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2022 (2) TMI 319 - AT - Income TaxExistence of PE in India - Income accrued in India - assessee has a PE in India subsidiary company set up - abassessee is a company incorporated in USA and also a tax resident of USA - Assessee pleaded that it does not have any PE in India in terms of Article 5 of the Double Taxation Avoidance Agreement (DTAA) entered into and subsisting between India and USA. The Indian Company i.e. GIA India Laboratory Pvt. Ltd., which was set up on 26/09/2007, is a subsidiary of the assessee company. This subsidiary company set up a laboratory in India and since then engaged in the activity of gem grading in India - HELD THAT:- As during the year under consideration vis-à-vis earlier years [2019 (7) TMI 859 - ITAT MUMBAI] which has been admitted both by the ld. AO as well as ld. DRP, respectfully following the aforesaid decisions of the Tribunal, we hold that the ld. AO erred in invoking section 9 of the Act and / or Article 5 of the India USA DTAA in order to say that assessee has a PE in India. Accordingly, the ground No.2 raised by the assessee is allowed. Taxability of royalty - HELD THAT:- Since there is no PE in India, there will be no occasion to royalty being effectively connected with the PE or taxability of royalty u/s.44DA Chargeability of interest u/s.234C - HELD THAT:- This ground would be consequential in nature as we have directed the ld. AO to re-determine the income in terms of the aforesaid directions. In any event, we hold that interest u/s.234C of the Act shall be charged only on the returned income and not on the assessed income. The law is very well settled in this regard.
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