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TMI Blog2012 (12) TMI 370X X X X Extracts X X X X X X X X Extracts X X X X ..... nt with Warner Bros Pictures India Pvt Ltd, which is an Indian company for the distribution of the cinematographic films in India and receipt of royalty at specified rates. The assessee submitted before the Assessing Officer that the royalty received from India on account of distribution of films is not taxable under the Income Tax Act because clause (v) of Explanation 2 to section 9(1)(vi) of the IT Act excludes consideration for the sale, distribution or exhibition of cinematographic films from the purview of 'royalty'. It was further contended that if the said receipt is held as business income, then in the absence of PE in India, the same would not be taxable as well. The Assessing Officer did not accept the contention of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r grounds raised by the assessee are only consequential to the main ground of assessability of royalty income. 4. We have heard the ld AR of the assessee as well as the ld DR and considered the relevant material on record. The ld AR of the assessee has submitted that an identical issue has been considered and decided by this Tribunal in assessee's own case for the Assessment Year 2006-07 vide order dated 30.12.2011 in ITA No.3160/Mum/2010. 4.1 On the other hand, the ld DR has submitted that for the Assessment Year 2006-07, the Assessing Officer assessed the royalty income by treating the same as taxable in India under the provisions of DTAA of Indo US; whereas for the year under consideration, the Assessing Officer has assessed the ro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner of Income Tax(Appeals) has not considered the provisions of sec 5 of the Act and Article 7 of the treaty, which has been referred by this Tribunal in para 7 as under: (7) Learned Departmental Representative referring to various findings of the CIT (A) submitted that the CIT (A) erred in not considering the provisions of section 5 of the ACT and Article 7 of ready while deleting the above as he has held that there is as business connection and accordingly the income is taxable under the Indian Income Tax Act Sec. 9(1)(i) r.w.s Section 5 (2). 5.1 Thus, it is clear that for the Assessment Year 2006-07, the issue of business income and PE was raised before the Tribunal. However, the Tribunal has concurred with the view of the Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be considered as Agency PE within the definition of Permanent Establishment. (11) We have examined this aspect also. As rightly held by the CIT (A) even if income arises to the Non-Resident due to the business connection in India, the income accruing or arising out of such business connection can only be taxed to the extent of the activities attributed to permanent establishment. In this case, the assessee does not have any permanent establishment in India. Since the Indian company who obtained the rights is acting independently, Agency PE provisions are not applicable to the assessee company. The assessee relied on the decision of Ishikawajma-Harima Heavy Industries Ltd v. Director of Income Tax 2007 (158)-TAXMAN 0259-SC that incomes a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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