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2019 (2) TMI 2045 - AT - Income TaxIncome deemed to accrue or arise in India - existence of a Permanent Establishment (PE) in India - Liaison Office at Bombay - India–Japan Tax Treaty - assessee is a company incorporated in Japan as allowed by the Reserve Bank of India to open a Liaison Office (LO) at Bombay for liaison work with a condition that no business will be carried out by the company and no income will be earned by the company through the LO - HELD THAT:- As, on the basis of the facts and evidences available on record, which are very much the same in the impugned assessment year, the Tribunal ultimately concluded that there is nothing on record to prove that the Liaison Office at Mumbai was functioning as an independent profit centre to constitute as PE of the assessee. While coming to such conclusion, the Tribunal also took note of the allegation of the Assessing Officer that the Liaison Office has violated the permission granted by the RBI with regard to conducting its activities and which will be taken up by the Assessing Officer with the RBI. In this context, the Tribunal observed that since there is no adverse report or action taken by the RBI against the assessee, it has to be accepted that the Liaison Office was performing its activities in accordance with the permission granted by the RBI. It is relevant to observe, same view was expressed by the Tribunal while deciding identical issue in assessee’s own case for assessment year 2007–08. Tribunal has taken a conscious view that such impounded documents do not establish the fact that the Liaison Office is acting as a PE of the assessee, such decision of the Tribunal being purely on the basis of facts obtaining from the impounded documents, which also forms the basis for addition in the impugned assessment year, respectfully following the view expressed by the Tribunal in the preceding assessment years in the orders referred to above, we hold that the Liaison Office at Bombay does not constitute a PE of the assessee under Article–5 of Indian–Japan Tax Treaty. Hence, no income of the assessee can be brought to tax in India. Accordingly, we delete the addition made by the Assessing Officer. Grounds no.1, 2 and 3, are allowed.
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