2023 (5) TMI 740 - AT - Income Tax

Income deemed to accrue or arise in India - Addition u/s 44DA or u/s 115A r.w.s. 9(1)(vii) - amount received by the assessee from Delhi Airport Metro Express Pvt. Ltd. is taxable u/s 44DA as per departmental or u/s 115A r.w.s. 9(1)(vii) as per assessee - assessee is a non-resident corporate entity, a tax resident of Hong Kong - contention of the assessee is that since professional services rendered by the assessee are not through any fixed place of profession, the receipts are not taxable under section 44DA - HELD THAT:- As contention of the assessee is farfetched, hence, not acceptable. The expression ‘fixed place of profession’ is used in the context of a non-resident, which is not a foreign company. Though, the expression ‘fixed place of profession’ has not been defined specifically under the provisions of the Act, however, the term ‘Permanent Establishment’ used in section 44DA, in turn, refers to the definition of ‘Permanent Establishment’ u/s 92F(iiia) of the Act.

As per definition of PE under section 92F(iiia), it includes fixed place of business, through which, the business of the enterprise is wholly or partly carried on. Thus, the fixed place of profession is akin to fixed place of business. Therefore, assessee’s contention in this regard are rejected.

Whether the assessee had a PE in India ? - On a perusal of the agreement between the parties, it is observed that the contractee is to provide office space with some other facilities to the employees of the assessee in India to carry out their activities. Such premises and facilities have been given free of charge. However, the question, which arises, is, whether access given to the assessee of the office premises of the contractee would constitute service PE or for that matter any other PE.

The facts on record do not reveal that the space and facilities provided to the assessee by DAMEPL can be construed to be a fixed place of business from where the assessee carries on its business wholly or partly.

In the facts of the present appeal, the Revenue has failed to establish through corroborative evidence that the assessee is having control over the premise. Admittedly, it is the DAMEPL, which is having control over the premises and the assessee has been given access to the premise and provided certain space and facilities. No corroborative evidence has been brought on record to demonstrate that the assessee carries on business in India wholly or partly through a fixed place of business.

That being the factual position emerging on record, applying the ratio laid down in the judicial precedents cited before us by the learned counsel for the assessee, we hold that the assessee does not have any PE in India. That being the fact, the provisions of section 44DA would not be applicable.

Thus income offered by the assessee un/s 115A read with section 9(1)(vii) of the Act has to be accepted. More so, considering assessee’s contention that in the preceding assessment years, similarly declared income has been accepted has not been controverted by the Revenue. Accordingly, we delete the addition made by the Assessing Officer under section 44DA of the Act.