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TMI Blog2020 (12) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... Accordingly, he advanced his arguments on ground No. 3, which reads as under: "Ground No. 3 The learned A.O. and the learned CIT(A) have erred in law and facts, in making an addition of an amount of INR 90,21,347 to the returned income by treating the amount as Fees for Technical Services on accrual basis. The learned AO and the learned CIT(A) have erred in law and facts in not considering the Appellant's submission and by taxing the aforesaid amount twice - once in AY 2014-15 and again in AY 2015-16." 3. The facts relating to the issue are discussed in brief. The assessee is a company incorporated and operating in Germany. The assessing officer noticed from Form No. 3CEB that the assessee has received a sum of Rs. 90,21,347/- towar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es amount to receipt by the assessee and is accordingly taxable and that it is immaterial when it did actually receive it in the U.K. The A.O. also observed that the assessee has failed to substantiate that the above said FTS income have been offered by it in the subsequent year. Accordingly, the A.O. assessed the above said amount of Rs. 90,21,347/- as income of the assessee. The Ld. CIT(A) also confirmed the same and hence the assessee has filed this appeal before us. 7. The Ld. A.R. submitted that the decision rendered by Hon'ble Supreme Court in the case of Standard Triumph Motor Company Ltd. (supra) was related to a case where no Double Taxation Avoidance Agreement was available between India and the other country. In the instant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered into a Double Taxation Avoidance Treaty with Federal Germany Republic as per notification dated 26.8.1985. It is also settled proposition of law that the DTAA provisions shall override the Income tax provisions unless the provisions of Income tax Act is beneficial to the assessee. Article 12 of DTAA is concerned with taxability of Royalties and fees for technical services. Article 12 (1) reads as under: "1. Royalties and fees for technical services arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State." The Mumbai Bench of Tribunal in the case of UHDE GMBH (supra) has examined the issue as to whether the royalties of FTS is taxable on receipt basis or accrual basis. For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f such income are contained in art. VIIIA of the agreement for the avoidance of double taxation. In Cl. 2 of the said agreement, fees for technical services, could be taxed in the Contracting State in which they arose and according to the law of that State. The term "fees for technical services" has been defined in Cl. 4 of the said article in a wide manner so as to include payments of any kind to any person. If we read Cl. 3, which defines the term "royalties" and Cl. 4, as observed earlier, which defines the term "fees for technical services" together, there cannot be any doubt that what is taxable is payment received by a person of the other Contracting State. Though under S. 5(2)(b) of the IT Act, in the case of a non-resident, income w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmany, income arising to him in India by way of royalties or technical charges could be taxed in India but that could be only on the receipt basis." 10. The Hon'ble Bombay High Court has also considered an identical issue in the case of M/s. Siemens Aktiengesellschaft (supra) and it was held as under: 2. As regards first question is concerned, the Income Tax Appellate Tribunal referring to para 1 to 3 under Article XII -A of the Double Taxation Avoidance Treaty with the Federal Germany Republic as per notification dated 26th August 1985 held that the assessment of royalty or any fees for technical services should be made in the year in which the amounts are received and not otherwise. Counsel for the Revenue relied upon the Special B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved its submissions. The Ld. A.R. submitted before us that the assessee has received several payments and the impugned income would form part of any of those payments. Since the Ld. A.R. also could not also exactly pinpoint with evidence that the impugned income was offered to tax in assessment year 2015-16, he agreed that this fact may be verified by the assessing officer. Accordingly, we restore this issue to the file of A.O. for limited purpose of satisfying himself that the impugned amount has been offered to tax by the assessee in A.Y. 2015-16 or in any other assessment year.
13. In the result, the appeal filed by the assessee is treated as allowed.
Order pronounced in the open court on 24th Nov. 2020. X X X X Extracts X X X X X X X X Extracts X X X X
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