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2012 (1) TMI 9 - AT - Income TaxIndo French DTAA - foreign company's business of operations of ships in international traffic carried out through agents's fixed place in India – question of existence of a Permanent Establishment – Dependent Agent Permanent Establishment(DAPE) or independent agent - Article 5, 7 & 9 of Indo French DTAA - determination of profits attributable to PE – Relief under article 9 – levy of interest u/s 234B - Held that:- Permanent establishment in the present case will be governed by Article 5(5) read with Article 5(6) of Indo French DTAA. Since there are no findings by the A.O., or the DRP, to the effect that the transactions between the agent and the assessee are not at an arm's length price, the agent is treated to be an independent agent in view of the provisions of Article 5(6). Such a finding by the revenue is a sine qua non for existence of DAPE. Thus, it is held that the assessee did not have any PE in India. Having held that the PE did not exist on the facts of this case, it is not really necessary to deal with profit attribution in the case of PEs. With respect to relief under Article 9 in respect of freight earnings it is held that the issue is covered against the assessee by a coordinate bench's decision in assessee's own case for the assessment year 2001-02 therefore, the assessee may take up the issue before Hon'ble Courts. Levy of interest under section 234 B – A.O. is directed to grant necessary relief. - Decided partly in favor of assessee.
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