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2019 (3) TMI 1893 - AT - Income TaxTaxability of receipts of 'standby maintenance charges' in India - 'Fee for technical services' under section 9(1)(vii) - Appellant submits that the receipt of Standby Maintenance Charges from TCL is not taxable in India as the whole activity have been carried out outside India during the year under consideration - HELD THAT:- As decided in own case [2018 (5) TMI 2070 - ITAT MUMBAI] we notice that in Assessment Years 2001-02 to 2008-09, the Tribunal vide order [2015 (6) TMI 806 - ITAT MUMBAI] has dealt with similar issue, of course qua the revenues earned from “Restoration Services”. On this aspect, the Tribunal held such receipts to be in the nature of “business income‟, and after holding so, the Tribunal went on to deduce the method in terms of which the revenue could be apportioned to India operations in order to determine the income taxable in India. Tribunal deemed it fit to apportion the revenue on the basis of length of cable in the territorial waters of India. Though the decision has been rendered with respect to the restoration activity, so however, the methodology which has been found to be reasonable by the Tribunal is based on the fraction of length of entire cable system connected to India in its territorial waters. Drawing an analogy from the same, in the instant case too, we find that the standby maintenance charges recovered by the assessee from TCL only qua the length of cable in the territorial waters of India needs to be considered for computing the profits or income accruing to the assessee u/s 9(1)(i) Reasoning advanced by the Revenue to the effect that the standby maintenance charges are linked to the cable capacity is of no consequence for the present inasmuch as what is required to be decided is the income attributable to the business connection in India, which possibly is the length of the cable in the territorial waters of India - it is only the revenue from TCL which is on account of standby maintenance charges proportionate to the cable length in India that deserves to be considered for computing the profit or loss from standby maintenance activity attributable to India in terms of Sec. 9(1)(i) of the Act. Therefore, on this aspect, we uphold the plea of the assessee and direct the Assessing Officer to verify the calculation made by the assessee in this regard in its computation of income and recompute the income accordingly. Computation of the income from standby maintenance activities attributable in India - HELD THAT:- We find that the standby maintenance charges recovered by the assessee from TCL only qua the length of cable in the territorial waters of India needs to be considered for computing the profits or income accruing to the assessee u/s 9(1)(i) of the Act. The reasoning advanced by the Revenue to the effect that the standby maintenance charges are linked to the cable capacity is of no consequence for the present inasmuch as what is required to be decided is the income attributable to the business connection in India, which possibly is the length of the cable in the territorial waters of India. Therefore, in our view, it is only the revenue from TCL which is on account of standby maintenance charges proportionate to the cable length in India that deserves to be considered for computing the profit or loss from standby maintenance activity attributable to India in terms of Sec. 9(1)(i) of the Act. Therefore, on this aspect, we uphold the plea of the assessee and direct the Assessing Officer to verify the calculation made by the assessee in this regard in its computation of income and recompute the income accordingly. Thus, on this aspect, assessee succeeds as above. Charging of interest u/s 234B - HELD THAT:- As a settled proposition in terms of the judgment of Hon'ble Bombay High Court in the case of NGC Network Asia LLC, [2009 (1) TMI 174 - BOMBAY HIGH COURT] that there would be no chargeability of interest u/s 234B of the Act as the receipts on account of standby maintenance charges from TCL are subjected to withholding tax u/s 195 of the Act. On this aspect, it was also a common point between the parties that the said proposition has also been affirmed by the Tribunal in assessee’s own case in the orders. Thus, on this aspect, assessee succeeds.
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