TMI Blog2017 (12) TMI 1684X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. - ITA No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P has erred in confirming the action of the Ld AO of taxing receipts of ₹ 29,81,376 being a receipt of an affiliate company, as a receipt of the assessee. The Appellant prays that the receipts ₹ 29,81,376 are receipts of an affiliate company and hence, the addition in this regard be deleted. 5. Ground 5: The Ld. DRP has erred in confirming the action of the Ld. AO of taxing ₹ 1,69,840 being receipts for induction and leadership training provided by the assessee considering it to be taxable in India as Royalty / FTS. The Appellant prays that the receipts for induction and leadership training amounting to ₹ 1,69,840 are not taxable in India and hence, the addition in this regard be deleted. 3. The ground of appeal No.1 raised by the assessee is against assessability of management service charges received by the assessee from its Indian affiliates amounting to ₹ 18,94,69,420/-. 4. The learned Authorized Representative for the assessee pointed out that the assessee was Resident of Sweden and had received management service fees from the Indian companies. The issue which arises in the present ground of appeal is whether the same is Fees fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TAA between India and Sweden but also covered by subsequent DTAA entered into by India with Netherlands, USA and Portuguese, etc.; hence, the same was taxable in the hands of assessee. But since the assessee was actual beneficial owner of fees for technical services, the tax was charged @ 10% of gross amount as per the DTAA. The Tribunal vide para 8 in assessment year 2004-05 referring to earlier order in assessment year 2007-08 discussing the principle of Most Favoured Nation clause vis- -vis payment received by the assessee company from its Indian subsidiaries held that the same could not be brought to tax. The Tribunal held that the issue is squarely covered by the earlier orders of Tribunal in assessment years 2007-08 and 2008-09 and following the same parity of reasoning, the claim of assessee was allowed on the principle of Most Favoured Nation clause and it was held that the receipt of ₹ 18,94,69,420/- received by the assessee from its Indian subsidiaries could not be brought to tax in its hands. The relevant findings of the Tribunal are reproduced under paras 8 and 0 at pages 5 to 14 of the order of Tribunal datd 19.02.2016. We are making reference to the aforesaid fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate company as receipt of the assessee. 15. The learned Authorized Representative for the assessee in this regard, pointed out that the issue is whether the said receipts of ₹ 29,81,376/- belongs to the assessee and the DRP in this regard had given directions which have not been followed. The DRP vide para 2.2.9 at page 25 observed as under:- 2.2.9 We have carefully considered the facts and arguments furnished by the assessee. The assessee has stated that ₹ 29,81,376/- is inadvertently taxed in its hands as its receipt. However, in reality, it is receipt of its affiliate company. In this connection, we direct the learned AO to examine the assessee s contention and tax the amount in the hands of the correct recipient, if the assessee s contention is found to be correct. In the case of assessee s contention found to be correct, the amount of ₹ 29,81,376/- will be deleted. 16. The plea of assessee before us is that the Assessing Officer has not examined the said issue while passing the assessment order under section 143(3) r.w.s. 144C(13) of the Act. The DRP had directed the Assessing Officer to examine the contention of assessee as to whether the said rec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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