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2020 (5) TMI 629 - AT - Income TaxIncome accrued in India - PE in India - use or hire of the containers in international traffic - India UK DTAA - HELD THAT:- Payment of arm’s length remuneration to the agent, and taxability of income embedded in such payment in India, is not even in dispute before us, the stand of the authorities below cannot be approved. Given this finding, it is immaterial as to whether the DAPE existed or not, for the simple reason that, as the binding legal position is, the existence of DAPE is wholly tax neutral. We are aware that on a conceptual note, a PE, whether a fixed base PE, DAPE or any other type of PE, provides for threshold limits to trigger taxation in the source state, but then if as a result of a DAPE, no additional profits, other than agent's remuneration in the source country - which is taxable in the source state anyway de hors the existence of PE, become taxable in the source state, the very approach to the DAPE profit attribution may indeed seems incompatible with the above legal position. It may sound incongruous from an academic point of view but then that’s what the law is. We hold that once an agent has been paid arm’s length remuneration, and the income embedded in such remuneration has been taxed in India, no further profits can be taxed in the hands of the DAPE. Accordingly, the action of the authorities below, in bringing income of the DAPE- independent of the agency remuneration received by the agent of the assessee, is unsustainable in law. We, therefore, uphold the plea of the assessee and delete the impugned addition in the hands of the assessee. Pronouncement of orders within 90 days - Covid-19 epidemic - Worldwide lockdown - HELD THAT:- An unprecedented situation not only in India but all over the world. Government of India has, vide notification dated 19th February 2020, taken the stand that, the coronavirus “should be considered a case of natural calamity and FMC (i.e. force majeure clause) maybe invoked, wherever considered appropriate, following the due procedure…”. The term ‘force majeure’ has been defined in Black’s Law Dictionary, as ‘an event or effect that can be neither anticipated nor controlled’ When such is the position, and it is officially so notified by the Government of India and the Covid-19 epidemic has been notified as a disaster under the National Disaster Management Act, 2005, and also in the light of the discussions above, the period during which lockdown was in force can be anything but an “ordinary” period. In the light of the above discussions, we are of the considered view that rather than taking a pedantic view of the rule requiring pronouncement of orders within 90 days, disregarding the important fact that the entire country was in lockdown, we should compute the period of 90 days by excluding at least the period during which the lockdown was in force. Period during which lockout was in force is to excluded for the purpose of time limits set out in rule 34(5) of the Appellate Tribunal Rules, 1963. Viewed thus, the exception, to 90-day time-limit for pronouncement of orders, inherent in rule 34(5)(c), with respect to the pronouncement of orders within ninety days, clearly comes into play in the present case. Of course, there is no, and there cannot be any, bar on the discretion of the benches to refix the matters for clarifications because of considerable time lag between the point of time when the hearing is concluded and the point of time when the order thereon is being finalized, but then, in our considered view, no such exercise was required to be carried out on the facts of this case.
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