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2022 (9) TMI 1236 - AT - Income TaxAssessment u/s 144C - AO passed a draft assessment order - constitution of dependent agent PE and taxability of royalty income under Article 7 of India – UK DTAA - Whether there was no variation in income returned by the appellant and, therefore the impugned order passed by the AO is void ab initio and, therefore, is liable to be quashed? - HELD THAT:- We find that the Assessing Officer has only recharacterized the income which was shown as royalty income by the assessee and was taxed as ‘business income’ by the Assessing Officer without there being any variation in income returned by the assessee. In our understanding of the provisions of section 144C of the Act mentioned hereinabove, we are of the considered view that the Assessing Officer wrongly assumed jurisdiction u/s 144C of the Act when there is no variation in the income returned by the assessee. See IPF INDIA PROPERTY CYPRUS (NO. 1) LTD. [2020 (2) TMI 1667 - ITAT MUMBAI] We hold that the AO wrongly assumed jurisdiction u/s 144C of the Act, and therefore, the final assessment order framed in Assessment Years 2007-08 and 2010-11 to 2015-16 are barred by limitation and accordingly, the impugned assessment orders are liable to be quashed as void ab initio. This additional ground is, accordingly, allowed. Determination of income - consideration for use of brand [ie for ‘Royalties’] in India as liable td tax Tat 40% as Business Income under Article 7 instead of being liable to tax as ‘Royalties’[at 15%] under Article 13 of DTAA between UK and India - assessee moved an application u/r 29 of the ITAT Rules requesting for admission of additional evidences - HELD THAT:- It is true that the entire assessment has been based on the reading of the trade mark license agreement dated August 08, 2002. It is equally true that supplementary trade mark licence agreement dated April 04, 2013 changes the color of the entire transaction. Such an agreement which goes to the root of the matter cannot be brushed aside lightly. Therefore, in the interest of justice and fair play and as contended by the ld. DR, we deem it fit to restore the entire quarrel to the file of the Assessing Officer. AO is directed to consider the agreement dated April 04, 2013 and decide the issue afresh after giving reasonable and adequate opportunity of being heard to the assessee. Thus, ITA is allowed for statistical purposes.
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