Is Global Account Coordination Cost treated as Fees for Technical Services under the Income Tax Act?

IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI “D” BENCH: NEW DELHI
(THROUGH VIDEO CONFERENCING)

BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER &
DR.B.R.R.KUMAR, ACCOUNTANT MEMBER

ITA No.2252/Del/2016
Assessment Year : 2008-09

McCANN Erickson (India) Pvt.Ltd.,
204-2016, Tolstoy Marg,
New Delhi-110001.
PAN-AAACT0835D
APPELLANT 

vs 

ACIT,
Range-6(1),
New Delhi-110002.
RESPONDENT

Appellant by Sh. Sanjesh Kumar Jawarani, CA
Respondent by Sh. Farhat Khan, Sr. DR

Date of Hearing 03.06.2021
Date of Pronouncement 02.07.2021

ORDER

PER KUL BHARAT, JM :

This appeal filed by the assessee for the assessment year 2008-09 is directed against the order of Ld. CIT(A)-20, New Delhi dated 31.03.2016. The assessee has raised following grounds of appeal:-

1.1. “On the facts and circumstances of the case and in law the Ld.CIT Appeal has erred in disallowance u/s 40(a)(i) of the Act.

1.2. On the facts and circumstances of the case and in law the Ld.CIT Appeal has erred in treating the Global Account Coordination Cost as Fees for Technical Services.

1.3. On the facts and circumstances of the case and in law the Ld.CITAppeal has erred in not appreciating that retrospective amendment in law  cannot charge the tax withholding liability with retrospective effect unless such services were rendered in India.”

2. The facts giving rise to the present case of the assessee are that the caseof the assessee was re-opened for assessment and the assessment was framedu/s 147 of the Income Tax Act, 1961 (“the Act”) vide order dated 26.03.2014.While framing the assessment, the Assessing Officer did not accept the explanation offered by the assessee regarding non-applicability of provision fordeduction of tax, therefore, he proceeded to make addition of Rs.57,38,948/- on account of non-deduction of tax in respect of Global Account Coordination cost.

3. Aggrieved against this, the assessee preferred appeal before Ld. CIT(A) who after considering the submissions and perused material available on record, dismissed the appeal of the assessee.

4. Aggrieved against this, the assessee is in appeal before this Tribunal.

5. Ld. Counsel for the assessee reiterated the submissions made in the appellate proceedings. He contended the appeal as against the order of Assessing Officer who made disallowance by invoking the provision of 40(a)(i) of the Act on account of treatment of Global Account Coordination Cost of Rs.57,38,948/- as per provisions of section 195 read with explanation 2 ofsection 9(1)(vii)(b) of the Act. He contended that so far as the provision of section 9(1)(viii) and relevant Articles of DTAA is concerned, no tax should bededucted under section 195 of the Act hence, no disallowance can be made under section 40(a)(i) of the Act. He further submitted that Ld.CIT(A) failed to consider that retrospective amendment in law cannot charge the tax withholding liability with retrospective effect unless such services were rendered in India. 

To know more in details find the attachment file