AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (11) TMI 796
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Act'] and passing the order under Section 263 of the Act, which is also bad in law and prayed to be quashed 2. On the facts and circumstances of the case and in law, the PCIT has erred in assuming jurisdiction under Section 263 of the Act, without appreciating that the learned Assessing Officer ['AO'] has taken one of the possible views Accordingly, the order under Section 263 of the Act is without jurisdiction, bad in law and prayed to be quashed 2.1 On the facts and circumstances of the case and in law, the learned PCTT has erred in invoking the provisions of Section 263 of the Act without appreciating that the learned AO, in the reassessment proceedings, allowed the said payments by following the Jurisdictional High Court and Jurisdictional Tribunal rulings. Accordingly, the order under Section 263 of the Act, dated February 13, 2025 is bad in law and prayed to be quashed. 2.2 On the facts and circumstances of the case and in law, the learned PCIT has exceeded his jurisdiction by concluding that the findings of the learned AO are incorrect merely because of past litigation on the matters by the department Thus, the learned PCIT has steppe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nd prayed to be quashed. 8. On the facts and circumstances of the case and in law, the learned PCIT has erred in not passing the order u/s 263 within the time limit as prescribed under the said section qua the payments to non residents which have been considered in the original assessment order dated 29 September 2021 Accordingly, the order u/s 263 is time barred to that extent." 2.1. Assessee has raised as many as eight grounds, all of which relate to invoking of revisional proceedings u/s.263 and passing the impugned revisionary order under the said section. 3. From the perusal of the impugned revisionary order passed by ld. PCIT-8, we note from para 2, wherein he observed that assessee had paid professional fees (foreign remittances) to the extent of Rs. 13,80,01,423/- on which TDS was not done. According to it, in this regard, the Assessing Officer has issued and served various notices including show cause notice dated 09.01.2023 to the assessee. Assessee in its submission had justified the issue of non-deduction of tax at source along with details which were accepted by the Assessing Officer and hence no additions were made. 3.1. In para 2.2, he observed that....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... income chargeable to tax in India in the hands of the overseas entities and therefore, TDS was not required to be done u/s. 195 of the Act. 5.1. From the perusal of the impugned assessment order passed u/s. 143(3) r.w.s. 144B, dated 29.09.2021, we take note of the issue raised by ld. PCIT has been dealt by the ld. Assessing Officer in para-3.0, onwards. Ld. Assessing Officer completed the assessment by making disallowance of Rs.7,99,15,590/- instead of correct amount of Rs. 11,89,86,331/- u/s. 40(a)(i) for professional fees on which TDS was not done, which should have been done u/s. 195 of the Act. 5.2. Assessee has furnished correct factual position in respect of the disallowance made by the ld. Assessing Officer which is tabulated below: ● The following payees' amounts were misquoted by NaFAC in the Assessment order. Sr. No. Non-resident Payee Name Amounts reported in the submissions during Asst proceedings (Rs.) Amounts quoted in Assessment order (Rs.) Difference Amounts (Rs.) 1 International Screening Solutions, Inc USA 2,55,719 2,55,179 540 2 KPMG LLP UK 1,06,68,991 10,66,899 96,02,092 3 KPMG LLP, USA....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 2009-10 (ITA No. 1917/MUM/2013) 5. ITAT Mumbai order in the matter of BSR & Co LLP for AY 2010- 11 and 2011-12 (combined order) (ITA No. 4533/Mum/2016 to ITA No. 4536/Mum/2016) 6. ITAT Mumbai order in the matter of BSR & Co LLP for AY 2012-13 (ITA No. 361/MUM/2017) 7. ITAT Mumbai order in the matter of BSR & Co LLP for AY 2013-14 (ITA No. 2549/Mum/2018) 5.5. Details of judgment by Hon'ble Jurisdictional High Court of Bombay in assessee's own case vide appeal No. 690 of 2017, dated 24.09.2019, relating to Assessment Year 2008-09 was considered wherein revenue challenged that professional fees payment outside India without realizing that the tax was required to be deducted thereon, the disallowance was rightly made. Hon'ble Bombay High Court held that there was no challenge to the applicability of DTAA by revenue and therefore, there is no infirmity found in the order of the Coordinate Bench. Thus, after considering the factual matrix of the case backed by long line of judicial precedents, including that of Hon'ble jurisdictional High Court of Bombay in assessee's own case as well as decisions of Coordinate Bench in assessee's ow....
