TMI Blog2019 (7) TMI 1076X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee from its Indian Branch towards data processing fee is not chargeable to tax in India due to principles of mutuality - HELD THAT:- As in Sumitomo Mitsui Banking Corporation v/s DDIT, [ 2012 (4) TMI 80 - ITAT MUMBAI] the payment of data processing fee being a payment to self, is governed by the principles of mutuality, hence, not taxable. Accordingly, the Tribunal deleted the addition. The same view has been expressed in the subsequent assessment years as well and the latest order of the Tribunal on the issue is for the assessment year 2010 11 [ 2017 (10) TMI 1467 - ITAT MUMBAI] . It is also relevant to observe, while deciding Revenue s appeal on the disputed issue in assessment year 2006 07 and 2007 08, the Hon'ble Jurisdictional High Court upheld the decision of the Tribunal. Moreover, while deciding the issue in the assessment year 2008 09 in assessee s own case in [ 2016 (3) TMI 1356 - ITAT MUMBAI ] , the Tribunal has also decided the issue in favour of the assessee though on different reasoning. Thus, it is evident, the Tribunal in assessee s own case for the preceding assessment years has consistently held that data processing fee is not chargeable to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ities have rejected the aforesaid claim of the assessee by holding that the rate of tax applicable to non resident companies would be applicable to the assessee. 4. Shri Farookh Irani, the learned Sr. Counsel for the assessee, fairly submitted that the issue has been decided against the assessee by the Tribunal consistently in the preceding assessment years and assessee s appeals on the issue is now pending before the Hon'ble Jurisdictional High Court. Thus, he submitted, following the earlier decisions of the Tribunal, the issue has to be decided against the assessee. 5. The learned Departmental Representative agreed with the aforesaid submissions of the learned Sr. Counsel for the assessee. 6. We have considered rival submissions and perused the material on record. As could be seen from the materials available on record, the issue whether the rate of tax applicable to domestic companies and Co operative Bank is applicable to the assessee is a recurring dispute between the parties from the preceding assessment years. However, the Tribunal has consistently decided the issue against the assessee in the preceding assessment years. In t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amount cannot be treated as income of the assessee. 11. At the outset, the learned Sr. Counsel for the assessee submitted, the issue has been consistently decided by the Tribunal in favour of the assessee in the preceding assessment years. Further, he submitted, Revenue s appeal on the issue in the assessment years 2006 07 and 2007 08 have been dismissed by the Hon'ble Jurisdictional High Court. Thus, he submitted, the issue stands covered in favour of the assessee. 12. The learned Departmental Representative agreed with the aforesaid submissions of the Learned Sr. Counsel for the assessee. 13. We have considered rival submissions and perused the material on record. As could be seen from the facts on record, the dispute between the parties relating to taxability of data processing fee at the hands of the assessee as royalty / fee for technical services is a recurring issue from the preceding assessment years. While deciding the issue in the year 2005 06 in assessee s own case the Tribunal in ITA no.339/Mum./2019, dated 16th July 2014, followed its earlier order and held that as per the Special Bench decision of the Tribunal, Mumb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erned by the principle of mutuality is not taxable. Accordingly, she deleted the addition. 18. At the outset, the learned Sr. Counsel for the assessee submitted, the issue is covered by the decisions of the Tribunal in assessee s own case in preceding assessment years, wherein, the Tribunal following the Special Bench decision in Sumitomo Mitsui Banking Corporation (supra) has held that the interest paid by the Indian Branch to the Head Office being a payment to self is governed by the principles of mutuality, hence, not taxable. In this context, he drew our attention to the latest order of the Tribunal passed for the assessment year 2011 12 in ITA no.444/ Mum./2017, dated 29th August 2018. 19. The learned Departmental Representative, though, agreed that in the preceding assessment years, the Tribunal has decided the issue in favour of the assessee, however, he submitted that certain aspects have not been considered by the Tribunal and learned Commissioner (Appeals) while deciding the issue. He submitted, as per section 9(1)(v)(c) of the Act, interest income is chargeable at the hands of the non resident irrespective of the fact whether it is the Head ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contained under section 9(1)(v)(c) of the Act interest income is taxable in India and the applicability of such provision has been ignored by the appellate authority, we must observe, this particular aspect relating to the applicability of section 9(1)(v)(c) of the Act was also under consideration of the Special Bench in case of Sumitomo Mitsui Banking Corporation (supra) and the Special Bench clearly and categorically held that since the interest payable by the Indian Branch to the Head Office is a payment to self, it cannot be brought to tax by relying upon the provision of section 9(1)(v)(c) of the Act. Therefore, insofar as the applicability of the aforesaid provision is concerned, it stands settled in favour of the assessee by the decision of the Tribunal, Special Bench, referred to above. Moreover, by virtue of explanation to section 9(1)(v)(c) of the Act, it is provided that in case of non resident engaged in banking business any interest payable by the PE in India to the Head Office would be chargeable to tax in India. However, the aforesaid explanation has been inserted by Finance Act, 2015, w.e.f. 1st April 2016. From the notes and memorandum as well as CB ..... X X X X Extracts X X X X X X X X Extracts X X X X
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