9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (7) TMI 829 - AT - Income TaxIncome deemed to accrue or arise in India - addition on account of alleged royalty taxable u/s 9 (l)(vi) of the Income Tax Act, 1961 read with article 12(3) of India Switzerland Double Taxation Avoidance Agreement - HELD THAT - As decided in assessee's own case 2013-14, 2020 (11) TMI 466 - ITAT MUMBAI we uphold the plea of the assessee and delete the impugned addition. No other issues were pressed before us. In any event, the other points raised in the appeal were in the nature of consequential levies. Decided in favour of assessee.
Issues Involved:
1. Addition of Rs 29,49,80,527 as royalty taxable under section 9(1)(vi) of the Income Tax Act, 1961, read with Article 12(3) of the India-Switzerland Double Taxation Avoidance Agreement (DTAA). 2. Procedural issue regarding the delay in pronouncement of the order beyond 90 days due to the COVID-19 pandemic. Issue-wise Detailed Analysis: 1. Addition of Rs 29,49,80,527 as Royalty: The primary issue in this appeal is the addition of Rs 29,49,80,527 made by the Assessing Officer, treating it as royalty taxable under section 9(1)(vi) of the Income Tax Act, 1961, read with Article 12(3) of the India-Switzerland DTAA. The assessee, a Switzerland-based company, provides market research reports on the pharmaceutical sector to its customers worldwide. These reports are delivered through an online platform and are based on statistical data compilations. The authorities below had relied on the Karnataka High Court's judgment in CIT Vs Wipro Ltd and other similar judgments to classify these receipts as royalty. The Tribunal referred to the jurisdictional High Court's decision in DIT Vs Dun and Bradstreet Information Services India Pvt Ltd, which had held that payments for business information reports did not attract the provisions of section 195 of the Act. This decision was based on the Authority for Advance Rulings' (AAR) ruling that such payments were not for the use of or right to use any copyright, patent, trademark, or information of commercial experience. The Tribunal noted that the AAR's decision, which was concurred with by the jurisdictional High Court, applied equally to the Indo-Swiss DTAA. The Tribunal emphasized that if the assessee is not taxable under the respective DTAA, there is no need to examine taxability under the Income Tax Act, 1961. The Departmental Representative could not provide any legally distinguishable features or reasons for not following the jurisdictional High Court's binding precedent. Consequently, the Tribunal deleted the impugned addition of Rs 29,49,80,527 as royalty in the hands of the assessee. 2. Procedural Issue Regarding Delay in Pronouncement of the Order: The Tribunal addressed the procedural issue concerning the delay in pronouncing the order beyond the 90-day period stipulated by Rule 34(5) of the Income Tax Appellate Tribunal Rules, 1963. The hearing was concluded on 6th February 2020, but the order was pronounced on 13th July 2020 due to the COVID-19 pandemic and the nationwide lockdown imposed by the Indian government. The Tribunal noted that the term "ordinarily" used in Rule 34(5) allows for flexibility in extraordinary circumstances. The lockdown and the resulting disruption in judicial work were deemed extraordinary circumstances. The Tribunal referred to the Supreme Court's orders extending the limitation period due to the pandemic and the Bombay High Court's order extending the validity of interim orders. It concluded that the period of lockdown should be excluded from the 90-day time limit for pronouncing orders. The Tribunal reasoned that the unprecedented situation caused by the pandemic justified the delay and that a pragmatic approach should be adopted in interpreting the time limits. The Tribunal emphasized that the law should be interpreted in light of ground realities and the exceptional circumstances caused by the pandemic. Conclusion: In conclusion, the Tribunal allowed the appeal filed by the assessee, deleting the addition of Rs 29,49,80,527 as royalty. The Tribunal also justified the delay in pronouncing the order beyond 90 days due to the extraordinary circumstances of the COVID-19 pandemic and the resultant lockdown. The order was pronounced under Rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1962, by placing the details on the notice board.
|
