Income Tax Appellate Tribunal Mumbai Agfa Healthcare Nv, Mumbai vs Deputy Commissioner Of Income Tax ... on 31 August, 2018 IN THE INCOME TAX APPELLATE TRIBUNAL "L" BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI N.K PRADHAN, ACCOUNTANT MEMBER ITA no.6740/Mum./2017 (Assessment Year : 201415) Agfa Healthcare N.V. C/o Deloitte Haskins & Sells LLP Tower3, 27th to 32nd Floor Indiabulls Financial Centre ................ Appellant Elphinstone Mills Compound Senapati Bapat Marg Mumbai 400 013 PAN AAICA8105D v/s Dy. Commissioner of Income Tax (I.T) ................ Respondent Circle1(1)(1), Mumbai Assesseeby : Shri Girish Dave a/w Ms. Kadambari Dave Revenue by : Shri M.V. Rajguru Date of Hearing 11.06.2018 Date of Order 31.08.2018 ORDER PER SAKTIJIT DEY, J.M. Aforesaid appeal by the assessee is directed against assessment order dated 27th October 2017, passed under section 143(3) r/w 144C(13) of the Income Tax Act, 1961 (for short ―the Act‖) for the assessment year 201415 in pursuance to the directions of the Dispute Resolution Panel (DRP)1, Mumbai. 2 Agfa Healthcare N.V. 2. The assessee has raised five grounds. 3. Shri Girish Dave, learned Counsel for the assessee, at the outset, submitted that ground no.3 is not pressed, since, the Assessing Officer has already granted relief to the assessee by applying the correct rate of tax. In view of the submissions by the learned Counsel for the assessee, this ground is dismissed. 4. In ground no.1, the assessee has challenged the taxability of ` 2,01,63,957, received for provision of information and communication services (ICS) as royalty under section 9(1)(vi) of the Act as well as under IndiaBelgium Double Taxation Avoidance Agreement (DTAA). 5. Brief facts are, the assessee is a tax resident of Belgium and is in the business of production and sale of health and digital imaging solutions. In short, assessee is a manufacturer of magnetic resonance imaging (MRI) machines. For the assessment year under dispute, the assessee filed its return of income on 29th November 2013 disclosing nil income. During the assessment proceedings, the Assessing Officer called for various information and documents and on examining them he found that, though, assessee has earned income from provision of ICS to its Indian Group company viz. Agfa Healthcare India Pvt. Ltd. (AHIPL)during the relevant previous year, however, it has not offered to tax such income. Thus, he called upon the assessee to explain why 3 Agfa Healthcare N.V. the income earned from the Indian Group company should not be made taxable in India. In response, it was submitted by the assessee that the Indian Group Company (AHIPL) has entered into a business agreement with AgfaGevaert N.V. for provision of ICS. Subsequently, due to internal reorganization of the provision of ICS with Agfa Group, the ICS agreement was transferred to the assessee company vide tripartite novation agreement between Agfa Gevaert N.V., AHIPL and the assessee. Describing the nature of various services provided by the assessee to AHIPL as per the agreement it was submitted that assessee provides services / support requested by AHIPL in relation to use of SAP, Remote Access Services, Software Support Services, Application Support Services, WAN Services, P.C. Support Services, Mail and Calendaring Services, etc. It was submitted that ICS is a global shared service providing solutions worldwide for the needs in information and communication services of the Agfa Group worldwide. Agfa ICS servers are developed and maintained in Belgium. The ICS team serves all the Agfa associates and affiliates including AHIPL and has a total count of 296 people which includes 86 Manager level personnel and 210 employee level personnel. It was submitted that the roles and responsibilities of the ICS team includes assisting internal users and external customers about the changes to, or introduction of new services. The services are rendered from Belgium 4 Agfa Healthcare N.V. and no employee travels to India for rendering the services. It was submitted that no specific resources are dedicated to render services on