Facts of the Case

The appellant, Convergys Customer Management Group Inc., had preferred multiple income tax appeals before the Delhi High Court concerning various assessment years involving international taxation disputes. During pendency of these appeals, the tax dispute was resolved through the Mutual Agreement Procedure (MAP) under the India–USA DTAA.

The Competent Authority of India (CBDT) issued an order of resolution under Section 90 of the Income Tax Act read with Article 27 of the India–USA DTAA for Assessment Years 2002–03 to 2004–05 and 2006–07 to 2012–13. Pursuant to such settlement, the assessee accepted the resolution and initiated withdrawal of pending appeals before the High Court and ITAT.

Issues Involved

  1. Whether pending tax appeals should continue after settlement under the Mutual Agreement Procedure (MAP).
  2. Whether Revenue’s connected appeals should also be withdrawn in view of the same bilateral tax settlement.
  3. Effect of Section 90 read with Article 27 of the India–USA DTAA on pending judicial proceedings.

Petitioner’s Arguments

  • The appellant submitted that the underlying tax disputes stood conclusively resolved under the Mutual Agreement Procedure.
  • Since the settlement had attained finality under the treaty mechanism, continuation of the appeals had become unnecessary.
  • The appellant sought permission to withdraw all pending appeals in view of the accepted MAP resolution.

Respondent’s Arguments

  • The Revenue acknowledged that the disputes had been resolved through the MAP mechanism under the India–USA DTAA.
  • Revenue submitted that several connected departmental appeals involving identical issues were also covered by the same settlement framework.
  • Revenue sought permission to withdraw its own pending appeals in consonance with the treaty resolution.

Court Findings / Observations

The Delhi High Court noted that the dispute between the parties had been amicably settled under the Mutual Agreement Procedure under the bilateral tax treaty. The Court accepted the submissions of both the assessee and the Revenue that continuation of litigation was no longer necessary after final resolution under the statutory treaty mechanism.

The Court recognized the binding effect of the MAP resolution under Section 90 of the Income Tax Act and Article 27 of the India–USA DTAA. 

Court Order / Final Decision

The Delhi High Court allowed the applications and dismissed the assessee’s appeals as withdrawn. Further, all connected Revenue appeals covered under the same MAP resolution were also dismissed as withdrawn.

Thus, all pending disputes for the covered assessment years stood concluded in terms of the treaty-based settlement.

Important Clarification

This judgment does not decide the substantive tax controversy on merits. The Court merely recorded withdrawal of appeals because the parties reached resolution through the Mutual Agreement Procedure under the India–USA DTAA.

The legal significance of this case lies in reaffirming that once MAP settlement is accepted by the taxpayer and Revenue, pending litigation can be withdrawn to give effect to treaty 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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