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Date of Decision: 03.10.2023
THE COMMISSIONER OF INCOME TAX (INTERNATIONAL
TAXATION)-1, DELHI ..... Appellant
Through: Mr Puneet Rai, Sr Standing Counsel with Mr Ashivini Kumar and Mr
Rishabh Nangia, Advs.
PTE LTD ..... Respondent
Through: Dr Sashwat Bajpai, Adv.
HON'BLE MR. JUSTICE GIRISH KATHPALIA [Physical Hearing/Hybrid Hearing (as per request)]
RAJIV SHAKDHER, J.: (Oral)
CM Appl.50704/2023
JUDGMENT
1. Allowed, subject to just exceptions. CM Appl.50705/2023 [Application filed on behalf of the appellant/revenue seeking condonation of delay of 45 days in re-filing the appeal]
2. This is an application moved on behalf of the appellant/revenue seeking condonation of delay in re-filing the appeal. 2.[1] According to the appellant/revenue, there is a delay of forty-five (45) days.
3. Dr Sashwat Bajpai, who appears on behalf of the respondent/assessee, says that he would have no objection if the delay in re-filing the appeal is condoned. 3.[1] It is ordered accordingly.
4. The application is disposed of in the aforesaid terms. ITA 564/2023
5. This appeal concerns Assessment Year (AY) 2019-20.
6. Via the instant appeal, the appellant/revenue seeks to assail the order dated 30.12.2022 passed by the Income Tax Appellate Tribunal [in short, “Tribunal”].
7. The issue that the Tribunal was called upon to consider was whether income from „information technology and other administrative services‟ provided by the respondent/assessee to its affiliate in India could be construed as „Fees for Technical Services‟ [in short, “FTS”], having regard to the provisions of India-Singapore Double Taxation Avoidance Agreement [in short, “Indo-Singapore DTAA”].
8. The record shows that the Assessing Officer (AO), via the draft assessment order dated 28.09.2021, concluded that the services provided by the respondent/assessee to the Indian subsidiary were in the nature of „management support services‟ and hence, taxable at the rate of 10% plus surcharge and education cess under the Indo-Singapore DTAA.
9. The objections lodged before the Dispute Resolution Panel (DRP) by the respondent/assessee did not result in success. The DRP proceeded to reject the objections filed by the respondent/assessee. Consequently, the final assessment order dated 30.03.2020 was passed by the AO under Section 143(3) read with Section 144C(13) of the Income-tax Act, 1961 [in short, “Act”], This led to the institution of an appeal by the respondent/assessee before the Tribunal.
10. The Tribunal ruled in favour of the respondent/assessee.
11. Mr Puneet Rai, learned senior standing counsel, who appears on behalf of the appellant/revenue, says that the order of the Tribunal is unsustainable. 11.[1] In support of his submission, Mr Rai relies on the assessment order passed in the matter. Mr Rai contends that the respondent/assessee is providing professional advice to its Indian subsidiary through studies, evaluation, review of reports, liaising work, advice on key policy issues and business operations, HR management, and financial management among other things.
12. Dr Sashwat Bajpai, who appears on behalf of the respondent/assessee, contends to the contrary.
13. The Tribunal, in concluding that services offered by the respondent/assessee to its Indian affiliates did not come within the purview of FTS, as reflected in Article 12(4)(b) of the Indo-Singapore DTAA, concluded that they did not fulfil the criteria of „make available‟ principle.
14. According to the Tribunal, the agreement between the respondent/assessee and its Indian affiliate had been effective from 01.01.2010, and if, as contended by the appellant/revenue, technical knowledge, experience, skill, and other processes had been made available to the Indian affiliate, the agreement would not have run its course for such a long period. 14.[1] Notably, this aspect is adverted to in paragraphs 17 to 23 of the impugned order. For convenience, the relevant paragraphs are extracted hereafter: