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2022 (3) TMI 1209 - AT - Income TaxIncome accrued in India - payment received by the appellant from supply of equipment on an offshore basis were taxable in India u/s. 9(1)(i) of the Act r.w. Article 7 of the India - USA DTAA - presence of expat employees - business connection and PE in India - HELD THAT:- There is no dispute that the Revenue has taken a particular stand in Assessment Years 2002-03 to 2006-07 which was upheld in the subsequent appellate proceedings. It is also not in dispute that for the year under consideration, there is no specific finding given neither by the Assessing Officer nor by the DRP in respect of the presence of the expat employees. In our considered opinion, whether an assessee has PE in a particular Assessment Year has to be decided on facts of that Assessment Year and not by the facts of earlier Assessment Years. When the assessee has raised specific objections before the DRP, the DRP ought to have given findings on the objections raised by the assessee. We find that the order of the DRP is silent in this respect. Moreover, the premises which were considered to be at the disposal of the employees of the assessee were not in use any more in Assessment Years 2014-15 and 2015-16. This fact is also not dealt with by the revenue authorities. Since the entire assessment order/DRP orders are based on the findings given in Assessment Years 2002-03 to 2006-07, cannot be basis for framing assessment under consideration. Therefore, in the interest of justice and fair play, we deem it proper to restore the appeals to the file of the Assessing Officer/DRP. AO is directed to examine the presence of expat employees for each Assessment Year under consideration and decide the issue afresh after giving reasonable and sufficient opportunity of hearing to the assessee. AO is further directed to examine the transactions claimed to be at arm's length and if found correct, decide the issue as per provisions of law and settled propositions of the Hon'ble High Courts/Supreme Court. Assessee is directed to furnish all necessary details in support of its claim that no expat employees were present during the Assessment Year under consideration. Income from supply of software in India treating the same as royalty in terms of provisions of section 9(1)(vi) of the Act and Article 12 of the DTAA - AO was of the opinion that the words "use of or right to use" denote that both specific use and use of copy right result in earning of royalty income, even if it is called as 'sale' can be treated as royalty under the provisions of the Act - HELD THAT:- This quarrel is now well settled by the decision of the Hon'ble Supreme Court in the case of Engineering Analysis Center of Excellence Pvt. Ltd. [2021 (3) TMI 138 - SUPREME COURT] - we direct the Assessing Officer to delete the impugned addition in the captioned Assessment Years.
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