9911796707
TMI Blog2004 (10) TMI 265X X X X Extracts X X X X X X X X Extracts X X X X ..... of by way of this common order. 2. Facts in brief: All the assessees herein belong to McKinsey Co Inc. group and have received money from the Indian branch of McKinsey Co Inc. for services rendered. The issue is whether the fees received by these assessees before from the Indian branch office of McKinsey Co Inc. would constitute "fees for included services" within the meaning of art. 12(4) of the India-US treaty. The AO completed the assessment by observing as follows: "6.5 Further, it is seen from the records/assessments of the previous year, that the assessee has been making the same submission year after year. The explanations and the wordings are identical. Further, McKinsey India has made such payments not only to M/s McKinsey Company, Inc., United Kingdom, but also to 31 other subsidiaries/branches of the McKinsey Group in various countries of the world and this has been the position from the last many years. Also while giving examples of the nature of information sought by the Indian branch of McKinsey Co. Inc., it is seen that the same old correspondence pertaining to asst. yr. 1997 -98 have been provided in every year. Further, vide letter dt. 5th Sept., 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssue is covered in favour of the assessee and against the Revenue by the decisions referred to by the first appellate authority as well as the decision of the Tribunal in the ease of McKinsey Co., Inc. (Phillippines) Ors. vs. Asstt. Director of IT (2006) 99 TTJ (Mumbai) 857 : (2006) 99 ITO 549 (Mumbai) and other orders. Referring to para 6.5 of the order of the AO which is extracted above for ready reference she submitted that the assessee has not furnished any information before the AO for the impugned assessment year, to enable him to come to a conclusion that the facts of this year are identical to the facts of other assessment years and thus, the law laid down by the Tribunal is applicable to that year. She submits that the assessee has only furnished some old correspondence pertaining to the asst. yr. 1997-98 and thereafter it had filed certain correspondences pertaining to the financial year 2006-07 relevant to the asst. yr. 2007-08 and has not furnished any document or evidence relevant to the impugned assessment year in any of this batch of cases. She submitted that the appeals may be restored to the file of the AO for verifying the facts and applying the law laid down ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithin the term "royalty" and therefore, art. 12(3) of the Indo-US DTAA is not attracted. Similarly, the nature of services are not "fee for included services" as per art. 12(4) of the Indo-US tax treaty. He submits that these legal positions have been examined and followed by the Tribunal in various years in the assessee's own group cases; (b) Model e-mail has been furnished by the assessee during the asst. yr. 1997-98 and the services in all the subsequent years are similar. Based on this sample e-mail and other evidences the Tribunal had, in the earlier years, agreed with the contention of the assessee that the fees received for services in question are not "fees for included services". He relied on the decision of the Bench in the case of McKinsey Co., Inc. (Phillippines) Ors. para 9 on p. 561 where the Tribunal based on the decision of the Special Bench of the Tribunal in the case of Motorola Inc. vs. Dy. CIT (2005) 96 TTJ (Del)(SB) 1 held that the burden shifts to the Revenue to show that the assessee has a taxable income under DTAA and then the burden is on the assessee to show that the income is exempt even under the DTAA. He vociferously contends that the burden of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able. He relies on the judgments of the Hon'ble Supreme Court in the case of Radhasoami Satsang vs. CIT (1991) 100 CTR (SC) 267 : (1992) 193 ITR 321 (SC) as well as the decision in the case of Parimisetti Seetharamamma vs. CIT (1965) 57 ITR 532 (SC) for the propositions that there should be consistency in the decision when the same facts exist year after year. 9. When the Bench pointed out that the assessee is bound to supply the information sought for by the AO for the purpose of discharging its duty, especially when such information is in the exclusive possession of the assessee as held by the Hon'ble Supreme Court in the case of CIT vs. Best Co. (P) Ltd. (1966) 60 ITR 11 (SC), Shri Porus Kaka submitted that it is not his ease that the assessee should not furnish any information sought by the Revenue but wants this Bench to crave an exception. He argues that on the facts that are available, the AO has no positive evidence that the fee paid is "fees for included services" and thus he cannot come to such conclusion. Shri Porus Kaka further relies on the assessment order of the Indian branch of McKinsey Company Inc. for the asst. yr. 2003-04 passed on 24th March, 2006 by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Company Inc. to the various customers listed out in the assessment order. He submits that when the AO is same for the Indian branch of McKinsey Company Inc. as well as of the assessees before us, he was fully aware of the nature of services and thus to hold that no information has been filed is not correct. Shri Porus Kaka vehemently contends that the 500 pages of paper book and material filed is sufficient for the AO to come to a conclusion on this issue. He also expressed