TaxTMI 
TaxTMI 
2024 (5) TMI 442
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....ssessee has questioned the validity of DRP's direction in absence of proper Document Identification Number (DIN). However, at the outset, Sh. Ajay Vohra, learned Senior Counsel appearing for the assessee, on instructions, submitted that he would argue the appeal on merits only and the legal issues raised in ground nos. 2, 3 and additional ground, need not be adjudicated at this stage, but be kept open. Further, on instructions, he submitted that ground nos. 4 and 5 are not pressed. Accordingly, ground nos. 4 and 5 are dismissed. 4. The issue on merits arising for consideration, in terms of ground nos. 6, 7 and 8, is in relation to taxability of Rs. 114,31,40,765/- as Fee for Technical Services (FTS) in terms of Article 12 of India - Sweden Double Taxation Avoidance Agreement (DTAA). 5. Briefly the facts relating to this issue are, the assessee is a non-resident corporate entity incorporated in Sweden and a tax resident of that country. As observed by the Assessing Officer, the assessee is a part of the Volvo Group and is engaged in providing Information Technology ('IT') solutions, particularly catering to IT needs of automotive industries. For the assessment year under dispu....
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....India - Portugal DTAA, as, such fees are not ancillary or subsidiary to any royalty income. Thus, it was pleaded by the assessee that the income cannot be treated as FTS under Article 12(3) of India - Sweden DTAA read with Article 12(4) of India - Portugal DTAA. The Assessing Officer, however, was not convinced with the submissions of the assessee. 8. Referring to Article 12(3) of India - Sweden DTAA, the Assessing Officer held that the scope and ambit of the said provision is wide enough to include the receipts earned by the assessee. In this context, the Assessing Officer observed that the restrictive provisions of India - Portugal and India - Finland treaties cannot be automatically imported to India - Sweden treaty in absence of a separate notification issued by India incorporating such provision in India - Sweden DTAA. In the aforesaid premises, the Assessing Officer ultimately concluded that the receipts to the tune of Rs. 114,31,40,765/- are to be treated as FTS under Article 12(3) of India - Sweden DTAA and taxable at the rate of 10% on gross basis. Accordingly, he framed the draft assessment order. Against the draft assessment order so framed, the assessee raised object....
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....ting assessment for assessment year 2018, held that the receipts are in the nature of FTS under Article 12(3) of India - Sweden DTAA. He submitted, the same position is being followed by the Department in subsequent assessment years. He submitted, the nature of receipts from Indian entities can be determined only in the first year of assessment. He submitted, once the nature of receipts was examined and held to be in the nature of royalty, the same cannot be re-characterized to FTS in the subsequent years in absence of any change in facts as the rule of consistency would apply. In this context, learned counsel relied upon the following decisions: 1. Radhasoami Satsang Vs. CIT, 193 ITR 321 (SC) 2. CIT Vs. Kotak Securities Ltd. [2016] 67 taxmann.com 356 (SC) 3. CIT Vs. Excel Industries Ltd, 358 ITR 295 (SC) 4. CIT Vs. Neo Polypack (P) Ltd., 245 ITR 492 (Delhi) 5. Johnson Matthey India Pvt. Ltd. Vs. DCIT, ITA No. 14/2013 (Delhi) 6. CIT Vs. Alstom Projects India Ltd., 394 ITR 141 (Bombay) 7. Pr. CIT Vs. Nippon Leakless Talbross Pvt. Ltd. 455 ITR 335 (P&B) 8. SC Enviro Agro India Ltd. Vs. DCIT (ITA No. 704/Mum/2012)....
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....Under the End User Services and Shared Infrastructure, the assessee provides facilities and various services keeping in view the End User requirement, such as, emails, personal computer environment, voice/telephone. Under the voice support, mobile and fixed voice services are provided to connect people in local and global context. Under the IT support services, the assessee operates service desk for all types of IT related issues from end users. Under the Volvo Corporate Network, assessee provides a secured access to Volvo Network, which is prerequisite for use of any business application other IT services provided by the assessee. The assessee also provides Business Consultancy Services in terms of which it renders consultancy services with respect to IT services provided by it. 15. Though, the assessee has claimed that these are standard and routine services, however, fact remains that the assessee has provided managerial, consultancy and technical services. Copies of invoices placed in the paper-book do not provide the description/details of services provided. At this stage, we may look into the definition of FTS under Article 12(3)(b) of India - Sweden DTAA, which reads as u....
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....Officer to freshly examine the nature of receipts in a subsequent assessment year, as, each assessment year, being an independent unit, the principle of res-judicata does not apply to tax proceedings. Furthermore, in case, the Assessing Officer has made a mistake in the earlier assessment years in characterizing the nature of income, that cannot be allowed to be perpetuated forever. In the facts of the present appeal, undoubtedly, the assessee has rendered certain services to the group entities in India and received payments. Therefore, the nature and character of such services, whether managerial, technical or consultancy have to be examined. Obviously, the receipts qua managerial, technical or consultancy services would definitely fall within the ambit of FTS and not royalty. 19. In the instant case, the Assessing Officer has examined the nature of receipts in respect of certain services rendered by the assessee to the Indian entities and found them to be FTS. The aforesaid factual position is not disputed even by the assessee. Therefore, it is established on record that the receipts are in respect of certain services rendered by the assessee. If that is the case, it needs to ....