Facts of the Case

The appellant, Convergys Customer Management Group Inc., had filed multiple Income Tax Appeals before the Delhi High Court pertaining to various assessment years involving international taxation disputes. During the pendency of these appeals, the dispute between the assessee and the Indian tax authorities was resolved through the Mutual Agreement Procedure (MAP) under the Indo-US Double Taxation Avoidance Agreement.

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. Following such resolution, the assessee accepted the settlement and initiated withdrawal of the pending appeals before the High Court and the Income Tax Appellate Tribunal.

Issues Involved

  1. Whether pending tax appeals could be withdrawn after settlement of disputes through Mutual Agreement Procedure (MAP).
  2. Whether the Revenue’s connected appeals could also be dismissed as withdrawn upon the same settlement framework.
  3. Whether the MAP resolution under Section 90 and Article 27 of the DTAA attained binding effect upon acceptance by the assessee.

Petitioner’s Arguments

  • The appellant submitted that the tax dispute had been amicably resolved through the Mutual Agreement Procedure under the Indo-US DTAA.
  • It was argued that the resolution settled the issues involved in the pending appeals.
  • In light of the settlement, the appellant sought permission to withdraw the pending appeals.

Respondent’s Arguments

  • The Revenue informed the Court that several connected appeals filed by both the Revenue and the assessee were also covered under the same MAP settlement.
  • The Revenue placed on record communication from the Deputy Commissioner of Income Tax (International Taxation), confirming the CBDT’s resolution order.
  • The Revenue submitted that instructions had been received to withdraw the related appeals as well.

Court Findings / Court Order

The Delhi High Court observed that the dispute had already been settled under the Mutual Agreement Procedure under the Indo-US Double Taxation Avoidance Agreement and the assessee had formally accepted the resolution.

Accordingly:

  • The applications seeking withdrawal of appeals were allowed.
  • The assessee’s appeals were dismissed as withdrawn.
  • The Revenue’s connected appeals, being covered under the same MAP settlement, were also dismissed as withdrawn.

Important Clarification

The Court clarified that once a tax dispute is resolved through the Mutual Agreement Procedure under Section 90 of the Income Tax Act and the relevant DTAA provisions, and such resolution is accepted by the assessee, continuation of parallel judicial proceedings becomes unnecessary. This order reinforces the binding and effective nature of MAP settlements in international taxation disputes.

Sections Involved

  • Section 90, Income Tax Act, 1961
  • Article 27, India-USA Double Taxation Avoidance Agreement (DTAA)
  • Mutual Agreement Procedure (MAP) Framework

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

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