TaxTMI 
TaxTMI 
2024 (3) TMI 1204
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....250/2021-22/1039488281(1), dated 7/2/2022 arising out of the order passed u/s. 143(3) r.w.s 144C of the Income Tax Act, 1961 [the Act] for the AY 2017-18. 2. Briefly stated the facts of the case are that the assessee is a foreign company incorporated in Mauritius Companies Act, 2001 and is a tax resident of Mauritius. The assessee is engaged in the business of managing diamond factories and facilitating diamantaires to operate economically for high quality diamond factories across the Globe. The assessee has entered into a technical collaboration with its Associated Enterprises [AEs] in India viz., Worldwide Diamond Manufacturers Pvt Ltd and Worldwide Diamond Sorting Pvt Ltd for providing technical, process, marketing and sales assistanc....
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.... that it is a settled position that the taxpayer has the legal right u/s. 90(2) of the Act to apply the provisions of the Act or applicable tax treaty whichever is more beneficial and the same is not legal opportunism. 3. The Ld. CIT(A), Hyderabad-10 failed to appreciate that under the India - Mauritius Tax Treaty, the Article on taxation of Fees for Technical Services was inserted with effect from 1st April, 2017 ie., after the year under consideration and for the year under consideration the said income was business profits which could not be taxed in India in absence of a Permanent Establishment [PE] in India. 4. The Ld. CIT(A), Hyderabad-10 failed to appreciate the point that the facts of the case of the appellant are ....
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....here is no "Service PE" existing in India but the Ld. CIT(A) failed to appreciate that fact. The Ld. AR also argued that the penal proceedings were dropped after the Ld. CIT(A)'s order. The Ld. AR further submitted that the assessee vide letter dated 24/12/2019 during the scrutiny assessment proceedings has voluntarily agreed to tax the FTS u/s. 115A of the Act to buy peace, to avoid litigation and also to avoid penal proceedings. However, the Ld. AR pleaded that this amount is not taxable in India, in the absence of Service PE and hence pleaded that the addition made may kindly be deleted. In this context, the Ld. AR relied on the following case laws: (i) Decision of the jurisdictional Bench of the ITAT in the case of Paramina Ear....
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....the assessee has also paid a differential tax amount of Rs. 1,78,700/- during the scrutiny assessment and it is only an afterthought to the earlier accepted stand of the assessee. He therefore pleaded that the order of the Ld. CIT(A) be upheld. The Ld. DR relied on the Circular No. 333 [F.No.506/42/81-FTD], dated 2-4-1982. 6. We have heard both the sides and perused the material available on record as well as the orders of the Ld. Revenue Authorities and the written submission made by the assessee. There is no dispute on the fact that the assessee is not having a Permanent Establishment [PE] in India. Further, there is no specific clause in the DTAA entered into between the Republic of India and Mauritius as pointed out by the Ld. AR in ....
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....ent made to the non resident was in the nature of FTS. Therefore, the facts of the assessee's case are squarely covered by the decision of ITAT Bangalore (supra). Accordingly, we hold that the lower authorities have erred in taxing the FTS separately u/s9(1)(vii) of the Act. Accordingly orders of the lower authorities are set aside and the appeals of the assessee are allowed." Further in the case of DCIT, Circle-4(2), New Delhi. Vs. Campus Eai India Pvt. Ltd in ITA No. 355/Del/2021 Asstt. Year: 2017-18 the Coordinate Bench of Delhi Tribunal has held as under: "14. From the above, it is abundantly clear that the Ld. CIT(A) after considering the impugned issue in detail has given his finding that invocation of the provisions o....
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.... order of the Tribunal is confirmed. [Para 19] As far as the order in article 22 is concerned, there is no justifiable ground to uphold that portion of the order after the discussion on the extent of income falling for consideration under royalty as defined under article 12 and the amount paid as towards technical services falling for consideration under article 7. Since the said income does not fall as miscellaneous income, the same cannot be brought under article 22. [Para 20] Even though it was submitted that the fee paid towards technical services cannot be brought towards business income, yet in the absence of any material to show that the same is not related to the business of the assessee, the said contention is rej....