Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2013 (6) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2013 (6) TMI 544 - ITAT MUMBAIRoyalty / Fee for technical services - Insertion of Explanation to section 9 by way of amendment by Finance Act, 2010 with retrospective effect from 01-06-1976 - whether it changes the position of law as far as the assessee is concerned? - Held that:- Keeping in view the decision of Carborandum Co. (1977 (4) TMI 2 - SUPREME Court) which was in the context of section 42 which corresponds to section 9(1)(i) and in the case of Toshoku Ltd. (1980 (8) TMI 2 - SUPREME Court) which was in the context of section 9(1)(i) itself, the Hon'ble Bombay High Court, in assessee's case [2008 (12) TMI 30 - HIGH COURT OF BOMBAY] held that the provisions of section 9(1)(i) having been construed by the Hon'ble Supreme Court, the interpretation thereof was no longer res-integra and the issue was decided by applying such interpretation of section 9(1)(i) which was held to be applicable in the case of the assessee for the determination of its taxable income in India. It is no doubt true that reference was also made to the decision Ishikawajima Harima Heavy Industries Ltd. ( 2007 (1) TMI 91 - SUPREME COURT) which was in the context of section 9(1)(vii)(c) however their Lordships were conscious of the fact that the said decision was rendered in the context of section 9(1)(vii)(c) as is evident from para 44 of the order. It was also observed by that with the understanding of law laid down by the Hon'ble Apex Court in the case of Ishikawajima Harima Heavy Industries Ltd. (supra), if one turns to the facts of the case in hand and examines them on the touchstone of section 9(1)(vii)(c), services, which are source of income sought to be taxed in India, must be utilised in India and rendered in India. Therefore find it difficult to concur with the view expressed by the division bench of this Tribunal in the case of Linklaters LLP (2010 (7) TMI 535 - ITAT, MUMBAI ) that the judgment of Hon'ble Bombay High Court in assessee's case for A.Y. 1996-97 is based on the legal premise of interpretation of section 9(1)(vii) and the said premise no longer holds good in view of amendment made by the Finance Act, 2010 in section 9 with retrospective effect from 1st June, 1976. Thus the amendment made by the Finance Act 2010 in section 9 with retrospective effect from Ist June, 1976, which is applicable only in the cases covered under clause (v), (vi) or clause (vii) of section 9(1) and not clause (i) of section 9(1), thus has not negated the decision of Hon'ble Bombay High Court in the case of the assessee for A.Y. 1996-97 and the said decision rendered in the context of section 9(1)(i) still holds good even after the said amendment in so far as the assessee's case is concerned. Therefore answer the question No. 1 in favour of the assessee. True and correct interpretation of the term "Directly or indirectly attributable to Permanent Establishment" in Article 7(1) of the India-UK DTAA - whether it is correct in law to hold that the consideration attributable to the services rendered in the State of residence is taxable in the source State"? - Held that:- As provided in Article 7(1)& 7(3) where a permanent establishment takes an active part in negotiating, concluding or fulfilling contracts entered into by the enterprise, then, notwithstanding that other parts of the enterprise have also participated in those transactions, profits of the enterprise arising out of those contracts shall be apportioned in the ratio of the contribution of the PE to those transactions and the contribution of the enterprise as a whole and such profits as apportioned to the contribution of the PE shall be treated for the purposes of Article 7(1) as being the profits indirectly attributable to that PE. Consequently the profits apportioned to the contribution of other parts of the enterprise to the transactions cannot be treated as profits indirectly attributable to the PE for the purpose of Article 7(1) so as to bring the same to tax in the source country - answer the question No. 2 in favour of the assessee.
|