Western Union Financial Services Inc Gurgaon v. Ddit New Delhi

In The Income Tax Appellate Tribunal Delhi Bench D New Delhi Before Sh G D Agrawal Honble President And Sh K N Chary Judicial Member Ita No 4956 Del 2011 Assessment Year 2008 09 Ita No 5649 Del 2010 Assessment Year 2007 08 Order Per K N Chary Judicial Member Ita No 4956 Del 2011 Is Preferred By The Assessee In Respect Of Ay 2007 08 And Ita No 5649 Del 2010 Is Preferred By Th E Revenue In Respect Of Ay 2008 09 The Assessee And The Facts Involved In These Matters Are Joint Director Of Income Tax Osd Intl Taxation Circle 2 2 New Delhi Vs Western Union Financial Services Inc C O Kpmg India Pvt Ltd Building No 10 8 Th Floor Tower B Dlf Cyber City Phase Ii Gurgaon Pan Aaacw 1936 E Appellant Respondent Western Union Financial Services Inc C O Kpmg India Pvt Ltd 8 Th Floor Tower B Dlf Building 10 Dlf Cyber City Phase Ii Gurgaon 122002 Pan Aaacw 1936 E V S Ddit International Taxation 2 2 New Delhi Appellant Respondent Appellant By Sh Tarandeep Singh Ca Respondent By Sh S S Rana Cit Dr Date Of Hearing 16 11 2017 Date Of Pronouncement 06 12 2017 Ita No 5649 Del 2010 4956 Del 2011 2 Common We Therefore Deem It Just And Convenient To Dispose These Appeals Of By Way Of A Common Order 2 Briefly Stated Facts Are That The Assessee Is A Foreign Company Incorporated In Usa And Is Engaged In The Business Of Rendering Money Transfer Services From Abroad Some Of The Remittan Ces Made Through The Assessee By The Remitters Abroad Are Destined In F Avour Of Individuals Residing In India And The Assessee Has Appointed Re Presentatives In India Who Provide Services Of Making Payments To Individu Al Beneficiaries In India And According To The Assessee Such Represent Atives Are Independent Pertains Like Banks Post Office Travel Agents Etc Having Substantial Business Of Their Own Assessee Claims That There Were No Liaison Offices In India For Both The Ays 2007 08 And 2008 09 The Ao Found That The Assessee Has A Business Connection In India U S 9 O F The Income Tax Act 1961 In Short Act The Assessee Had A Permanent Establishment In Short Pe In India Under Article 5 Of The Indo U S Taxation Avoidance Agreement The Arms Length Remuneration Paid To T He Representatives In India Will Not Extinguish The Tax Liability Of The Assessee In India That 50 Of The Net Profit Earned Abroad From Funds Remitted To India Is Taxable In India In Respect Of The Ay 2007 08 The Assessee C Arried The Matter Before The Dispute Resolution Panel Ii In Short Drp N Ew Delhi And The Drp Held That From The Chart Furnished By The Assessee The Facts Involved In This Matter For The Ay 2007 08 Were Covered By The Decisi On Of The Tribunal For The Ay 2001 02 In Assessees Own Case But Since The Department Filed An Ita No 5649 Del 2010 4956 Del 2011 3 Appeal Before The Honble High Court They Declined To Interfere With The Orders Of The Transfer Pricing Officer In Short T Po And Confirmed The Assessment Orders On All The Issues Including Charg Ing Of Interest U S 234 B Of The Act 3 In Respect Of Ay 2008 09 The Assessee Carried T He Matter In Appeal To The Ld Cit A Xxix New Delhi And By Order Dated 29 07 2011 Ld Cit A Followed The Order Of The Tribunal For The Ay 2001 0 2 In Assessees Own Case And Allowed The Appeal Of The Assessee Hence The Assessee Is In Appeal Before Us For The Ay 2007 08 In Ita No 5649 Del 2010 And The Revenue Is In Appeal Before Us For The Ay 2008 09 In Ita No 495 6 Del 2011 4 Heard The Ld Counsel On Either Side And Perused The Material Papers On Record Ld Dr Heavily Placed Reliance On The A Ssessment Orders For Both The Years And Also The Order Of The Drp For Ay 2007 08 Ld Ar Placed Reliance On The Decision Of This Tribunal In Assess Ees Own Case In Ita No 4889 Del 2004 