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TMI Blog2019 (11) TMI 1552X X X X Extracts X X X X X X X X Extracts X X X X ..... ch was considered to be ancillary and incidental to consulting engineering services, was also held to be not taxable in the absence of assessee s PE in India. However, in the year before us, the assessee has already offered the consulting engineering fees to tax which has been accepted by the revenue. Since we have admitted additional ground of appeal on this point, the issue of taxability of consulting engineering services would go back to Ld. AO for adjudication. Therefore, logically, the issue of taxability of cost recharge, which has been treated as ancillary and incidental to consulting engineering services, would also go back to Ld. AO for re-adjudication in the light of stand taken qua consulting engineering services. Therefore, we d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orities for adjudication keeping in view the ratio of judgment of Hon'ble Supreme Court rendered in National Thermal Power Corp. Ltd. V/s CIT (229 ITR 383) and Jute Corporation of India Ltd. (187 ITR 688). Our attention has also been drawn to the fact that the said issue is covered in assessee's favor by the order of this Tribunal for AY 2012-13 in assessee's own case vide ITA No. 1296/Mum/2017 order dated 15/02/2019. The Ld. DR opposed the admission of the same by submitting that the assessee offered the income, in this regard, in its return of income. However, keeping in mind the stated facts and circumstances, the bench acquiesced to admission of additional ground of appeal. Finally, the grounds to be adjudicated would read as under: 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... own case vide ITA No. 1296/Mum/2017 order dated 15/02/2019, a copy of which has been placed on record. The Ld. DR could not controvert the same but relied upon the orders of lower authorities. 3.1 Facts on record would reveal that the assessee being non-resident assessee stated to be engaged in providing engineering and consultancy services was assessed for year under consideration vide final assessment order dated 23/10/2017 pursuant to the directions of Ld. DRP, wherein the income of the assessee was determined at ₹ 637.19 Lacs as against Nil return filed by the assessee on 30/11/2014. The original return was revised twice wherein the assessee finally declared an income of ₹ 120.58 Lacs on account of consulting and engineerin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agement, operations, Project Management function, corporate and commercial services etc. It was submitted that these services would qualify as managerial services and hence not covered by Article 13 of India-UK DTAA. Even, if these services were considered to be technical or consultancy services, the same would still not be covered since these services do not make available any technical knowledge, experience, skill, know-how or processes to the recipient of service. Therefore, such services would be classified as business income and not taxable in India in the absence of Permanent Establishment (PE) in India as per Article-7 read with Article-5 of India-UK DTAA. 3.4 However, Ld. AO formed an opinion that the income earned by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al to consulting & engineering services, was also held to be not taxable in the absence of assessee's PE in India. However, in the year before us, the assessee has already offered the consulting & engineering fees to tax which has been accepted by the revenue. Since we have admitted additional ground of appeal on this point, the issue of taxability of consulting & engineering services would go back to Ld. AO for adjudication. Therefore, logically, the issue of taxability of cost recharge, which has been treated as ancillary and incidental to consulting & engineering services, would also go back to Ld. AO for re-adjudication in the light of stand taken qua consulting & engineering services. Therefore, we deem it fit to restore both the groun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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