The Delhi bench of Income Tax Appellate Tribunal (ITAT) recently held that the payment received from freight /logistic support service could not be treated as Royalty Under Section 9(1)(Vii) of Income Tax, Act 1961 a and Article 12 of the Double Taxation Avoidance Agreement.
Assessee Expeditors International of Washington, is a non-resident corporate entity and its headquarter is at Washington. The assessee carries out operations in various segments, such as airfreight, ocean freight and ocean services, vendor consolidation, cargo insurance, purchase order management and customized logistics information.
During the assessment proceedings assessee received some amount from India towards sale of logistic services which didn’t calculated while the return filed by the assessee because such services were rendered from outside India. Assessing officer made an order without considering the submission of assessed .Against the order assesee filed an appeal before the ITAT.
After considering the contentions of the both parties the division bench of the ITAT compraising G.S.Pannu, President & Saktijit Dey, Judicial Member observed that the issue between the assessee and the revenue starting from assessment year 2010-11.
Furthermore they upheld the decision of Tribunal which was passed by in the year 2010-2011 that is “the amount received by the assessee from freight/logistic support services cannot be treated as FTS/FIS either under the Act or under treaty provisions”.The addition amount added by the AO was deleted and the appeal was allowed
Rohan Khare & Priyam Bhatnagar,appeared on behalf of the assessee and Shri Gangadhar Panda, appeared on behalf of the Revenue.
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