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2017 (9) TMI 976 - HC - Income TaxInstallation Permanent Establishment (PE) - ad-hoc attribution between sales and services - taxability of income as fees for technical services - Held that - Court while not setting aside the impugned order of the ITAT in its entirety, sets aside only that portion of the impugned order of the ITAT that disposes of the Assessee s appeals and restores the aforementioned appeals of the Assessee to the file of the ITAT for adjudication of the aforementioned grounds regarding installation Permanent Establishment (PE), ad-hoc attribution between sales and services and taxability of income as fees for technical services. It is made clear that the ITAT is only required to adjudicate the above grounds urged by the Assessee which were not adjudicated upon by it in the impugned order and no other ground. However, after the decision of the ITAT in terms of this order, it would be open to the Assessee, if so warranted, to file appeals before this Court challenging the said order of the ITAT as well as the impugned order of the ITAT challenged in the present appeals insofar as it decides the other grounds against the Assessee. The appeals of the Appellant-Assessee before the ITAT will now be listed before the ITAT on 24th October 2017 for directions.
Issues Involved:
Appeals under Section 260A of the Income Tax Act 1961 challenging ITAT's order for Assessment Years 2001-02 to 2008-09; Failure of ITAT to address grounds regarding Permanent Establishment (PE), ad-hoc attribution between sales and services, and taxability of income as fees for technical services; Dispute over whether Assessee consciously gave up grounds before ITAT; Interpretation of interim order requiring deposit by group companies; Contention regarding filing application under Section 254(2) of the Act; Setting aside part of ITAT's order and restoring appeals for adjudication of specific grounds. Analysis: The High Court considered appeals filed by the Assessee under Section 260A of the Income Tax Act, challenging a common order passed by the ITAT for various Assessment Years. The primary issue raised was whether the ITAT overlooked grounds related to Permanent Establishment (PE), ad-hoc attribution, and taxability of income as fees for technical services. The Court found that the ITAT indeed failed to address these grounds, which were raised by the Assessee in its appeals (para 3-4). During the proceedings, the Senior Standing Counsel for the Revenue argued that the Assessee had consciously not pressed the grounds before the ITAT. However, the Court noted that specific grounds were raised in the appeals filed by the Assessee, indicating that the ITAT failed to address these issues rather than them being given up by the Assessee (para 6). A dispute arose regarding an interim order requiring deposit by group companies of the Assessee. The Revenue contended that restoring the appeals would give an unfair advantage to the Assessee. The Court clarified that the interim order covered the present Assessee as well, and the Assessee had complied with the deposit requirements. Therefore, the stay continued during the appeal proceedings (para 8). The Revenue further argued that the Assessee should have filed an application under Section 254(2) of the Act if the grounds were not adjudicated upon. The Court acknowledged this as a possible remedy but emphasized that the ITAT had indeed overlooked the grounds raised by the Assessee, leading to the decision to set aside part of the ITAT's order and restore the appeals for adjudication of those specific grounds (para 9-10). In the final decision, the Court directed the ITAT to adjudicate on the specific grounds raised by the Assessee, which were not addressed in the earlier order. The Assessee was given the option to challenge the ITAT's decision in the future if necessary. The appeals were listed for further directions, and the interim orders were to remain in effect until the ITAT's decision (para 10-12).
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