issue in controversy, the Assessing Officer during the reassessment proceedings, came to the conclusion a....
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....sessee and deleted the addition. Learned CIT(Appeals) on appreciation of Article 8 of Indo-Netherlands DT AA has held that these two activities are to be considered as a part of operation of air- craft in international traffic. 6. Learned DR while impugning the order of the Learned CIT(Appeals), contended that the services rendered for ground handling and technical handling are not to be considered as a part of operation of air-craft in international traffic. These are separate activities and they have nothing to do with operation of air-craft in international traffic. He pointed out that GECD in its latest update of the commentary on Article 8 has observed such services as ancillary for operation of air-craft in international traffic but concluded out that these are to be construed as a part of operation of air-craft in international traffic: He emphasized that India is not a party to the countries who concur on commentary for interpretation of clauses in the DTAA. He referred paragraph 10.1 from GECD commentary on Article 8. " 17. Now, adverting to the case at hand, undisputedly, the assessee entered into an agreement dated 01.09.1995 for a period of two years, with Jet Airl....