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2015 (5) TMI 607 - ITAT DELHIExistence of Permanent Establishment (PE) in India or not - India UK DTAA - Held that:- All the requisite conditions for attracting the mandate of Article 5(2)(k) are satisfied inasmuch as (i) there is furnishing of services including managerial services; (ii) such services are other than those taxable under Article 13 (royalties and fees for technical services); (iii) such services are rendered out of India; (iv) such services are rendered by ‘other personnel’; and (v) such activities continued for a period of more than 90 days within 12 months’ period. It is thus held that the service PE of the assessee is established in India. Respectfully following the order above in assessee’s own case for the assessment year 2008- 09, the issue agitated is decided against the assessee by holding that the services PE of the assessee is established in India. - Decided against assessee. Royalty earned - whether effectively connected with the service PE of the assessee in India? - Held that:- As decided in assessee's own case [2014 (7) TMI 260 - ITAT DELHI] Tribunal in the earlier year has held that the total amount consisting Lumpsum Licence/Know-how Fees and also royalty was consideration for the transfer of IP rights simplicitor and also the service rendered by the employees of the second category - in so far as the question of royalty representing consideration for the transfer of IP rights simplicitor was concerned, the service PE representing the deputationists had no role to play either in creating or making it available to JCB India - That is how the Tribunal came to hold that the same was not effectively connected with the service PE of the assessee in India - the consideration for rendering of services by the employees of first category was chargeable to tax under Article 7 of the DTAA – thus, the matter is remitted back to the AO for determination of the amount of income in terms of Article 7 – So, respectfully following the aforesaid referred to order these issues are set aside and remitted back to the file of the AO for determining the income inconsonance with the direction given for the earlier years - Decided in favour of Assessee by way of remand. Liability of interest u/s 234B did not arise as the assessee had included the amount of royalty and fees for technical services in its total income - Decided in favour of assessee.
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