TMI Blog2023 (3) TMI 912X X X X Extracts X X X X X X X X Extracts X X X X ..... that there is no detailed analysis as to why the said benefit is to be denied to the assessee. There has been no discussion neither in the DRP s order nor in the assessment order explaining why the income of the assessee is to be taxed in India. In the absence of such analysis, we are inclined to follow the decision of the Tribunal in assessee s case for earlier years which has held that the assessee was entitled to India - UK tax treaty benefits - we allow ground raised by the assessee. Income taxable in India - FTS - Whether the invoice raised by the assessee is in the nature of fees for technical services as defined under Article 13(4)(c) of India UK DTAA? - assessee contends that the A.O. has given a factually inaccurate finding that the co-ordinate bench in assessee s case has held the impugned amount to be taxable in India as per the DTAA - HELD THAT:- Tribunal in A.Y. 2013-14 and 2015-16 [ 2010 (7) TMI 535 - ITAT, MUMBAI ] held that the Revenue has failed to prove otherwise that the same pertain to fees for technical services - provisions of India-UK DTAA would override the provisions of the Act, thereby holding the remuneration received by the assessee for prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of these reimbursements of expenses. The action of the CIT(A), as rightly contends, is on pure surmises and conjectures - delete the disallowance of expenses as sustained by, the CIT(A) and hold that no part of reimbursements of expenses received by the assessee on the facts of this case, be treated as income of the assessee. Decided in favour of assessee. - ITA No. 1256/Mum/2021 And ITA No. 1257/Mum/2021 - - - Dated:- 22-2-2023 - Shri B. R. Baskaran, AM And Ms. Kavitha Rajagopal, JM For the Assessee : Shri Niraj Sheth For the Revenue : Ms. Surabhi Sharma ORDER PER KAVITHA RAJAGOPAL, J M: These appeals are filed by the assessee, challenging the order of the learned Assessing Officer (A.O. for short) passed u/s. 143(3) r.w.s. 144C(13) of the Income Tax Act, 1961 ( the Act'), pertaining to the Assessment Year ( A.Y. for short) 2016-17. 2. As the facts are identical, we hereby proceed to pass a consolidated order by taking ITA No. 1256/Mum/2021 as a lead case. The assessee has challenged the assessment order dated 29.04.2021 on various grounds. ITA No. 1256/Mum/2021 3. The brief facts are that the assessee is a limited liability partn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , whether the assessee s income was taxable in India as per Article 7(1) of DTAA. v. Whether the assessee was liable to be taxed in India as per Article 15 of India-UK DTAA, which was only applicable to individuals and not in the case of the assessee. 7. The above mentioned issues are to be adjudicated in this present appeal. The first issue pertains to denying benefit of India - UK DTAA to the assessee by the A.O. The assessee contends that as per Article 4(1)(a) of the India - UK tax treaty, the assessee was liable to the taxed in the UK by reason of incorporation, domicile or place of management or on other conditions. The assessee claims to have been incorporated in UK and the taxes are paid by its partners and not by the firm per se . The assessee further contends that being a resident of UK, the assessee was entitled to the benefit of India-UK tax treaty. The assessee further submits that the assessee computes profits as per the provisions of UK tax law and allocated such profits amongst its members which are subject to tax in UK. The assessee relied on the decision of the Hon'ble Apex Court in the case of Union of India vs. Azadi Bacho Andolan [2003] 263 ITR 706 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at paras 21 to 28 before arriving at the conclusion at paragraph 79 as under:- In view of the above discussions, as also bearing in mind the entirety of the case, we hold that the assessee was indeed eligible to the benefits of India-UK tax treaty, as long as entire profits and the partnership firm are taxed in UK - whether in the hands of the partnership firm though the taxable income is determined in relation to the personal characteristics of the partners, or in the hands of the partners directly. To that extent, I.T.A. No.1690/Mum/2015 objection taken by the learned Departmental Representative, on the question of admissibility of India-UK tax treaty benefits, is held as maintainable but rejected on merits . 10. Similarly, in other years, the Tribunal has followed its earlier order and held that M/s. Linklaters is eligible for the benefits of India-UK DTAA so long as entire profits of the partnership firm are taxed in UK, whether in the taxable income is determined in relation to personal characteristics of the partners or in the hands of the firm directly. In the year before us, there is no dispute on facts that ultimately tax has been paid either by the said firm or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax treaty benefits. In holding so, we allow ground nos. 12 to 14 raised by the assessee. 