Facts of the Case

The assessee, Convergys Customer Management Group Inc., had filed multiple income tax appeals before the Delhi High Court against orders concerning international taxation issues for various assessment years. During the pendency of these appeals, the dispute between the assessee and the Revenue was resolved under the Mutual Agreement Procedure (MAP) as contemplated under the India-USA DTAA.

The Competent Authority of India, CBDT, issued a resolution order under Section 90 of the Income Tax Act, 1961, read with Article 27 of the India-USA DTAA, covering Assessment Years 2002–03 to 2004–05 and 2006–07 to 2012–13.

Pursuant to acceptance of the MAP resolution, the assessee initiated steps for withdrawal of the pending appeals before the High Court and the Income Tax Appellate Tribunal.

Issues Involved

  1. Whether pending tax appeals can be withdrawn after settlement under the Mutual Agreement Procedure (MAP) under the DTAA?
  2. Whether corresponding Revenue appeals concerning the same assessment years should also be permitted to be withdrawn?
  3. What is the legal effect of a MAP resolution under Section 90 of the Income Tax Act?

Petitioner’s Arguments (Assessee’s Contentions)

  • The assessee submitted that the dispute had been conclusively resolved under the MAP mechanism under the India-USA DTAA.
  • Since the settlement had been accepted, continuation of the pending appeals was unnecessary.
  • Accordingly, permission was sought to withdraw all pending appeals.

Respondent’s Arguments (Revenue’s Contentions)

  • The Revenue acknowledged the settlement reached under the MAP mechanism.
  • It informed the Court that several connected appeals filed by the Revenue for related assessment years were also covered under the same MAP resolution.
  • The Revenue sought permission to withdraw those connected appeals as well.

Court Findings 

The Delhi High Court took note of the fact that the dispute had been settled under the statutory mechanism of MAP under the India-USA DTAA and that both parties had accepted the resolution.

The Court recognized that once a dispute stands resolved under an international tax treaty mechanism and accepted by the parties, continuation of appellate proceedings would serve no useful purpose.

The Court further accepted the Revenue’s submission regarding withdrawal of its connected appeals arising from the same settlement framework.

Court Order / Final Decision

The Delhi High Court:

  • Allowed the applications seeking withdrawal of appeals filed by the assessee.
  • Dismissed the appeals as withdrawn.
  • Permitted withdrawal of the connected Revenue appeals and dismissed them as withdrawn.

Important Clarification

  • A MAP resolution under a DTAA, once accepted by the taxpayer and the tax authorities, attains finality and effectively resolves the tax dispute.
  • Pending judicial proceedings can be withdrawn to give effect to the treaty resolution.
  • Section 90 gives statutory force to DTAA provisions and their dispute resolution mechanisms.

This case reinforces judicial recognition of MAP as an effective alternative dispute resolution

Link to download the order - https://delhihighcourt.nic.in/app/case_number_pdf/2018:DHC:8711-DB/SRB13032018ITA32014_125651.pdf 

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