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2013 (12) TMI 999 - AT - Income TaxTechnical Expenditure – Held that:- Following Sumitomo Mitsui Banking Corporation v. Deputy DIT [2012] 16 ITR (Trib) 116 - The principle of mutuality applies in respect of transactions between the permanent establishment and its head office - There can be no profit from transactions with self in as much as neither there can be any deduction in the hands of the permanent establishment nor there can be any income in the hands of the head office in respect of such mutual transactions - The learned CIT(A) was justified in holding that a sum of ₹ 4.23 crores can neither be allowed as deduction in the hands of Indian branch nor be considered as income in the hands of the head office. Following CIT v. P. V. A. L. Kulandagan Chettiar [2004] 267 ITR 654 (SC) - The provisions of sections 4 and 5 are subject to the contrary provision, if any, in the Double Taxation Avoidance Agreement - The provision of the Act or that of the Double Taxation Avoidance Agreement, whichever is more beneficial to the assessee, shall apply - The payment of ₹ 4.23 crores by the permanent establishment to the head office is a payment to self and hence cannot be allowed as deduction in the hands of permanent establishment - As a result thereof, the provisions of section 40(a)(i) were held to be not applicable. Since the assessee is a non-resident governed by the provisions of the Double Taxation Avoidance Agreement, it is entitled to the benefits of the Double Taxation Avoidance Agreement, if the quantum of income or the overall tax liability turns out to be less as per the Double Taxation Avoidance Agreement vis-a-vis the domestic law - It is not possible to determine as to whether or not the computation under the Double Taxation Avoidance Agreement is more beneficial to the assessee – The issue was restored for fresh adjudication. Fee for technical services – DTAA – Held that:- Though there is a discussion about article 13(4)(c) of the Indo-U.K. Double Taxation Avoidance Agreement but the decision has been rendered only under the domestic law - There is no finding of the learned Commissioner of Income-tax (Appeals) that the amount is chargeable to tax as per the Double Taxation Avoidance Agreement - The amount is not chargeable to tax in the hands of the head office under the domestic law – The issue was restored for fresh decision. Interest u/s 234B and 234C – Held that:- The assessee is a non-resident, naturally any amount payable to it which is chargeable to tax under the Act, is otherwise liable for deduction of tax at source – Following Director of Income-tax (International Taxation) v. NGC Network Asia LLC [2009 (1) TMI 174 - BOMBAY HIGH COURT] - When the duty is cast on the payer to deduct tax at source, on failure of the payer to do so, no interest can be charged from the payee-assessee under section 234B – Decided in favour of assessee.
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