TaxTMI 
TaxTMI 
2025 (9) TMI 1615
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....e Ld.CIT(A) was justified in holding that fees for "borrowed services" were not FTS despite the same being specific to the requirements of clients of the Indian AE of the Assessee? 3. Whether on facts and in the circumstances of the case and in law, the Ld.CIT(A) was justified in giving relief to the assessee based on Mutual Agreement Procedure of US- incorporated associated enterprises of the Assessee, despite the fact that Assessee was not a party to any of the Mutual Agreement Procedure? 4. Whether on facts and in the circumstances of the case and in law, the Ld.CIT(A) was justified in holding that the assessee's receipts from India were of the nature of business receipts not taxable due to absence of PE in India, and not FTS despite the fact that the Assessee had rendered specific and specialized services only to its own AE in India that were specific to the requirements of the clients of the Indian AE?" 2. The assessee is a foreign company incorporated in Singapore. The assessee is part of McKinsey Group of entities the primary business of which is to render strategic consultancy services to its clients which includes the analysis of performance, devel....
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....of the view that there is a reasonable and sufficient cause for the delay in filing the appeal before the Tribunal. Therefore following the Hon'ble Supreme Court decision in the case of Collector, Land Acquisition Vs. MST.Katiji & Ors., (167 ITR 471) (SC) we condone the delay of 21 days in filing the appeal for both AY 2020-21 & 2021-22 and admit the appeals for adjudication 5. We heard the parties and perused the material on record. The ld. AR at the outset submitted that the issue of treating the services rendered by the assessee as taxable under article 12 of DTAA between India and Singapore has been a recurring issue and that the Co-ordinate Bench has been consistently holding the issue in favour of the assessee. The ld. AR in this regard drew our attention to recent order of the Co-ordinate Bench in assessee's own case for AY 2013-14 (ITA No. 2535/Mum/2023 dated 21.06.2024) where it has been held that "7. After giving a thoughtful consideration to the orders of the authorities below, we are of the considered view that the quarrel has been decided by this Tribunal in assessee's own case in earlier assessment years. This Tribunal in a bunch of appeal of the group....
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....f the AO / DRP, Ld Counsel for the assessee also demonstrated that they approved the order of the AO merely by stating that the MAP is year specific and they cannot be extended to the other Assessment Years. On this issue, he submitted that the fact are alike in all the AYs / appeals under consideration, the issue is common and the conclusions will not differ and therefore, the order of the Tribunal is fairly applicable to the facts of the present case. Further, bringing our attention to page 82 of the paper book, Ld Counsel for the assessee submitted that the resolution under MAP was duly accepted by the Department. In such case, the DRP / AO cannot take a different view in the matter. Further, referring to para 3.3 on page 85 of the paper book (a copy of the MAP proceedings vide File No.480/02/2008-FTD.I), Ld Counsel for the assessee mentioned that the 'borrowed service charges shall not be taxable in India as 'royalty' or 'FIS'.' Relevant lines from the said para 3.3 read as under:- "3.3. The amount paid by McKinsey India to Mckinsey & Co., Inc. Or any other McKinsey entity incorporated in the US on account of...........borrowed service charges......
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....nc. United States (ITA No.649/M/2007) * McKinsey & Company, Inc. Switzerland v/s ADIT(IT)(ITA No.7238/M/2002) > McKinsey & Company, Inc. (Philippines) & Ors. v/s ADIT (99TT) 857) > DDIT(IT) V/s McKinsey & Company, Inc. United States & Others v ADIT(IT)(ITA No.3483/M/2005) > McKinsey & Company, Inc. China & Others v/s DCIT (ITA No.7239/M/2002) > ADIT(IT) /s McKinsey & Company, Inc. Belgium (ITA No.3711/Mum/2006) 4. The Id. Counsel has further invited our attention that even the amount paid by the Indian Branch to the head office on account of borrowed service charges has been accepted and decided in favour of the assessee under Mutual Agreement Procedure (MAP) resolution and therefore the same is not taxable. The Id. Counsel has referred letter dated 23/03/2012 to show that under the Mutual Agreement Proceeding, one of the item was borrowed service charges. The Id. Counsel has further pointed out that the revenue challenged the decision of this Tribunal before the Hon'ble High Court record the issue involved in the appeal how duly been resolved under MAP and given effect by the Assessing Officer. He has referred the decision ....
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....re not similar to that of the AY 2007-2008 and others. Therefore, the argument that the MAP relevant for the other AY has no application to the facts of the present AY 2010-2011 is not sustainable. 8. Considering the above settled nature of the issue under consideration, we direct the AO to grant relief accordingly to the assessee after verification of the fact that the issues have already been resolved under the Mutual Agreement Procedure. Accordingly, all the grounds raised by the assessees in all the ten appeals are allowed. 8. As no distinguishing facts have been brought to our notice, respectfully following the decision of the co-ordinate Bench (supra), we decline to interfere in the finding of the CIT(A)." 6. The ld. AR also took the Bench through the various decisions of the Coordinate Bench in earlier AYs in assessee's own case where it has been held that the borrowed services cannot be treated as FTS under Article 12 of DTAA between India and Singapore. From the combined perusal of the findings of the Co-ordinate Bench in assessee's case for the earlier AYs and facts pertaining to AY 2020-21 and 2021-22 we notice that facts pertaining to the im....