TaxTMI 
TaxTMI 
TaxTMI 
2023 (8) TMI 296
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....d Form No. 10F furnished by M/s GIA Inc. USA from the tax authority of USA for the relevant year under consideration, the assessee is entitled to the benefit of Double Taxation Avoidance Agreement (DTAA) between India and USA even though such services were not rendered by the USA entity? (b) Whether in the facts and circumstances of the case, the learned ITAT has erred in law and on facts in ignoring that the service was rendered by an independent corporate entity (though a subsidiary of GIA Inc. USA) namely GIA Hong Kong Laboratory Ltd. Situated at Hong Kong and the payment was merely routed through GIA Inc. USA? (c) Whether in the facts and circumstances of the case, the learned ITAT has erred in law and on facts in deciding the issue in favour of the assessee ignoring the fact that the beneficial owner of the payment is M/s GIA Hong Kong Laboratory Ltd. Situated at Hong Kong and therefore the DTAA between India and USA cannot be invoked? (d) Whether in the facts and circumstances of the case, the learned ITAT has erred in law and on facts in deciding the issue in favour of the assessee ignoring the fact that as per very disclosure on the official website of the M/s GIA ....
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....countries.Any and all disputes,suits,cations,claims related to or arising out of this agreement shall be resolved exclusively pursuant to section 30 of the terms and conditions" 4.3 GIA set up a laboratory at Hong Kong under a separate company called GIA Hong Kong Laboratory Ltd. According to the assessee, it had no direct relationship or any agreement with the GIA Hong Kong Laboratory, Hong Kong. 4.4 It is the case of the assessee that during the year it wanted certain diamond to be certified by GIA USA. For this purpose it sent certain diamonds to Hong Kong for certification by GIA, USA. The invoices were raised by the GIA, USA instructing the assessee to make payment to offshore bank accounts of GIA, USA in Hong Kong. The assessee has also made the payment for the same GIA accounts of GIA, USA in Hong Kong. The payment has been made to its offshore Bank Account of HSBC Account No.801-045451-001 owned by GIA, USA. 4.5 The assessee committed an error in mentioning the name of beneficiary while filling entry in Form 15CA/15CB. It mentioned in the form that the remittance advice issued by the Bank of India is also in the name of GIA Hong Kong Laboratory Ltd. The assessing office....
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.... B.S. Soparkar, learned Counsel appearing on Caveat for the respondent assessee would make the following submissions: 6.1 Mr. Soparkar, learned Counsel, would submit that the certification of diamonds is from GIA USA. For such purposes, a customer service agreement has been entered into which clearly establishes that the agreement is with the GIA USA and not with the local laboratory. The certification is done by the US entity and there is "no make available" of technical services, know-how or knowledge exchange and therefore the remittances are not qualified as "fees for technical services" 6.2 It was only through an error that while filling Form 15CA and CB did the remittances were shown as Hong Kong. In fact, Mr. Soparkar, learned counsel, would rely on the details of the form and submit that it clearly showed that the remittances were made in the offshore Bank Account of the GIA USA entity and the moneys were therefore not received by the Hong Kong entity but as deposits were made in the accounts of the USA entity it was clearly covered under the India USA DTAA. 6.3 Mr. Soparkar, learned Counsel, would therefore submit that the AO was in error in not granting the benefit of ....
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....ndard benchmark and quality certificates by the trade as well as the consumers. All the intellectual property rights in the certificates issued by GIA belong to GIA USA. 3. With regards the transactions appellant had with GIA USA, the invoices and diamond grading certificates were issued by GIA USA in the name of appellant and the payment consideration for the issuance of diamond grading certificates were remitted by the appellant to GIA USA in its HSBC Bank Account No. 801-045451-001 in Hong Kong. 4. However, there was a clerical error in the Form 15CA & Form 15CB wherein the beneficiary name was mistakenly mentioned as GIA Hong Kong Laboratory Limited instead of GIA USA. Consequently, this mistake had continued in the payment advice and telex copy issued by the remitting bank. And thereby, the aforesaid error had further continued while furnishing the statement of facts, which was subsequently rectified during the income tax proceedings. 5. All payments were remitted to GIA USA in its HSBC account no. 801-045451-001 as mentioned in the invoices, bank payment advice and telex copy." 7.2 Reading of the affidavit extracted by the Appellate authority indicates that since d....
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....ynopsis and relied on certain case laws. It was also contended that the entry on Form-15CA / 15CB were wrongly filled up and that the payment of certification charges were in fact made to GIA Inc USA and furnished certificate of HSBC Bank that the bank account wherein the remittance were made owned by GIA Inc USA. The Id CIT(A) on appreciation of facts held that there is no dispute about the services rendered by GIA to assessee. Further the diamonds certification is issued by GIA Inc USA. Certificatin issued by GIA USA is considered as standard benchmark by the trade as well as by the customers and all intellectual property rights in the certification belongs to GIA Inc USA. The assessee had agreement with GIA Inc USA, on perusal of which it can be seen that the term of agreement clearly describes the status of GIA laboratory in Hong Kong. It is clear from the contents of agreement that Hong Kong, Dubai and Israel are the "taken in window" where articles are delivered. However, the services agreement is between the assessee and GIA USA. Copy of grading certificate is also issued by GIA USA, but due to clerical mistake the beneficiary of the remittance was erroneously specified a....
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....hat assessee, whose utilising the services will not be able to make use of technical knowledge, by itsel in its business without recourse to GIA Inc USA in future. The technical knowledge, experience skill etc will not remain with the assessee after rendering the services has come to an end." 7.5 A Division Bench of this Court in the case of Principal Commissioner Of Income Tax, Vadodara 3 versus M/S Bell Ceramics Ltd in Tax Appeal No. 162 of 2021, considering the provisions of Section 260A of the Income Tax Act held that the Appeal thereunder can only be admitted if the High Court is satisfied that the case involves a substantial question of law. Paras 11 and 12 thereof read as under: "11. It may be noted that the Appeal under Section 260A could be admitted only on the High Court being satisfied that the case involves a substantial question of law. The Supreme Court in the case of M. Janardhana Rao versus Joint Commissioner of Income Tax reported in (2005) 2 SCC 324, while dealing with the scope of Section 260A of the Income Tax Act, 1961, observed as under : - "14. Without insisting on the statement of substantial question of law in the memorandum of appeal and formulating....
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....) must be formulated. The expression "substantial question of law" is not defined in the Act. Nevertheless, it has acquired a definite connotation through various judicial pronouncements. In Sir Chunilal V. Mehta & Sons, Ltd. Vs. Century Spinning and Manufacturing Co. Ltd., AIR 1962 SC 1314 a Constitution Bench of this Court, while explaining the import of the said expression, observed that: "The proper test for determining whether a question of law raised in the case is substantial would, in our opinion, be whether it is of general public importance or whether it directly and substantially affects the rights of the parties and if so whether it is either an open question in the sense that it is not finally settled by this Court or by the Privy Council or by the Federal Court or is not free from difficulty or calls for discussion of alternative views. If the question is settled by the highest Court or the general principles to be applied in determining the question are well settled and there is a mere question of applying those principles or that the plea raised is palpably absurd the question would not be a substantial question of law." 19. Similarly, in Santosh Hazari Vs. Pu....