Income Tax Appellate Tribunal - Mumbai
Dcit (It) -3 (2)(2), Mumbai vs Msm Satellite (Singapore) Pte Ltd., ... on 21 June, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH "L", MUMBAI BEFORE SHRI RAJENDRA, ACCOUNTANT MEMBER AND SHRI C.N. PRASAD, JUDICIAL MEMBER ITA NO.1718/MUM/2015, (A.Y : 2010-11) MSM Satellite (Singapore) Pte. Ltd. v. Deputy Commissioner of Income C/o. SRBC & Associates LLP Tax (International Taxation) 14th Floor, The Ruby 29 Range 3(2)(2) Senapati Bapat Marg, 133 Scindia House Dadar (West) Ballard Pier Mumbai - 400 028 Mumbai 400 038 PAN : AABCS 9229 H (अपीलार्थी / Appellant) (प्रत्यर्थी / Respondent) ITA NO.1637/MUM/2015, (A.Y : 2010-11) Deputy Commissioner of Income Tax v. MSM Satellite (Singapore) Pte. Ltd.
(International Taxation) C/o. SRBC & Associates LLP
Range 3(2)(2) 14th Floor, The Ruby 29
133 Scindia House Senapati Bapat Marg,
Ballard Pier Dadar (West)
Mumbai 400 038 Mumbai - 400 028
PAN : AABCS 9229 H
(अपीलार्थी / Appellant) (प्रत्यर्थी / Respondent)
अपीलार्थी की ओर से /Assessee by : Shri Nitesh Joshi
प्रत्यर्थी की ओर से /Department by : Shri Jasbir Chouhan
सुनवाई की तारीख / Date of Hearing : 30.03.2017
घोषणा की तारीख / Date of Pronouncement : 21.06.2017 2 ITA Nos. 1637/Mum/2015 & ITA No.1718/Mum/2015 MSM Satellite (Singapore) Pte. Ltd. ., आदे श / O R D E R PER C.N. PRASAD (JM)
1. These two appeals are filed by the Revenue and the assessee against the order passed by the DRP Under Section 144C(5) of the Act.
2. The first issue in the appeal of the assessee is in respect of the taxability of interest received Under Section 244A of the Act.
3. At the outset the Learned Counsel for the assessee submits that this issue has been decided in its favor following the Special Bench Delhi in the case of ACIT v. Clough Engineering Limited 9 ITR (Trib) 618 by the coordinate bench of this Tribunal in assessee's own case for the assessment year 2005-06 in ITA.No.2523/Mum/2010 dated 28.08.2015, a copy of which is placed on record. The Learned Counsel further submits that following the said order of the coordinate bench for the Assessment Year 2005-06 this issue has been decided in the Assessment Year 2007-08 in ITA.No.8748/Mum/2011 by order dated 29.02.2016 copy of the order is placed on record.
4. Learned Departmental Representative supported the orders of the authorities below.
3ITA Nos. 1637/Mum/2015 & ITA No.1718/Mum/2015
MSM Satellite (Singapore) Pte. Ltd. .,
5. We find that the issue in appeal that is the taxability of the interest received Under Section 244 of the Act has been decide in assessee's favor for the Assessment Year 2005-06 as well as 2007-08. The Coordinate Bench while disposing the appeal for the Assessment Year 2005-06 held as under:-
ITA No. 2523/Mum/ 2010, Assessee's appeal:
AY 2005-06
14. In this appeal, the assessee has raised following grounds: -.
Taxability of Distribution Revenues
1. erred in enhancing the assessment by holding that the Appellant has a Dependent Agent PE in India in the form of Multi Screen Media Private Limited in respect of distribution revenues without appreciating that, after analyzing the facts of the case, the learned DDIT had held that the Appellant does not have a Dependent Agent FE in India in respect of the distribution revenues.
Taxability of the Interest Received under Section 244A of the Act
2. erred in enhancing the assessment by holding that the Appellant has a Dependent Agent PE in India in the form of Multi Screen Media Private Limited in respect of distribution revenues without appreciating that, after analyzing the facts of the case, the learned DDIT had held that the Appellant does not have a Dependent Agent FE in India in respect of the distribution revenues.
3. without prejudice to above, even assuming that interest received is taxable for the year under consideration, erred in confirming taxation of interest received under Section 244pt the Act under Article 11(4) of the India-Singapore Treaty (the 'Treaty"), on the basis that the interest received is effectively connected with the alleged FE of the Appellant in India as against claim of the Appellant that same is not connected with the alleged FE and hence it is taxable under Article 11(2) of the Treaty. 4 ITA Nos. 1637/Mum/2015 & ITA No.1718/Mum/2015
MSM Satellite (Singapore) Pte. Ltd. .,
4. without prejudice to above, even assuming that interest received is taxable for the year under consideration, failed to appreciate that once taxability of the Dependent Agent FE is extinguished, interest received under Section 244A It cannot be treated as effectively connected with the alleged FE.
5. without prejudice to above, even assuming that the interest received under Section 244A is effectively connected with the Appellant's PE in India, then so much of the interest that is attributable to the alleged Dependent Agent PE should only be taxed under Article 11(4) and balance interest should be taxed under Article 11(2) of the Treaty.
The Appellant craves to consider each of the above grounds of appeal without prejudice to each other and craves leave to add, alter, delete or modify all or any of the above grounds of appeal.
