BYK Asia Pacific Pte Ltd. v. ACIT (IT)

Case Laws Analysis
REFERRED BYK Asia Pacific Pte. Ltd. v. ACIT 2021 TaxPub(DT) 1597 (Pune-Trib)
REFERRED Sedco Forex International Inc. v. CIT 2017 TaxPub(DT) 4664 (SC)

SUBSCRIBE FOR FULL CONTENT


The Tax Publishers2024 TaxPub(DT) 777 (Pune-Trib) IN THE ITAT PUNE S.S. VISWANETHRA RAVI, J.M. & G.D. PADMAHSHALI, A.M. BYK Asia Pacific Pte Ltd. v. ACIT (IT) ITA No. 207/PUN/2023 23 January, 2024 Assessee by: Ketan Ved Revenue by: H. Ananda ORDER *S.S. Viswanethra Ravi, J.M.* This appeal by the assessee against the Order dated 13-12-2022 passed by the ACIT (IT) Circle-1, Pune under section 143(3) read with section 254 of the Act for assessment year 2016-17. 2. Ground No. 1 is general in nature, hence, requires no adjudication. 3. The learned AR submits that the assessee is not interested to prosecute ground Nos. 2, 2.1 and 2.2, hence the same are dismissed as not pressed. 4. The learned AR submits that ground Nos. 3 consisting of 3.1 to 3.6 and 4 consisting of 4.1 to 4.8 are relating to only one issue concerning rendering of technical services under India-Singapore tax treaty being reimbursement of cost without any mark-up consequently not warranting any disallowance on account of non-deduction of tax at source. 5. We find, that the present dispute concerning ground Nos. 3 and 4 is in second round of litigation before this Tribunal. The assessee placed on record order dated 24-03-2021 passed in first round of litigation by the Tribunal in assessees own case in BYK Asia Pacific Pte. Ltd. v. ACIT[ITA No.2110/PUN/2019,dt. 24-3-2021] : 2021 TaxPub(DT) 1597 (Pune-Trib) for assessment year 2016- 17, wherein, the Tribunal remanded the issue of IT expenses to the file of assessing officer for examination of true nature of transactions under which the assessee paid Income Tax expenses of Rs. 36,44,508 on monthly basis, further to determine whether or not tax is deductible at source under section 195 of the Act leading to disallowance under section 40(a)(i) of the Act. The relevant part of the said order is reproduced as under for ready reference : 14. The fifth item in the tally of expenses disallowed by the assessing officer is `Income Tax Expenses amounting to Rs. 36,44,508. This expenditure stands on a little different footing vis--vis the other expenses as discussed supra. Break-up of this amount has been given at page 69 of the paper book, which shows that there are twelve transactions, all taking place on the first day of every month. On enquiry from the learned AR, it turned out to be monthly payments by the Indian BO to the Singapore HO. The assessees stand on this expenditure before the DRP, as reproduced on page 5 of the Direction, was that: BYK, Germany develops/purchase and maintains common applications, software and other Income Tax Infrastructure for the BYK Group. The total cost of such Income Tax Support services is recharged to BYK Group entities including BYK, Asia Pacific Pte Ltd., i.e. head office based on numbers of users etc. Thereafter, the head office apportions the corresponding cost to the assessee in relation to the usage of Income Tax Support services for the India activities. Page 131 of the paper book is a copy of the invoice raised by BYK Germany on the Singapore HO having value of Euro 14857. Under the Remarks column, it has been mentioned as Monthly recurring amount regarding expenses for Income Tax -Services (Ref. IT-Services Agreement). The agreement referred to herein is the same agreement as pointed out by the assessee before the DRP on page 16 of the Direction, namely, Income Tax -Service agreement dated 1-1-2007. As against the invoice value of 14857 Euros, the assessee has been charged 6826 Euros by invoice dated 1-2-2016. Thus, it is clear that BYK Germany rendered Income Tax Services, inter alia, to the Indian BO on a regular basis and a monthly charge was raised there against. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2024 TaxPub(DT) 777 (Pune-Trib)

IN THE ITAT PUNE

S.S. VISWANETHRA RAVI, J.M. & G.D. PADMAHSHALI, A.M.

BYK Asia Pacific Pte Ltd. v. ACIT (IT)

ITA No. 207/PUN/2023

23 January, 2024

Assessee by: Ketan Ved

Revenue by: H. Ananda

ORDER

S.S. Viswanethra Ravi, J.M.

This appeal by the assessee against the Order dated 13-12-2022 passed by the ACIT (IT) Circle-1, Pune under section 143(3) read with section 254 of the Act for assessment year 2016-17.

2. Ground No. 1 is general in nature, hence, requires no adjudication.

3. The learned AR submits that the assessee is not interested to prosecute ground Nos. 2, 2.1 and 2.2, hence the same are dismissed as not pressed.

4. The learned AR submits that ground Nos. 3 consisting of 3.1 to 3.6 and 4 consisting of 4.1 to 4.8 are relating to only one issue concerning rendering of technical services under India-Singapore tax treaty being reimbursement of cost without any mark-up consequently not warranting any disallowance on account of non-deduction of tax at source.

5. We find, that the present dispute concerning ground Nos. 3 and 4 is in second round of litigation before this Tribunal. The assessee placed on record order dated 24-03-2021 passed in first round of litigation by the Tribunal in assessees own case in BYK Asia Pacific Pte. Ltd. v. ACIT[ITA No.2110/PUN/2019,dt. 24-3-2021] : 2021 TaxPub(DT) 1597 (Pune-Trib) for assessment year 2016- 17, wherein, the Tribunal remanded the issue of IT expenses to the file of assessing officer for examination of true nature of transactions under which the assessee paid Income Tax expenses of Rs. 36,44,508 on monthly basis, further to determine whether or not tax is deductible at source under section 195 of the Act leading to disallowance under section 40(a)(i) of the Act. The relevant part of the said order is reproduced as under for ready reference :

14. The fifth item in the tally of expenses disallowed by the assessing officer is `Income Tax Expenses amounting to Rs. 36,44,508. This expenditure stands on a little different footing vis--vis the other expenses as discussed supra. Break-up of this amount has been given at page 69 of the paper book, which shows that there are twelve transactions, all taking place on the first day of every month. On enquiry from the learned AR, it turned out to be monthly payments by the Indian BO to the Singapore HO. The assessees stand on this expenditure before the DRP, as reproduced on page 5 of the Direction, was that: BYK, Germany develops/purchase and maintains common applications, software and other Income Tax Infrastructure for the BYK Group. The total cost of such Income Tax Support services is recharged to BYK Group entities including BYK, Asia Pacific Pte Ltd., i.e. head office based on numbers of users etc. Thereafter, the head office apportions the corresponding cost to the assessee in relation to the usage of Income Tax Support services for the India activities. Page 131 of the paper book is a copy of the invoice raised by BYK Germany on the Singapore HO having value of Euro 14857. Under the Remarks column, it has been mentioned as Monthly recurring amount regarding expenses for Income Tax -Services (Ref. IT-Services Agreement). The agreement referred to herein is the same agreement as pointed out by the assessee before the DRP on page 16 of the Direction, namely, Income Tax -Service agreement dated 1-1-2007. As against the invoice value of 14857 Euros, the assessee has been charged 6826 Euros by invoice dated 1-2-2016. Thus, it is clear that BYK Germany rendered Income Tax Services, inter alia, to the Indian BO on a regular basis and a monthly charge was raised there against.