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2020 (3) TMI 500 - HC - Income TaxIncome accrued in India - Permanent Establishment under the terms of Article 5(4) of the DTAA - assessee had given distribution rights to Taj India for promoting and distributing TV channel in India on principal to principal basis - Eligible reason why Taj India should be treated as agency Permanent Establishment for the purpose of distribution income as per Article 5(4) of the DTAA - HELD THAT:- Tribunal noted that the first appellate authority, after due deliberation, had returned a finding of fact that Taj India was not acting as agent of the assessee but it had obtained the right of distribution of the channel for itself and subsequently, it had entered into contracts with other parties in its own name in which the assessee was not a party. The distribution of the revenue between the assessee and Taj India was in the ratio of 60:40 and the entire relationship was on principal to principal basis. Tribunal noted that this finding by the first appellate authority is corroborated by the terms and conditions of the distribution agreement as well as the sub-distributor agreement. After examining the requirement of Article 5 of the DTAA to constitute agency Permanent Establishment, Tribunal as a matter of fact held that none of the conditions as stipulated in Article 5(4) was applicable because Taj India was acting independently qua its distribution rights and the entire agreement was on principal to principal basis. Therefore, it was held that the distribution income earned by the assessee cannot be taxed in India because Taj India does not constitute an agency Permanent Establishment under the terms of Article 5(4) of the DTAA. The order of the first appellate authority was accordingly upheld. On thorough consideration of the matter, we are in agreement with the views expressed by the Tribunal. In fact, there is concurrent finding of fact between both the appellate authorities on this point. Learned standing counsel Revenue has not been able to show any perversity in such finding returned by the appellate authorities. In the absence thereof, we see no good reason to interfere with the finding of the Tribunal affirming the order of the first appellate authority.
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