9911796707
TMI Blog2024 (8) TMI 167X X X X Extracts X X X X X X X X Extracts X X X X ..... learned assessing officer are dismissed, order of the learned CIT A is upheld. Decided in favour of assessee. - Shri Prashant Maharishi, AM And Shri Sunil Kumar Singh, JM For the Assessee : Shri Pranay Gandhi For the Revenue : Shri Anil Sant, SR DR ORDER PER PRASHANT MAHARISHI, AM: 1. This appeal is filed by THE ASSISTANT COMMISSIONER OF INCOME TAX (International taxation) 2 (1) (1), Mumbai (the learned assessing officer against the appellate order passed by the COMMISSIONER OF INCOME TAX (APPEALS) 56, Mumbai dated 21/2/2024 wherein appeal filed by the assessee against assessment order passed under section 143 (3) read with section 144C) of the income tax act by The Deputy Commissioner of income tax (International taxation 2 (1) (2) Mumbai wherein the receipt from supply planning services of Rs. 536,843,276/ is treated as fees for technical services/royalty and tax at the rate of 15% under the India United Kingdom tax treaty , was allowed. 2. Therefore, the learned assessing officer is aggrieved and has raised following grounds:- i. Whether on the facts and in circumstances of the case the learned CIT A) erred in holding that the services rendered under the Supply planning servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tegorized by box and by site. This communication is termed as intention to offer. The intention to offer consist of provision of consistency of boxes thus the assessee under stakes to use its reasonable efforts to ensure that there is a consistency as to the size, type, quality, and Lake color of diamond is contained in each box in any category that it supplies during any given intention to offer period. The other services provision of extra net wherein the sight holder extranets accelerate efficiency in the process and provides platform for saving the information, third-party content plus tailored access each sight holder their own specific business information and process via secure, web-based, information sharing and business platform. The third service comprising therein is the provision of key account management wherein the main point of contact between sight holder and the assessee and assist in managing that relationship. The key account management manages and provides support in planning the intention to offer and delivery schedules. They are based in United Kingdom. 5. On the basis of these services the learned assessing officer held that the services provided are value-ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hange in the facts and circumstances of the case, the agreement is also the same, and the arguments of the revenue/assessing officer are also the same and therefore the order of the coordinate bench needs to be followed. 10. The learned departmental representative agreed that the issue is covered by the decision of the coordinate bench however submitted that grounds of appeal may be considered. 11. We have carefully considered the rival contention and perused the orders of the learned lower authorities. We find that the coordinate bench by order dated 16/12/2023 has decided the identical issue wherein the receipt from SPS services amounting to Rs. 1,026,221,488 is not chargeable to tax as fees for technical services or royalty as per the Indo UK Double Taxation Avoidance Agreement. (ITA number 6509, 2267, 5733, 5734, 1833/MU M/2016) for assessment year 2009 10, 2010 11, 2011 12, 2012 13 and, 2013 14 pronounced on 16/12/2023). The coordinate bench from paragraph number 44 has held that:- 44. We are in agreement with the contention of the ld. Counsel. Firstly there is no make available of any services of technical knowledge as held above and also this extranet is merely a platform to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... include the word 'Plan' and therefore, use of 'Plan' canot considered as royalty for the purposes of the Act. Giving information to intention to offer to be considered as any kind of plan which is again the same kind of providing design or provision or any systematic draft to carry out certain action. Here, the intention to offer cannot be held as a plan to fall within the ambit of royalty under Article 13 of India UK DTAA, ITA No.6509/Mum/2016 and other appeals M/s. De Beers UK Ltd 37 accordingly, the contention raised by the revenue is rejected. The ld. DR also submitted that assessee grants sight holder licence to use trademarks sight holder and / or DTC sightholderand also use its logo. Finally, he submitted that benefits received by the sight holders are due to the use of trademarks and therefore, the income earned by assessee should be chargeable to tax as royalty. 47. Here in this case, use of trademark is for specific purpose and sight holders have provided undertaking to the assessee that logo should be used only for the specific purpose. In any case, the fees earned by the assessee are through provision of SPS services and not through the use of trademarks ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other appeals M/s. De Beers UK Ltd 39 in accordance with the written guidelines supplied by the DTC and not to be used in such a way that might prejudice the goodwill of DTC etc. The service fees which is the subject matter of dispute in appeal, is received by DTC in lieu of services (which has been set out in Appendix A) is not for allowing any usage of the trademark 'Sightholder' and/ or 'DTC Sightholder'. 50. In so far as AO S observation or allegation that its information concerning industrial, commercial or scientific experience, nowhere it can be inferred that assessee provides any information concerning industrial, commercial or scientific experience. The term industrial commercial or scientific experience does not mean information of a commercial nature based on experience, albeit it means information concerning industrial, commercial or scientific experience itself here in this case, assessee has merely provided information to its sight holder with regard to its intention to offer via the extranet, which is merely a means of secured communication between assessee and its sight holders. Before us reliance was placed on the decision of GEC GECF Asia Limited ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on account of this activity that in the order of 13-6-2007 or for that matter in the order dated 13-11-2006 it is set out that there is a transfer of commercial experience in the share of diamond grading report. As discussed earlier it is true that GIA may have the experience of grading However, does it impart its experience to its client? in our opinion there is no imparting of its experience in favour of the client . ITA No. 6509/Mum/2016 and other appeals M/s. De Beers UK Ltd 41 52. Thus, the receipt of SPS fees by the assessee cannot be said to be falling in the definition of Royalty by virtue of information concerning industrial, commercial or scientific experience as the information is provided based on experience and not for imparting of experience. 53. However, with regard to taxability of supply planning services under Article 13(4)(a), for use of brand Nakshatra or Forever mark to promote sale of branded diamond products, it has been stated that the Nakshatra brand which was owned by assessee from which it has earned royalty income, earlier was sold in AY 2008-09. Thus, this payment cannot be held in the nature of FTS or royalty. Albeit this is business income for assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
