A.P. MOLLER, MUMBAI v. DDIT (IT) 1(1), MUMBAI

ITA 8116/MUM/2010 | 1998-1999
Pronouncement Date: 27-11-2014 | Result: Allowed

Appeal Details

RSA Number 811619914 RSA 2010
Assessee PAN AAACA8917F
Bench Mumbai
Appeal Number ITA 8116/MUM/2010
Duration Of Justice 4 year(s) 2 day(s)
Appellant A.P. MOLLER, MUMBAI
Respondent DDIT (IT) 1(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 27-11-2014
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 27-11-2014
Date Of Final Hearing 27-11-2014
Next Hearing Date 27-11-2014
Assessment Year 1998-1999
Appeal Filed On 24-11-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH MUMBAI BEFORE SHRI R.C.SHARMA A M & SHRI SANJAY GARG J M ITA N O. 8116 & 8117 / MUM/20 1 0 ( ASSESSMENT YEAR : 1998 - 99 & 200 0 - 01 ) A.P.MOLLER C/O MAERSK LINE INDIA PRIVATE LIMITED 12 TH FLOOR TOWER A URMI ESTATE GANPATRAO KADAM MARG LOWER PAREL (W) MUMBAI - 400 013 VS. THE DCIT (INTERNATIONAL TAXATION) - 1(1) MUMBAI - 400 038 PAN/GIR NO. : A A ACA 8917 F ( APPELLANT ) .. ( RESPONDENT ) /REVENUE BY : SHRI DIVESH CHAWLA /ASSESSEE BY : SHRI ASGHAR ZAIN DATE OF HEARING : 2 7 TH NOVEMBER 201 4 DATE OF PRONOUNCEMENT 27 TH NOVEMBER 2014 O R D E R PER R.C.SHARMA (A.M) : BOTH THESE APPEALS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) DATED 30 - 9 - 2010 FOR THE AS SESSMENT YEAR S 1998 - 99 & 2000 - 2001 IN THE MATTER OF IMPOSITION OF PENALTY U/S.271(1)(C) OF THE I.T. ACT . 2. SINCE COMMON GROUND IS INVOLVED IN BOTH THE APPEALS THEREFORE THE SAME ARE HEARD AND BEING DISPOSED OF BY THIS CONSOLIDATED ORDER. 3. AT THE OUTS ET IT WAS SUBMITTED BY LEARNED AR THAT IN THE COURSE OF SCRUTINY ASSESSMENT THE AO MADE AN ADDITION ON ACCOUNT OF MANAGEMENT FEES FOR RENDERING MANAGERIAL SERVICES TREATING THE SAME AS TAXABLE FEE ITA NO. 8116&8117/2010 2 FOR TECHNICAL SERVICES U/S.9(1)(VII) (C) OF THE ACT. LD. AR DREW OUR ATTENTION TO THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE WHEREIN QUANTUM ADDITION MADE IN BOTH THE ASSESSMENT YEARS ON ACCOUNT OF SUCH MANAGEMENT FEE WAS DELETED BY THE TRIBUNAL AFTER HAVING THE FOLLOWING OBSERVATIONS : - 34. THUS FOR TAXI NG THE ROYALTY AND FEES FOR TECHNICAL SERVICES IN CASE OF A NON - RESIDENT UNDER THE INDO DENMARK DTAA THE BASIC CONDITION IS THAT THERE HAS TO BE A P .E. OR FIXED BASE IN CONNECTION WITH WHICH SUCH A LIABILITY HAS BEEN INCURRED. NOT ONLY THIS SUCH ROYALTY OR FEES FOR TECHNICAL SERVICES ARE BORNE BY SUCH P.E. OR FIXED BASE. IF THAT IS NOT SO THE SAME CANNOT BE TAXED IN THE HANDS OF THE NON - RESIDENT. IN THIS CASE ADMITTEDLY THIS PAYMENT HAS NOT BEEN MADE BY ANY P.E. TO THE ASSESSEE FIRM ALBEIT THE PAYMENT HAS BEEN MADE BY NON - RESIDENT COMPANY I.E. TWO DANISH COMPANIES TO ANOTHER NON - RESIDENT I.E. A PARTNERSHIP FIRM ESTABLISHED UNDER THE LAWS OF DENMARK. ONCE THE PAYMENT HAS BEEN MADE FROM ONE NON- RESIDENT TO ANOTHER NON - RESIDENT IN CONNECTION WITH THE EN TIRE GLOBAL BUSINESS IN DENMARK ONLY THEN IT CANNOT BE HELD THAT SUCH A PAYMENT CAN BE TAXED IN INDIA EITHER AS FEES FOR TECHNICAL SERVICES OR AS ROYALTY THUS WE ARE OF THE OPINION THAT SUCH A PAYMENT CANNOT TAXED AS FTS IN CASE OF THE ASSESSEE. OTHERWI SE ALSO BY VIRTUE OF ARTICLE - 13(6) SUCH A PAYMENT CANNOT BE TAXED IN INDIA BECAUSE IT HAS NOTHING TO DO WITH THE MIPL AS THE MAIN CRITERIA THAT SUCH A PAYMENT HAS TO BE DEDUCTIBLE IN THE HANDS OF THE P E. IS NOT AT ALL APPLICABLE IN THE PRESENT CASE. NE ITHER THERE IS ANY ECONOMIC LINK OF THE ASSESSEE WITH THE P.E. NOR ANY PAYMENT HAS BEEN DEDUCTED BY THE P.E. THUS IN OUR CONCLUSION THE PAYMENT OF MANAGEMENT FEE CANNOT BE SUBJECTED TO TAX IN INDIA BY VIRTUE OF ARTICLE - 13(6). INSOFAR AS THE ISSUE OF DENI AL OF TREATY BENEFIT WE HAVE ALREADY DISCUSSED THIS ISSUE IN THE FORGOING PARAGRAPHS WHEREIN WE HAVE HELD THAT THE ASSESSEE FIRM IS ENTITLED FOR TREATY B ENEFIT. AS WE HAVE ALREADY HELD THAT THE PAYMENT OF MANAGEMENT FEE IS NOT TA XABLE IN INDIA AND BY VIRT UE OF ARTICLE - 13(6) AND THAT THE TREATY BENEFIT IS A VAILABLE TO THE ASSESSEE WE ARE NOT DEALING WITH THE ARGUMENTS RAISED BY THE EITHER PARTY ON SECTIONS 9(1)(I) OR 9(1)(VII). THUS THE THIRD ISSUE IS ALSO DECIDED IN FAVOUR OF THE ASSESSEE THAT THE MANAGE MENT FEE CANNOT BE TAXED IN INDIA IN THE HANDS OF THE ASSESSEE . 4. WE HAVE CONSIDERED RIVAL CONTENTIONS CAREFULLY GONE THROUGH THE ORDER OF THE TRIBUNAL DATED 8 - 11 - 2013 IN ASSESSEES OWN CASE WHEREIN THE ADDITION MADE ON ACCOUNT OF MANAGEMENT FEE HAS B EEN DELETED BY ITA NO. 8116&8117/2010 3 THE TRIBUNAL IN BOTH THE YEARS. AS THE ADDITION ITSELF HAS BEEN DELETED PENALTY LEVIED THEREON HAS NO LEGS TO STAND. 5 . IN THE RESULT BOTH APPEAL S OF ASSESSEE ARE ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 27/11/2014 . 27/11 / 2014 SD/ - SD/ - ( ) ( SANJAY GARG ) ( ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 27/11 /2014 /PKM PS COPY OF THE ORDER FORWARDED TO : / BY ORDER ( ASSTT. REGISTRAR) / ITAT MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) MUMBAI. 4. / CIT 5. / DR ITAT MUMBAI 6. GUARD FILE. //TRUE COPY//