X X X X Extracts X X X X
X X X X Extracts X X X X
....made to Background Bureau Inc covered in the order) 2008-09, 2009-10, 2010-11, 2011-12 ( Similar to payments made to Background Bureau Inc & KPMG USCMG LLC. USA and covered in the orders) 2008-09, 2009- 10, 2010-11, 2011-12 ( Similar to payments made to Background Bureau Inc & KPMG USCMG LLC, USA and covered in the orders) - 2 6 KPMG Advisory N.V. Netherlands Yes Audit Services 2,733,242 2008-09 (Similar to payments made to KPMG Accountants N.V.) 2008-09, 2009-10, 2010-11 (Similar to payments made to KPMG Accountants N.V.) 2008-09, 2009- 10, 2010-11 (Similar to payments made to KPMG Accountants N.V.) 2 7 KPMG SA France Yes Yes Accounting Advisory Services 2,260,800 2007-08 2007-08 BSR & Co LLP AY 2012- 13 AY 2014-15 2 8 KPMG Meijburg & Co Special Services B.V. Netherlands Yes Taxation and Audit Services 1,358,296 2008-09 (Similar to payments made to KPMG Accountants N.V.) 2008-09, 2009-10, 2010-11 (Similar to payments made to KPMG Accountants N.V.) 2008-09, 2009- 10, 2010-11 (Similar to payments made to KPMG Accountants N.V.) BSR & Co LLP ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Yes Audit Services 52,912 0 2010-11 and 2011-12 2010-11 and 2011-12 - 1 17 Foreign Exchange Fluctuation (USA, UK, Singapore & Australia) in respect of amounts debited in AY 2017-18 WCOME TA PARTMENT As the original amounts are not in the nature of FTS, the exchange fluctuation is also not in the nature of FTS TOTAL 108,224,253 Note 1 : The services are in the nature of Independent Personal Services under Article 14/15 of the respective Tax treaties and are not taxable in India in the absence of a fixed base of the non-residents in India Note 2 : The services are in the nature of business profits under Article 7 of the respective Tax treaties and are not taxable in India in the absence of a permanent establishment of the non-residents in India. The issues of company mentioned above at serial no. 1 to 16 is covered in favour of appellant. All the relevant decisions pointed out are discussed in Para 3 above. The appellant gets relief in respect of this addi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....one case mentioned at serial no. 5 in the case of KPMG Auditores & Consultores S.A., which required for further verification. All the relevant decisions pointed out are discussed in Para 3 above. The appellant gets relief in respect of all these additions. In the case of KPMG Auditores & Consultores S.A., Mozambique, the nature of services rendered are Tax Advisory Services. As per note 2 furnished by the appellant, has submitted that services are in the nature of business profits under Article 7 of the respective Tax treaties and are not taxable in India in the absence of a permanent establishment of the non-residents in India. The Assessing Officer is directed to verify the facts in the light of decisions given in Para 3 above and after considering the decision of P.T. Mckinsey Indonesia [2013] 141 ITD 357. Relief will be provided to the appellant if the income is not found to be taxable in India. No TDS is also required to be deducted in respect of foreign exchange fluctuation, where the TDS is not required to be deducted in respect of payments. This issue is consequential in nature and relief shall be provide to the appellant accordingly In view of di....
