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2023 (3) TMI 912 - AT - Income TaxIncome deemed to accrue or arise in India - benefit of India - UK DTAA to the assessee by the A.O. - Reference to incorporation, domicile or place of management or on other conditions - HELD THAT:- It is observed that the assessee’s case for A.Y. 2011-12 [2017 (2) TMI 779 - ITAT MUMBAI], the co-ordinate bench has held that the assessee is entitled to the benefits of India - UK DTAA by following the previous year’s decision of the Tribunal in the case of Linklaters LLP [2017 (2) TMI 779 - ITAT MUMBAI] Taxability of LLP or its partners - A.O. has held that as per UK laws, LLP is not a taxable entity and since the assessee is not liable to tax and only its partners are assessed to tax, the assessee cannot be given the benefit of the Tax Treaty - No doubt that the firm consists of Partners and the income of the firm are taxed in the hands of the partners, the assessee is also said to be incorporated and registered under the laws of UK. Other than the fact that the assessee has not paid tax, we have observed from the orders of the DRP and the A.O. that there is no detailed analysis as to why the said benefit is to be denied to the assessee. There has been no discussion neither in the DRP’s order nor in the assessment order explaining why the income of the assessee is to be taxed in India. In the absence of such analysis, we are inclined to follow the decision of the Tribunal in assessee’s case for earlier years which has held that the assessee was entitled to India - UK tax treaty benefits - we allow ground raised by the assessee. Income taxable in India - FTS - Whether the invoice raised by the assessee is in the nature of ‘fees for technical services’ as defined under Article 13(4)(c) of India UK DTAA? - assessee contends that the A.O. has given a factually inaccurate finding that the co-ordinate bench in assessee’s case has held the impugned amount to be taxable in India as per the DTAA - HELD THAT:- Tribunal in A.Y. 2013-14 and 2015-16 [2010 (7) TMI 535 - ITAT, MUMBAI] held that the Revenue has failed to prove otherwise that the same pertain to ‘fees for technical services’ - provisions of India-UK DTAA would override the provisions of the Act, thereby holding the remuneration received by the assessee for providing legal services as not amounting to ‘fees for technical services’, where the provisions of section 9(1)(vii) of the Act is not applicable - the revenue has failed to prove that the same would fall under the category of ‘fee for technical services’ as envisaged in Article 13 of the India-UK DTAA and thereby holding that the same cannot be brought to tax as ‘FTS’ as per section 90(2) of the Act. We are inclined to follow the said decisions, as the Revenue even during the impugned year has failed to controvert the contention of the assessee.- we allow ground raised by the assessee. Permanent establishment in India - period of stay in India - HELD THAT:- As assessee do not have a permanent establishment in India during the impugned year. As the period of stay of the employees of the assessee for rendering the services in India was only for 17 days and only when it amounts to 90 days or more, the assessee is said to have a permanent establishment in India as mandated by law. Liability to be taxed in India under Article 15 India-UK DTAA - whether only Article 7 was applicable in assessee’s case and not Article 15? - HELD THAT:- As decided in in the assessee’s case [2018 (9) TMI 1741 - ITAT MUMBAI] impugned amount of fee received by the assessee would not be liable to be taxed under Article 15 of India-UK DTAA As this issue has already been dealt with by the Tribunal extensively in the previous years, the same is also applicable for the impugned year as there is no change in facts for this year. Tribunal has reiterated that Article 15 of India-UK DTAA is dealt with only for taxability of independent personnel services or independent activity of similar character and not for the assessee which is a partnership firm. Appeal filed by the assessee is allowed. Accrual of income - Reimbursement of expenses treated as ‘income’ - India-Singapore tax treaty - HELD THAT:- As decided in case in Linklaters LLP [2017 (2) TMI 779 - ITAT MUMBAI] reimbursements received by the assessee are in respect of specific and actual expenses incurred by the assessee and do not involve any mark up, there is reasonable control mechanism in place to ensure that these claims are not inflated, and the assessee has furnished sufficient evidence to demonstrate the incurring of expenses. 'There is thus no good reason to make any addition to income in respect of these reimbursements of expenses. The action of the CIT(A), as rightly contends, is on pure surmises and conjectures - delete the disallowance of expenses as sustained by, the CIT(A) and hold that no part of reimbursements of expenses received by the assessee on the facts of this case, be treated as income of the assessee. Decided in favour of assessee.
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