Facts of the Case

Convergys Customer Management Group Inc., the appellant/assessee, had filed multiple appeals before the Delhi High Court relating to international taxation disputes for several assessment years. During the pendency of these appeals, the dispute was resolved through the Mutual Agreement Procedure under the Indo-US DTAA.

The Competent Authority of India (CBDT) passed a resolution order under Section 90 of the Income Tax Act read with Article 27 of the India-USA Double Taxation Avoidance Convention. Pursuant to acceptance of the MAP resolution by the assessee, steps were initiated for withdrawal of all pending appeals before the High Court and ITAT.

Simultaneously, the Revenue also sought withdrawal of connected appeals arising from the same tax dispute since those matters stood covered by the same MAP resolution. 

Issues Involved

  1. Whether pending appeals before the High Court can be withdrawn after settlement under Mutual Agreement Procedure (MAP)?
  2. Whether Section 90 of the Income Tax Act empowers implementation of DTAA dispute resolution settlements?
  3. Whether Revenue and Assessee are both bound by MAP settlement once accepted?
  4. Whether connected appeals involving identical issues should also be disposed of in terms of MAP resolution?

Petitioner’s Arguments (Assessee’s Contentions)

  • The appellant submitted that the dispute had been fully resolved through the MAP mechanism under the Indo-US DTAA.
  • Since the competent authorities had arrived at a mutually agreed resolution, continuation of litigation became unnecessary.
  • The assessee had formally accepted the resolution and sought withdrawal of all pending appeals accordingly.

Respondent’s Arguments (Revenue’s Contentions)

  • The Revenue informed the Court that not only the assessee’s appeals but also Revenue’s connected appeals were covered under the same treaty resolution.
  • The Revenue received instructions from the Competent Authority to withdraw its pending appeals after ensuring corresponding withdrawal by the assessee.
  • Revenue sought dismissal of all connected appeals as withdrawn.

Court Findings / Court Order

The Delhi High Court observed that the dispute had already been resolved under the Mutual Agreement Procedure under the Indo-US DTAA.

Considering that:

  • the assessee accepted the MAP resolution, and
  • the Revenue also agreed to withdraw its appeals,

the Court allowed the applications and dismissed all appeals as withdrawn.

The Court further extended the same treatment to connected appeals of both the assessee and Revenue, holding that all such matters stood covered by the same bilateral settlement framework.

Important Clarification

This judgment clarifies that once an international tax dispute is settled under the Mutual Agreement Procedure under a DTAA and accepted by the parties, pending judicial proceedings may be withdrawn to give effect to such settlement.

It reinforces that:

  • MAP resolutions are binding after acceptance;
  • Section 90 provides statutory backing to treaty settlements; and
  • Courts recognize treaty-based dispute resolution as final and enforceable.

 Sections Involved

Income Tax Act, 1961

  • Section 90 – Agreement with foreign countries for avoidance of double taxation

Indo-US Double Taxation Avoidance Agreement (DTAA)

  • Article 27 – Mutual Agreement Procedure (MAP)

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

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