Facts of the Case

The present matter pertained to multiple income tax appeals filed by Convergys Customer Management Group Inc. against the Revenue Authorities concerning international taxation issues for various assessment years. During the pendency of these appeals, the dispute between the assessee and the Revenue stood resolved through the Mutual Agreement Procedure (MAP) under the India–USA Double Taxation Avoidance Agreement (DTAA).

Pursuant to the resolution mechanism under the treaty framework, the assessee expressed its willingness to withdraw the pending appeals before the Delhi High Court and the Income Tax Appellate Tribunal. The Revenue also informed the Court that several connected appeals filed by both the Revenue and the assessee were similarly covered under the same MAP resolution.

Issues Involved

  1. Whether pending tax appeals could be withdrawn after settlement under the Mutual Agreement Procedure (MAP) under the India–USA DTAA?
  2. Whether the High Court could permit dismissal of appeals as withdrawn once the competent authorities under the DTAA had resolved the dispute?
  3. Whether connected Revenue appeals involving identical issues could also be withdrawn pursuant to the same resolution?

Petitioner’s Arguments (Assessee’s Contentions)

  • The assessee submitted that the disputes forming the subject matter of the appeals had been conclusively settled under the Mutual Agreement Procedure (MAP).
  • It was contended that the resolution was reached under the treaty mechanism recognized under the India–USA DTAA.
  • In view of the settlement, the assessee sought permission to withdraw the pending appeals.

Respondent’s Arguments (Revenue’s Contentions)

  • The Revenue acknowledged that the disputes had been resolved under the MAP mechanism.
  • The Revenue informed the Court that several other connected appeals filed by both the Revenue and the assessee would also stand covered by the same treaty settlement.
  • It was submitted that instructions had been received to withdraw those appeals as well, subject to corresponding withdrawal by the assessee.

Court Findings / Observations

The Delhi High Court observed that once the dispute had been resolved through the Mutual Agreement Procedure (MAP) under the treaty mechanism, continuation of the pending appeals became unnecessary.

The Court took note of the communication issued by the Competent Authority of India (CBDT), confirming that an order of resolution had been passed under Section 90 of the Income Tax Act, 1961, read with Article 27 of the India–USA DTAA.

The Court further recognized that the assessee had formally accepted the MAP resolution and initiated steps for withdrawal of all pending appeals.

Court Order / Final Decision

The Delhi High Court allowed the applications and dismissed the appeals as withdrawn in light of the settlement under the Mutual Agreement Procedure (MAP).

Additionally, all connected appeals filed by both the Revenue and the assessee, being covered by the same MAP settlement, were also dismissed as withdrawn.

Important Clarification

This judgment clarifies that where disputes relating to international taxation are resolved through the Mutual Agreement Procedure (MAP) under an applicable DTAA, pending judicial proceedings may be withdrawn to give effect to such treaty resolution.

The decision reinforces the practical implementation of Section 90 of the Income Tax Act, 1961, which gives statutory recognition to treaty obligations and dispute resolution mechanisms.

Sections Involved

  • Section 90, Income Tax Act, 1961
  • Article 27, India–USA Double Taxation Avoidance Agreement (DTAA)
  • Mutual Agreement Procedure (MAP) provisions under international tax treaties

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

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