2017 (7) TMI 1442 - AT - Income Tax

Income deemed to accrue or arise in India - Business profit attributable to the PE of the assessee in India - Royalty received by the assessee from Warner Bros Picture India Ltd in pursuance to the agreement for distribution and exhibition of the films in India - Whether Respondent does not have PE in India because the Indian company that has obtained the right is acting independently - HELD THAT:- As decided in assessee own case [2016 (10) TMI 1372 - ITAT MUMBAI] very issue of existence of PE in India has been considered by the Hon‟ble ITAT. The income of the assessee company does not qualify for the definition of Royalty in term of income tax Act 1961. The AO himself has accepted in the assessment order that the income of the assessee cannot be taxed as Royalty. Once the income of the assessee company does not qualify under the definition of Royalty, the income has to be held as business income. The business income cannot be taxed in the absence of PE in India. We have seen that the Hon‟ble ITAT has categorically held that the WBPIPL is not the PE of the assessee company.

Thus, respectfully following the decision of the Hon‟ble ITAT in the assessee‟s own case, we are of the view that the income of the assessee is not taxable in India and we direct the AO to delete the addition proposed on this account - Appeal of the Revenue is dismissed.