Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2012 (10) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2012 (10) TMI 55 - ITAT DELHIDTAA between India and Korea - computation of the income attributable to the Indian (PE) of the Korean company applicability of provisions of Transfer Pricing or Rule 10 read with Rules 10A to 10E Held that:- Supreme Court in the case of Hyundai Heavy Industries (2007 (5) TMI 196 - SUPREME COURT ) has observed that conjoint reading of sections 4 and 5 states that taxable unit is a foreign company and not its branch or PE in India. A non-resident assessee may have several incomes accruing or arising to it in India or outside India but so far as taxability under sec. 5(2) is concerned, it is restricted to incomes which accrue or arise or which deemed to accrue or arise in India. Plain reading of Rule 10 suggests that it can be applied in the cases where income accruing or arising to any non-resident from any business connection is such which cannot be definitely ascertained. In the present case, assessee has submitted the transfer pricing report and buttressed its contention with the material that income shown at cost+9% is at arms length. Assessing Officer nowhere pointed out that income cannot be definitely ascertained on the basis of the material placed on record by the assessee and, therefore, he is computing the income under Rule 10. Further, department itself has accepted the method of assessee in a number of years and sub Article 5 of Article 7 of the DTAA between India and South Korea also provides that profits attributable to PE shall be determined by the same method year by year unless there is good and sufficient reason to the contrary. Since no reasons are assigned by the AO for adopting different method from same source of income, in different years, it is held that income of the assessee be computed at cost+9% as declared by it, and accepted in subsequent year from the same contract Decided in favor of assesse. Interest u/s 234B Held that:- In case of a non-resident where entire income is subject to withholding tax u/s 195, then assessee could not be held to have committed default in payment of advance-tax and consequently it was not liable to pay interest u/s 234B.
|