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2018 (6) TMI 1591 - AT - Income TaxReopening of assessment u/s 147 - taxability of receipts for Management Service Fee ("MSF") - no Permanent Establishment (PE) in India - DTAA between India and Sweden - as per AO management service fees falls within the ambit of section 9(1)(vii) as well as India and Sweden Treaty and was taxable as fees for technical services - transaction were disclosed by the assessee company in its form No.3CEB and in the Notes to the return which was filed along with return of income HELD THAT:- we hold that in the absence of live link between reason to believe of escapement of income with the tangible material and even in the present case where the assessment order was passed u/s 143(1), the requirement of section is for the AO to come to a finding on the basis of tangible material to establish his case of reason to believe of escapement of income and in the absence of the same, re-assessment proceedings initiated were both invalid and bad in law. Accordingly, we hold so. We cancel the re-assessment proceedings initiated against the assessee and consequent order passed under section 143(3) r.w.s. 147 does not stand. The second aspect of the issue is that while recording reasons for reopening the assessment, the AO had relied on earlier order of Assessing Officer / DRP relating to assessment years 2007-08, 2008-09 and 2004-05 and held that since the issue has been decided against the assessee in earlier years, reasons were being recorded for reopening assessment for the year under appeal also. Once the issue has been decided in favour of assessee in earlier year [2018 (2) TMI 249 - ITAT PUNE], on which reliance was placed by the Assessing Officer while reopening the assessment, then also reasons recorded for reopening of assessment do not stand. Hence, re-assessment proceedings initiated against the assessee are invalid and bad in law. Before parting, we may also refer to the appeal of assessee in [2017 (12) TMI 1684 - ITAT PUNE] relating to assessment year 2010-11, wherein the Tribunal vide order dated 20.12.2017 considered not only the earlier decision of Tribunal in assessee’s own case but also decided the alternate argument of the Revenue that receipts for Management Service Fees are treated in the nature of dividend and taxed under clause 10 of the Tax Treaty between India and Sweden as well as under section 9(1)(iv) of the Act. Following the same parity of reasoning, we decide the issue on alternate plea also in favour of assessee and allow the claim of assessee in entirety.
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