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2023 (12) TMI 453 - AT - Income TaxIncome taxable in India - Addition of receipts from Industrial Liaison program (ILP) - Fees for Included Service (FIS), under Article 12 of the Double Taxation Avoidance Agreement between India and USA ('Treaty') - Appellant is a non-resident company and tax resident in United States of America, educational institution incorporated as a non-profit organization under the laws of the State of Massachusetts imparting knowledge and educate students in science, technology and related areas of scholarships - HELD THAT - Tribunal has in identical facts and circumstances in the case of Massachusetts Institute of Technology Ne Versus Deputy Commissioner Of Income Tax Intl Tax Circle 3 (2) (1) Mumbai 2023 (10) TMI 1186 - ITAT MUMBAI held that receipts from Industrial Liaison Program and receipt from Coordination Membership Agreement are not liable to tax in India in terms of Article 12 of DTAA as the same are not in the nature of Fee for Included Services . Whereas the Tribunal has confirmed the addition of receipts from Sponsorship Assignments holding the same to be Fee for Included Services taxable in India in terms of Article 12 of DTAA. Receipts from Industrial Liaison Program - As examining the scope of services provided by the Appellant under Industrial Liaison Program concluded that the Appellant provides factual information related to the research projects and the same does not involve rendering of any technical services or making available any technical knowledge or experience or skill. Therefore, the receipts from Industrial Liaison Program are not liable to tax in India in terms of Article 12 of the DTAA. Facts and circumstances being identical, respectfully following the above decision of the Tribunal in the case of the Appellant for the immediately preceding Assessment Year 2018-19, we hold that receipt from Industrial Liaison Program do not qualify as Fee for Included Services in terms of Article 12 of the DTAA and are, therefore, not taxable in India. Receipt from Sponsorship Assignment qualify as Fee for Included Services in terms of Article 12 of the DTAA and are, therefore, taxable in India. Receipts from Coordination Membership Agreements - The Appellant does not undertake any research nor does it describe any method or process involved in carrying out such research. Appellant merely provides help for accessing and dissemination of the consortium research to its members. The role of the Appellant is that of a coordinator between all the consortium members. Thus, the Appellant is only providing administrative support to the members and not rendering any technical services. It cannot be said that the Appellant is making available any technical know-how, experience, etc., or technical plan/design to the members as enumerated in Article 12 of the DTAA. Both the sides agreed that there is no change in the facts and circumstances of the case. Therefore, respectfully following the above decision of the Tribunal in the case of the Assessee for the immediately preceding Assessment Year 2018-19, we hold that receipt from Coordination Membership Agreement do not qualify as Fee for Included Services in terms of Article 12 of the DTAA and are not taxable in India. Denial of credit of TDS - We direct the Assessing Officer to verify the records and grant credit of tax deducted at source to the Appellant as per law.
Issues Involved:
1. General assessment of total income. 2. Addition of receipts from Industrial Liaison Program (ILP). 3. Addition of receipts from Sponsorship Assignments. 4. Addition of receipts from Coordination/Consortium Membership. 5. Incorrect inclusion of non-existing capital gains. 6. Non-consideration of current year and brought forward capital loss. 7. Taxation of interest on Income-tax refund. 8. Denial of Tax Deducted at Source (TDS) credit. 9. Levy of interest under Section 234B. 10. Levy of interest under Section 234D. 11. Penalty under Section 270A. Summary: General Assessment: The Appellant's general ground of appeal was dismissed as it was not pressed. Addition of Receipts from Industrial Liaison Program (ILP): The Tribunal found that the ILP receipts do not qualify as 'Fee for Included Services' under Article 12 of the DTAA. The ILP program involves providing factual information related to research projects without rendering technical services or making technical knowledge available. The Tribunal directed the deletion of the addition of INR 2,05,29,000/- related to ILP receipts. Addition of Receipts from Sponsorship Assignments: The Tribunal upheld the addition of INR 3,19,48,834/- for Sponsorship Assignments, concluding that the Appellant undertakes specific research for corporate sponsors and makes available technical knowledge and intellectual property, which qualifies as 'Fee for Included Services' under Article 12 of the DTAA. Addition of Receipts from Coordination/Consortium Membership: The Tribunal held that receipts from Coordination Membership Agreements do not qualify as 'Fee for Included Services' under Article 12 of the DTAA. The Appellant's role is limited to providing administrative support and coordination without rendering technical services or making technical knowledge available. The addition of INR 5,01,09,903/- was deleted. Incorrect Inclusion of Non-Existing Capital Gains: Ground No. 5 was dismissed as not pressed. Non-Consideration of Current Year and Brought Forward Capital Loss: Ground No. 6 was dismissed as not pressed. Taxation of Interest on Income-Tax Refund: Ground No. 7 was dismissed as not pressed. Denial of TDS Credit: The Tribunal directed the Assessing Officer to verify records and grant TDS credit of INR 8,16,358/- as claimed by the Appellant. Levy of Interest under Section 234B: Ground No. 9 was disposed of as consequential in nature. Levy of Interest under Section 234D: Ground No. 10 was disposed of as consequential in nature. Penalty under Section 270A: Ground No. 11 was dismissed as premature since penalty proceedings are separate from assessment proceedings. Conclusion: The appeal was partly allowed, with specific directions and deletions made concerning the various grounds raised by the Appellant.
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