13. The second issue to be adjudicated is whether the invoice amounting to Rs.2,29,39,575/- raised by the assessee is in the nature of fees for technical services as defined under Article 13(4)(c) of India UK DTAA. The assessee contends that the A.O. has given a factually inaccurate finding that the co-ordinate bench in assessee s case has held the impugned amount to be taxable in India as per the DTAA. The AO observed that the assessee has received the following receipts during the impugned year, which are summarized as under: Income in respect of services rendered in India Rs.34,10,488/- Income in respect of services rendered in India Rs.1,92,93,952/- As per 26AS and as per submission dated 05.12.2019) Rs.2,35,135/- Towards Disbursement Total Rs.2,29,39,575/- 14. The AO had taxed the above income as fee for technical services by holding that the services render ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n with the activities outside India and, therefore, cannot be deemed to arise in India. The ld. AR for the assessee relied on the decision of the Tribunal in assessee s case, wherein the same was held not to be fee for technical services and are not taxable under Article 13. The ld. AR also relied on the decision of the tribunal in assessee s case for A.Ys. 2011-12 and 2015-16. 16. The ld.DR, on the other hand, controverted the same and stated that the said decision of the tribunal in assessee s case for previous years was challenged before the Hon ble Jurisdictional High Court, thereby relied on the orders of the lower authorities. 17. Having heard the rival submissions and perused the materials on record. It is observed that the Tribunal in A.Y. 2013-14 and 2015-16 have dealt with this issue and has held that section 9 of the Act does not apply in the case of the assessee relating to fees for technical services and that the assessee was entitled to the benefit of DTAA. The Tribunal also held that the Revenue has failed to prove otherwise that the same pertain to fees for technical services . The Tribunal also held that the provisions of India-UK DTAA would override the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lishment in India. The ld. DR prayed that the same may be remanded back to the A.O. for the impugned year also for the factual verification. 21. Having heard the rival submissions and perused the material available on record. It is observed that in the earlier years, the co-ordinate bench has remanded this issue back to the A.O. for verifying the number of days of stay in India by the employees of the assessee who had rendered services in order to ascertain whether the assessee had a permanent establishment in India during the impugned year. The ld. AR has placed reliance on the submissions dated 13.12.2019 made by the assessee before the A.O. stating that the personnel/employee of the assessee had stayed in India for rendering services for a total cumulative number of days amounting to 17 days. This fact has not been controverted by the Revenue. The AO has also not denied the said fact in the assessment order. 22. From the above observation, we are of the considered view that the assessee do not have a permanent establishment in India during the impugned year. As the period of stay of the employees of the assessee for rendering the services in India was only for 17 days and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , whether in his own capacity or as a member of a partnership, who is a resident of a Contracting State in respect of professional services or other independent activities of a similar character may be taxed in that State. Such income may also be taxed in the other State and if : (a) he is present in that other State for a period or periods aggregating 90 days in the relevant fiscal year, or (b) he, or the partnership, has a fixed base regularly available to him, or it, in that other State for the purpose of performing his activities; (2) For the purpose of paragraph (1) of this Article an individual who is a member of a partnership shall be regarded as being present in the other State during days on which, although he is not present, another individual member of the partnership is so present and performs professional services or other independent activities of a similar character in that State. (3) The term professional services includes independent scientific, literary artistic, educational or teaching activities as well as the independent activities of physiciarns, surgeons, lawyers, engineers, architects, dentists and accountants. 