2025 (7) TMI 908

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....ndoned. 2. The application stands disposed of. ITA 207/2025 & CM APPL. 39440/2025 3. The Revenue has filed the present appeal under Section 260A of the Income Tax Act, 1961 [the Act], inter alia, impugning an order dated 14.11.2024 [impugned order] passed by the learned Income Tax Appellate Tribunal [ITAT] in ITA No. 2607/Del/2022 in respect of Assessment Year [AY] 2019-20. 4. The respondent [Assessee] is engaged in providing information technology support, maintenance support and software licensing services to various group entities including its Indian Associated Enterprises (AEs). 5. The Assessee - a tax resident of Japan - had preferred the aforesaid appeal [ITA no. 2607/Del/2022] before the learned ITAT against the final assessme....

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....foresaid direction, the AO passed the final assessment order dated 31.08.2022. The AO confirmed the quantum of the assessment of the income, but altered the head of income in which the said income was assessed. 9. The AO held that the amount in question received by the Assessee was chargeable to tax under the head 'income from other sources'. The AO reasoned that the amount received by the Assessee in terms of the arbitral award could not be considered as business income. 10. The plain reading of the assessment order indicates that the AO has merely reproduced some of the submissions as articulated in the remand report filed before the DRP. A plain reading of the remand report indicates that the AO had reasoned that the Assessee did not q....

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....urt reported in 156 taxmann.com 282 dated 8-11-2023 which reversed the decision of Mumbai Tribunal referred supra. Hence the decision relied upon by the Learned Joint Commissioner of Income Tax and by the Learned DR before us does not advance the case of the revenue. Accordingly, we hold that the principal portion of the compensation received pursuant to an Arbitral Award in the sum of Rs. 32,97,07,175/- would have to be construed only as business income of the assessee as it arises out of contractual obligation of the business. Undisputably there is no PE for the assessee in India. Hence in view of Article 7 of India Japan Tax Treaty, the same would not be chargeable to tax in India. 18. Now coming to the taxability of interest received....

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....absence of PE in India, the same would not be chargeable to tax in India as per Article 7 of India Japan Tax Treaty. 19. Hence we have no hesitation to hold that the compensation received by the assessee pursuant to an Arbitral Award in the total sum of Rs. 35,77,10,655/- would have to be construed only as business income of the assessee and in the absence of any PE of the assessee in India, as per Article 7 of the India Japan Tax Treaty, the same would not be chargeable to tax in India. Accordingly, the Ground Nos. 3 to 4.1. raised by the assessee are allowed." 13. There is no dispute that the amount awarded to the Assessee was against it claims for payment of supplies, which was accepted by the Arbitral Tribunal. Thus, undisputedly, ....