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TMI Blog2021 (2) TMI 993X X X X Extracts X X X X X X X X Extracts X X X X ..... AY 2016-17 was not selected for scrutiny to examine any change of stand in the manner of offering of any particular income. We do not find that return for A. Y. 2016-17 was selected to examine any change of stand by the appellant. Therefore, we do not find any pendency in respect of the questions raised in the present application before the Income Tax Authority. Further, as the Applicant had already offered the amount for services rendered as Royalty/FTS in the return for AY 2016-17 there was no occasion for the AO to examine this change of stand. Therefore, we have no hesitation to hold that the change of opinion on the part of the Applicant in the present application did not render the issues pending in the AY 2016-17. The change of stand by the appellant is to be examined on the merits and this exercise can be undertaken in the course of merit hearing only. The Hon'ble Delhi High Court has held in the case of Hyosung Corporation [ 2016 (2) TMI 575 - DELHI HIGH COURT] that a notice under section 143(2) merely asking for certain information from assessee issued prior to filing of application before AAR will not constitute bar in terms of clause (i) to proviso to section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o service agreements with the Applicant viz. Service Level Agreement and I.T. Support Service Agreement. It was explained that similar services were being provided by the Applicant to its other group companies across the globe and the primary objective to enter into these agreements with DSP India was to assist it in achieving the global standardisation of its operations. It was further submitted the employees of the Applicant shall not visit India for providing the operational and other support services to DSP India under the agreements and that all the activities will be carried out from outside India. It is in connection with these two agreements that the present application has been filed wherein the following questions have been raised: 1. Whether on facts and circumstances of the case and in law, the amount received by the Applicant from DSM Sinochem Pharmaceuticals India Private Limited ( DSP India for rendering business support services under the Service Level Agreement would qualify as Fees of Technical Services ( FTS ) or Royalty as per the provisions of the Article 12 of Double Taxation Avoidance Agreement ( DTAA ) entered into between India and Netherlands. 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r completed scrutiny vide notice u/s 143(2) dated 24/07/2019, the issues raised in the application filed before this authority on 12/02/2018 were already pending before the Assessing Officer. It was further submitted that it was evident from the said return that the Applicant had considered the payment by DSP India as fee for technical services (FTS) on which tax was deducted and paid. In the return the Applicant had disclosed these receipts as in the nature of FTS and taxable @ 10% under Article 12 of Indo-Netherlands DTAA and according to Revenue this issue was already pending before the A.O. for final determination in the pending assessment. The Revenue has further submitted that the Applicant had been filing the return of income since A.Y. 2011-12 and had all along offered such receipts on account of FTS in its return on which tax was also paid. Therefore, the questions raised by the Applicant in the present application was infructuous as the Applicant itself had offered the identical receipts to tax in the earlier years. 4. The Revenue vide letter dated 08/07/2019 has further submitted that a detailed questionnaire along with notice u/s 142(1) for A. Y. 2016-17 was issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17 was selected only to verify whether the sales turnover/receipts were correctly offered for tax and whether the international transaction in respect of mutual agreement or arrangement was correctly shown in Form 3CEB. So far taxability of FTS was concerned, there was no dispute and this question was not pending before the AO. As regarding notice u/s 142(1) along with questionnaire, the Ld. A.R. submitted that the questionnaire was general in nature and no specific question relating to the questions raised in the present application were raised. He further submitted that the questionnaire was issued in a mechanical manner without any application of mind which was evident from the Question No. 27 which stated that However if any of the above points are not relevant in your case then you may consider the same as not applicable 7. It was submitted by the Ld. AR that the proceeding for A. Y. 2016-17 was governed by earlier agreement effective from January 1, 2013, whereas the questions raised in the present application were in respect of agreements effective from 01 st April 2017. Therefore, the reliance of the Department on the proceeding for A.Y. 2016-17 was wholly erroneo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication were already pending before the Income-Tax Authority and, therefore, the bar under clause (i) of the proviso to Section 245R (2) was attracted. The questions raised in the present application are in respect of amount received by the Applicant from DSP India for rendering business support services under Service Level Agreement and for providing information technology support services under IT Support Service Agreement. The present Service Level Agreement and Information Technology Service Agreement were effective from 01/04/2017 and the first year in which the services as per these new agreements could have been examined by the Department was A. Y. 2018-19. However, the proceeding pending before the Department was for the earlier assessment year 2016-17. The contention of the Revenue is that identical services were provided under earlier agreement. On the other hand, the Applicant has contended that two additional services were included in the service level agreement with effect from 01/04/2017 which constituted 15.83% of the total service. Further, the allocation methodology of the services had also changed. In essence all the services rendered under earlier 2013 agreement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax on the Royalty/FTS of ₹ 36,87,39,400/- as disclosed in the return and refund of ₹ 21,37,350/- was claimed on account of excess TDS. Since the Applicant had already offered the receipt on account of services rendered as income, this issue cannot be said to be pending before the Assessing Officer in the A. Y. 2016-17. The precise reason for issue of notice u/s 143(2) for A. Y. 2016-17 was not to examine the nature of the services rendered under the agreement or to bring the receipt of these services to tax; as this amount was already offered by the Applicant itself in the return of income. The limited issue before the Assessing Officer was only to reconcile the receipts and the corresponding TDS shown in the return vis-a-vis the amounts appearing in 26AS. Therefore, when the appellant had already suo-moto disclosed the receipt on account of services rendered in the return of income and offered it to tax, it cannot be said that the same issue was pending before the Assessing Officer until and unless one of the reasons for selection was to examine the nature of services rendered, which was not the case in the present instance. 12. The Revenue has referred to the ques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his fact is also evident from the earlier discussions regarding income disclosed in the return for A. Y. 2016-17. The services rendered in 2017 agreement were identical with all the services under 2013 agreements and in addition two more services were included. Thus, when the Applicant had itself offered the receipt for services as per the earlier agreement to tax, the present application is found to be on change of opinion. However, there is no bar under the provisions of the Act to approach this Authority to decide the issue of taxability; even if the identical receipts were offered to tax by the Applicant in the earlier year(s). There is no stipulation in proviso to Section 245R of the Act that if the application is based on change of opinion, such application can not to be admitted. What is relevant to consider is whether such change of opinion renders the issue as 'pending' before the Income Tax Authority for the earlier year(s)? The issue can be said to be pending before the Income Tax Authority only when the return is selected for scrutiny to examine the change of stand by the assessee or where such change of opinion is examined by the Income Tax Authority and a cons ..... X X X X Extracts X X X X X X X X Extracts X X X X
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