TaxTMI 
TaxTMI 
2026 (8) TMI 287
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.... NFAC/2019-20/10174802 143(3) read with section 144B of the Income tax Act 2021-22 NFAC/2020-21/10206002 143(3) read with section 144B of the Income tax Act 2022-23 NFAC/2021-22/10357088 143(3) read with section 144B of the Income tax Act 2. The ld. CIT(A) has considered Appeal No. NFAC/2017-18/10022110 for AY 2018-19(being ITA No.2328/Del/2026 herein) as the "Lead Year" and has held that the findings of the Lead Year are applicable mutatis mutandis to other appeals as well because the nature of issues involved, facts involved as also the grievances as were raised by the assessee before the ld. CIT(A) were common. 3. Brief facts as understood from the orders of the authorities below as also from the Synopsis filed by the ld. AR of the assessee are, the assessee is a partnership firm which is engaged in rendering the legal and consultancy services across various practice areas comprising of mergers and acquisitions, taxation, dispute resolution, competition law, regulatory litigation, capital markets and private equity. Such professional and consultancy services are claimed to have been rendered by the assessee to both its Indian clients as well as inte....
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....apan and receipts from other countries constitute only about 2% of the total receipts. The Assessing Officer in accordance with his understanding denied the claim of FTC by making following observations as are noted by him in the Assessment Order for Assessment Year 2018-19:- 1. The nature of services provided by the assessee is clearly of legal nature covered under Article 14 of the DTAA. This nature is also accepted by the assessee firm as can be seen from the above discussion. In lieu of the nature of services provided in this case, Article 14 is clearly attracted as against Article 12 of the DTAA. 2. Article 12, as observed from the plain reading of the DTAA, is attracted in case of Royalties and Fee for technical services. 3. Article 14, as observed from the plain reading of the DTAA, is attracted in case of Independent personal services which explicitly includes professional services including independent activities of lawyers. 4. The Article 14 is applicable for both of individuals as well as partnership firm. The usage of words like He and His are concern-neutral terms. These terms not only apply to individuals but also to other concerns ....
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....m the DTAA with Japan, Rule 128 of the Rules as also the judgement of ITAT, Mumbai Bench in the case of Amarchand & Mangaldas & Suresh A. Shroff & Co. as reported in 122 Taxman.com 248 has decided the issue in favour of the assessee by holding that Assessing Officer was not justified in denying the credit of FTC to the assessee and has allowed the appeals of the assessee by treating Assessment Year 2018-19 as the Lead Year and by holding that the findings of the Assessment Year 2018-19 are applicable for all other years. 5. Aggrieved with the above order, Revenue is in appeals before us raising following grounds of appeal in AY 2018-19 :- 1. Whether, on the facts and in the circumstances of the case, the Ld. CIT(A) erred in law in allowing Foreign Tax Credit (FTC) u/s. 90/91without applying the statutory tests for admissibility of FTC, including determining the creditability of the foreign levy, its nexus with the corresponding income offered to tax in India, and the year of allowability? 2. Whether the Ld. CIT(A) erred in law in allowing FTC without applying the limitation principle under section 90/91 read with the Rules, i.e. restricting the credit to the In....
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....TC without establishing the nexus with the corresponding income offered to tax in India. He has further submitted that the restricting of credit of FTC to the extent of Indian tax attributable of such income also needs verification. He has, therefore, urged upon the Bench to restore back to Assessing Officer for verification of all these facts before the FTC claim is allowed to the assessee. 8. On the other hand, ld. AR of the assessee, has submitted that the assessee firm has been carved out of the erstwhile firm i.e. Amarchand & Mangaldas & Suresh A. Shroff & Co. and this very issue earlier came up in the case of erstwhile firm for Assessment Year 2014-15 wherein the claim of FTC was denied for the identical reasons by the Assessing Officer but, however ITAT has allowed the relief to the assessee by holding and analyzing the DTAA between India and Japan to conclude that it is Article 12(4) read with Article 23 which is applicable to the professional receipts and not Article 14 as had been done by the Assessing Officer in that year. The ld. AR also referred to another judgement of ITAT, Mumbai Bench in the case of DCIT v. Cyril Amarchand Mangaldas for the Assessment Year 2017-1....
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....es below because the learned Assessing Officer has not denied the credit of FTC in any of the assessment orders because the corresponding income on which the assessee claimed FTC has not been offered to tax. It has, therefore, been submitted that no useful purpose would be served by referring the matters back to the Assessing Officer as it would tantamount to multiplication of proceedings especially in view of the fact that all the relevant facts and figures i.e. the income earned from these foreign jurisdiction and corresponding FTC claimed by the assessee are duly noted by the Assessing Officer in the respective assessment orders and not even an iota of doubt has been expressed by the Assessing Officer in respect of these facts and figures. 12. Further, ld. AR submitted that the ld. CIT(A) has made correct interpretation of the provisions of various Articles as contained in the respective DTAA as also the provisions of section 90/90A of the Income Tax Act read with Rule 128 of the Rules. The ld. AR relied upon the judgements of ITAT, Mumbai Bench in the erstwhile firm i.e. Amarchand & Mangaldas & Suresh A. Shroff & Co. as reported in 122 taxmann.com 248 and also on the judgeme....
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....tion were rightly subjected to tax withholding in Japan. The judicial precedents cited by the authorities below are in the context of the tax treaties other than Indo Japan tax treaty, and the provisions of the Indo Japan tax treaty are not in parimateria with the provisions of those tax treaties. These judicial precedents deal with the tax treaties that India has entered into with China, U.K. and the USA, but then all the three treaties are, in the material respects, differently worded vis-à-vis the Indo-Japanese tax treaty that we are presently dealing with. It is, therefore, not even necessary, even if we have our reservations on correctness of these decisions, to refer the matter to the larger bench for reconsideration of the principle laid down therein. Suffice to say, on the facts of this case, the conclusions arrived at by the Japanese tax authorities, directing tax withholdings from the payments made to the assessee by its Japanese clients, cannot be said to unreasonable or incorrect. In the light of these discussions, as also bearing in mind entirety of the case, we hold that the assessee was wrongly declined tax credit of Rs. 80,55,856/- on the facts of this case. ....