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2022 (12) TMI 1209 - AT - Income TaxTaxability of search fees - DRP/AO held that a sum received by the appellant towards executive search fees is taxable as fees for technical services under section 9(1)(vii) of the Income-tax Act, 1961 and under Articles 12(5)(a) and / or 12(5)(b) of the India-Netherlands tax treaty - AR submitted that in preceding assessment years Advance Pricing Agreement (“APA”) was entered by the Indian subsidiary of the assessee company, which covered the transactions with assessee - HELD THAT:- The year under consideration is not covered by the APA. From the perusal of aforesaid order passed by the coordinate bench of the Tribunal in assessee‟s own case for preceding assessment year, we find that the issue of taxability of search fees was decided in favour of assessee in assessment year 2011–12 also and the coordinate bench, in aforesaid decision, supported the findings rendered in preceding year as well as its conclusions, by reference to benchmarking agreed between Indian subsidiary and CBDT vide APA dated 30/08/2016. Therefore, we are of the considered view that findings rendered in preceding assessment year are equally applicable to the year under consideration even though it is not covered by the aforesaid APA. Thus, respectfully following the order passed by the coordinate bench of the Tribunal in assessee‟s own case cited supra, we uphold the plea of the assessee and direct the AO to delete the addition on account of search fees. As a result, grounds No. 1 – 9 raised in assessee‟s appeal are allowed. Taxability of management fees - AO treated management service fees as “fee for technical services‟ under Article 12(5)(b) / 12(5)(a) of India Netherlands DTAA, in line with its findings rendered in respect of taxability of search fees - HELD THAT:- As is evident from the record, lower authorities have not examined any of the services and by following its findings rendered in respect of search fees taxed management service fees also as “fee for technical services‟ under Article 12 of India Netherlands DTAA. Thus, in view of above, we deem it appropriate to remand the issue of taxability of management service fees to the file of AO for de novo adjudication, as per law, after necessary examination of relevant agreement. The AO is also directed to examine each and every service in respect of which assessee has received management service fees, while deciding this issue. The assessee shall be at liberty to furnish all the evidences in support of its claim. Needless to mention that no order shall be passed without affording reasonable opportunity of being heard to the assessee. As a result, grounds No. 10 – 17 are allowed for statistical purpose. Taxability of reimbursement of expenses - HELD THAT:- This issue is recurring in nature and has been decided in favour of the assessee by the decision of the coordinate bench of Tribunal for preceding assessment years. Thus, respectfully following the order passed by the coordinate bench of the Tribunal in assessee's own case [2022 (9) TMI 1403 - ITAT MUMBAI] we uphold the plea of the assessee and direct the AO to delete the addition on account of reimbursement of expenses. As a result, grounds No. 18 – 20 raised in assessee's appeal are allowed.
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