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2020 (12) TMI 857 - AT - Income TaxIncome accrued in India - dependent agent PE in India - Service PE and fixed place PE within Article 5 of Indo China DTAA - Deemed to accrue and arise u/s 9 of the Act – Income of the Permanent Establishment - HELD THAT:- The appellant company, Huawei China (HC) had subsidiary in India, namely, Huawei Telecommunications India Company Private Ltd. (HI). HI not only constitutes dependent agent PE of HC but also Service PE and fixed place PE within Article 5 of Indo China DTAA. The counsel had vehemently argued that statements recorded at the time of survey do not have any evidentiary value in light of the decision in the case of S. Kader Khan [2007 (7) TMI 182 - MADRAS HIGH COURT] which has been confirmed by the Hon'ble Supreme Court [2013 (6) TMI 305 - SC ORDER] - In our considered opinion, the said decision is totally on different set of facts. In the case in hand, statements of key employees relied upon by the Revenue are well supported by documentary evidences in the form of emails which prompted the Revenue to take a stand that the office of HI in India was engaged in carrying out the business activities of HC. Moreover, in the case in hand, income has not been determined on the basis of any banal declaration by any witness but after analysing in detail the activities of the PE in India since its inception Assessee has repeatedly referred to various clauses of contracts/agreements entered into with Indian buyers for purchase/sale of telecommunication network equipment. The contracts are contractual obligations between the parties, inter se, but who could be in a better position than the key employees of HI to tell how the transactions were actually undertaken, which is the ground reality. Income attribution - As decided in own case [2014 (4) TMI 770 - ITAT DELHI] equipment, i.e., the hardware supplied by the assessee contained the software and the software was not separately supplied. The only ground stressed upon by the learned DR was to point out the bifurcation of the contract price between the hardware and software. We find that the facts were identical before the Hon'ble Jurisdictional High Court in the case of Ericsson A.B., New Delhi [2011 (12) TMI 91 - DELHI HIGH COURT] - we hold that there was only one contract for supply of equipment which included hardware and software both and, therefore, the income from supply of the equipment is to be assessed as business income arising from the assessee's business connection/PE in India. We, therefore, direct the Assessing Officer to rework out the assessee's income accordingly Charging of interest u/s. 234B - HELD THAT:- Under section 195 of the Act, tax is deductible at source from payments made to non-residents. Appellant is a non-resident and thus, tax is deductible at source from the payments made to it under section 195 of the Act. Since tax was deductible at source on all the payments made to Appellant, no advance tax was payable as per the provisions of the Act. In the case of DIT v. GE Packaged Power Inc.[2015 (1) TMI 1168 - DELHI HIGH COURT] held that no interest under section 234B of the Act can be levied on the assessee-payee on the ground of non-payment of advance tax because the obligation was upon the payer to deduct the tax at source before making remittances to them. Amendment to the provisions have been brought by the Finance Act, 2012, w.e.f. 1.4.2012 by which a proviso below section 209(1)(d) of the Act has been added but applicable from A.Y. 2013-14. Considering the law on this issue, we direct the Assessing Officer not to charge interest u/s. 234B of the Act upto A.Y. 2012-13. Interest can be levied as per provisions of law from A.Y. 2013-14 onwards.
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