TMI Blog2023 (1) TMI 227X X X X Extracts X X X X X X X X Extracts X X X X ..... e., Fujitsu Limited, Japan. The second proposition, as a matter of fact, flows from the findings of fact returned by the CIT(A). CIT (A) has found as a matter of fact that the appellant was playing the role of a service provider after procuring the same from other group companies and that it had dominion over the fees received by it. We have also put to Mr Chandra as to whether there was any ground raised in the appeal preferred before the Tribunal that the finding returned by the CIT(A) was perverse. No specific ground in those terms was framed. It is Mr Chandra s submission though that the ground raised was that the CIT(A) had erred in concluding that the respondent/assessee was entitled to the status of a beneficial owner. To our minds, once it is held that there was no back-to-back arrangement and the respondent/assessee had dominion and control over the fees received by it and thus entitled to status of a beneficial owner, then, even according to the appellant/revenue, the provisions of Article 12 of the DTAA will kick in. Tribunal, as noted above, has sustained the orders passed by the CIT(A). According to us, no substantial question of law arises in the above- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d standing counsel for the appellant/revenue, has submitted that the orders passed by the Tribunal and CIT(A) deserve to be set aside as there is clearly a back-to-back arrangement between the respondent/assessee and its holding company i.e., FL. 7.1 In support of this plea, Mr Chandra has relied upon the order passed by the AO. In particular, our attention has been drawn to the following parts of the order: 5. During the course of assessment, it came to light that the assessee has an agreement with its sister concern named Fujitsu Limited, Japan (FJ) (a company based in Japan) under which the branding and management fee received by the assessee from FCI is transferred to FJ on a back- to- back basis. Vide questionnaire dated 27.11.2018 the following query was made: Furnish a copy of your agreement with Fujitsu Consulting India under which branding and management fee is charged. Also, furnish a copy of your agreement with Fujitsu Japan under which Fujitsu Japan charges branding and management fee from you. What is the difference between the branding and management fee received by you from Fujitsu Consulting India and branding and management fee paid by you to Fujitsu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opportunity was then provided to the assessee. Vide its reply dated 17.1.2018, the assessee responded as follows: There is no transfer of branding fee and management fee received from Fujitsu Consulting India to Fujitsu Japan through a back to back arrangement. The fee for these services had been received by us in consideration for services provided to Fujitsu Consulting India. We have full and unconditional right to use and enjoy the fee received from Fujitsu Consulting India and there exists no obligation on us to pass it on to Fujitsu Japan. We are therefore not in agreement with your observation that Fujitsu America, Inc. could be treated as a pass through entity or conduit in relation to these charges. We confirm that we are the beneficial owner of all these service charges and have the fall and unconditional right to use and enjoy these payments. The assessee's position is clearly contrary to the facts. When the assessee has a binding obligation to forward the entire fee receipts under consideration to another entity, how can it claim to have an unconditional right to use and enjoy the fee received ? For reasons explained in the above paragraphs, the claim th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rioka with the Appellant which were not accessible. In the given email, downtime notification mentions that FAI networking team is working on high priority. C. Email dated March 21, 2015 from erpprod@us.fuiitsu.com (email ID of FAI) to Sachin.amonkar@in.Fujitsu .com (employee of Indian AE) This email is by the central email id maintained by the FAI to remind the approver at Indian AE to approve/reject the time card entries submitted by the employees of the Indian AE in relation to a project. D. Email dated April 5, 2014 from far.hvperiomsupport@fuiitsu.com (email id of FAI) to Ashutosh.Prabhucles@ai(a)in.fuiitsut.com (employee of Indian AE) This is an email from Hyperion financial system, which is maintained by FAI and used by Indian AE wherein a regular FAICONS application update was provided. E. Email dated January 16, 2015 from offshore Appsupport@in.Fujitsu.com FC.IN.Entireoffice@in.Fijitsu.com There was a downtime due to technical issue with the FAI for which a notification was sent to Indian users by FAI. The email shows the resolution regarding an update that the Oracle application working normally. F. Email dated September 9, 2014 to Sept ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lephone and other means agreed on from time to time with the Purchasing company. As per the agreement, the appellant in this case is a supplying company responsibilities which are set out in the description of the services set out in Schedule 1 Description of Services. 5.16 It may be relevant to note that beneficial owner is someone who besides being a legal owner has dominion and control over the property I.e. an owner of property who holds it for his own benefit and not as an agent, trustee or nominee for some other person, one who has right to deal with the property as is own. Based on judicial precedents, following principles emerge in order to consider the attribution of beneficial ownership: Possession - Whether the recipient of income exercises dominion over income received; Risk and control - Whether the recipient of income is its bearing the risks associated with such income and exercises power or influence over such income received Assesses is not an agent/nominee - Whether the recipient is acting on its own account and neither an agent/nominee of its holding company nor acting as funnel of flowing incomes to other entity. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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