> v. Commissioner Of Income Tax

$~74 to 85 * IN THE HIGH COURT OF DELHI AT NEW DELHI+ ITA 131/2021 CONVERGYS CUSTOMER MANAGMENT .....Appellant Through: Mr. Ajay Vohra, Sr. Adv. with Dr. Shashwat Bajpai, Mr. Ravi Sharma, Mr. Sarthak Tripathi and Ms. Simran Madhyan, Advs. versus COMMISSIONER OF INCOME TAX .....Respondent Through: Mr. Sunil Aggarwal, Sr.SC with Mr. Shivansh B. Pandya and Mr. Viplav Acharya, Ms. Priya Sarkar, JSCs and Mr. Utkarsh Tiwari, Adv. 75 + ITA 246/2023 THE COMMISSIONER OF INCOME TAX INTERNATIONAL TAXATION-1 NEW DELHI .....Appellant Through: Mr. Puneet Rai, SSC with Mr. Ashwini Kumar, Mr. Rishabh Nangia, Mr. Nikhil Jain, Ms. Srishti, Advs. versus CONVERGYS CUSTOMER MANAGEMENT GROUP INC. (NOW KNOWN AS CONCENTRIX CVG CUSTOMER MANAGEMENT GROUP INC.) .....Respondent .....Respondent Through: Mr. Ajay Vohra, Sr. Adv. with Dr. Shashwat Bajpai, Mr. Ravi Sharma, Mr. Sarthak Tripathi and Ms. Simran Madhyan, Advs. 76 + ITA 290/2023 CONVERGYS CUSTOMER MANAGEMENT GROUP INC. (NOW KNOWN AS CONCENTRIX CVG CUSTOMER ITA 131/2021 and connected matters Page 1 of 12 MANAGEMENT GROUP INC.) .....Appellant Through: Mr. Ajay Vohra, Sr. Adv. with Dr. Shashwat Bajpai, Mr. Ravi Sharma, Mr. Sarthak Tripathi and Ms. Simran Madhyan, Advs. versus DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 1(2)(1) INTERNATIONAL TAXATION NEW DELHI .....Respondent .....Respondent Through: Mr. Sunil Aggarwal, Sr.SC with Mr. Shivansh B. Pandya and Mr. Viplav Acharya, Ms. Priya Sarkar, JSCs and Mr. Utkarsh Tiwari, Adv. 77 + ITA 390/2023 THE COMMISSIONER OF INCOME TAX (INTERNATIONAL TAXATION)-1, NEW DELHI .....Appellant Through: Mr. Puneet Rai, SSC with Mr. Ashwini Kumar, Mr. Rishabh Nangia, Mr. Nikhil Jain, Ms. Srishti, Advs. versus CONVERGYS CUSTOMER MANAGEMENT GROUP INC (NOW KNOWN AS CONCENTRIX CVG CUSTOMER MANAGEMENT GROUP INC.) .....Respondent .....Respondent Through: Mr. Ajay Vohra, Sr. Adv. with Dr. Shashwat Bajpai, Mr. Ravi Sharma, Mr. Sarthak Tripathi and Ms. Simran Madhyan, Advs. 78 + ITA 436/2023 CONVERGYS CUSTOMER MANAGEMENT GROUP INC. (NOW KNOWN AS CONCENTRIX CVG CUSTOMER ITA 131/2021 and connected matters Page 2 of 12 MANAGEMENT GROUP INC) .....Appellant Through: Mr. Ajay Vohra, Sr. Adv. with Dr. Shashwat Bajpai, Mr. Ravi Sharma, Mr. Sarthak Tripathi and Ms. Simran Madhyan, Advs. versus DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE- 1(2)(1) INTERNATIONAL TAXATION, NEW DELHI .....Respondent .....Respondent Through: Mr. Sunil Aggarwal, Sr.SC with Mr. Shivansh B. Pandya and Mr. Viplav Acharya, Ms. Priya Sarkar, JSCs and Mr. Utkarsh Tiwari, Adv. 79 + ITA 506/2023 THE COMMISSIONER OF INCOME TAX (INTERNATIONAL TAXATION)-1, NEW DELHI .....Appellant Through: Mr. Puneet Rai, SSC with Mr. Ashwini Kumar, Mr. Rishabh Nangia, Mr. Nikhil Jain, Ms. Srishti, Advs. versus CONCENTRIX CVG CUSTOMER MANAGEMENT GROUP INC. .....Respondent .....Respondent Through: Mr. Ajay Vohra, Sr. Adv. with Dr. Shashwat Bajpai, Mr. Ravi Sharma, Mr. Sarthak Tripathi and Ms. Simran Madhyan, Advs. 80 + ITA 57/2024 THE COMMISSIONER OF INCOME TAX (INTERNATIONAL TAXATION)-1, NEW DELHI .....Appellant ITA 131/2021 and connected matters Page 3 of 12 Through: Mr. Puneet Rai, SSC with Mr. Ashwini Kumar, Mr. Rishabh Nangia, Mr. Nikhil Jain, Ms. Srishti, Advs. versus CONCENTRIX CVG CUSTOMER MANAGEMENT GROUP INC. .....Respondent .....Respondent Through: Mr. Ajay Vohra, Sr. Adv. with Dr. Shashwat Bajpai, Mr. Ravi Sharma, Mr. Sarthak Tripathi and Ms. Simran Madhyan, Advs. 81 + ITA 58/2024 THE COMMISSIONER OF INCOME TAX (INTERNATIONAL TAXATION)-1, NEW DELHI 80 + ITA 57/2024 THE COMMISSIONER OF INCOME TAX (INTERNATIONAL TAXATION)-1, NEW DELHI .....Appellant ITA 131/2021 and connected matters Page 3 of 12 Through: Mr. Puneet Rai, SSC with Mr. Ashwini Kumar, Mr. Rishabh