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2017 (12) TMI 1684 - AT - Income TaxTaxability of receipts for management services - fees for Technical Services' ('FTS') - India Portuguese Treaty - Most Favoured Nation clause - HELD THAT - The Tribunal in [2016 (3) TMI 964 - ITAT PUNE] vide para 8 in assessment year 2004-05 referring to earlier order in assessment year 2007-08 [2014 (12) TMI 388 - ITAT PUNE] discussing the principle of Most Favoured Nation clause vis-à-vis payment received by the assessee company from its Indian subsidiaries held that the same could not be brought to tax. We are making reference to the aforesaid findings of the Tribunal but for the sake of brevity, we are not reproducing the same. Consequently, we allow the claim of assessee and hold that the receipts for management services provided to the Indian affiliates amounting to ₹ 18.94 crores are not to be taxed in the hands of assessee. The ground of assessee is allowed. Taxability as dividend - Treaty between India and Sweden - HELD THAT:- The Tribunal in the case of payer i.e. Sandvik Asia Pvt. Ltd. in [2017 (6) TMI 1290 - ITAT PUNE] relating to assessment year 2005-06 vide order dated 14.06.2017 held that management fees paid to Sandvik AB, Sweden i.e. the assessee before us was income on account of rendering of management services and could not be treated as dividend. Following the same parity of reasoning, we dismiss the alternative stand of the DRP/Assessing Officer in taxing the management service charges in the hands of assessee. Taxability of receipt of affiliate company as receipt of the assessee - HELD THAT:- we direct the Assessing Officer to verify the invoices raised in this regard and tax the amount in the hands of correct recipient i.e. the assessee or its affiliate company. Undoubtedly, reasonable opportunity of being heard would be granted to the assessee in this regard. Taxability of receipts for induction and leadership training provided by the assessee as taxable in India as Royalty / FTS - HELD THAT:- The services provided by the assessee are governed by India-Portuguese Treaty and consequently, applying the principle of Most Favoured Nation clause, the payments received by the assessee company from its Indian subsidiary could not be brought to tax in the hands of assessee.
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