This document provides a comprehensive examination of the ITAT Delhi’s decision concerning the appeal by International Management Group (UK) Limited against the order passed by the Assistant Commissioner of Income-Tax, Circle-2(1)(1), (Intl. Taxation) New Delhi for the assessment year 2017-18.
The appellant, a UK based company, filed its return declaring income substantially lower than the assessment made by the tax authorities. The contention primarily revolved around the nature of income earned from India, whether it should be classified as fees for technical services (FTS) as per the India-UK Double Taxation Avoidance Agreement (DTAA).
The dispute focused on whether the income not directly attributable to the permanent establishment in India could be taxed as fees for technical services under Article-13 of the India-UK Tax Treaty. The assessing officer, supported by the Dispute Resolution Panel’s directions, treated these incomes as FTS, leading to a higher tax liability for the appellant.
The appellant argued that this classification was incorrect, citing previous years’ rulings where similar income was not treated as FTS. Despite these arguments, the ITAT, referencing past decisions against the appellant for similar claims, upheld the assessing officer’s classification. The bench agreed with the lower authorities, maintaining consistency with its prior decisions on related matters.
This case highlights the complexities of tax treaties and the interpretation of terms like ‘make available’ in the context of technical services. The ITAT’s decision reaffirms the importance of clear documentation and justification regarding the nature of cross-border transactions and their tax treatment under applicable DTAA provisions.
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