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TMI Blog2024 (5) TMI 442X X X X Extracts X X X X X X X X Extracts X X X X ..... ce desk for all types of IT related issues from end users. Under the Volvo Corporate Network, assessee provides a secured access to Volvo Network, which is prerequisite for use of any business application other IT services provided by the assessee. The assessee also provides Business Consultancy Services in terms of which it renders consultancy services with respect to IT services provided by it. Though, the assessee has claimed that these are standard and routine services, however, fact remains that the assessee has provided managerial, consultancy and technical services. Copies of invoices placed in the paper-book do not provide the description/details of services provided. In the instant case, the AO has examined the nature of receipts in respect of certain services rendered by the assessee to the Indian entities and found them to be FTS. The aforesaid factual position is not disputed even by the assessee. Therefore, it is established on record that the receipts are in respect of certain services rendered by the assessee. If that is the case, it needs to be examined, whether the receipts in relation to services rendered fall within the definition of FTS. AO has done exactly the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons, he submitted that ground nos. 4 and 5 are not pressed. Accordingly, ground nos. 4 and 5 are dismissed. 4. The issue on merits arising for consideration, in terms of ground nos. 6, 7 and 8, is in relation to taxability of Rs. 114,31,40,765/- as Fee for Technical Services (FTS) in terms of Article 12 of India Sweden Double Taxation Avoidance Agreement (DTAA). 5. Briefly the facts relating to this issue are, the assessee is a non-resident corporate entity incorporated in Sweden and a tax resident of that country. As observed by the Assessing Officer, the assessee is a part of the Volvo Group and is engaged in providing Information Technology ( IT ) solutions, particularly catering to IT needs of automotive industries. For the assessment year under dispute, the assessee filed its return of income on 11.12.2020, declaring nil income claiming refund of TDS, amounting to Rs. 11,43,58,540/- In course of assessment proceedings, the Assessing Officer called upon the assessee to furnish the details of receipts earned from India corresponding to the TDS. He also called for various other details. On examining the materials on record, he observed that in terms with agreement entered by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said provision is wide enough to include the receipts earned by the assessee. In this context, the Assessing Officer observed that the restrictive provisions of India Portugal and India Finland treaties cannot be automatically imported to India Sweden treaty in absence of a separate notification issued by India incorporating such provision in India Sweden DTAA. In the aforesaid premises, the Assessing Officer ultimately concluded that the receipts to the tune of Rs. 114,31,40,765/- are to be treated as FTS under Article 12(3) of India Sweden DTAA and taxable at the rate of 10% on gross basis. Accordingly, he framed the draft assessment order. Against the draft assessment order so framed, the assessee raised objections before learned DRP. However, learned DRP concurred with the view expressed by the Assessing Officer. In terms with the directions of learned DRP, the impugned assessment order was passed. 9. Before us, while opening his arguments on the issue, learned Senior Counsel appearing for the assessee, at the very outset, fairly conceded that the issue relating to applicability of MFN clause under Protocol to India Sweden DTAA stands decided against the assessee in view of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subsequent years in absence of any change in facts as the rule of consistency would apply. In this context, learned counsel relied upon the following decisions: 1. Radhasoami Satsang Vs. CIT, 193 ITR 321 (SC) 2. CIT Vs. Kotak Securities Ltd. [2016] 67 taxmann.com 356 (SC) 3. CIT Vs. Excel Industries Ltd, 358 ITR 295 (SC) 4. CIT Vs. Neo Polypack (P) Ltd., 245 ITR 492 (Delhi) 5. Johnson Matthey India Pvt. Ltd. Vs. DCIT, ITA No. 14/2013 (Delhi) 6. CIT Vs. Alstom Projects India Ltd., 394 ITR 141 (Bombay) 7. Pr. CIT Vs. Nippon Leakless Talbross Pvt. Ltd. 455 ITR 335 (P B) 8. SC Enviro Agro India Ltd. Vs. DCIT (ITA No. 704/Mum/2012) 9. Donaldson India Filter Systems (P) Ltd. Vs. DCIT, 101 taxmann.com 66 (ITAT, Delhi) 10. NIIT Ltd. Vs. DCIT, 180 ITD 141 12. Without prejudice, he submitted that the nature of support services provided by the assessee are standard and routine services, hence, cannot be considered as managerial, technical or consultancy services to bring it within the ambit of Article 12(3) of the tax treaty. To buttress his submission, learned Senior Counsel took us through various clauses of the agreement to emphasize that the services rendered are not specialized services. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on other IT services provided by the assessee. The assessee also provides Business Consultancy Services in terms of which it renders consultancy services with respect to IT services provided by it. 15. Though, the assessee has claimed that these are standard and routine services, however, fact remains that the assessee has provided managerial, consultancy and technical services. Copies of invoices placed in the paper-book do not provide the description/details of services provided. At this stage, we may look into the definition of FTS under Article 12(3)(b) of India Sweden DTAA, which reads as under: Article 12(3)(b)- The term fees for technical services, means payment of any kind in consideration for rendering of any managerial, technical or consultancy services including the provisions of services by technical or other personnel but does not include payments for services mentioned in Articles 14 and 15 of this Convention. 16. As could be seen, the definition of FTS under the treaty covers any kind of payment for rendering of any managerial, technical or consultancy services including provision of services by technical or other personnel. Thus, the definition of FTS under Article ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsultancy have to be examined. Obviously, the receipts qua managerial, technical or consultancy services would definitely fall within the ambit of FTS and not royalty. 19. In the instant case, the Assessing Officer has examined the nature of receipts in respect of certain services rendered by the assessee to the Indian entities and found them to be FTS. The aforesaid factual position is not disputed even by the assessee. Therefore, it is established on record that the receipts are in respect of certain services rendered by the assessee. If that is the case, it needs to be examined, whether the receipts in relation to services rendered fall within the definition of FTS. The Assessing Officer, in our view, has done exactly the same. Therefore, the action of the Assessing Officer in characterizing the receipts as FTS cannot be called into question by advancing the theory of rule of consistency. Thus, in our view, the judicial precedents cited before us by learned Senior Counsel would be of no help to the assessee, as, what is essential to determine is, the nature and character of receipts in the instant assessment year and not, what the Assessing Officer has erroneously held in earlie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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