2010 (6) TMI 647 - AT - Income Tax

Summary

Issues:
1. Challenge to the action of the ld. CIT(A) regarding the taxability of marketing contribution and reservations assessment fees received by the assessee.

Analysis:
The appeal was filed by the Revenue against the order of the ld. CIT(A)-V(2)(2), Mumbai, challenging the holding that the marketing contribution and reservations assessment fees received by the assessee are not taxable as "royalty" or "fees for technical services." The Tribunal observed that the relief was granted to the assessee based on a previous decision in the assessee's own case for the assessment year 1997-98. The Tribunal noted that the monies received were not unfettered receipts but were to be used for agreed purposes, indicating a fiduciary capacity. The Tribunal held that these receipts could not be considered income of the assessee and were not taxable as royalty or fees for technical services. The Tribunal directed the Assessing Officer to delete the addition, providing relief to the assessee.

In a subsequent case for assessment years 1998-99, 1999-2000, and 2001-02, a similar issue arose, and the Tribunal restored the matter to the Assessing Officer for re-adjudication. The Tribunal found discrepancies in the receipts and payments, indicating that the amounts were not received in a fiduciary capacity. The Tribunal directed the Assessing Officer to ascertain the true facts and re-adjudicate the issue, considering whether the marketing contribution and reservation assessment fees should be treated as Royalty under the DTAA between India and the USA.

The learned counsel for the assessee argued that the aspect considered by the Tribunal in the subsequent case was not relevant to determine the nature of the amounts received. However, the Tribunal found this aspect relevant and necessary for re-consideration. Considering the judicial propriety and discipline, the Tribunal set aside the order of the ld. CIT(A) and restored the issue to the Assessing Officer for fresh consideration, following the direction given in the previous case. Consequently, the appeal of the revenue was treated as allowed for statistical purposes.