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2012 (6) TMI 294 - AT - Income TaxDTAA between India and Japan - Whether Liasion Office maintained in India under approval of RBI constitutes its Permanent Establishment in terms of Article 5 of said DTAA - assessee submitted that office was carrying on preparatory or auxiliary work but not undertaking any core revenue generating activity - Held that:- There is no dispute that India office is a fixed place. The dispute is whether the business of the assessee is being partly carried on through this office and in absence of any evidence on record with regard to commercial activity having been done by the assessee in India, the LO cannot be considered to be a PE. Further, income which otherwise neither arose nor accrued in India cannot be deemed to accrue or arise in India by looking merely an exclusionary clause (e). Once an activity is construed as being subsidiary or in aid or support of main activity, it would fall within the exclusionary clause. In view of the AAR ruling in case of K.T. Corporation, Korea(2009 (5) TMI 37 (AAR)) it is held that LO cannot be taken to be a PE unless its activities exceed the permitted activities or the department lays hand on any concrete material or evidence to state that any substantive business activity has been carried on from this place. Since no income accrues or arises to the assessee in India, no income can be deemed to accrue or arise to the assessee in India by invoking exclusionary sub-paragraph (e) - Decided against the Revenue
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