Calcutta High Court
Trasfer Pricing) vs M/S. Koninklijke Philips N.V on 3 January, 2024
Author: Supratim Bhattacharya
Bench: T.S. Sivagnanam, Supratim Bhattacharya
1
O - 32
IN THE HIGH COURT AT CALCUTTA
Special Jurisdiction [Income Tax]
ORIGINAL SIDE
ITAT/179/2023
IA NO.GA/2/2023
COMMISSIONER OF INCOME TAX -
(INTERNATIONAL TAXATION AND
TRASFER PRICING)
-Versus-
M/S. KONINKLIJKE PHILIPS N.V
BEFORE :
THE HON'BLE CHIEF JUSTICE T.S. SIVAGNANAM
And
THE HON'BLE JUSTICE SUPRATIM BHATTACHARYA
Date : 3rd January, 2024
Appearance :
Mr. Smrajit Roy Chowdhury, Adv.
Mr. Soumen Bhattacharjee, Adv.
...for the appellant.
Mr.Abhratosh Majumdar, Sr. Adv.
Mr.Pranit Bag, Adv.
Mr.A.K. Dey, Adv.
Mr.B.Dey, Adv.
...for the respondent.
The Court : We heard Mr. Smarajit Roy Chowdhury,
learned senior standing counsel assisted by Mr. Soumen
Bhattacharjee, learned counsel for the appellant and Mr.
Abhratosh Majumdar, learned senior counsel assisted by Mr.
Pranit Bag, learned counsel for the respondent.
The names of Mr. Smarajit Roy Chowdhury and Mr.
Soumen Bhattacharjee, learned senior standing counsel for the
Department were inadvertently omitted to be mentioned and the
same stands rectified and their names shall be recorded in the
order dated 1st December, 2023.
The appeal is admitted on the following substantial
questions of law :
"(a) Whether the Learned Tribunal has committed
substantial error in law by observing that interest paid
under Section 244A(1) of the IT Act comes under the
purview of debt claim?
(b) Whether the Learned Tribunal has committed
substantial error in law by deciding that tax cannot
be deducted at source at the time of interest paid
under Section 244A of the Act?
(c) Whether the Learned Tribunal has committed
substantial error in law by not considering the
condition for application of benefit under MFN clause
as stated in CBDT Circular No. 3 of 2022 dated
03.02.2022?
(d) Whether the Learned Tribunal has committed
substantial error on the facts and in the
circumstances of the case and in law in not
appreciating the fact that no separate notification
has so far been issued by CBDT for importing the
benefits of the India - Italy DTAA into the media -
Netherland DTAA as requited under Sub- Section (1) of
Section 90 of the Act. Without prejudice, whether on
the facts and in the circumstances of the case and in
law, the ITAT has erred in not appreciating the fact
that the interest for delay in Income Tax refund is
held to be "Income from other Sources" by ITAT SB,
Mumbai, in the case of Maharashtra State Co-operative
Bank Ltd. vs. ACIT reported in 2 ITR 453?
(e) Whether the Learned Tribunal has committed
substantial error in law in not appreciating the fact
that in respect of cross-border transaction, the
characterization of income by the source country
prevails over that made by the residence country in
view of OECD partnership report, 1999 in case of
conflict of qualification and, therefore, the interest
on income tax refund would be income from other
sources?
(f) Whether the ITAT has erred in law in not
appreciating the fact that interest on income tax
refund is compensatory and does not arise from a
loaner loanee relationship?
(g) Whether the Income Tax Appellate Tribunal has erred
in law importing Art.12(3)(a) of India - Italy DTAA
into India - Netherland DTAA under its MFN clause?
(h) Whether the ITAT has erred in law not appreciating
the fact that interest on income - tax refund being
income from other sources is taxable in India as per
provision of income tax read with India Netherland
DTAA?"
The revenue has preferred this appeal challenging the
order passed by the Income Tax Appellate Tribunal for
different assessment years in respect of the assessee and the
learned Tribunal had followed the decision of the High Court
of Delhi in the case of Steria (India) Ltd. Vs. CIT reported
at (2016) 386 ITR 390 (Del.) and another decision of the High
Court of Delhi in the case of Concentrix Services Netherlands
Vs. ITO TDS in Appeal No.WP(C) No.9051/2020 dated 22.4.2021
and the decision of the High Court of Karnataka in Apollo
Tyres Ltd. Vs. CIT (IT) in WP No.31737 of 2016. The learned
Tribunal has also taken note of a decision of the High Court
of Madras in the case of Ansaldo Energio SPA Vs. CIT (IT)
reported at (2016) 384 ITR 312 (Mad.) and allowed the appeal
by the assessee to the extent indicated as above.
The legal issue involved in the case has been settled
by the Hon'ble Supreme Court in the decision of Assessing
Officer Circle (International Taxation) Vs. Nestle SA reported
at 2023 458 ITR 756W (SC) wherein among other things held that
a notification under Section 90 of the Income Tax Act, 1961 is
necessary and mandatory condition for a court, authority or
tribunal to give effect to a double taxation avoidance
agreement or any protocol change, its terms and conditions
which has the effect of altering, accepting of conditions of
law. The said decision covers the batch of cases which include
the appeal filed by the Department against the judgment of
High Court of Delhi Steria (India) Ltd., Concentrix Services
Netherlands and other decisions. Thus, the appeal filed by the
revenue was also allowed. Thus, as on date, the law on the
subject is covered against the assessee which would be
sufficient to allow this appeal filed by the revenue.
The learned senior counsel for the respondent
assessee has submitted that in several review applications
filed before the Hon'ble Supreme Court against the said
decision in Nestle SA and the revenue, the Hon'ble Supreme
Court held that the matter be kept pending so that the outcome
of the review applications can be placed before this Court.
Since, as on date, the law on the subject is in favour of the
Department and against the assessee, this appeal is admitted
on the above substantial questions of law.
The appellant shall file requisite number of informal
paper books prepared out of Court including therein all
relevant materials used before the learned Court below within
ten weeks from date and serve copies thereof upon the learned
Advocate for the Respondent.
Settlement of index and all other formalities are
dispensed with.
Since the respondent is represented, service of
notice of appeal on the respondent is waived.
List this matter after twelve weeks.
The stay application stands closed.
(T.S. SIVAGNANAM)
(CHIEF JUSTICE)
(SUPRATIM BHATTACHARYA, J.)
S.Das/
