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2011 (5) TMI 568 - AT - Income TaxInternational transaction - appellant submitted that the business associates did not having Permanent Establishment (PE) in India - With regard to the conclusion of the AO that the non-resident is in receipt of income from the assessee and therefore section 163(1)(c) would be applicable, the appellant submitted that the taxability of the income under the Act has to be examined before holding that section 163(1)(c) applies to the case of the appellant - Whether the parameters laid down in section 163(1)(b)are satisfied in the case of the appellant - Held that:- A mere relation between the business of the non-resident and the activity in India which facilitates or assists the carrying on of the business of the non-resident would result in a business connection - The business of the non-resident was transshipment of cargo and the appellant engaged their services for shipment of cargo from India to a destination which the appellant could not reach without the assistance of the transshipment through the non-resident - All these facts in our opinion are sufficient to justify the conclusion that there was a business connection within the meaning of section 163(1)(b) as well as section 9(1)(i) - non-resident had business connection in India and therefore income had accrued and arisen in India to the non-resident which is chargeable to tax - In the absence of treaty between India and Hong Kong, we have to proceed to tax income that accrues to the non-resident in India - Decided against the assessee Regarding tax deducted from source - CIT(A) has given a finding that the appellant charges its customers freight payable inclusive of the freight from the port of transshipment to the ultimate destination and this is done with the tacit understanding with the non-resident who does transshipment outside India - Held that:- There is no material on record to suggest that the appellants were acting as agents when they dealt with the Indian customer sending cargo, there is equally no material to show that the appellants were dealing with the non-residents only on a principal to principal basis - Under the 1922 Act, there were no separate proceedings by which a person in India is treated as Agent of non-resident. Under 1922 Act, in section 42, it was provided that income of the non-resident could be assessed either in his name or in that of his agent, if there was a business connection - At the stage of treating a person in India as agent of a non-resident, the liability to tax of the non-resident need not be established. Against assessee.
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