2024 (2) TMI 640 - AT - Income Tax

Accrual of income in India - receipts on account of logistic support services, reimbursement of global account management charges and lease line charges - Fee for Technical Services/Fee for Included Services ( FTS'/ FIS ) as per the provisions of section 9(1)(vii) and Article 12 of the India-USA DTAA - HELD THAT - As decided in assessee own case 2023 (5) TMI 1296 - ITAT DELHI these issues has been consistently decided in favour of the assessee in all these years, while holding that the amount received are not in the nature of FTS/FIS either under the Act or under treaty provisions. Accordingly, the addition was deleted. Decided in favour of assessee.

Summary

Issues Involved:
The judgment involves issues related to the final assessment order passed u/s 143(3) r.w.s. 144C(13) of the Income Tax Act, 1961 for the Assessment Year 2021-22. The key issues raised by the assessee include the classification of fee for freight/logistic support services, reimbursement of global account management charges, and lease line charges under relevant provisions of the Act and the India-USA Double Taxation Avoidance Agreement (DTAA).

Issue 1 - Fee for Freight/Logistic Support Services:
The assessee contested the addition of INR 149,85,14,454 received for services rendered outside India, arguing that it should not be classified as Fee for Technical Services/Fee for Included Services (FTS/FIS) u/s 9(1)(vii) of the Act and Article 12 of the India-USA DTAA. The Coordinate Bench of the Tribunal consistently decided in favor of the assessee, citing previous rulings and holding that the amount cannot be treated as FTS/FIS. Consequently, the addition was deleted.

Issue 2 - Reimbursement of Global Account Management Charges:
Another contested addition was INR 7,68,26,193 received by the assessee from Expeditors International (India) Private Limited (EI India), treated as FTS/FIS under the Act and India-USA DTAA. The Tribunal, based on previous decisions, ruled in favor of the assessee, stating that the amount is not in the nature of FTS/FIS. Therefore, the addition was deleted.

Issue 3 - Reimbursement of Lease Line Charges:
The Ld. AO added INR 1,03,04,852 received by the assessee from EI India as royalty under Explanation 2 to section 9(1)(vi) of the Act and Article 12 of the India-USA DTAA. However, the Tribunal, considering previous rulings and High Court decisions, concluded that the payment made was not royalty and deleted the addition. The Tribunal emphasized the consistent favorable decisions in the assessee's own case and allowed the ground raised by the assessee.

Conclusion:
The Tribunal, after reviewing the facts and previous decisions, ruled in favor of the assessee on all contested issues. The Revenue failed to present any new evidence or binding precedent to challenge the decisions made in the preceding assessment years. As a result, the appeal of the assessee was allowed, and the additions made by the Ld. AO were deleted. The Tribunal also noted that the levy of interest under section 234A and 234B was consequential, and the initiation of penalty proceedings under section 270A was deemed premature and did not require adjudication.