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2022 (11) TMI 1345 - AT - Income TaxFee for Technical Services (FTS) - PE in India - Applicability of Force of Attraction Rule - amount received from contract with Andhra Pradesh Transmission Corporation (AP Transco) atxed applying the rate of 20% - HELD THAT:- Undisputedly, the projects from which the assessee has earned revenue in the year under consideration were continuing from preceding assessment year. We have noted, while considering identical nature of dispute arising between the parties, the Coordinate Bench [2019 (12) TMI 812 - ITAT DELHI] relating to assessment years 2001-02 to 2005-06, has not only held that there is no PE of the assessee in India, insofar as, the AP Transco project is concerned, but also held that Force of Attraction Rule will not apply As duration of services rendered for AP Transco project in terms with the agreement is for a period of less than 6 months. The aforesaid factual position has not been controverted by the Revenue. That being the case, there is no PE in terms with Article 5(1) read with Article 5(2)(i) of the Tax Treaty. Therefore, the decision of the Coordinate Bench (supra) will squarely apply to the facts of the present appeal. That being the case, respectfully following the decision of the Coordinate Bench, we direct the Assessing Officer to delete the addition. Ground nos. 1 and 2 are allowed. Taxability of revenue earned from contract with Jaiprakash Industries Ltd. by applying the provisions of section 44DA of the Act - As on going through the decision of the Tribunal in preceding assessment years, we find that the Tribunal did not accept assessee’s claim that the revenue earned from the contract with the Jaipraksh Industries Ltd. is covered under section 44BBB of the Act, however, the Tribunal held that the assessee has no PE in India and in absence of PE, the revenue earned from Jaiprakash Industries Ltd., being in the nature of FTS will be taxable at the rate of 10%. Thus we direct the Assessing Officer to tax the revenue earned from the Jaiprakash Industries Ltd by applying the rate of 10% as provided under Article 12 of India – Germany Tax Treaty. This ground is partly allowed. Applicability of Force of Attraction Rules to the revenue earned from contracts with AP Transco and Jaiprakash Industries Ltd. - As relying on assessee own case Force of Attraction Rule is not applicable to the revenue earned from the AP Transco and Jaiprakash Industries Ltd. Interest u/s 234B and 234C is not chargeable where tax is deductible at source - The reliance placed on GE Packages Power Inc. [2015 (1) TMI 1168 - DELHI HIGH COURT] is apt.
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