X X X X Extracts X X X X
X X X X Extracts X X X X
....skill etc. to the assessee. Thus it is chargeable under FTS agreement of respective DTAA. e. Where there are no articles of Fees For Technical Services the learned assessing officer held that those services fall under the ambit of article 22/23 of the Double Taxation Avoidance Agreement such as other income' on income not expressly mentioned and therefore taxes required to be deducted at source on that. As assessee has failed to deduct tax at source is disallowed the same. f. On appeal before the learned CIT A noted in paragraph number [8] of his order at page number 56 that each of the entities covered in the above payment at serial number 1 to 16 is covered in favour of the appellant, all the relevant decision pointed out discussed in paragraph number [3] and therefore the appellant gets relief in respect of this disallowance. g. Further with respect to the 5 entities he held that the issue squarely covered in favour of the assessee by the decision of the coordinate bench in case of BSR and Co LLP for assessment year 2015-16 and 2017-18 as the payments are similar. The sixth payment was with respect to the foreign exchange fluctuation on the above p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y the decision of the coordinate bench in assessee's own case for assessment year 2001-02 vide order dated 7 April 2017 and further the orders of the learned CIT(A) for subsequent years following that order of ITAT. It covered the issue. He referred to the decision of the coordinate bench in assessee's own case for assessment year 2001 02 in para number 5.15 and 5.16 wherein it has been held that the KPMG and the assessee is having a relationship of mutual Association and its member respectively and no element of Income was embedded in the remittances received by the foreign entity." 6. Matter travelled before the Coordinate Bench wherein references were made to the afore-stated long line of judicial precedents and it was submitted that the issue is no longer res integra, squarely covered in favour of the assessee and therefore, the disallowance deleted by ld. CIT(A) ought to be upheld. The findings given by the Coordinate Bench on both the issues as contained in Para 12 and 13 are extracted below, whereby the relief granted by ld. CIT(A) was upheld. "12. We have carefully considered the rival contention and perused the orders of the lower authorities. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ind any infirmity in the order of the learned CIT (A) thus, the disallowance of Rs. 434,019,511/- for non-deduction of tax at source is correctly deleted. Accordingly the order of the 6 of the learned CIT (A) is upheld and ground number 5 appeal is dismissed. 7. In the meanwhile, case of the assessee was re-opened by invoking provisions of section 148 r.w.s.147. Ld. Assessing Officer noted that certain information was flagged in accordance with the risk management strategy formulated by CBDT. For the purpose of issuing notice u/s.148, ld. Assessing Officer alleged that assessee had availed services from various overseas concerns and it had made foreign outward remittances amounting to Rs. 13,80,01,423/- without tax withholding. According to the ld. Assessing Officer, these services were in the nature of fees for technical services and the make available clause was also satisfied. Hence, these payments were liable to tax withholding, which the assessee had not done, leading to escapement of income. 7.1. Assessee made its detailed submissions in response to notice issued u/s.148A(b). Assessee submitted that accrued amount of professional fees pertaining to Assessment Year 2018-....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s the aggregate of total outward remittance made in the year under consideration, which includes the amount pertaining to earlier years. He thus, completed the reassessment by holding that the professional fees paid was not taxable in India in the hands of the recipients and that no tax was required to be deducted in India and thus, no variation in the income was proposed. 8. From the above history of proceedings under various sections of the Act before various authorities, it is evident that the issue raised by ld. PCIT for invoking the impugned revisionary proceedings u/s.263 and passing the revisionary order there under are on the same issue which has been adequately and repeatedly dealt in the assessment completed u/s. 143(3) which went up to the stage of appellate proceedings before the Coordinate Bench and also in reassessment proceedings u/s. 147, wherein ld. Assessing Officer had accepted the claim of the assessee. We are in a state of wonderment as to what more would ld. PCIT require so as to hold the Assessing Officer who has not conducted adequate enquiries and detailed verification to invoke the proceedings u/s. 263. Ld. PCIT in paragraph 5.5 mentions that the decisi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ought on record by the assessee, requiring the ld. Assessing Officer to inquire and make detailed verification which has not been done by him. 8.2. Without prejudice, even if the impugned revisionary order is upheld and the order giving effect is passed, whereby the additions as contemplated by ld. PCIT are made by the ld. Assessing Officer, the same would still get covered by the long line of judicial precedents already listed above, resulting into a wasteful exercise of adding one more proceeding under the Act. 9. The issue regarding whether the assessment order is erroneous or prejudicial on the ground of insufficiency of enquiry has been dealt by the Hon'ble Delhi High Court in the judgment of ITO v. DG Housing Projects Ltd. (supra), which has been followed by various co-ordinate benches of the ITAT in various cases. Hon'ble High Court while adverting to the issue held that in cases of wrong opinion for finding on merit, the CIT has to come to the conclusion and himself decide that order is erroneous, by conducting necessary enquiry, if required and necessary before the order u/s 263 of the Act is passed. In such cases, the order of the AO will be erroneous becaus....