Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2011 (9) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2011 (9) TMI 807 - AT - Income TaxIndia Singapore DTAA - assessee company, tax resident of Singapore, entered into an agreement with Prasar Bharti[PB] for the telecasting production of cricket events held during stipulated period - whether receipts from Prasar Bharti amount to business income or FTS - rate of tax applicable to such receipts - Held that:- Services of production and generation of live television signal rendered by the assessee in terms of agreement were in the nature of technical services. Assessee made available to PB the services which are based on technical knowledge, experience, skill, know-how and processes which also consisted of development and transfer to PB of technical plan and design relating to production and generation of live television signal as per clause (xxvii) of para 5 of the agreement. Therefore, the consideration received by the assessee for rendering such technical services was in the nature of fee for technical services within the meaning of clause (b) and (c) and paragraph 4 of Article 12 of DTAA. Thus, under the DTAA also, the character of income arising to assessee from operation and maintenance of the services rendered in respect of production and generation of live television signal was in the nature of fee for technical services Whether assessee has a Permanent Establishment in India? - Held that:- Assessee had no fixed place or service PE in India on grounds that firstly, contract was signed by the assessee at Singapore and all the activities relating to this contract were carried out from Singapore. Secondly, affairs of the assessee company were wholly carried out at Singapore. Thirdly, assessee has led some sufficient evidence to establish the fact that the TV crew did not stay for more than 10 days in each year. Residence of two non-residents directors in India will not make the company a resident in India as held in the case of Radha Rani Holdings (P) Ltd. Estimate of days made by the AO is not made based on the record or information but on the basis of certain news items and e-mails which, do not give an objective picture of the actual days of the stay of the employees. Thus uphold the assessee's contention that it had no PE in India during these years. Rate of tax applicable to India - 20% or 10% - Held that:- As per paragraph 2 of Article 12 of the DTAA royalties and fees for technical services may also be taxed in the Contracting State, in which they arise and according to the laws of that Contracting State, but if the recipient is the beneficial owner of the royalties or fees for technical services, the tax so charged shall not exceed 10%. Thus merit in the argument of assessee that the situation is to be governed by the DTAA and not by domestic law. Reversal of the orders of lower authorities applying the rate of 20% by recoursing to Section 44D read with Section 115A of the IT Act. Advertisement revenues - received by the assessee in Singapore for matches played abroad - Held that:- The dominant object of the payment by the Indian companies to assessee's Singapore office was to advertise their products in foreign territory in foreign cricket matches and the dominant object emerges to be the advertisement in foreign territories. Thus the advertisement revenue has no attribution to India and in the absence of any PE this revenue cannot be taxed in India. See Lufthansa Cargo India (P) Ltd. v. Dy. CIT [2004 (6) TMI 273 - ITAT DELHI-B]. Chargeability of interest u/s 234B & C - Held that:- Since, receipts of the assessee were liable to TDS u/s 195, the same will not be liable for advance tax and the interest was not liable by them as per provisions of Section 209 - Decided partly in favor of assessee.
|