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2023 (6) TMI 351 - AT - Income TaxApplicability of section 44BB - mandation of existence of PE in India - India-UK DTAA - whether section 44BB will apply in absence of PE? - HELD THAT:- Section 44BB provides that notwithstanding anything contained in sections 28 to 41 and section 43 & 43A, 10% of the gross receipt of a non-resident engaged in the business of providing services or facilities or supplying plant & machinery on hire which is used in prospecting for or extraction of mineral oils shall be deemed to be the profits & gains of business. Thus, this section has rightly been contended by ld. Counsel of the assessee that it is a computation provision. Thus, this section provides a presumptive taxation rate for computation of profits but does not override provision of sections 5, 9 or section 90 of the Income-tax Act, 1961. Case law referred by assessee in this regard i.e. Sedco Forex International [2017 (11) TMI 78 - SUPREME COURT] fully supports this proposition as expounded that sections 4, 5 & 9 are to be kept in mind, where assessment is done u/s 44BB. It is settled proposition that unless Revenue is able to prove that the assessee has a PE in India, its business profits cannot be subject to tax in India. This view is supported by decision of R&B Falcon Offshore Ltd [2010 (9) TMI 741 - ITAT, DELHI] In this case, ITAT clearly held that in absence of a PE, section 44BB has no application. As referred in Hon’ble Supreme Court decision in the case of ADIT vs. E-Funds [2017 (10) TMI 1011 - SUPREME COURT] burden of proving the existence of PE lies on the Revenue which has not been discharged. In this view of the matter, assessee succeeds that there is no finding of PE in this case, hence section 44BB will not apply. Decided in favour of assessee.
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