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2018 (4) TMI 1421 - AT - Income TaxFixed place PE in India - Effective management of the assessee - Penalty levied u/s 271(1)(c) - Article-8 of Indo- Mauritius DTAA non applicability - Whether Freight Connection (India) Pvt. Ltd. would constitute agency PE of the assessee? - Held that:- the effective management can be only in between two contracting state is not correct and as per the facts narrated above, we are of the considered view that the effective management of the assessee is neither in Mauritius nor in India and we are in agreement with the views of Mr. Klaus Vogel, who is an eminent authority of International Taxation, that if the effective management of an enterprise is not in one of the contracting state, but is situated in the third state, the benefit of article-8, cannot be extended. The facts, being identical, following the decision of the coordinate bench rendered in the case of Bay lines (Mauritius)(2018 (2) TMI 1524 - ITAT MUMBAI) we hold that the assessee does not have Fixed place PE in India. The assessee does not have PE in India and its income being business income, it cannot be brought to tax in India. Accordingly we set aside the orders passed by Ld CIT(A) on this issue in all the years under consideration. Penalty levied u/s 271(1)(c) - CIT(A) deleted the penalty holding that the issue relating to taxability of income is debatable in nature. Since we have held that the assessee is not liable for taxation in India for its business profits, the penalty orders passed by the AO in all the five years would not survive. Accordingly, we quash the impugned penalty orders passed by the tax authorities in all the five years.
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