9911796707
TMI Blog2018 (10) TMI 1600X X X X Extracts X X X X X X X X Extracts X X X X ..... t that has emerged at that stage was not before the revenue at the scrutiny stage, as such, the fresh reconciliation filed by MNYL u/s 133(6) of the Income-tax Act, 1961 does not prove the contention of the assessee that MNYL paid or credited only the amount of ₹ 57,43,37,091/- excluding the amount of service tax to the assessee as per MNYL books of accounts for the relevant period. This approach of the learned AO does not seem to be correct. There is no reason for the learned AO to disregard the direction of the learned DRP to bring to tax only the royalty amount after excluding the service tax element after due verification of the fact. The confirmation submitted by the MNYL subsequent to the directions of the learned DRP clearly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ively are filed against the directions of the learned Dispute Resolution Panel ( DRP ) dated 13.11.2014. 2. Brief facts of the case are that M/s New York Life Insurance Company General Funds is an US based company and is primarily engaged in the business of life insurance. For the Asstt. Year 2010-11, the assessee filed their return of income on 22.9.2010 declaring the taxable income of ₹ 63,34,93,811/- and subsequently, revised the same on 28.3.2012 by declaring the total income at ₹ 57,43,37,091/-. During the assessment proceedings, learned Assessing Officer (Ld. AO) observed that in the year under consideration, the assessee-company licensed its completely owned trademark New York Life to an Indian company named as Max ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Royalty income exclusive of the service tax element in the hands of the assessee. 6. Subsequently, while complying with the directions of the learned DRP, learned AO, after hearing the assessee again held that the entire amount of ₹ 63,34,93,811/- is liable to tax. Assessee is, therefore, before us in Appeal No.2125/Del/2015 whereas challenging the directions of the learned DRP, the revenue preferred ITA No.1400/Del/2015. 7. At the outset, it could be seen that though the learned DRP directed the learned AO in specific terms that the Royalty income in the hands of the assessee at ₹ 57,43,37,091/- exclusive of the service tax element of ₹ 5,91,56,720/- alone had to be brought to tax, subsequently , while giving eff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20/-. But the learned AO did not do so. We, therefore, now proceed to look at this aspect. 10. Though the assessee submitted before the learned AO in respect of their receiving only ₹ 50,74,59,146/- out of the sum of ₹ 57,43,37,091/- after deducting the tax of ₹ 6,68,77,942/- and the said fact was confirmed by MNYL in their letter dated 22.1.2014, the confusion in this matter had arisen because of the difference in the figures furnished by MNYL in their two letters, namely, 22.1.2014 and 30.1.2014 respectively. The figures mentioned in the letter dated 22.1.2014 are in conformity with the case of the assessee. However, in the subsequent letter MNYL stated that an amount of ₹ 617,857,313/- has been debited in its b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the two figures that were shown as royalty by MNYL, viz., ₹ 57,43,37,091/- and ₹ 61,78,57,313/-. The assessee explained by letter dated 15.12.2014 that the difference between ₹ 61,78,57,313/- and ₹ 57,43,37,091/- is the amount of ₹ 4,35,20,223/- which was debited in the accounts of MNYL towards pre paid expenses charged during the year. The confirmation from the MNYL establishes the same. Even at this stage, in all fairness, learned AO should have made enquiries into the figure of ₹ 4,35,20,223/- instead of blindly saying that this new fact that has emerged at that stage was not before the revenue at the scrutiny stage, as such, the fresh reconciliation filed by MNYL u/s 133(6) of the Income-tax Act, 196 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain the addition of ₹ 5,91,56,720/- treating it as royalty. 15. Learned AR further submitted that such question of treating the service tax as royalty had not arisen in the AY 2009-10 whereas in the subsequent Asstt. Year, namely, 2011-12 while passing the order u/s 143(3) of the Act, learned AO excluded the service tax component included in the TDS certificate. Assessment order for the Asstt. Year 2011- 12 is placed on record. 16. In these circumstances, we are of the considered opinion that bringing the service tax element of ₹ 5,91,56,720/- to income tax cannot be sustained and the learned AO is directed to delete the same. Appeal of the assessee is accordingly allowed. 17. In the result, appeal of the revenue is dis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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