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2010 (11) TMI 681 - AT - Income TaxInternational Taxation - Liaison office in India ("Indian LO") - The Indian offices practically carry out all operations of the business of the commission agent except the formation of the contract between the vendors and the buyers, which in any case cannot be done by a commission agent. While carrying out FAR analysis, the assessee attributed 33% of the business functions to the Indian offices. 18% of the assets employed in the business belong to the Indian offices. It is also admitted that 3% of the risk was taken by Indian offices. - held that:- relying on the decision in the case of Performing Right Society Ltd. (1976 -TMI - 6491 - SUPREME Court), it is held that notwithstanding the nomenclature of liaison office, the Indian offices are carrying out real and substantive business operations of the assessee, the income from which accrues or arises in India. - business connection established - assessee has permanent establishment in India - assessee was liable to be taxed in India on the income attributable to India offices. - However expenses incurred shall be deducted. Regarding interest u/s 234B and 234C - it may be stated that the assessee is a non-resident company, which receives income from another non-resident company outside India. All payments to a non-resident person are liable for deduction of tax at source under section 195 of the Act. Therefore, all receipts of the assessee are liable to tax deduction at source - Since there is no liability to pay advance-tax, there cannot be any reason for charging interest under sections 234B and 234C for failure to pay advance-tax, which was not payable in the first place - Appeal is allowed
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