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2016 (3) TMI 117 - ITAT MUMBAI

2016 (3) TMI 117 - ITAT MUMBAI - TMI - Section 44 BBB applicability to the remittance made to Atomstroyexport(ASE) - whether all the payments were in the nature of 'fees for technical services' that same were liable to tax in India? - Intergovernmental- Agreement - Held that:- Income-tax proceedings the doctrine of res judicata is not applicable but consistency and definiteness has to be maintained unless there is a manifest distinguishable feature. We find that the FAA, while passing orders in .....

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arly, the argument of the FAA with regard to introduction of section 44BB is not at all convincing. International transactions are governed by the DTAA. s. and Inter-govermental Agreements. Considering the above discussion, we are of the opinion that the appeals filed by the assessee have to be allowed. Therefore, revising the orders of the FAA, we decide the effective grounds of appeal in favour of the assessee. - ITA No. 6394/Mum/08, ITA No. 733-35/Mum/11, ITA No. 931/Mum/11 - Dated:- 12-2-201 .....

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nt-company and was incorporated on September 3, 1987 and is a wholly owned Government of India enterprise. It is engaged in the business of generation of power from nuclear energy and was also in the process of setting up nuclear power stations in India in various locations. The Republic of India and the then Union of Soviet Socialist Republic (USSR) had entered into an agreement dated November 20, 1988 for co-operation in the construction of a Nuclear Power Station in India. A supplementary agr .....

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clear Power Station and in terms of the co-operation to be provided by the Russian Organisation, the appellant has entered into following Contract: (a) Off shore Service Contract ( OSC dated December 17, 2001) (b) Contract dated August 23, 2002 'For Deputation of the Contractor's Specialist at Site'. In the orders passed, under section 195(2)of the Act, on 12-07-2006 the AO held that the provisions of section 44 BBB of the Act did not apply to the remittance made by the appellant to .....

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d that the above Contracts / agreements that had been entered by the appellant and ASE were to be read in the backdrop of the Intergovernmental- Agreement and not in isolation, that consolidating reading would bring out the true character of the transaction, that Article 11 of the Intergovernmental agreement read with the supplementary agreement indicated that ASE was to provide necessary assistance to the assessee for setting up a Nuclear Power Station in India, that the provision of section 44 .....

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ting survey for selecting materials for construction of the nuclear power station, that ASE had prepared detailed project report (DPR) prepared and had submitted to the Government of Republic of India for its review and final decision with regard to the implementation of the project. After considering the submissions of the assessee and the order of the AO, passed u/s. 195(2)of the Act, the FAA took notice of the fact that identical issue had been decided by his predecessor on four occasions in .....

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throw any light on the issue as to whether any appeal against the above mentioned earlier orders were filed or not before the Tribunal. In these circumstances, it has to be reasonably presumed that the issue had attained finality as the AO had not challenged the orders of the FAA. s. We find that the FAA had analysed the agreements entered into by the assessee with its Russian Counterpart and had taken a holistic view. Both the organizations are governed by the Inter governmental Agreement. ASE .....

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irmity. Therefore, confirming his order we decide the effective ground of appeal against the AO. ITA/733-35 & 931/Mum/2011: 5. In the appeals filed by the assessee the FAA had endorsed the order of the AO. s. who had held that the provisions of section 44BBB were not applicable with regard to the job undertaken by ASE, that the assessee payment made by the assessee was in nature of royalty. The AO directed the assessee to deduct tax @10% for the payments made to ASE. The FAA, during the appe .....

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for designing work, technical supervision and training of employees and do not cover the whole power project, that reliance placed by the appellant company on the inter governmental agreement between- India and USR dated 20-11-1988 was not fully acceptable, that section 44BBB was introduced in the Act by Finance Act, 1989 w. e. f 01-04-1990 and at the time of signing of inter-government agreements, Section 44BBB was not even in existence. He further observed that the principle of res-judicata a .....

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he had held that principles of res judicata were not applicable to the Income tax proceedings, that the facts and circumstances were identical to the facts of earlier orders passed by his predecessors, as mentioned at paragraph 4 of our order. As there were no new facts on record, he should not have taken a contrary view. We are of the opinion that where a fundamental aspect continuing during the different assessment years is found as a fact one way or the other and the parties have allowed that .....

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licable to tax matters as each year is separate and distinct, nevertheless where facts are identical from year to year, there has to be uniformity and in treatment. On an earlier occasion in the case of Gopal Purohit(336 ITR 287), the Hon ble Court has held that that there should be uniformity in treatment and when facts and circumstances for different years were identical particularly in the case of the same assessee. The Hon ble Delhi High Court has in the case of Galileo Nederland BV, (367 IT .....

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of Dhansiram Agarwalla(217 ITR 4)has laid the following principle with regard to consistency of approach in judicial matters: The totality of the circumstances and their combined effect are to be taken into consideration while deciding the question as to whether or not a particular fact is proved. Neither the principle of res judicata nor the rule of estoppel is applicable to the assessment proceedings, yet the rule of consistency does apply to such proceedings. We would like to discuss the matt .....

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section 256(2) to refer the case, the Hon ble Court held as under: ……the doctrine of res judicata does not apply to income-tax proceedings since each assessment year is independent of the other but where an issue had been decided consistently in a particular manner for earlier assessment years, for the sake of the same view should continue to prevail for subsequent years unless there is material change in the facts. Since in the instant case there was no single distinguishing feat .....

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