apprehension that the current e-mail correspondence, if produced before the AO will not be accepted by him. 10. Joining the issue Smt. Malti Sridharan, the learned Departmental Representative submitted, on the reliance placed by Shri Porus Kaka on the assessment order of the Indian branch of McKinsey Company Inc., that this assessment order has nothing to do with the assessment orders before us. She argues that the mutual agreement procedure between the asses sees and the Indian branch of McKinsey Company Inc. was only on the issue whether services rendered by McKinsey Company Inc. are "included services" or not and the facts of these assessees were never before any competent authority. She furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, when called for. As per Smt. Malti Sridharan, the Revenue is entitled to draw an adverse inference in case of non-co-operation by the assessee. 12. She once again reiterated that it is not her case that the issues are not covered in favour of the assessee by the decisions of various Benches or the Tribunal but that the assessee cannot refuse to give any information for the particular assessment year so as to enable the AO to verify that the facts of that particular assessment year are pari materia with the facts that are considered for various Benches of the Tribunal in various earlier assessment years so as to apply the law laid down in those assessment years. She also submits that to hold otherwise, would be setting a dangerous precedent, as the assessee from now on would refuse to give any piece of paper to the AO and argue that the model or sample e-mail of 1997 furnished, should be taken as the facts of the case and the law laid down by the Tribunal in those years be applied. 13. On the decisions of the Tribunal in the assessee's own case relied upon by Shri Porus Kaka, Mrs. Malti Sridharan pointed out that in those cases, some evidence was furnished before the AO and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... form me who's handling the request. Also, it would be best if you could send in the replies by Tuesday (28th October). Since I will not be in office for a week from 29th October (our time) onwards, if you do send it on 29th October (your time), please send it directly to Gaurav with a cc to me if you are sending it bye-mail. Or, fax it to Gaurav at the Delhi office fax number (91-11-379) with a cc to me. Do give me a call at the Mumbai office (91-022028505532-x 2073) if something is unclear. The charge code is ZXE332. The information requirement is as indicated below, (please indicate the value in US $ or indicate the conversion rates). Indicators of size of company -Turnover -Assets -Number of employees -Plant locations/capacities -Exports -Listed/unlisted Nature of business -companies could be in any of the chain of activities manufacturing, blending, distribution -combination of above Customer profile -industries covered (textiles/leather/paper)." There are many Annexures thereafter giving list of company in various countries. This e-mail does not appear to be directly connected for a particular job of consultancy to a particular client. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scue of the assessee because, the fact whether the services received by the Indian branch of the assessee is directly relatable to the services rendered by the Indian branch of McKinsey Co. Inc. has also to be verified by the AO and it is for the assessee to lead evidence to that extent. The voluminous paper book filed by the assessee does not contain even one document or paper relating to the impugned assessment year. So even if it is 500 pages or 800 pages. it does not make any difference to the case. The submissions made by the assessee vide its letter dt. 24th May, 2005 are only submissions and not facts. Submissions made by the assessee or its counsel cannot take the place of evidence. It is the duty of the assessee to lead evidence, so as to prove that his submissions are in tune with the facts. When evidence cannot be furnished, the same cannot be made up or substituted with submissions or arguments. In the submissions dt. 24th May, 2005 at para 7 it is given as follows: "7. Details of revenues earned The revenues earned by the assessee represents the consideration for the time and expenses incurred in rendering the above services to McKinsey India. The details of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion to demonstrate the nature of services is not maintained or cannot be given. The correspondence, the invoices, the bills, etc. have to be furnished, to demonstrate that the assessee's claim is correct. 14.4 Coming to the judgment of McKinsey Co., Inc. (Phillippines) Ors. vs. Asstt. Director of IT, the Hon'ble Single Member of the Tribunal has decided the issue by referring to certain evidences, such as, e-mails filed before him. It was not a case where no paper whatsoever was filed as in the impugned assessment year. The judgment of the Hon'ble Supreme Court in the case of Radhasoami Satsang referred the judgment of Parashuram Pottery Works Co. Ltd. vs. ITO 1977 CTR (SC) 32 : (1977) 106 ITR 1 (SC) and held that where fundamental aspects permeating to different assessment years have been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year. In the case before the Hon'ble Supreme Court there is no dispute that the facts of the previous years and subsequent years are the same. In the case on hand, the AO's problem i ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