Ita No 1572 74 Del 2010 Co No 1 63 165 Del 2010 And In Ita No 5551 5552 Del 2012 For The Ay 200 1 02 For The Ay 2002 03 2003 04 2005 06 And Ay 2004 05 2009 1 0 Respectively He Submitted That In The Order Dated 24 09 2010 Passed By The Ld Drp For The Ay 2007 08 Vide Paragraph No 4 The Drp On A Compar Ison Of The Facts Relating To The Ay 2001 02 With The Facts For Ay 200 7 08 Found That The Facts Are Similar And As A Matter Of Fact The Facts For The Ay 2007 08 Are Squarely Covered By The Order Of The Tribunal In As Sessees Own Case For The Ita No 5649 Del 2010 4956 Del 2011 4 Ay 2001 02 For That Matter Ld Cit A By Order Da Ted 29 07 2011 For The Ay 2008 09 Vide Paragraph Nos 5 6 Held That The Fa Cts Relating To The Year 2008 09 Are Similar To The Facts Involved In T He 2001 02 Ay And The Matter Was Covered By The Order Of The Tribunal For The Ay 2001 02 In Ita No 4889 Del 2014 Both The Parties Also Admitted B Efore Us That The Facts Involved For The Years 2007 08 2008 09 Are Simila R To The Facts Involved For The Year 2001 02 5 We Have Carefully Considered These Facts In The Light Of The Orders Of The Co Ordinate Benches Of This Tribunal For The Ye Ar 2001 02 2002 03 2003 04 2005 06 2004 05 2009 10 In Ita No 488 9 Del 2004 For The Ay 2001 02 The Tribunal Considered The Issues At Le Ngth And Reached The Conclusions That Though The Assessee Has A Business Connection In India They Had Neither Fixed Nor The Agencies Pe In India As Such In The Absence Of Any Pe In India The Profits If Any Attributab Le To Indian Operations Could Not Be Assessed As Business Profits Under Article 7 Of The Treaty The Tribunal Further Held That The Liaison Office Could Not Be Considered To Be Fixed Place Pe Of The Assessee As It Carries Out Th E Activities Which Are Of A Preparatory Or Auxiliary Character It Was Also H Eld That The Agents Engaged By The Assessee In This Matter Are Independ Ent Agents Under Article 5 5 Of The Treaty And They Do Not Habitually Exerc Ise The Authority To Conclude The Contracts On Behalf Of The Assessee A Nd On That Premise It Was Held That There Is No Agency Pe Of The Assessee In India The Sum And Substance Of The Order Of A Co Ordinate Bench Of Th E Tribunal Is That Ita No 5649 Del 2010 4956 Del 2011 5 Though The Assessee Had Business Connection Since They Do Not Have Any Fixed Place Pe Or Agency Place Pe In India And In The Absence Of Any Pe In India The Profits If Any Attributable To Indias O Peration Could Not Be Assessed As Business Profits Under Article 7 Of The Treaty Facts Being Similar For All The Years Involved In This Matter We Find It Difficult To Reach A Different Conclusion And The Consistent View Taken By The Tribunal For All The Earlier Years Could Not Be Disturbed Without An Y Compelling Reasons The Conclusions Reached By The Tribunal For The Ay 2 001 02 Answers All The Grounds Raised By The Assessee For The Ay 2007 0 8 And Revenue For The Ay 2008 09 As Such While Respectfully Following The Consistent Views Of The Co Ordinate Bench Of This Tribunal We Hold That Th E Findings Of The Drp For The Ay 2007 08 Cannot Be Sustained And At The Same Time Finding Of The Ld Cit A For The Ay 2008 09 Cannot Be Interfered Wi Th Consequently Ita No 5649 2010 Has To Be Allowed While Ita No 4956 De L 2011 Has To Be Dismissed We Order Accordingly 6 In The Result Appeal Of The Revenue In Ita No 4 956 Del 2011 Is Dismissed And The Appeal Of The Assessee In Ita No 5649 Del 2010 Is Allowed The Order Is Pronounced In The Open Court On 06 Th Of December 2017 Sd Sd G D Agrawal K N Chary President Judicial Member Date 06 Th Decem Ber 2017 Amit Kumar Ita No 5649 Del 2010 4956 Del 2011 6 Copy Forwarded To 1 Appellant 2 Respondent 3 Cit 4 Cit Appeals 5 Dr Itat Assistant Regist Rar Itat New Delhi