Mainly, two issues have been raised in the assessee's appeal, firstly, taxability of distribution revenue, and other taxability of interest received u/s 244A.
15. As regards ground no. 1, it has been admitted by both the parties that this issue is similar to ground no. 2 as raised by the Department. Since this issue has been decided in favor of the assessee by holding that the same is not taxable on the ground that it has been paid at Arm's length price, therefore, this ground becomes purely academic.
16. As regards the issue relating to taxability of interest received u/s 244A, it is admitted that, so far as taxability of interest Under Section 244 is concerned, under Article 11(4) of India Singapore Treaty, the same is now covered by the decision of the Hon'ble Special Bench in the case of ACIT vs Clough Engineering Ltd, reported in [2011] 09 ITR (Trib) 618 (Delhi)(SB). Accordingly, we hold that so far as the issue of taxability of interest u/s 244A in the hands of the assessee, we decide the same in favour of the assessee after following the ratio laid down by the Hon'ble Special Bench in the case of ACIT v Clough Engineering Ltd (supra), However ground raised, vide ground no. 2, 4 and 5 regarding taxability of interest Under Section 244A, the same are treated as infructuous. 5 ITA Nos. 1637/Mum/2015 & ITA No.1718/Mum/2015
MSM Satellite (Singapore) Pte. Ltd. .,
6. Respectfully following the said order, we allow this ground of appeal of the assessee.
7. The next issue in the appeal of the assessee is regarding not granting Credit for TDS, Advance Tax and Self-Assessment Tax. On hearing both sides we direct the Assessing Officer to grant credit for TDS, Advance Tax and Self- Assessment Tax after due verification.
8. Coming to the Revenue's appeal the first ground reads as under: -
On the facts and in the circumstances of the case and in law, whether the Ld. DRP was correct in holding that the entire liability was extinguished if the payment in question was made at Arm's Length, thus deleting the addition of Rs.110.17 Crores made by the Assessing Officer without appreciating the fact that the Revenue is in appeal on the same issue before the Hon'ble Supreme Court for A.Y. 1999-2000 in SET Satellite (Singapore) Pte. Ltd. case.
9. Both the parties agreed that this issue has been decided in favor of the assessee by the Hon'ble Bombay High Court in the case of M/s. Set Satellite (Singapore) Pte. Ltd v. Dy.DIT (International Taxation) 307 ITR 205 wherein it was held that advertisement revenue received by resident of Singapore is not taxable in India. It was held that sales were made on principle to principle basis. Respectfully following the decision of the Hon'ble High Court in the case of M/s. Set Satellite (Singapore) Pte. Ltd v. Dy. DIT (International Taxation) 307 ITR 205, we dismiss the ground raised by the Revenue. 6 ITA Nos. 1637/Mum/2015 & ITA No.1718/Mum/2015
MSM Satellite (Singapore) Pte. Ltd. .,
10. In Ground No.2 the Revenue is challenging the order of the DRP as under: -
On the facts and in the circumstances of the case and in law, whether the Ld. DRP was correct in holding that the entire distribution revenue earned both by the assessee and its agent is not to be taxed, deleting the addition of Rs.325.20 crores made by the Assessing Officer without appreciating the fact that the Revenue is in appeal on the same issue before the Hon'ble Supreme Court for A.Y. 2002-03 and 2003-04 in SET Satellite (Singapore)Pte. Ltd. case.
11. Both parties fairly stated that this issued is decided by the Coordinate Bench of the Tribunal for the Assessment Year 2005-06 and 2006-07 in ITA.No.2870/Mum/10 dated 28.08.2015, copy of the order is placed on record. The Coordinate Bench decided this as under: -
"11. After considering the rival contention and above facts, we find that, so far as the issue relating to addition on account of 'advertisement revenue' and 'distribution revenue' the same stands decided in favor of the assessee by the Tribunal, which has been affirmed by the Hon'ble High Court in Assessment Year 1999-2000 and also in subsequent years. As regards the issue of 'distribution receipts' treated as 'royalty income', we find that this has been treated as business income and such a finding or conclusion now have attained finality, as pointed out by the Ld. Senior Counsel. Thus, finding of the CIT(A) on both the issues are affirmed and ground no. 1 & 2 are dismissed".
12. Thus respectfully following the said order we dismiss the ground of the Revenue.
7ITA Nos. 1637/Mum/2015 & ITA No.1718/Mum/2015
MSM Satellite (Singapore) Pte. Ltd. .,
13. In the result appeal of the assessee is partly allowed for statistical purposes and appeal of the Revenue is dismissed.
Order pronounced in the open court on the 21st June, 2017.
Sd/- Sd/- (RAJENDRA) (C.N. PRASAD) ले खा सदस्य / न्यायिक सदस्य / ACCOUNTANT MEMBER JUDICIAL MEMBER मुुंबई / Mumbai; दिनाुं क / Dated /06/2017 VSSGB, SPS आदे श की प्रयियलयि अग्रे यिि / Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आयुक्त(अपील) / The CIT(A), Mumbai. 4. आयकर आयुक्त / CIT
5. दवभागीय प्रदतदनदि, आयकर अपीलीय अदिकरण, मुुं बई / DR, ITAT, Mumbai
6. गार्ड फाईल / Guard file.
सत्यादपत प्रदत //True Copy// आदे शानुसार/ BY ORDER, सहािक िं जीकार (Asstt. Registrar) आिकर अिीलीि अयिकरण,मुुं बई / ITAT, Mum