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TMI Blog2015 (4) TMI 670X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year, which is covered by such resolution. 2. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in holding that interest u/s 234B is not chargeable in the assessee's case, by relying upon the decision of Hon'ble High Court of Delhi in the case of Jacob Civil Incorporated, without appreciating that the levy of interest 234B is mandatory as held in the case of CIT Vs Anjum M.H. Ghaswala & Others 252 ITR 1 (SC)." 2. Briefly stated the facts giving rise to these appeals are that the assessee had filed its return of income for AY 2004-05 on 31.4.2004 declaring at nil income and assessment was finalized at an income of Rs. 6,00,31,583/-. The assessee filed its return of income for AY 2006-07 on 12.12.2006 declaring an income of Rs. 74,07,404 and this case was subsequently selected for scrutiny. It is also pertinent to note that the assessee is a non-resident company incorporated under the laws of Delaware, USA and during the financial years under consideration, the assessee was engaged in the business of broadcasting Animal Planet Channel over the entire Asia region including India. Discovery Communications India (DCIN) is a company incorpor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not entitled to the treaty benefits. * A sum of Rs. 1,78,924/- (being 101'0 of the gross advertisement revenues) was treated as taxable income in the hands of the appellant. * A sum of Rs. 5,98,39,242/- (being subscription revenue income of DCIN) was treated as royalty income of the appellant under the provisions of clause (v) of Explanation 2 to Sec. 9(1)(vi) of the Act and under Article 12(3)(a) of the Treaty. * In addition the AO also levied interest u/s 234B of the Act amounting to Rs. 39,50,424/-." 4. Being aggrieved by the above assessment orders, the asessee preferred appeals before the CIT(A) which were partly allowed on both the grounds as reproduced hereinabove. Ground No.1 5. Apropos ground no. 1, ld. DR submitted that the CIT(A) has erred in holding that only 10% of Subscription Revenues are taxable as business income against the entire such revenues taxed by the AO as Royalty, without considering that every assessment year is an independent year and further, MAP resolution applies only to the particular entity and for the particular assessment year, which is covered by such resolution. 6. Ld. DR drawing our attention towards para 7 at page 11 of the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsequent years in taking a different or deviated stand. Ld. Counsel of the assessee further placed copies of the assessment order for AY 2008-09 dated 5.10.2011 assessment order for AY 2009-10 dated 27.11.2011 and assessment order for AY 2010-11 dated 26.2.2014 and submitted that the advertisement and distribution revenues have been consistently taxed by the department @10%, therefore, for the assessment years under consideration in these appeals, revenue is not allowed to charge the same at 20% or any other higher rate. 9. On careful consideration of above submissions, we note that the issue has been decided in favour of the assessee by the CIT(A) for AY 2004-05 with following observations and conclusion:- "Ground No.III & IV: These grounds are in respect of taxability of advertisement revenues & subscription revenues. Discovery Asia LLC ('DALLC') (earlier known as Discovery Asia Inc.), one of the appellant's group company had earlier invoked the provisions of Article 27 of Treaty relating to Mutual Agreement Procedure ('MAP') for AY 2000-01 and AY 2001-02. A MAP resolution dated January 02, 2006 was thereafter issued for AYs 2000-01 and AY 2001-02. Under the aforesa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxability of Advertisement and subscription revenues in India, including inter-alia that no PE exists/payment of arms length remuneration to DCIN extinguishes any further tax liability of the assessee in India, to buy peace and to put an end to litigation, this could be resolved in spirit of DAI MAP resolution (concluded between the two Competent Authorities) and the order of the DRP wherein Advertisement and Subscription revenues were treated as business income and 10'10 of Advertisement and Subscription revenues were treated as taxable income in India. On the basis of the above position, on examination of the documents placed on record by the appellant, and to ensure consistency of assessment over the years, by following the basis of taxability of the Advertisement and Subscription revenues in the other relevant years, I hold that the Appellant has a PE in India, both Advertisement and Subscription revenues constitute business income of the Appellant in India and that 10% of the Advertisement and Subscription revenues be treated as taxable income of the appellant in India. This ground is ruled partly in favour of the appellant." 10. In view of above, we are inclined to ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the CIT(A) has decided the issue in favour of the assessee with following conclusion:- "Regarding u/s 234B of the Act, the appellant has submitted that the appellant is a non-resident and tax was deductible u/s 195 of the Act on the income of the appellant and, therefore it was not required to deposit any advance tax and consequently interest u/s 234B is not leviable in the appellant's case. The appellant has relied upon various authorities as under:- i) DIT v Jacabs Civil Incorporated, Mitsubishi Corporation and Ors 330 ITR 578 (Delhi). ii) DIT v Ericsson AB (ITA No.504/2007)(Delhi High Court); iii) DIT v NBGC Network Asia (222 CTR 86 )(Mum.); iv) CIT v Sedco Forex International Drilling Co. Ltd 264 ITR 320 (Uttranchal); v) CIT v Madras Fertilizers Limited (149 ITR 703)(Mad) vi) Rheinbraun Engineering & Wasser GmbH (1915/Bom/96). vii) Asia Satellite Ltd (85 ITD 478)(Del). In view of various High Courts decisions including Jurisdictional High Court on the issue, I hold that interest u/s 234B is not leviable in case of appellant being non- resident when its entire income is subject to TDS u/s 195. This ground is therefore ruled in favour of the appellant. " 14. In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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