Nangia, Mr. Nikhil Jain, Ms. Srishti, Advs. versus CONCENTRIX CVG CUSTOMER MANAGEMENT GROUP INC. .....Respondent .....Respondent Through: Mr. Ajay Vohra, Sr. Adv. with Dr. Shashwat Bajpai, Mr. Ravi Sharma, Mr. Sarthak Tripathi and Ms. Simran Madhyan, Advs. 81 + ITA 58/2024 THE COMMISSIONER OF INCOME TAX (INTERNATIONAL TAXATION)-1, NEW DELHI .....Appellant Through: Mr. Puneet Rai, SSC with Mr. Ashwini Kumar, Mr. Rishabh Nangia, Mr. Nikhil Jain, Ms. Srishti, Advs. versus CONCENTRIX CVG CUSTOMER MANAGEMENT GROUP INC. .....Respondent .....Respondent Through: Mr. Ajay Vohra, Sr. Adv. with Dr. Shashwat Bajpai, Mr. Ravi Sharma, Mr. Sarthak Tripathi and Ms. Simran Madhyan, Advs. 82 + ITA 115/2024 CONVERGYS CUSTOMER MANAGEMENT GROUP INC. (NOW KNOWN AS CONCENTRIX CVG CUSTOMER MANAGEMENT GROUP INC.) .....Appellant Through: Mr. Ajay Vohra, Sr. Adv. with Dr. Shashwat Bajpai, Mr. Ravi Sharma, Mr. Sarthak Tripathi ITA 131/2021 and connected matters Page 4 of 12 and Ms. Simran Madhyan, Advs. versus ASSISTANT COMMISSIONER OF INCOME TAX, INTERNATIONAL TAXATION, CIRCLE- 1 (2) (1) NEW DELHI .....Respondent .....Respondent Through: Mr. Ruchir Bhatia, SSC with Mr. Anant Mann and Mr. Pratyaksh Gupta, JSCs. 83 + ITA 116/2024 CONVERGYS CUSTOMER MANAGEMENT GROUP INC. (NOW KNOWN ASCONCENTRIX CVG CUSTOMER MANAGEMENT GROUP INC.) .....Appellant Through: Mr. Ajay Vohra, Sr. Adv. with Dr. Shashwat Bajpai, Mr. Ravi Sharma, Mr. Sarthak Tripathi and Ms. Simran Madhyan, Advs. versus ASSISTANT COMMISSIONER OF INCOME TAX, INTERNATIONAL TAXATION, CIRCLE- 1 (2) (1) NEW DELHI .....Respondent Through: Mr. Ruchir Bhatia, SSC with Mr. Anant Mann and Mr. Pratyaksh Gupta, JSCs. 84 + ITA 438/2024 & CM APPL. 46641/2024 (EX. LIST OF DATES & SYNOPSIS) CONCENTRIX CVG CUSTOMER MANAGEMENT GROUP INC .....Appellant .....Appellant Through: Mr. Ajay Vohra, Sr. Adv. with Dr. Shashwat Bajpai, Mr. Ravi Sharma, Mr. Sarthak Tripathi and Ms. Simran Madhyan, Advs. ITA 131/2021 and connected matters Page 5 of 12 versus ACIT (INT. TAXATION), CIRCLE 1 (2) 1, NEW DELHI .....Respondent Through: Mr. Ruchir Bhatia, SSC with Mr. Anant Mann and Mr. Pratyaksh Gupta, JSCs. 85 + ITA 539/2024 THE COMMISSIONER OF INCOME TAX (INTERNATIONAL TAXATION)-1 NEW DELHI .....Appellant Through: Mr. Puneet Rai, SSC with Mr. Ashwini Kumar, Mr. Rishabh Nangia, Mr. Nikhil Jain, Ms. Srishti, Advs. versus CONCENTRIX CVG CUSTOMER MANAGEMENT GROUP INC. .....Respondent Through: Mr. Ajay Vohra, Sr. Adv. with Dr. Shashwat Bajpai, Mr. Ravi Sharma, Mr. Sarthak Tripathi and Ms. Simran Madhyan, Advs. CORAM:HON'BLE MR. JUSTICE YASHWANT VARMAHON'BLE MR. JUSTICE HARISH VAIDYANATHAN SHANKAR O R D E R% 06.03.2025 1. 1.The appellant assessee seeks to impugn the order dated 27 November 2020 and which forms the subject matter of lead appeal number 131 of 2021. The present batch of appeals are concerned with the following Assessment Years[1], particulars of which appear in the table which we extract hereinbelow: - 1 AYs ITA 131/2021 and connected matters Page 6 of 12 versus CONCENTRIX CVG CUSTOMER MANAGEMENT GROUP INC. .....Respondent Through: Mr. Ajay Vohra, Sr. Adv. with Dr. Shashwat Bajpai, Mr. Ravi Sharma, Mr. Sarthak Tripathi and Ms. Simran Madhyan, Advs. CORAM:HON'BLE MR. JUSTICE YASHWANT VARMAHON'BLE MR. JUSTICE HARISH VAIDYANATHAN SHANKAR O R D E R% 06.03.2025 1. 1.The appellant assessee seeks to impugn the order dated 27 November 2020 and which forms the subject matter of lead appeal number 131 of 2021. The present batch of appeals are concerned with the following Assessment Years[1], particulars of which appear in the table which we extract hereinbelow: - 1 AYs ITA 131/2021 and connected matters Page 6 of 12 2.The principal question which appears to have faced the Income Tax Appellate Tribunal[2]was whether a Permanent Establishment[3]of the appellant assessee had come into being in the AYs in question. Before us, it is not disputed that the Tribunal has essentially followed the view that it had expressed for AYs 2006-07 and 2008-09. 