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2014 (11) TMI 725 - AT - Income TaxPermanent establishment - Whether the assessee had a permanent establishment in India or not – Held that:- Following the decision in Linklaters LLP Versus ITO (Int’l Taxation) [2010 (7) TMI 535 - ITAT, MUMBAI] - in a situation where specific provisions for professional services or independent personal services or included services exist under article 15, when services are rendered by the enterprise, article 5(2)(k) will come into play, and when services are rendered by an individual, article 15 will find application - article 15 will not be applicable, as the assessee did have a PE in India under article 5(2)(k) of the India-UK tax treaty, and profits attributable to the PE are taxable under article 7 of the India-UK tax treaty - the assessee did have Permanent Establishment in India. Computation of income – Held that:- Following the decision in Linklaters LLP Versus ITO (Int’l Taxation) [2010 (7) TMI 535 - ITAT, MUMBAI] - the plea put forth by the assessee proceeds on fallacy that arm’s length price adjustment can be made in respect of the transactions with the clients of the assesse - the revenues earned by the assessee are to be taken at actual figures and no adjustment is permissible in respect of the same - the order of CIT(A) is upheld. Validity of Receipts – Reimbursement of expenses – Held that:- Following the decision in Linklaters LLP Versus ITO (Int’l Taxation) [2010 (7) TMI 535 - ITAT, MUMBAI] - The reimbursements received by the assessee are in respect of specific and actual expenses incurred by the assessee and do not involve any mark up, there is reasonable control mechanism in place to ensure that these claims are not inflated, and the assessee has furnished sufficient evidence to demonstrate the incurring of expenses - There is no reason to make any addition to income in respect of these reimbursements of expenses - the AO is directed to delete the disallowance of expenses as sustained by the CIT(A) and hold that no part of reimbursements of expenses received by the assesse is to be treated as income of the assessee. Assessment of Professional receipts – Held that:- Following the decision in Linklaters LLP Versus ITO (Int’l Taxation) [2010 (7) TMI 535 - ITAT, MUMBAI] - only that portion of the income relating to the services performed in India is assessable - the entire profits directly or indirectly attributable to the Permanent Establishment is assessable and accordingly upheld the order of the AO – the matter is remitted back to the AO. Interest u/s 234B – Held that:- Following the decision in Director of Income tax Vs. Alcatel LUCENT USA Inc. [2013 (11) TMI 734 - DELHI HIGH COURT] - Assessee have denied its liability to pay income tax right from the beginning, should not take the plea that the Indian payers should have deducted tax at source from the remittances made to it - where the revenue has been deprived of use of monies and thereby put to loss for no fault on its part and where loss arose as a result of vacillating stands taken by the assessee, it is not expected of assessee to shift responsibility to Indian Payers - the levy of interest u/s 234B of the Act upheld – Decided against assesse.
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