Withdrawal of Appeal Due to Mutual Agreement Procedure – BBC Global News Ltd vs DCIT Circle-1(1)(2), International Taxation, New Delhi

Case Summary: BBC Global News Ltd vs DCIT Circle-1(1)(2), International Taxation, New Delhi

Case Number: ITA 6052/DEL/2019
Appellant: BBC Global News Ltd. (Earlier known as BBC World News Ltd.), New Delhi
Respondent: Deputy Commissioner of Income Tax (DCIT), Circle-1(1)(2), International Taxation, New Delhi
Assessment Year: 2016-17
Case Filed On: 15th July 2019
Order Type: Final Tribunal Order
Date of Order: 23rd December 2022
Pronounced On: 23rd December 2022

Introduction

The case of BBC Global News Ltd. vs DCIT Circle-1(1)(2), International Taxation, New Delhi, pertains to an appeal filed by the appellant challenging the income assessment order for the assessment year 2016-17. The appeal was filed against the Deputy Commissioner of Income Tax (DCIT), Circle-1(1)(2), International Taxation, New Delhi. The primary issue was the assessment of income under the provisions of the Income Tax Act, 1961, in relation to the Double Taxation Avoidance Agreement (DTAA) between India and the United Kingdom.

Background of the Case

BBC Global News Ltd., formerly known as BBC World News Ltd., is a well-known international media company headquartered in the United Kingdom with operations in various countries, including India. For the assessment year 2016-17, the company’s income was assessed by the DCIT, Circle-1(1)(2), International Taxation, New Delhi, under the provisions of the Income Tax Act, 1961, and the relevant DTAA provisions.

The company contested the income assessment, arguing that the assessment did not appropriately consider the provisions of the DTAA between India and the UK, particularly those related to the avoidance of double taxation and the application of mutual agreement procedures. The appeal was filed before the Income Tax Appellate Tribunal (ITAT) seeking relief from the assessment order.

Mutual Agreement Procedure (MAP)

During the course of the proceedings, BBC Global News Ltd. invoked the provisions of Article 27 – Mutual Agreement Procedure (MAP) of the DTAA between India and the UK. On 10th July 2019, the company filed an application under the MAP provisions with the Competent Authority of the United Kingdom, seeking a resolution of the tax dispute through bilateral negotiations between the tax authorities of the two countries.

The MAP is a dispute resolution mechanism provided under DTAAs, allowing taxpayers to seek relief from double taxation or taxation not in accordance with the treaty. It involves the competent authorities of the contracting states negotiating to resolve the issue and agree on the appropriate tax treatment of the taxpayer’s income.

Resolution Under MAP

On 25th November 2022, the Competent Authorities of India and the UK reached a resolution regarding the assessment of income for BBC Global News Ltd. under the MAP provisions. The resolution was communicated to the company by the Foreign Tax & Tax Research Division-I(1), Central Board of Direct Taxes, New Delhi. The resolution addressed the tax dispute to the satisfaction of both parties, eliminating the need for further litigation.

Proceedings Before the ITAT

Following the resolution under MAP, BBC Global News Ltd. submitted a letter dated 13th December 2022 to the ITAT, seeking to withdraw its appeal for the assessment year 2016-17. The company expressed that the tax dispute had been resolved under the MAP provisions, and therefore, it no longer wished to pursue the appeal.

The appeal was heard by the Delhi ‘Friday-D’ Bench of the ITAT, which included Shri G.S. Pannu, Hon’ble President, and Shri Kul Bharat, Hon’ble Judicial Member. The hearing took place on 23rd December 2022, and the Tribunal considered the request for withdrawal.

Tribunal’s Decision

The Tribunal reviewed the letter submitted by the authorized signatory of BBC Global News Ltd. and the communication regarding the resolution under MAP. The Tribunal noted that the dispute had been satisfactorily resolved under the MAP provisions and that the appellant no longer sought to pursue the appeal.

Shri Sanjay Kumar, Senior Departmental Representative (DR), representing the respondent, did not oppose the withdrawal of the appeal. Considering the circumstances, the Tribunal allowed the request for withdrawal and dismissed the appeal as withdrawn.

Conclusion

The appeal filed by BBC Global News Ltd. against the income assessment for the assessment year 2016-17 was dismissed by the ITAT following the company’s request to withdraw the appeal. The withdrawal was made after the tax dispute was resolved through the Mutual Agreement Procedure (MAP) under the DTAA between India and the UK.

This case underscores the effectiveness of the MAP as a dispute resolution mechanism under DTAAs, allowing multinational companies to resolve tax disputes amicably without prolonged litigation. The resolution of the dispute through MAP reflects the cooperative approach between the tax authorities of India and the UK in addressing cross-border tax issues.

Order Pronounced in Open Court: 23rd December 2022

Judicial Members: Shri G.S. Pannu and Shri Kul Bharat

Assistant Registrar: ITAT, New Delhi

Withdrawal of Appeal Due to Mutual Agreement Procedure – BBC Global News Ltd vs DCIT Circle-1(1)(2), International Taxation, New Delhi