This case analysis covers the appeal filed by the Assistant Commissioner of Income Tax (ACIT), Circle-1(3)(1) (International Taxation), New Delhi against Fujitsu America Inc, California under ITA No. 1022/DEL/2020. The appeal pertains to the assessment year 2015-16 and was filed on March 9, 2020. The final decision was pronounced on June 9, 2022, and the appeal was dismissed.
The appellant, ACIT Circle-1(3)(1) (International Taxation), challenged the assessment order passed by the Income Tax Officer (ITO) for the assessment year 2015-16. The initial assessment order had been contested before the Commissioner of Income Tax (Appeals) [CIT(A)], but the appeal was dismissed by the CIT(A)-42, Delhi. Subsequently, the appellant filed an appeal with the Income Tax Appellate Tribunal (ITAT), Delhi Bench.
The appeal was registered as ITA No. 1022/DEL/2020 and was heard by the ITAT Delhi “D” Bench on June 9, 2022. The virtual hearing was presided over by Shri N.K. Billaiya, Accountant Member, and Ms. Astha Chandra, Judicial Member. The appellant, represented by Shri Sanjay Kumar, Senior Departmental Representative (DR), presented their case, while no representative appeared on behalf of the respondent, Fujitsu America Inc.
The main grievances of the revenue were as follows:
The tribunal examined the case details and noted that the return of income filed by the assessee for the assessment year 2015-16 declared an income of Rs. 9,88,56,830, which was offered to tax at 15% under the India-USA Double Taxation Avoidance Agreement (DTAA). The TPO did not take any action regarding the international transactions, as they were being examined in the case of the Associated Enterprise (AE).
During the scrutiny assessment, it was found that Fujitsu America Inc had an agreement with its sister concern, Fujitsu Limited, Japan, where the branding and management fees received from FCI were transferred to Fujitsu Limited on a back-to-back basis. The Assessing Officer taxed the receipts at 25% on a gross basis, asserting that Fujitsu America Inc was not the beneficial owner of the receipts.
In the appeal before the CIT(A), Fujitsu America Inc argued that the receipts were taxable at 15% under the India-USA DTAA, as they were the beneficial owner of the fees for technical services. The CIT(A) invoked Section 250(4) of the Income Tax Act to call for email communications between the group entities, which were submitted by the assessee. After reviewing the emails, the CIT(A) concluded that Fujitsu America Inc was the beneficial owner of the fees and entitled to the treaty benefit.
Based on the uncontroverted facts presented by the CIT(A), the tribunal upheld the findings and dismissed the revenue’s appeal. The final order was pronounced on June 9, 2022, concluding that Fujitsu America Inc is the beneficial owner of the fee for technical services and is entitled to the tax rate benefits under the India-USA DTAA.
The official order as pronounced by the members of the Tribunal is as follows:
This appeal by the revenue is preferred against the order of the CIT(A)-42, Delhi dated 13.12.2019 pertaining to A.Y. 2015-16.
None appeared on behalf of the Assessee before us at the time of virtual hearing. However, the Assessee’s A.R. vide letter dated NIL has requested for withdrawal of the appeal filed by the assessee and stated that the assessee has opted to settle the dispute relating to the tax arrears for the assessment year under consideration under the Vivad Se Vishwas Scheme, 2020. A certificate to this effect under Section 5(1) of The Direct Tax Vivad Se Vishwas Act, 2020 has also been filed. In view of the above, we accept the request of the assessee for withdrawal of the aforesaid appeal. In the result, the appeal of the assessee is dismissed as withdrawn.
Above decision was pronounced on conclusion of Virtual Hearing on 15th April, 2021.
sd/- (KUL BHARAT) JUDICIAL MEMBER
sd/- (G.S. PANNU) VICE PRESIDENT
SRB
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR, ITAT
Assistant Registrar
This decision reflects the procedural closure of the case without a substantive adjudication on the merits of the original assessment order for the relevant assessment year.
ITA 1022/DEL/2020: ACIT Circle-1(3)(1) (International Taxation) vs Fujitsu America Inc, California
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