2 Tribunal 3 PE ITA 131/2021 and connected matters Page 7 of 12 This is a digitally signed order.The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above.The Order is downloaded from the DHC Server on 17/03/2025 at 11:13:55 3.We are however apprised of a Mutual Agreement Procedure[4]determination which was subsequently commenced and which culminated in the passing of a resolution which stands embodied the communication dated 01 February 2018. The aforesaid communication as well as the MAP determination is extracted hereinbelow: - “Office of the Deputy Commissioner of Income Tax Circle- 1(1)(1), International Taxation –Wing E-2, 4[th] Floor, Room No. 409, Civic Centre, New Delhi 110002 F. No . DCIT/lnt.Tax/Cir 1(1)(1)/2017-18/731 Dated : 01.02.2018 To The Principal Officer M/s Convergys Customer Management Group Inc C/oPricewaterhouseCoopers, Sucheta Bhawan Gate No 2, 11-A, Vishnu Digamber Marg New Delhi - 110 002. Sub : Resolution under section 90 of the Income Tax Act, 1961 r.w Article 27 of the India-USA Double Taxation Avoidance Convention - reg. Please refer to the subject cited above. 2. In this regard, please find enclosed herewith copy of letter F.No.480/7/2013-FTD.I dated 11.12.2017 (received in this office on 25.01.2018) on the subject cited above received from the Joint Secretary (Ft& TR-1) and Competent Authority of India conveying resolution of Mutual Agreement Procedure (MAP) in the case of M/s Convergys Customer Management Group Inc for the Assessment Years 2002-03 to 2004-05 and 2006-07 to 2012-13. 3. As per the provisions of sub rule (4) of Rule 44(H) of the Income Tax Rules, 1962, effect to the resolution so arrived at under MAP is to be given within ninety days of receipt of the same, if the assessee :- (i) gives its acceptance to the resolution arrived at under MAP ; and (ii) withdraws its appeal, if any, pending on the issue which was the subject matter for adjudication under MAP 4 MAP ITA 131/2021 and connected matters Page 8 of 12 4. In view of the above, you are required to submit your acceptance to the resolution under MAP done by the Competent Authority as is mentioned in the enclosed letter and submit confirmation of withdrawal of pending appeals, if any, along with documentary proof to the undersigned at the earliest. (Indu Bala) Deputy Commissioner of Income-Tax Circle -1(1)(1), International Taxation, New Delhi” F.No. 480/7 /2013-FTD.IGovernment of India Ministry of Finance Department of Revenue Central Board of Direct Taxes Office of the Competent Authority of India ……… Resolution under Section 90 of the Income-tax Act, 1961 read with Article 27 of the India-USA Double Taxation Avoidance Convention 4. In view of the above, you are required to submit your acceptance to the resolution under MAP done by the Competent Authority as is mentioned in the enclosed letter and submit confirmation of withdrawal of pending appeals, if any, along with documentary proof to the undersigned at the earliest. (Indu Bala) Deputy Commissioner of Income-Tax Circle -1(1)(1), International Taxation, New Delhi” F.No. 480/7 /2013-FTD.IGovernment of India Ministry of Finance Department of Revenue Central Board of Direct Taxes Office of the Competent Authority of India ……… Resolution under Section 90 of the Income-tax Act, 1961 read with Article 27 of the India-USA Double Taxation Avoidance Convention The Competent Authority of USA under the India-USA Double Taxation Avoidance Convention invoked Mutual Agreement Procedure in the case of Convergys US for Assessment Years (A Ys) 2002-03, 2003-04, 2004-05, 2006-07, 2007-08, 2008 -09, 2009-10, 2010-11, 2011-12 and 2012 - 13. 