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2019 (4) TMI 280 - AT - Income TaxIncome accrued in India - supply of telecommunications hardware to Indian telecom operators - ‘royalty’ income from supply of software on a gross basis - India-Finland DTAA - existence of PE in India - HELD THAT:- Contention of the Ld. DR is not tenable that the facts of the year under considerations are distinguishable from A.Y. 1997-98, 1998- 99 because issue that “the assessee has a fix place PE in the NIPL office and DAPE in the form of NIPL” has already been dealt with by the Special Bench II as is evident from a question of law framed by Hon’ble High Court on the findings returned by the Tribunal in SB II holding that NIPL did not constitute a fix place PE of the assessee. When the revenue has failed to prove that there exists PE of the assessee these grounds raised by the revenue have become infructuous being consequential in nature. Taxability of interest from vendor financing - assessee has not treated the amount to be legally claimed nor has acknowledged any debt due to its customer as delayed payment no income can be said to accrue to the assessee on account of delayed payment as neither there was any corresponding liability on any of the debtors nor the assessee had claimed any entitlement on such an interest. So AO/CIT(A) have erred in imputing ₹ 50,000,000/- as income from vendor financing for the purpose of taxability in the hands of assessee in India as business income. In view of what has been discussed above, we are of the considered view that following the decision rendered by SB-1 and SB-II which is applicable to the facts and circumstances of the cases at hand on account of identical facts, existence of fixed place PE of assessee in India is not established, consequently appeals filed by the assessee allowed.
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