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TMI Blog2024 (11) TMI 1016X X X X Extracts X X X X X X X X Extracts X X X X ..... said to unreasonable or incorrect, and hold that the assessee was wrongly declined tax credit on the facts of this case Thus, we find merit in the submission of the assessee and allow the claim of deduction. Decided against revenue. - Shri Amarjit Singh, Accountant Member And Shri Sandeep Singh Karhail, Judicial Member For the Assessee : Shri Sunil M. Lala For the Revenue : Shri Ram Krishna Kedia, Sr. DR ORDER PER AMARJIT SINGH, ACCOUNTANT MEMBER: These appeals of the Revenue for the assessment years 2020- 21 and 2017-18 are directed against the order u/s 250 of the Income-tax Act, 1961 dated 06.05.2024 passed by the ld. Commissioner of Income-tax (Appeal), National Faceless Appeal Centre, Delhi. 2. Both these appeals filed by the Revenue are based on similar issues on identical facts, therefore, for the sake of convenience, both these appeals are adjudicated together by taking the ITA No.3382/Mum/2024 as the lead case and its findings will be applied to the other appeal mutatis mutandis wherever applicable. ITA No.3382/Mum/2024 3. Grounds of appeal are as under:- 1. On the facts and in the circumstances of the case and in law the ld.CIT(A) erred in allowing tax relief in regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee after following the decision of the ITAT, Mumbai on the similar issues identical to the case of the assessee. The relevant extract of the decision of the CIT(A) is reproduced as under:- 6.1.3 I have perused submissions of the appellant and the decisions cited therein. It is noted that the facts of the case of the appellant are identical to the case of M/s.Cyril Amarchand Mangaldas ITA no.1046/Mum./2023 (AY 2017-18) ITA no.104 7/Mum./2023 (AY 2018-19), common order dated 28/06/2023 wherein relying upon the decision, dated 18/12/2020, of coordinate bench of Hon ble ITAT, Mumbai in case of Amarchand and Mangaldas and Suresh A Shroff Co. v/s ACIT, in ITA No. 2613/Mum./2019 (AY 2014-15), it was noted that the Japanese authorities had interpreted Article 14 of the India-Japan DTAA differently holding that the provisions of Article 14 shall be applicable only in case of professionals working in the individual capacity, i.e. independent lawyers, and not to entities engaged in rendering professional services like corporate law firms, such as the assessee and therefore, its clients in Japan were directed by Japanese tax authorities to deduct tax under Article 12 of the India-Japan DTAA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lea of the assessee seeking deduction of the taxes so withheld abroad in the computation of its income. Facts of the case of present appellant are identical as in the cases cited above. It is not the case of the AO that in India, the appellant has not offered the income received from Japan on which tax was withheld there. The similar provisions for India- Singapore applied by the AO in the present case are also cited below: ARTICLE 14: INDEPENDENT PERSONAL SERVICES - 1. Income derived by an individual who is a resident of a Contracting State from the performance of professional services or other independent activities of a similar character shall be taxable only in that State except in the following circumstances when such income may also be taxed in the other Contracting State : (a) if he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities; in that case, only so much of the income as is attributable to that fixed base may be taxed in that other State ; or (b) if his stay in the other Contracting State is for a period or periods amounting to or exceeding in the aggregate 90 days in the relevant fiscal year, in that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... graph (a) of this paragraph, if such provision has not been modified thereafter or has been modified only in minor respects so as not to affect its general character. 5. Subject to the provisions of the laws of Singapore regarding the allowance as a credit against Singapore tax of tax paid in any country other than Singapore, Indian tax paid, whether directly or by deduction, in respect of income from sources within India shall be allowed as a credit against Singapore tax payable in respect of that income. Where such income is a dividend paid by a company which is a resident of India to a resident of Singapore which owns not less than 25 per cent of the share capital of the company paying the dividends, the credit shall take into account Indian tax paid in respect of its profits by the company paying the dividends. 6. For the purposes of paragraph 4 of this Article the term Indian tax paid shall be deemed to include any amount of tax which would have been payable in India but for a deduction allowed in computing the taxable income or an exemption or reduction of tax granted for that year in question : (a) Sections 10(4), 10(4B), 10(5B), 10(15)(iv), 10A, 10B, 33AB, 80-I and 80- IA, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n shall be given in accordance with the following paragraphs of this Article. 