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TMI Blog2025 (5) TMI 812X X X X Extracts X X X X X X X X Extracts X X X X ..... law, the learned DRP (Dispute Resolution Panel') and Learned DCIT have erred in considering income from consulting engineering services amounting to INR 1,73,68,588/- as Fees for Technical Services (FTS) as per Section 9(1)(vii) of the Act and Article 13 of India-UK Double Taxation Avoidance Agreement (DTAA). 2. Ground No. II- Taxability of amount received as management fees & cost recharge as both Royalty and Fees for technical services (FTS), 2.1 On the facts and in the circumstances of the case and in law, the learned DRP (Dispute Resolution Panel) and Learned DCIT have erred in considering management fees & common cost recharge amounting to INR 5,76,02,441/- as both Royalty and Fees for Technical Services ('FTS') as per Section 9(1)(vi) and 9(1)(vii) of the Act and Article 13 of India-UK Double Taxation Avoidance Agreement (DTAA'). 3. Ground No. III-Erroneous rate of tax applied while computing tax payable, 3.1 Without prejudice to the above grounds, on the facts and in the circumstances of the case and in law, the learned DCIT has erroneously applied a tax rate of 15% as per India-UK DTAA instead of applying a beneficial rate of 10.608% under the Act w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.Y. 2021-22, the impugned nature of incomes of the assessee were determined as non taxable in India by pursuing the India UK DTAA.The orders of ITAT for AY 2014-15 to AY 2017-18 were restored back to the revenue authority on the ground that one of the grounds of the assessee related CES was not raised inadvertently before the DRP. In the draft assessment order, the proposal was made for addition of these incomes in India will be taxed accordingly. Finally, the assessee carried the grievance before the Ld.DRP and all the orders of the co-ordinate bench of ITAT for the assessment years cited above, were duly cited before the Ld. DRP during the hearing. But the Ld.DRP finally passed an order dated 17/12/2024 and followed its own orders for the earlier years and upheld the proposal of the Ld.AO. The Ld.DRP observed that the second limb of clause (c) of Article 13(4) of India UK Tax Treaty can be invoked when the amount is paid in consideration for rendering of any technical and consultancy services consisting the development and transfer of technical plan or technical design. Thus, it held that amount received for consulting, engineering services amount to Rs. 1,73,68,588/- and income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or processes. The Tribunal held that unless there is transfer Buro Happold Limited of technical expertise skill or knowledge along with drawings and designs and if the assessee cannot independently use the drawings and designs in any manner whatsoever for commercial purpose, the payment received cannot be treated as fees for technical services. Though, we have taken note of other decisions cited by the learned Authorised Representative we do not intend to deliberate further on them. As regards the decisions cited by the learned Departmental Representative, we find them to factually distinguishable, hence, not applicable to the present appeal. In any case of the matter, the Department has failed to establish on record that through development and supply of technical designs / drawings / plans the assessee has made available technical knowledge, experience, skill, knowhow or processes to the service recipient so as to bring the amount received within the meaning of fees for technical services under Article-13(4)(c) of the India-UK Tax Treaty. Therefore, in our considered opinion, the amount received by the assessee has to be treated as business profit and in the absence of a PE in I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng addition of Rs. 21,25,145/- made towards Consulting Engineering services for A.Y. 2018-19 and Rs. 15,18,250/- For A.Y. 2019-20 which have been rejected by the DRP. Similarly, on the same issue for A.Y. 2020-21 also, DRP vide its order dated 12.12.2022 has rejected the contentions of the assessee and upheld the addition made by the AO and the department has filed an appeal before the Hon'ble High Court of Bombay." It is further submitted that the DRP also addressed this issue in its order, specifically on page 9, paragraph 5.6. However, the DRP chose to maintain consistency with its own previous rulings, thereby disregarding the guidance provided by higher judicial authorities, and upheld the additions proposed by the Ld. AO. 5. The Ld. DR merely relied on the orders passed by the revenue authorities and was unable to effectively counter any of the submissions made by the Ld. AR. 6. We have heard the rival submissions and perused the material available on record. Upon careful consideration, we find that the assessee's case is squarely covered by the decisions of the ITAT, Mumbai Bench, in the assessee's own case for earlier assessment years. The assessee is a company incor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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