Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Online)(ITAT) 4358

INCOME TAX APPELLATE TRIBUNAL (MUMBAI BENCH)
C.V. BHADANG, President, Vikram Singh Yadav, Accountant Member
Bobst Bielefeld GmbH – Appellant
Versus
Asst. Commissioner of Income Tax – Respondent
ITA No. 6029/Mum/2025 | ITA No. 6030/Mum/2025

Advocates:
For Assessee: Shri Siddesh Chaugule
For Revenue: Shri Krishna Kumar, Sr.DR

Limited scrutiny does not bar examining legitimate DTAA claims raised by assessee; matter remanded for treaty benefit adjudication.

Headnote:(A) Income-tax Act, 1961 - Sections 90(2), 91, 115A, 234A, 234B, 234C, 270A - India-Germany DTAA - Articles 11, 12 - Limited scrutiny assessment - Assessee, German tax resident, offered FTS income under 'Profits & Gains from Business/Profession' due to ITR form limitations, claimed 10% treaty rate notionally via S.91 relief - AO taxed @40% allowing ineligible S.91 relief - CIT(A) upheld citing limited scrutiny scope - Tribunal holds AO must examine legitimate treaty claims raised during proceedings despite limited scrutiny; CIT(A) powers permit adjudication - Matter remanded for fresh consideration of treaty benefits, PE absence. (Paras 9-16)

Facts of the case:
Assessee-company provided technical services from Germany, earned Rs.1,26,59,423 (AY 2017-18), filed return under business head @30% with notional S.91 relief to achieve 10% effective rate under DTAA Art.12 - Selected for limited scrutiny on S.90/91 relief - AO taxed @40% allowing relief erroneously - Similar issue in AY 2018-19 with FTS and interest.

Findings of Court:
AO failed to examine assessee's explanation for notional S.91 claim in context of treaty benefits; exceeded limited scrutiny by altering tax rate without addressing PE/FTS claim.

Issues: Whether assessee eligible for 10% DTAA rate on FTS absent PE; scope of limited scrutiny to entertain treaty claims; correctness of S.91 relief denial and tax computation.

Ratio Decidendi: Appellate authorities must adjudicate legitimate claims supported by material even in limited scrutiny if raised by assessee; AO cannot ignore treaty benefits or assessee's explanations on record. CBDT Circular No.14 (1955) mandates assisting assessee on entitlements. (Paras 13-15)

Result: Appeals allowed for statistical purposes; remanded to CIT(A).

Table of Content
1. assessee's return filing and assessment under limited scrutiny on double taxation relief (Para 2 , 3 , 4 , 5)
2. claim for dtaa benefits on fts at 10% despite business head reporting (Para 6 , 7)
3. cit(a) upholds ao citing limited scrutiny limits and assessee's return declarations (Para 8 , 9)
4. ao erred by allowing ineligible s.91 relief and exceeding scrutiny scope (Para 10 , 11 , 12)
5. appellate stage permits examining legitimate treaty claims beyond limited scrutiny (Para 13 , 14 , 15 , 16)
6. appeals remanded to cit(a) for both ays (Para 17 , 18)

ORDER

PER VIKRAM SINGH YADAV, A.M :

These two appeals are filed by the assessee against the respective orders of the Learned Commissioner of Income Tax (Appeals)-55, Mumbai [„Ld.CIT(A)‟], both dated 15-07-2025, pertaining to Assessment Years (AYs.) 2017-18 & 2018-19, wherein the assessee has taken the following grounds of appeal:

Grounds of appeal (AY. 2017-18):

1. Ground No. 1 - General On the facts and in the circumstances of the case and in law, Ld. CIT(A) has erred in upholding the assessment order passed by the Learned Assessing Officer ('Ld. AO'), which resulted in determining income tax liability to INR 53,19,994 on the Appellant's assessed income and consequential interest thereon.

2. Ground No. 2 Taxing the income under wrong head of income and non- consideration of the beneficial provision of India-Germany Double Taxation Avoidance Agreement ('the Treaty')

On the facts and in the circumstances of the case and in law, the Ld. AO has erred in not considering the submission of the Appellant to tax the income of INR 1,26,59,423 under the head "Fees for Technical Services" (FTS) under Article 12 instead of income inadvertently reported under the head of "Profits and Gains from Business or Profession" in the Income-tax return. Accordingly. Ld. CIT(A) has erred in upholding the order passed by Ld. AO

3. Ground No. 3-Non grant of the beneficial provisions of the Treaty

Without prejudice the Ground No.2, the Ld. AO has erred in not appreciating the fact that the Appellant, being a tax resident of Germany, having no Permanent Establishment (PE) in India, is eligible to claim the beneficial tax provision under the Treaty. Thus, Ld. AO has erred in taxing the income under the provisions of the Act. Accordingly, Ld. CIT(A) has erred in upholding the order passed by Ld. AO.

4. Ground No. 4-Incorrect calculation of Interest under section 234A, 234B and 234C of the Act

On the facts and in the circumstances of the case and in law, consequential erroneous interest liability under sections 234A, 2348 and 234C of the Act should not arise and needs to be deleted.”

Grounds of appeal (AY. 2018-19):

“1. Ground No. 1 - General

On the facts and in the circumstances of the case and in law, Ld. CIT(A) has erred in upholding the assessment order passed by the Learned Assessing Officer ('Ld. AO'), which resulted in determining income tax of INR 58,24,207 on the Appellant's assessed income and consequential interest thereon.

2. Ground No. 2 Taxing the income under wrong head of income and non- consideration of the beneficial provision of India-Germany Double Taxation Avoidance Agreement ('the Treaty')

On the facts and in the circumstances of the case and in law, the Ld. AO has erred in not considering the submission of the Appellant to tax the income of INR 1,01,85,082 under the head "Fees for Technical Services" (FTS) under Article 12 and income of INR 36,74,155 under the head "Interest Income" under Article 11 of the Treaty instead of income inadvertently reported under the head of "Profits and Gains from Business or Profession" in the Income-tax return. Accordingly, Ld. CIT(A) has erred in upholding the order passed by Ld. AO

3. Ground No. 3-Non grant of the beneficial provisions of the Treaty

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2026 Supreme(Online)(ITAT) 4358

INCOME TAX APPELLATE TRIBUNAL (MUMBAI BENCH)C.V. BHADANG, President, Vikram Singh Yadav, Accountant MemberBobst Bielefeld GmbH – AppellantVersusAsst. Commissioner of Income Tax – RespondentITA No. 6029/Mum/2025 | ITA No. 6030/Mum/2025

Limited scrutiny does not bar examining legitimate DTAA claims raised by assessee; matter remanded for treaty benefit adjudication.

INCOME TAX APPELLATE TRIBUNAL (MUMBAI BENCH)
C.V. BHADANG, President, Vikram Singh Yadav, Accountant Member
Bobst Bielefeld GmbH – Appellant
Versus
Asst. Commissioner of Income Tax – Respondent
ITA No. 6029/Mum/2025 | ITA No. 6030/Mum/2025