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2022 (3) TMI 1032 - AT - Income TaxPE in India - Taxability of advertisement revenue and distribution revenue - assessee is a foreign company registered under the Mauritian Law and is engaged in the business of telecasting its sports channel “Ten Sports” - whether the assessee has a Permanent Establishment (“P.E.”) in India in respect of advertisement revenue and distribution revenue received by the assessee? - India Mauritius DTAA - HELD THAT:- In the present case, the Revenue, except merely referring t clause of the Addendum, has neither established nor brought anything on record, either at the assessment stage or before us, that Taj India had habitually exercised the authority to conclude the contract on behalf of the assessee. Revenue has failed to discharge the burden casted on it to prove that the twin conditions provided in Article 5(4)(i) of the DTAA are satisfied in the facts of the present case. As held in the case of Motorola Inc.[2005 (6) TMI 226 - ITAT DE LHI-A] that DTAA is only an alternative tax regime and not an exemption regime and therefore, the burden is first on the Revenue to show that the assessee had a taxable income under the DTAA, and then the burden is on the assessee to show that its income is exempt under DTAA. Similarly, was held by the Co-ordinate Bench of the Tribunal in ITO v. Right Florists (P) Ltd. [2013 (4) TMI 338 - ITAT KOLKATA]. In view of the above, Taj India cannot be held to be dependent agent P.E. of the assessee in India under Article 5(4)(i) of the India Mauritius DTAA with respect to the distribution revenue. Accordingly, to this extent order passed by the CIT(A) is upheld and the grounds raised by the Revenue are dismissed. P.E. in India in respect of advertisement revenue - Revenue has not been denied that Taj India was remunerated at arm‟s length price with respect to advertisement revenue and transfer pricing analysis was also accepted by the Transfer Pricing Office passed under section 92CA(3) - we accept the alternative plea of the assessee and held that as Taj India was remunerated at arm‟s length price in respect of advertisement revenue, no further profit needs to be attributed to same for the purpose of taxation in India. Further, as regards the issue of existence of P.E. with respect to advertisement revenue, same is left open. Accordingly to this extent, order passed by the CIT(A) is set aside and addition made by Assessing Officer with respect to advertisement revenue is directed to be deleted. As a result, the appeal filed by the assessee is allowed on the alternative plea. Disallowance of transponder fees and uplinking charges under section 40(a)(i) - HELD THAT:- As the facts and circumstances of the present case are similar to the earlier assessment years, wherein transponder fees and uplinking charges were paid by the assessee and India USA DTAA provisions were considered, respectfully following the decision of the Co–ordinate Bench rendered in assessee‟s own case [2016 (8) TMI 504 - ITAT MUMBAI] we hold that the aforesaid payments are not in the nature of Royalty within the meaning of Article–12 of the India USA DTAA. the provisions of Article 3(2) of India US DTAA are similar to India Singapore DTAA, which were considered by Co-ordinate Bench of the Tribunal in aforesaid decision. Accordingly, respectfully following the judicial precedence in assessee‟s own case, the order passed by the CIT(A), deleting the disallowance made by the Assessing Officer under section 40(a)(i) of the Act, is affirmed. Consequently, the grounds raised by the Revenue are dismissed.
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