Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2024 (2) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (2) TMI 917 - AT - Income TaxTaxability of income in India - Income attributable to India - income of advertisement and subscription revenue - Permanent Establishment (PE) in India at arm’s length or not? - whether assessee has business connection in India as per section 9(1)(i) r.w.s 5(2) of the IT Act? - AO estimated 15% of the net advertisement revenue as ‘Business Income’ of the assessee u/s. 9(1)(i) as attributable to India and held subscription income as ‘royalty’ u/s 9(1) (vi) of the Act and has taxed the same @20% - case of assessee is that since assessee has remunerated Indian agents i.e. ZTL and El-Zee at arm’s length, no further income is attributable to the assessee from operations carried out in India. HELD THAT:- The assessee accepted the position that it has business connection in India. No meaningful arguments against the findings of CIT(A) on this issue were advanced by the ld. Counsel in the instant appeal. In this factual matrix, we have no hesitation in upholding that the assessee has ‘Business Connection’ in India. Taxability of revenue from operations in India - Explanation 1(a) to section 9(1)(i) of the Act contemplates that a where a non resident has business connection in India and his business operations are carried out partly abroad and partly in India, in such a situation revenue only from operations in India shall be taken into account and a reasonable portion thereof shall be treated as income accruing or arising in India. As relying on Set Satellite (Singapore) PTE Ltd. [2008 (8) TMI 96 - BOMBAY HIGH COURT] where the overseas entity has remunerated PE in India at arm’s length nothing further is liable to be taxed in the hands of non-resident entity. It is not the case of Revenue that the assessee has not compensated it’s India agents viz. ZTL and El–Zee at arm’s length. The ld. Counsel for the assessee made a categoric statement that remuneration paid to ZTL and El-Zee is commensurate to industry rates. This fact has not been rebutted by the Department. Therefore, the rate at which the assessee has remunerated ZTL and El-Zee are considered at arm’s length. Thus, we find merit in ground No.2 of appeal by the assessee. The Assessing Officer is directed to delete addition confirmed by the CIT(A) on account of assessee’s income from operations in India.
|