2. The Competent Authorities of both the countries after ITA 131/2021 and connected matters Page 9 of 12 This is a digitally signed order. having examined the facts of the case and issues involved, have arrived at the following resolution with respect to the assessment of the income of Convergys US in terms of Section 90 of the Income-tax Act, 1961 read with Article 27 of the India-USA Double Taxation Avoidance Convention and Rule 44H of the income-tax rules, 1962. Permanent Establishment (Article 5) The Competent Authorities of both the countries have made no determination on whether Convergys US has established an Indian permanent establishment (PE) as per Article 5 of the India-US Double Taxation Avoidance Convention. Convergys US has not agreed or admitted that it, or its US subsidiaries, has a PE in India either. Solely for the purposes of settling multiple years of disputes, the competent authorities of both the countries agree with the following attribution of profits as shown in table below:- Profit Attribution In addition, for AY 2006-07, ₹6,817,878 will be included in the taxable income of Convergys US in India and taxed at the rate of 15%. 3. To the extent not covered herein, all other matters shall begoverned as per provisions of the Income-tax Act, 1961. 4. The Assessing Officer will give effect to this resolution in terms of Sub Rules (4) and (5) of Rule 44H of the Income-tax Rules, 1962. (Pragya S. Saksena) Joint Secretary (FT&TR-1) and Competent Authority of India” 4.As is manifest from the above, the communication records that ITA 131/2021 and connected matters Page 10 of 12 This is a digitally signed order.The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. the competent authorities of both countries had desisted from making any determination on whether Convergence US had established an Indian PE as per Article 5 of the India-US Double Taxation Avoidance Agreements[5]. However, and solely with the objective of settling that dispute which straddled multiple years, the parties appear to have agreed to an exercise of attribution. It is thus apparent that the issue of PE remained untouched. 5.However, and although the MAP determination had concluded in 2017 itself, this fact clearly does not appear to have been brought to the attention of the Tribunal and which has evidently proceeded on the basis that its determination for AYs 2006-07 and 2008-09 had survived. In view of the aforesaid and in our considered opinion, this alone would merit the orders impugned herein being set aside so as to enable the Tribunal to examine the matters afresh. 6.We accordingly allow these appeals and set aside the following orders of the Tribunal as tabulated herein below: 5 DTAA 5.However, and although the MAP determination had concluded in 2017 itself, this fact clearly does not appear to have been brought to the attention of the Tribunal and which has evidently proceeded on the basis that its determination for AYs 2006-07 and 2008-09 had survived. In view of the aforesaid and in our considered opinion, this alone would merit the orders impugned herein being set aside so as to enable the Tribunal to examine the matters afresh. 6.We accordingly allow these appeals and set aside the following orders of the Tribunal as tabulated herein below: 5 DTAA ITA 131/2021 and connected matters Page 11 of 12 This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. 7.All appeals shall stand revived on the board of the concerned Tribunal to be considered and examined afresh. All rights and contentions of respective parties on merits are kept open. YASHWANT VARMA, J. HARISH VAIDYANATHAN SHANKAR, J.MARCH 06, 2025/neha ITA 131/2021 and connected matters Page 12 of 12