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2021 (6) TMI 667 - AT - Income TaxAccrual of income in India - Income taxable in India - payments received by the assessee on account of Management Service Fees - Tax Treaty between India and Portual (referred to via protocol attached to Double Taxation Avoidance Agreement (DTAA) between India and Sweden - HELD THAT:- The fact as on date is that the issue in respect of Management Service Fees is well covered in favour of the assessee. The Revenue has preferred appeal before the Hon’ble jurisdictional High Court on the substantial question of law on the same issue. That however, the matter has not yet attained finality at the High Court level nor we find any contrary direction given by the Hon'ble High Court in respect of the issue of Management Service Fees vis-à-vis the ITAT orders in favour of the assessee. Therefore, it is clear that as on date, the issue decided is in favour of the assessee. Tribunal had analyzed the DTAA between India and Portuguese Tax Treaty rendered to (via protocol) attached to the Tax Treaty between India and Sweden and had held that the payments received by the assessee on account of Management Service Fees cannot be brought to tax in view of the principle of most favoured nation (MFN) clause in the Tax Treaty. In view of the aforesaid discussion, we are of the considered view that Management Service Fees cannot be brought to tax in India. Thus, grounds 1 and 2 are allowed. Tax receipts towards Leadership Training Fee - HELD THAT:- Since the assessee is a Sweden based company and SAPL has its registered office in India, basically they are covered by the India – Sweden Tax Treaty. That however, in the said tax treaty, there is a special protocol with respect to the Most Favoured Nation (MFN) clause and there is DTAA entered into between India and Sweden and now the parties of original DTAA agreement between India and Sweden would be governed by the provisions of DTAA between India and Portuguese Republic which they entered into through MFN clause. As assessee submitted that let the matter be remanded to the file of Assessing Officer to re-adjudicate this issue after factual verification as per the legal proposition laid down by the order of the Tribunal [2021 (1) TMI 211 - ITAT PUNE] The learned Departmental Representative did not raise any objection. In view of the above facts, we set aside the findings of the DRP on this issue of Leadership Training Service Fees to the file of Assessing Officer to re-adjudicate while complying with the principles of natural justice and as per law as indicated hereinabove. Appeal of the assessee is partly allowed for statistical purposes.
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