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2015 (9) TMI 1532 - AT - Income TaxPermanent Establishment in India under Article 5(2)(k) of India UK DTAA - Held that:- This matter has been decided against assessee by the Tribunal in assessment year 1995- 96 again been followed by the Tribunal in AYs 1996-97 & 1997-98 wherein held specific provisions for professional services or independent personal services or included services exist under art. 15, when services are rendered by the enterprise, art. 5(2)(k) will come into play, and when services are rendered by an individual, art. 15 will find application. Therefore, while we agree with the learned counsel that art. 15 will not be applicable on the facts of the present case, this finding does not really come to the rescue of the assessee since, as we have already held, the assessee did have a PE in India under art. 5(2)(k) of the India-UK tax treaty, and, accordingly, profits attributable to the PE are taxable under art. 7 of the India-UK tax treaty. The very plea of the assessee proceeds on fallacy that arm's length price adjustment can be made in respect of the transactions with the clients of the assessee. The revenues earned by the assessee are to be taken at actual figures and no adjustments are permissible in the same is to be rejected as well. The action of the authorities below is confirmed on this count as well. - Decided against assessee Reimbursement of expenses - considered as ‘income’ by the revenue - Held that:- As decided by Tribunal in AY 1995-96 we are inclined to uphold the grievance of the assessee. The reimbursements received by the assessee are in respect of specific and actual expenses incurred by the assessee and do not involve any markup, 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 thus no good reason to make any addition to income in respect of these reimbursements of expenses.- Decided in favour of assessee Taxability of income related to work performed in India - Held that:- The Tribunal though in AY 1995-96 had decided this issue against the assessee after invoking the principle of “force of attraction”, however, later on, the Special Bench of the Tribunal in the case of ADIT vs Clifford Chance reported in [2013], (2013 (6) TMI 544 - ITAT MUMBAI ) has decided the issue in favour of the assessee and against the revenue, whereby the specific finding of the Tribunal on this issue has been reversed. Accordingly, following the binding precedence of Special Bench in the case of ADIT vs Clifford Chance (supra). We hold that the profits, which are attributable to the PE can only be assessed in India and thus ground no.1 raised by the revenue stands dismissed. CIT(A) excluding receipts from Serium Institute of India Ltd - Held that:- As it has been admitted by both the parties that this issue is not arising in this year and, therefore, no adjudication is required. Accordingly, the issue raised is treated as dismissed as there is no receipt of this kind in this year. Denial of benefit under Indo-UK DTAA - Held that:- It has been admitted that the treaty benefit of Indo-UK DTAA has been allowed by the Tribunal in the earlier years, therefore, in AY 1995-96, this issue has been concluded in favour of the assessee as held that the assessee was indeed eligible to the benefits of India-UK tax treaty, as long as entire profits and the partnership firm are taxed in UK – whether in the hands of the partnership firm though the taxable income is determined in relation to the personal characteristics of the partners, or in the hands of the partners directly. Charging of interest u/s 234D as introduced from 1st June, 2003 will have retrospective effect. Accordingly, following the binding judicial precedence, we hold that interest u/s 234D will be leviable in case of the assessee for this year also. See case of Indian Oil Corporation Ltd [2012 (9) TMI 517 - BOMBAY HIGH COURT]
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