2019 (8) TMI 1856 - HC - Income Tax

Income taxable in India - data processing fees paid by the India branch of the Assessee bank to the Singapore branch - HELD THAT - We are informed that from the order of the Co-ordinate bench of the Tribunal for Assessment Year 2006-07, Revenue filed an appeal to this Court 2018 (3) TMI 1991 - BOMBAY HIGH COURT raising this very issue. This Court s order did not entertain this question as proposed therein on the grounds that the same in the facts of the case was academic in nature. This for the reason what was being paid by the Indian entity to its Singapore branch was only in the nature of reimbursement of expenses. This finding of fact was not challenged in the Revenue s appeal for Assessment Year 2006-07 or in these appeals for Assessment Year 2008-09 and 2009-10. The Revenue has not been able to show any difference in facts and/or in law in the subject Assessment Years to that in Assessment Year 2006- 07. Therefore, the above decision of this Court for Assessment Year 2006-07 will apply in these two Appeals.

Summary

Issues:
- Interpretation of tax law related to data processing fees paid by an Indian branch to a foreign branch of an Assessee bank.

Analysis:
The judgment by the High Court of Bombay pertains to two Appeals challenging a common order by the Income Tax Appellate Tribunal regarding Assessment Years 2008-09 and 2009-10. The primary question raised in these Appeals was whether the data processing fees paid by the Indian branch of the Assessee bank to its Singapore branch should be taxable in India. The Tribunal had relied on a previous decision by its Coordinate Bench for the Assessment Year 2006-07, where the appeal of the Assessee was allowed. The High Court noted that the Revenue had previously filed an appeal to the High Court for the Assessment Year 2006-07 on the same issue, but the Court did not entertain the question as it was deemed academic. The Court found that the payments made by the Indian entity to its Singapore branch were merely reimbursement of expenses, as established in the previous decision. Since the Revenue failed to demonstrate any factual or legal differences in the subject Assessment Years compared to the previous year, the High Court applied the decision of the Court for Assessment Year 2006-07 to the current Appeals.

The High Court emphasized that the identical question raised in the two Appeals did not give rise to any substantial question of law based on its previous order relating to Assessment Year 2006-07. Therefore, the Court dismissed both Appeals based on the reasons stated in its earlier order. The judgment reaffirmed the principle established in the previous decision that the payments in question were not taxable in India, as they were considered reimbursement of expenses rather than income.