Case Law Details
Metso Outotec OYJ Vs DCIT (ITAT Kolkata)
ITAT Kolkata held that the assessee has no permanent establishment in India and these services were also rendered outside India but the services has been used in India and, therefore, it is taxable in India.
Facts- The case of the assessee was selected for scrutiny assessment in both the years and accordingly notice under section 143(2) was issued and served upon the assessee. The assessee has provided IT Services to Indian customers during the relevant financial year. It has raised invoices on account of supply of services amounting to Rs.2,04,00,802/- in A.Y. 2020-21, whereas Rs.1,38,10,480/- in A.Y. 2018-19. The stand of the assessee was that it had earned income from IT Services in pursuance of a Service Agreement with Outotec India Private Limited and it had performed the said services in Finland through its office/workshop under Clause 3 of the Service Agreement. The assessee further contended that it has no permanent establishment in India and, therefore, as per Article 12 of the India-Finland DTAA, the alleged receipts are not taxable in the hands of the assessee. The ld. Assessing Officer was not satisfied with the contention of the assessee and he proposed the addition. DRP upheld the levy of taxation on the alleged receipt for sale of IT Services as FTS.
Another issue involved in the appeals is, whether receipt received in the shape of guarantee fees deserves to be taxed in India within the meaning of Article 21 of India-Finland Treaty.
Conclusion- Held that in the assessee’s own case for A.Y. 2015-16, ITAT has considered in details all these issues. The judgment of the ITAT is reported in 109 taxmann.com 69 rendered in I.T.A. No. 2601/KOL/2018. The Tribunal has recorded the finding that no doubt the assessee has no permanent establishment in India and these services were also rendered outside India but the services has been used in India and, therefore, it is taxable in India. The ITAT as well as DRP has made reference to Article 12(5) of India-Finland DTA in this connection.
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