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2015 (12) TMI 1799 - AT - Income TaxPermanent establishment in India under Article 5(2)(k) of DTAA between India and the UK - profits attributable to the PE - HELD THAT:- As decided in assessee's own case [2015 (9) TMI 1532 - ITAT MUMBAI] while we agree with the learned counsel that art. 15 will not be applicable on the facts of the present case, this finding does not really come to the rescue of the assessee since, as we have already held, the assessee did have a PE in India under art. 5(2)(k) of the India-UK tax treaty, and, accordingly, profits attributable to the PE are taxable under art. 7 of the India-UK tax treaty. In view of the above discussions, we are unable to uphold the plea so strenuously argued by the learned counsel for the assessee, and we hold that the authorities below have rightly invoked the provisions of art. 5(2)(k). We approve the same, and decline to interfere in the matter. On adjustments required claimed by the assessee in earnings of the PE, on the basis of prevailing market prices of similar services, in view of independence fiction of art. 7(2). Reimbursement of the expenses as part of the income of the assessee - HELD THAT:- As decided in assessee's own case [2015 (9) TMI 1532 - ITAT MUMBAI] the reimbursements received by the assessee are in respect of specific and actual expenses incurred by the assessee and do not involve any markup, there is reasonable control mechanism in place to ensure that these claims are not inflated, and the assessee has furnished sufficient evidence to demonstrate the incurring of expenses. There is thus no good reason to make any addition to income in respect of these reimbursements of expenses. The action of the CIT(A), as learned counsel rightly contends, on pure surmises and conjectures. Income accrued in India - income relatable to work performed in India in liable for taxation in India - profit as attributable to the PE, can only be assessed in India - HELD THAT:- This issue also stands covered in favour of the assessee on the basis of orders of the Tribunal passed in the case of the assessee for A.Y. 1997-98 wherein it was held that only income related to services rendered in India, is liable to tax in India. Further, reliance was also placed by him upon the judgment of Hon’ble Mumbai Special Bench of the Tribunal in the case of Clifford Chance [2013 (6) TMI 544 - ITAT MUMBAI] - income in respect of services rendered in India, which are attributable to PE only, would be taxable in India. Thus, ground no. raised by the Revenue stands dismissed. 85% of disbursement claim proportionate to the fee related to the services rendered in India as compared to total fees - HELD THAT:- As relying on assessee's own case [2015 (9) TMI 1532 - ITAT MUMBAI] no amount should be disallowed. Thus, ground no.2 of the Revenue’s appeal stands dismissed.
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