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12-04-2019, Maquet Holdings, Section 144C(13), 144C(15)(b), Tribunal Mumbai

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2 months 1 week ago #9142 by amit
Section - 144C(13), 144C(15)(b), 144C, 92CA(3), 153(1)
Order Date - 12-04-2019
Favouring - Partly
Court - Tribunal Mumbai
Appellant - Maquet Holdings B.V. & Co. KG
Respondent - DCIT
Justice - SAKTIJIT DEY JM & MANOJ KUMAR AGGARWAL AM
Citation - 419Taxpundit177
Appeal No. - ITA no.2572/Mum./2017
Asstt. Year - 2013–14

Order

PER : SAKTIJIT DEY. J.M.

Aforesaid appeal filed by the assessee is directed against the assessment order dated 27th January 2017, passed under section 143(3) r/.w section 144C(13) of the Income-tax Act, 1961 (for short "the Act"), pertaining to the assessment year 2013–14 in pursuance to the directions of the Dispute Resolution Panel–3 (WZ), Mumbai, (herein after called “the DRP”).

2. In addition to the main grounds raised in the memorandum of appeal, the assessee has raised the following additional grounds:–

“The appellant craves leave to raise the following additional ground of appeal without prejudice to the grounds raised in the original appeal:

Ground No. 1

On the facts and circumstances of the case and in law, the appellant not being an 'eligible assessee' within the meaning of section 144C(15)(b) of the Income-tax Act, 1961 (the Act), the learned Assessing Officer erred in passing a draft order under section 143(3) r.w.s. 144C(l) of the Act instead of an assessment order under section 143(3) of the Act.

The appellant therefore submits that the order issued under section 143(3) r.w.s. 144C(13)of the Act, is, invalid, bad in law and ought to be quashed

The appellant craves leave to add to, amend, alter, vary, omit or substitute the aforesaid additional ground of appeal or add a new ground or grounds at any time before or at the time of hearing of the appeal as they may be advised.”

3. We have heard the learned Counsels appearing for the rival parties on admission of additional grounds. The additional ground raised by the assessee involves important legal and jurisdictional issue going to the root of the matter and does not require investigation into fresh facts. Therefore, following the decision of the Hon'ble Supreme Court in National Thermal Power Corporation Ltd. v/s CIT, 229 ITR 383 (SC) and the decision of the Hon'ble Jurisdictional High Court in CIT v/s Pruthvi Brokers and Shareholders Ltd., 349 ITR 336 (Bom.), we admit the additional ground for adjudication.

4. Brief facts relating to the aforesaid issue are, the assessee claiming itself to be a limited liability partnership (LLP) was incorporated in Germany on 4th September 2012. It is a subsidiary of Maquet Verwaltungs B.V., Netherlands. The assessee is generally in the business of medical systems it developed and infrastructure functions for hospital departments including operating room, hybrid operating room, catheter laboratories and intensive care units. In the course of its business, it has provided various services to its group entity in India. For the assessment year under dispute, the assessee filed its return of income on 30th November 2013 declaring total income of ` 4,351. In the course of assessment proceedings, the Assessing Officer after calling for necessary details and examining them found that as per the software licensing agreement, the amount received from its Indian Group entity for use of software license and training fees is in the nature of fees for technical services. Therefore, he called upon the assessee to show cause why the amount received should not be treated as royalty/fees for technical services and brought to tax in India. Though, the assessee relying upon various clauses of the double taxation avoidance agreement (DTAA) between India and Germany submitted that the amount received cannot be treated as royalty or fees for technical services, however, the Assessing Officer rejecting the submissions of the assessee ultimately concluded that the amount of ` 68,19,769, received by the assessee from the Indian Group company has to be treated as royalty under Article–12 of India–Germany Tax Treaty. Accordingly, he added back the same to the income of the assessee along with training fees of ` 43,509. Accordingly, he passed the draft assessment order.

5. Though, assessee raised objection before learned DRP against the addition made in the draft assessment order, however, learned DRP refused to interfere with the addition made in the draft assessment order. Accordingly, the Assessing Officer passed the impugned assessment order

6. The basic contention of the learned Authorised Representative is, the assessee not being an “eligible assessee” as defined under section 144C(15) of the Act, the Assessing Officer could not have passed the draft assessment order under section 144C(1) of the Act. He submitted, the Assessing Officer can pass a draft assessment order under sub–section (1) of section 144C of the Act only in respect of an eligible assessee. He submitted, as per the definition of eligible assessee under section 144C(15)(b) of the Act, it means any person in whose case there is a variation in income as a consequence of order passed by the Transfer Pricing Officer under section 92CA(3) of the

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