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2017 (8) TMI 912 - ITAT MUMBAIAssessment of income in India - P.E. in India - whether an agent satisfies conditions laid down in paragraph-5? - determination of tax ability of advertisement revenue earned by foreign companies - estimation of profit @ 20% of gross advertising revenues - assessee company was located in Hong Kong - India-Holland DTAA - Held that:- We find that agency agreement was entered into between Star Advertising Sales BV and News Television India Private Ltd on 31/05/1994, as per the agreement between SIPL and the assessee, SIPL was required to solicit advertisement in India for Channels, that the agent had to solicit the advertisement at the rates fixed by the assessee, that it could not enter in to any agreement with any client independently, that the even after agreement the assessee was the final and deciding authority to decide the fate of the advertisement, that the agent was to receive fix percentage of the invoiced amount as commission. The agent was free to carry out any other business. If all these facts are considered cumulatively, it becomes clear that the agent had no power to bind the assessee in any legal obligation. The assessee did not have a PE in India, that it was not carrying out any business activities in India and therefore no part of its revenue was attributable to India, that SIPL was an independent agent under Article 5(6)of the tax treaty between India and Holland, that the activities of the agent were carried out in its ordinary course of business, that the agent was not wholly and exclusively devoted to the assessee, that payments made to SIPL were at arm's length, that provisions of Circular 742 were applicable for determining the tax liability of the assessee. In short, the assessee was not liable to pay tax in India in any of the AY.s. mentioned above. Effective ground of appeal is decided in favour of the assessee.
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