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2017 (5) TMI 720 - AT - Income TaxExistence of PE in India - income accrued in India - Attribution of entire management fee to the alleged PE in India - Held that:- As per section 9(1) of the Act all income accruing or arising, whether directly or indirectly, through or from any business connection in India, or through or from any property in India, or through or from any asset or source of income in India, shall be deemed to accrue or arise in India, however, Explanation (1) to section 9(1) makes it clear, in case of a business of which all operations are not carried out in India, only such part of the income as is reasonably attributable to the operations carried out in India shall be deemed to accrue or arise in India. Therefore, the income of the assessee has to be determined keeping in view the aforesaid legal principle. In view the aforesaid facts, since the assessee’s contention with regard to the exact profit attributable to PE in India has not been properly analysed/examined, therefore, we are inclined to remit the issue to the file of the AO for fresh adjudication. It is open for the assessee to furnish all material/evidences to justify its claim that profit worked out as per the chart submitted before us is the income actually attributable to the PE in India. Due opportunity must be given to the assessee to produce any other evidences and material before the AO on this account. The AO is directed to properly consider and examine the submissions of the assessee in the light of the evidences and material brought on record and decide the issue as per law. It goes without saying, the AO must afford reasonable opportunity of being heard to the assessee before deciding the issue. Ground no.2 and 3 are allowed for statistical purposes. Levy of interest u/s 234B for non-payment of advance tax - Held that:- The assessee being a non-resident, the liability is on the payer to deduct tax at source u/s 195 of the Act at the time of payment and there is no liability on the assessee to pay advance tax. This view of ours is supported in the case of Director of Income-tax (International Taxation) v. NGC Network Asia LLC [2009 (1) TMI 174 - BOMBAY HIGH COURT]. In view of the above levy of interest u/s 234B of the Act is unsustainable. This ground is allowed.
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