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2012 (12) TMI 186 - AT - Income TaxForeign company – engaged in supply of GSM Mobile Telecommunication system comprising of hardware and software to various cellular companies operation in India – Revenue contending assessee having business connection in India and has a permanent establishment in the form of a dependent agent establishment – income from licensing of software amounted to receipt of royalty – Held that:- It is observed that facts and circumstances of these years are the same as in the previous years. Issues are squarely covered in favour of the assessee by the judgement of the Jurisdictional High Court in the assessee’s own case for the earlier Assessment Years wherein it was held that since goods were manufactured outside India and even the sale has taken place outside India. Thereby, no part of the income accrued to the assessee in India. Payment received by the assessee was towards the title and GSM system of which software was an inseparable part incapable of independent use and it was a contract for supply of goods. Therefore, no part of the payment therefore can be classified as payment towards royalty. Because the installation contractor is a subsidiary of the assessee holding company would not, by itself, give rise to a business connection. Therefore, assessee did not have any business connection in India. In view of this, it is not necessary to go into the issue whether the assessee had any Permanent Establishment in India or not during the relevant period in India or not.- Decided in favor of assessee. Regarding levy of interest charged u/s 234B it is held that levy of interest was not justified, inasmuch as the assessee had no obligation to pay any advance tax as tax was deductible at source on its income that was chargeable to tax in India.
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