25. The ld. DR, on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been filed by the assessee which is a group entity of Linklaters LLP, challenging the assessment order dated 29.04.2021, passed u/s.14(3) r.w.s. 144C of the Act, pertaining to the A.Y. 2016-17, in pursuance to the direction of the DRP. 30. The brief facts are that the assessee filed its return of income on 26.09.2016, declaring the total income at Rs. Nil. The assessee s case was selected for scrutiny and the assessment order dated 29.04.2021 was passed by the A.O. determining the total income at Rs.13,11,534/- on account of amount envisaged by the assessee as for technical service as per the provisions of the IT Act and DTAA between India and Singapore. 31. The assessee is in appeal before us, challenging the said assessment order on the grounds of: i. Fee for technical services under the India-Singapore DTAA ii. Non existing of permanent establishment in India iii. Applicability of Article 15 of the India Singapore DTAA to assessee s case along with the other consequential grounds. 32. As the facts of the case in ITA No. 1256/Mum/2021 is the same, except for the fact that this appeal pertains to the tax treaty between India-Singapore DTAA. Ground nos. 1 to 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he A.O. further stated that the assessee has been employed by the Indian entities for carrying out a pre work for certain remuneration. On this finding, the A.O. held that the assessee s case would come under the purview of Article 15 of India Singapore DTAA. 38. The ld. AR contended the said fact and stated that the assessee has not received anything by way of salary, wages or other similar remuneration and that the assessee being a firm would not be covered under Article 15 of DTAA. 39. The ld. DR relied on the order of the A.O. 40. Having heard the rival submissions and perused the material on record. The assessee company being a resident of Singapore, the provision of India-Singapore treaty was applicable. Article 15 of the said tax treaty relates to the taxability of salaries, wages or similar remuneration in respect of an employment. The assessee being a firm is said to have not received any salary, wages, or remuneration pertaining to any employment contract. The assessee s contention that it shall be taxed under Article 14 of India- Singapore tax treaty has not been controverted by the Revenue in its findings. Neither the A.O. nor the DRP has substantiated with suf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.O. From the above observation, we are of the considered opinion that the Article 15 of India-Singapore tax treaty will not be applicable in assessee s case. We hereby allow ground no. 25 and its related grounds raised by the assessee. 42. Ground no. 23 pertains to the reimbursement of expenses amounting to Rs.88,987/- which was treated as income by the A.O. The assessee has challenged the reimbursement of expenses as part of gross receipts. It is observed that the said issue has been dealt with in assessee s group entity case in Linklaters LLP vs. Dy. CIT(IT) (in ITA No. 1540/Mum/2016 vide order dated 29.08.2018), wherein it has been held as under: 27. Having considered rival submissions we find that while deciding identical issue in assessee's own case for assessment year 2011-12 supra, the Tribunal has held as under:- 40. We have gone through the orders passed by the lower authorities and orders passed in earlier years by the Tribunal in case of Linklaters. The perusal of chart containing details of the expenses clearly shows that all these items are in the nature of expenses. These are apparently not items of revenue. These are mostly expenses of routine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the CIT (A) and hold that the reimbursements of expenses received by the assessee, particularly on the facts of the case, cannot be treated as income in the hands of the assessee. Learned Departmental Representative, on the other hand, relies upon the orders of the authorities below and submits that the onus is on the assessee to produce all the evidences of expenditure and that this onus is clearly not discharged by the assesses. 133. Having heard the rival submissions and having perused the material on record, we are inclined to uphold the grievance of the assessee. The reimbursements received by the assessee are in respect of specific and actual expenses incurred by the assessee and do not involve any mark up, there is reasonable control mechanism in place to ensure that these claims are not inflated, and the assessee has furnished sufficient evidence to demonstrate the incurring of expenses. 'There is thus no good reason to make any addition to income in respect of these reimbursements of expenses. The action of the CIT(A), as learned counsel rightly contends, is on pure surmises and conjectures. In view of the above discussions, we direct the Assessing Officer to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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