2. Double Taxation shall be eliminated as follows: (i) in Nepal: 19 (a) Where a resident of Nepal derives income which, in accordance with the provisions of this Agreement, may be taxed in India, Nepal shall allow as a deduction from the tax on the income of that resident, an amount equal to the tax paid in India. Such deduction shall not, however, exceed that portion of the tax as computed before the deduction is given, which is attributable, as the case may be, to the income which may be taxed in India. (b) Where in accordance with any provision of the Agreement, income derived by a resident of Nepal is exempt from tax in Nepal, Nepal may nevertheless, in calculating the amount of tax on the remaining income of such resident, take into account the exempted income. (ii) In India: (a) Where a resident of India derives income which, in accordance with the provisions of this Agreement, may be taxed in Nepal, India shall allow as a deduction from the tax on the income of that resident, an amount equal to the tax paid in Nepal. Such deduction shall not, however, exceed that portion of the tax as computed befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is allowable in India u/s 90 of the Act. 6. Heard both the sides and perused the material on record. During the appellate proceedings before us, the ld. Counsel, without reiterating the facts as discussed above, at the outset, submitted that issue on hand being squarely covered by the following judicial pronouncements of the ITAT, Mumbai:- i. Amarchand Mangaldas Suresh A. Shroff Co. v. Assistant Commissioner of Income Tax Circle 16(2), Mumbai [2020] 122 taxmann.com 248 (Mumbai - Trib.) ii. Deputy Commissioner of Income-tax v. Cyril Amarchand Mangaldas [2023] 154 taxmann.com 99 (Mumbai - Trib.) iii. Amarchand Mangaldas Suresh A. Shroff Co. v. Commissioner of Income Tax (Appeals) National Faceless Appeal Centre Delhi [ITA No. 982/Mum/2023 AY 2017-18] 7. With the assistance of the ld. Representatives, we have perused the decision of the ITAT in the case of Amarchand Mangaldas Suresh A. Shroff Co. v. Commissioner of Income Tax (Appeals) in ITA No. 982/Mum/2023 pertaining to AY 2017-18 wherein the provisions of Article 12 and Article 14 of the India- Japan Double Taxation Avoidance Agreement are discussed and it is held that Article 12 of the DTAA provides that income from professional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilable model now in vogue in many tax treaties. The only reason for which exclusion from article 12 was canvassed by the Assessing Officer was that rather specific provisions of article 14 have to make way for rather general provisions of article 12, but then when we hold that, in the context of Indo Japan tax treaty, article 14 comes into play only for individuals, this proposition ceases to hold good in the present context. As a corollary to this legal position, and the exclusion clause under article 12(4) not being triggered on the facts of this case as such, it is indeed reasonably possible to hold that the payments in question were rightly subjected to tax withholding in Japan. The judicial precedents cited by the authorities below are in the context of the tax treaties other than Indo Japan tax treaty, and the provisions of the Indo Japan tax treaty are not in pari materia with the provisions of those tax treaties. These judicial precedents deal with the tax treaties that India has entered into with China, U.K. and the USA, but then all the three treaties are, in the material respects, differently worded vis- -vis the Indo-Japanese tax treaty that we are presently dealing wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by applying to an item of income, a provision of convention that is different from state of residence considers to be applicable. Therefore, in all cases in which interpretation of residence country about applicability of a treaty provision is not the same as that of source jurisdiction about the provision and yet the source country levied taxes whether directly or by way of tax withholding, tax credit cannot be declined. 10. There is nothing before us on hand differs from the issues raised in the cases cited (supra) so as to take a different view on this issue. Therefore, since the issue on hand being squrely covered, therefore, following the principle of consistency, we find merit in the submission of the assessee and allow the claim of deduction. Following the decisions of the ITAT Mumbai as referred to above, we do not find any infirmity in the decision of the ld.CIT(A), therefore, the grounds of appeal filed by the Revenue are dismissed. 11. In the result, the appeal of the Revenue is dismissed. ITA No.3381/Mum/2024 12. We have adjudicated similar issue with identical facts, vide ITA No.3382/Mum/2024 as discussed supra in this order, therefore, applying the findings in that a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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