Mckinsey & Company Inc.united Kingdom v. Dy.director Of Income-Tax (International

K.J. IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.478 OF 2009 McKinsey & Company Inc.United Kingdom )..Appellant Vs. Dy.Director of Income-tax (International) Taxation) 4-1, Mumbai )..Respondents ---- Mr.Poras Kaka with Mr.Sajit Suvarna, Vivek Shetty, Amrite Thakkar & Mr.Mayuresh Borkar i/by DSK Legal for the appellant. Mr.Parag Vyas with Mr.P.S.Sahadevan for the respondents. ---- Coram : F.I.Rebello & R.S.Mohite,JJ Date : 25.3.2009. PC 1. The substantial questions of law as framed in this appeal are as follows :- (A) Whether on the facts and in the circumstances of the case and in law the Tribunal has passed the impugned order in violation of principles of natural justice ? (B) Whether the failure to follow the orders pronounced by the Tribunal in the Appellant’s own case for earlier years on identical facts is erroneous and contrary to law ? (C) Whether the Tribunal erred in setting aside the assessment order and sending the matter back to the Respondent No.1 for fresh adjudication on the directions as given by it in its order ? (D) Whether the Tribunal ought to have held that the fee received by the Appellant from McKinsey India is in the nature of business profits and cannot be regarded as fees for included services ? : 2 : (E) Whether the order of the Tribunal that the matter requires to be set aside by ignoring evidence on record and denying to take on record evidence sought is perverse, contrary to law and ought to be set aside ? (F) Whether the Tribunal’s placement of onus is contrary to its own decisions and erroneous and contrary to law ? (G) Whether the Tribunal erred in not following the order of the Respondent No.1 passed in the case of McKinsey India for the impugned year where it is stated that the Competent Authorities of India and the USA decided that income of McKinsey India should be computed on the net income basis as the services rendered are not in the nature of fees for included services ? (H) Whether the Tribunal ought to have followed the principle laid down in the case of Radhasoami Satsang vs Commissioner of Income-tax (193 ITR 321) (I) Whether reference by the Tribunal to the Supreme Court judgment in case of Parimisetty Setharamamma vs Commissioner of Income-tax (56 ITR 532) is erroneous and contrary to the law as it was not cited by the Appellant ? 2. Counsel appearing for the appellant contended that though voluminous evidence had been produced before the Assessing officer the same was wrongly deemed insufficient by the authorities. 3. On perusal of the judgment and order passed by the ITAT we find that the evidence which was produced did not pertain to the assessment year 2003-2004 which was under consideration. In fact, the evidence produced pertained to the assessment years 1997-98 and 2007-2008. The question involved : 3 : was whether the inputs given by the assessee company for the year 2003-2004 would be covered by the U.S.-India Tax Treaty. For this purpose documentation for the A.Y. 2003-2004 was necessary. We find that even though the assessee had not made an application for additional evidence in this regard, an opportunity has been given to him to produce these documents and to furnish evidence by e-mails, correspondence, bills, invoices or any other material so as to enable the assessing officer to probe and come to a proper conclusion as to what were the nature of services rendered by the assessee. We find that in the circumstances of this case, there cannot be said to be any breach of natural justice or perversity in the impugned order. In this view of the matter, the questions of law as U.S.-India Tax Treaty. For this purpose documentation for the A.Y. 2003-2004 was necessary. We find that even though the assessee had not made an application for additional evidence in this regard, an opportunity has been given to him to produce these documents and to furnish evidence by e-mails, correspondence, bills, invoices or any other material so as to enable the assessing officer to probe and come to a proper conclusion as to what were the nature of services rendered by the assessee. We find that in the circumstances of this case, there cannot be said to be any breach of natural justice or perversity in the impugned order. In this view of the matter, the questions of law as framed do not arise. 4. It was brought to our notice that the Dy.Director of Income-tax (International Taxation- 4(1) Mumbai has now made a requisition dated 13.1.2009. It was sought to be contended that the requisition is draconion in nature in so far as it seeks information of a nature which is not required for deciding the issue in question. Counsel appearing for the department, after perusing the requisition, states that it would be sufficient if documents mentioned in paragraph-2 of the requisition are furnished. Needless to say that : 4 : since the onus is upon the assessee to support the contentions raised by them, it would be open for them to furnish all documents which they feel are relevant to the issue to be decided. It is also expected that the assessing officer will take into account the orders passed by superior authorities including ITAT for earlier years, if relevant and applicable to the assessment year. Time to furnish documents is extended by a period of four weeks from today. 5. Subject to the aforesaid directions, the appeal stands dismissed. (R.S.Mohite,J) (F.I.Rebello,J)