2019 (6) TMI 1667 - AT - Income Tax

Income deemed to accrue or arise in India - PE in India - DTAA between India and UAE (DTAA) - As per CIT -A profits attributable to the assessee s PE at 3.56% of its offshore supply segment and 14.69% of its onshore service segment were not taxable in India - HELD THAT - It is pertinent to note that for assessment years 2007-09 2012 (10) TMI 257 - ITAT DELHI and 2008-09 2013 (10) TMI 753 - ITAT DELHI the Tribunal held that there is no PE in India during the relevant assessment year which was confirmed by the Hon ble High Court. In the present assessment year as well the issues are common and the facts remain identical to that of the earlier assessment year. The CIT(A) while deciding this issue relied upon the decision of the Hon ble High Court as well as the Tribunal and after taking cognizance of the decisions of judicial forums decided the appeal in favour of the assessee. There is no need to interfere with the findings of the CIT(A) as the matter is covered in favour of the assessee in assessee s own case for earlier assessment years. Decided in favour of assessee.

Summary

Issues:
1. Existence of Permanent Establishment (PE) in India under DTAA.
2. Taxability of profits attributable to PE.
3. Levy of interest u/s 234B.

Analysis:
1. The appeal concerned whether the assessee had a Permanent Establishment (PE) in India under Article 5 of the Double Taxation Avoidance Agreement between India and UAE (DTAA). The Assessing Officer held that the assessee had a Fixed placed PE in India in the form of a Project Office, an Installation PE due to activities carried out in India, and a Dependent Agent PE in India. Consequently, additions were made to the income declared by the assessee in its revised return. However, the CIT(A) allowed the appeal of the assessee, citing previous tribunal and high court decisions in the assessee's favor for earlier assessment years. The CIT(A) concluded that there was no need to interfere with the findings as the matter was already covered in favor of the assessee in previous cases.

2. The second issue revolved around the taxability of profits attributable to the assessee's PE in India. The CIT(A) held that the profits attributable to the assessee's PE at 3.56% of its offshore supply segment and 14.69% of its onshore service segment were not taxable in India. The CIT(A) based this decision on previous tribunal and high court decisions in the assessee's favor for earlier assessment years. The Ld. AR submitted that the issue had already been decided in the assessee's favor for previous assessment years, which was confirmed by the Hon'ble Delhi High Court. The Ld. DR, representing the Revenue, could not distinguish the previous decisions. Ultimately, the appeal of the Revenue was dismissed based on the consistent decisions in the assessee's favor.

3. The final issue pertained to the levy of interest u/s 234B. The CIT(A) held that, on the given facts, interest u/s 234B could not be levied. This decision was in line with the overall outcome of the case, where the appeal of the Revenue was dismissed due to the matter being covered in favor of the assessee in previous assessment years. The Tribunal, after hearing both parties and considering the relevant material on record, upheld the CIT(A)'s decision and dismissed the appeal of the Revenue.

In conclusion, the Tribunal upheld the CIT(A)'s decision in favor of the assessee on all issues, citing consistent decisions in the assessee's favor for previous assessment years. The appeal of the Revenue was dismissed, and the order was pronounced in the Open Court on 14th June 2019.