TaxTMI 
TaxTMI 
TaxTMI 
2021 (1) TMI 53
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....ticle 13 of the India-UK Double Taxation Avoidance Agreement ('DTAA') 2. Ground No.II - Levy of surcharge and Education Cess on tax calculated at special rates under the DTAA 2.1. Without prejudice to the above, on the facts and circumstances of the case and in law, the learned DCIT has erred in levying surcharge amounting to INR 2,59,727 and education cess amounting to INR 1,63,628 on tax calculated as per rate provided in Article 13 of India-UK DTAA. 2.2. The learned DCIT has not appreciated the fact that as per Article 13 of the DTAA, the tax rate cannot exceed 15%. Further, the term 'tax' as defined under India-UK DTAA includes any income tax including surcharge and identical / substantially similar taxes. 3. Ground No.III - Erroneous levy of consequential interest under section 234B 3.1. On the facts and circumstances of the case, the learned DCIT has erred in levying consequential interest under section 234B of the Act, amounting to INR 3,03,688. 2.1. We find that assessee had also raised additional ground of appeal on 20/01/2020 which is as under:- 1. Ground No.1 - Taxability of Consulting and Engineering Service 1.1. On the facts and in the circumstances of t....
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....s. 2,49,72,127):- This is the amount charged to Buro India towards various costs incurred. The same has not been offered to tax by the assessee on the contention that these being management cost recharges does not make available any knowledge, skill, process, know-how and experience to Buro India as per the terms of the India-UK DTAA. During the assessment proceedings, the assessee has given an explanation as to why the amount received under this head has not been offered to tax. 3.3. The assessee submitted that it incurs various costs for the benefit of Buro group and hence, these costs are allocated group entity passed on certain pre-determined cost allocation key as per the cost allocation agreement. Accordingly, during the year under consideration, the assessee had raised common costs amounting to Rs. 2,49,71,127/- to Buro India in respect of IT functions, business development, finance, human resource management, operations, project management function, corporate and commercial. The assessee pleaded that the transactions are governed by the India-UK DTAA as assessee is a tax resident of UK. He pleaded that as per Article 13 of India-UK DTAA, Fees for technical Services ('FTS....
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....ng below the returned income. 3.7. Per contra, the ld. AR vehemently argued that there is absolutely no bar if the assessed income goes below the returned income as ultimately only the real income should be brought to tax in accordance with law which would also be in consonance with the Article 265 of the Constitution of India. He vehemently argued that the department could not be unjustly enriched merely because certain amounts had been erroneously offered to tax by the assessee. He placed reliance on the decision of the Hon'ble Gujarat High Court in the case of Milton Laminates Ltd., vs. CIT reported in 37 Taxmann.com 249 (Guj) and Gujarat Gas Company Ltd., vs. JCIT reported in 245 ITR 84. We find lot of force in the said arguments of the ld. AR and we find that issue involved in the additional ground and the regular ground No.1 was the subject matter of adjudication of this Tribunal in assessee's own case for A.Y.2014-15 in ITA No.7111/Mum/2017 dated 13/11/2019 wherein the exactly similar arguments were advanced by the ld. DR for that year also. We find that this Tribunal for A.Y.2014-15 in assessee's own case had admitted the additional ground and disposed off the issue in dis....
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....ince these services do not make available any technical knowledge, experience, skill, know-how or processes to the recipient of service. Therefore, such services would be classified as business income and not taxable in India in the absence of Permanent Establishment (PE) in India as per Article-7 read with Article-5 of India-UK DTAA. 3.4 However, Ld. AO formed an opinion that the income earned by the assessee was taxable in India as per Section-9 of the Act and Article 13 of India-UK DTAA both as royalty as well as fees for technical services. Since, as per the agreement, the assessee was entitled for mark-up of 5%, the said receipts were enhanced to that extent and brought to tax. 3.5 Aggrieved, the assessee raised objections against the proposed addition before Ld. DRP. The Ld. DRP, after considering assessee's submissions, confirmed the stand of Ld. AO by noticing that the services being rendered by the assessee were ancillary and subsidiary to the application or enjoyment of right of the assessee in brand used by the Buro- India and the payment was royalty in terms of para 3(a) of Article-13 of the treaty and therefore, its nature was that of fees for technical services.....