Cummins Inc.,, Pune vs Assessee

Cummins Inc, C/o Cummins India Limited, Kothrud, Pune - 38 .... Appellant

PAN: AABCC6225D

Vs.

The Dy. Director of Income Tax (International Taxation-I), Pune .... Respondent

Appellant by : Rajan Vora Respondent by : A.K. Modi Date of hearing : 12-02-2015 Date of pronouncement : 20-02-2015

ORDER

PER SUSHMA CHOWLA, JM:

This appeal filed by the assessee is against the order of Dy.

Director of Income Tax (International Taxation-I), Pune dated

28.10.2011 relating to assessment year 2007-08 passed under section

143(3) r.w.s. 144C(13) of the Income-tax Act, 1961.

2. The assessee has raised the grounds of appeal Nos.1 to 3

against the taxability of consideration received for facilitating grant of

user charges in software to Indian entities as per the provisions of

Indian-US Tax Treaty. The assessee had claimed the said receipt as

exempt from tax in India in its return of income. However, the

Assessing Officer and the Dispute Resolution Panel treated the said

receipt as taxable in India in the hands of the assessee as royalty 2 ITA No.1663/PN/2011 Cummins Inc.

under the provisions of Act and also as well under Article 12 of Double

Taxation Avoidance Agreement between India and USA.

3. The learned Authorized Representative for the assessee pointed

out that similar issue arose before Pune Bench of the Tribunal in

assessee's own case relating to assessment years 2004-05 and 2006-

07. It was a common point between the parties that the issue relating

to the taxability in India of consideration received for facilitating grant

of user rights in software to Indian entities was decided against the

assessee by the Tribunal in ITA No.73/PUN/2011 relating to

assessment year 2004-05 and ITA No.74/PUN/2011 relating to

assessment year 2006-07, vide order dated 08.08.2013. The learned

Authorized Representative for the assessee further pointed out that in

the appeal filed by the assessee before the Hon'ble Bombay High Court

against the said order of Tribunal dated 08.08.2013, a substantial

question of law has been framed, but the decision of the Tribunal

dated 08.08.2013 has not been altered by any higher authority. The

Hon'ble Bombay High Court in ITA(L) No.267 of 2014 relating to

assessment year 2004-05 and in ITA(L) No.268 of 2014 relating to

assessment year 2006-07, vide judgment dated 29.01.2014 had

admitted the appeal of the assessee and framed the following

substantial question of law:-

"a. "Whether in the facts and circumstances of the case, the Tribunal was right in holding that the income earned by the Appellant was taxable as royalty under Article 12 of the Double Taxation Avoidance Agreement between India and the United States of America?

b. Whether in facts and circumstances of the case, the Tribunal was right in not disposing off the without prejudice argument considered by the Appellant that the related support services are not taxable in India as Fees for Included Services under the India-US Tax Treaty?"

3 ITA No.1663/PN/2011 Cummins Inc.

4. The copy of the order of the Hon'ble Bombay High Court dated

29.01.2014 admitting the aforesaid question of law has been filed on

record. Further, it is a common point between both the Authorized

Representatives that in assessment year 2004-05, the issue of

reopening of assessment has also been admitted for adjudication and

question of law framed, but the said issue does not arise in the present

appeal. In view of the admission of question of law on the issue of

taxability of consideration received by the assessee for facilitating

grant of user rights in software to Indian entities, the assessee filed an

application under section 158A(1) of the Act pointing out that identical

question of law was pending before the Hon'ble Bombay High Court

and the final decision on the said issue be applied, against which, the

assessee would not raise any question of law before the Hon'ble

Bombay High Court and / or Hon'ble Supreme Court of India, in the

captioned assessment year. The application made by the assessee in

Form No.8 is available on record and copies of the same were

forwarded to the Department. The Assessing Officer vide letter dated

22.12.2014 has on verification of records, admitted that the question

of law involved in the appeal filed before the Hon'ble Bombay High

Court for assessment years 2004-05 and 2006-07 were pending for

decision and the assessee's claim was correct. It was further pointed

out that in assessment year 2004-05, there was one more question of

law i.e. re-opening of assessment, which does not arise in the present

assessment year.

5. In view thereof, the issues raised by the assessee vide grounds of

appeal Nos.1 to 3 are decided against the assessee following the

decision of Tribunal (supra), dated 08.08.2013 in assessee's own case

relating to assessment years 2004-05 and 2006-07, since there is no 4 ITA No.1663/PN/2011 Cummins Inc.

change in the facts and circumstances. However, in view of the

declaration made by the assessee in prescribed Form No.8 in terms of

section 158A(1) of the Act, the Assessing Officer is directed to apply

the decision of the Hon'ble Bombay High Court and / or Hon'ble

Supreme Court of India, on the said issues being decided in assessee's

own case, relating to assessment years 2004-05 and 2006-07. The

grounds of appeal Nos.1 to 3 raised by the assessee are accordingly,

dismissed.

6. The ground of appeal No.4 is against the levy of interest under

sections 234B and 234C of the Act, which is consequential and hence,

the same is dismissed.

7. In the result, the appeal filed by the assessee is dismissed,

subject to the aforesaid observations.

Order pronounced on this 20th day of February, 2015.

Sd/- Sd/- (G.S. PANNU) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER Pune, Dated: 20 th February, 2015. GCVSR Copy of the order is forwarded to: - 1) The Assessee; 2) The Department; 3) The DRP, Pune; 4) The concerned CIT(A); 5) The CIT concerned; 6) The DR "B" Bench, I.T.A.T., Pune; 7) Guard File. By Order //True Copy// Assistant Registrar I.T.A.T., Pune