TMI Blog2015 (5) TMI 277X X X X Extracts X X X X X X X X Extracts X X X X ..... ndo-Mauritius DTAA has been referred to and particularly paragraphs 5.4 and 5.5. and the Tribunal concludes that the requirement that the first enterprise in the first mentioned State has and habitually exercised in that State an authority to conclude contracts in the name of the enterprise unless his activities are limited to the purchase of goods or merchandise for the enterprise is a condition which is not satisfied. Therefore, this is not a case of B4U India being an agent with an independent status. This finding is rendered of the order under challenge. We do not find that the Tribunal's order and which also refers to the Hon'ble Supreme Court decision in Morgan Stanley & Co. (2007 (7) TMI 201 - SUPREME Court ) can raise any substantial questions of law. The requirement and in relation to computation of income from international transactions having regard to arm's length price has been put in place in Chapter-X listing special provisions relating to avoidance of tax by substituting section 92 to 92F by the Finance Act of 2001 with effect from 1st April, 2002. Therefore, such compliance has to be made with effect from assessment years 2002-03 relevant to which is the previou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in India and consequently the question of deduction of tax at a source u/s 195 does not arise despite the transfer of telecast right being a consideration for Royalty as clarified in Explanation (4) and (5) to section 9 of the I.T. Act ? 2. The factual background in which these appeals have been brought by the Revenue are that the respondent-assessee is a Mauritius based company. The Revenue proceeded against it on the footing that it is engaged in the business of telecasting of TV channels such as B4U Music, MCM etc. It is the case of the Revenue that the income of the assessee from India consisted of collections from time slots given to advertisers from India through its agents. The assessee claimed that it did not have any permanent establishment in India and has no tax liability in India. The Assessing Officer did not accept this contention of the assessee and held that affiliated entities of the assessee are basically an extension in India and constitute a permanent establishment of the assessee within the meaning of Article 5 of the Double Taxation Avoidance Agreement (DTAA). 3. This view of the Assessing Officer was not accepted by the assessee and it preferred a appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, the Tribunal's orders raise the above questions and which are substantial question of law. 6. It is argued that even with regard to the Question (C), the assessee cannot be said to be relieved of the obligation of deducting tax under section 195 of the Income Tax Act, 1961. This could not be a finding and equally the relief from applicability of section 40(a)(i) when the transponder charges being a consideration for process as clarified in terms of explanation 6 to section 9 of the Income Tax Act, 1961. Thus, the finding that this amount is not liable to tax in India and consequently, the question of deduction of tax at source does not arise will also raise substantial question of law. 7. However, Mr. Mistri, learned senior counsel appearing on behalf of the assessee raised a preliminary objection and pointed out that though the appeals are for distinct assessment years, the Revenue has filed appeals, raising same questions of law. The Tribunal order may be common but the grounds for each assessment years and in the Memos of Appeal before the Tribunal are not necessarily common. Therefore, the grounds in the Memos of Appeal of the Revenue and the assessee being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e all the appeal paper-books, we are inclined to agree with Mr. Mistri. The Tribunal had before it the order passed on 8th November, 2004 by the Commissioner of Income Tax (Appeals). As far as that order is concerned, it is subject matter of the Revenue's Income Tax Appeal No.1599 of 2013. There, the Revenue raised the ground that the assessee was having a dependent agent viz. B4U and that the Commissioner erred in holding that it cannot be treated as such. Further, even if the B4U is held to be a dependent agent, it is being paid remuneration at arm's length. Therefore, further profits cannot be taxed in India. Insofar as these grounds are concerned, the admitted facts are that the assessee is a foreign company incorporated in Mauritius. As noted, it had filed its residency certificate and pointed out that its business is of telecasting of TV channels such as B4U Music, MCM etc. During the assessment year under consideration, its revenue from India consisted of collections from time slots given to advertisers from India. The details filed by the assessee revealed that there is a general permission granted by the Reserve Bank of India to act as advertisement collecting agen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by Circular No.742. Thus it was held that no further profits should be taxed in the hands of the assessee. 10. This conclusion of the Commissioner has been upheld by the Tribunal. It noted the rival contentions and in great details. The Tribunal concluded that after referring to the clauses in the agreement between the assessee and B4U that B4U India is not a decision maker nor it has the authority to conclude contracts (see paragraph 29). Further, the Revenue has not brought anything on record to prove that agent has such powers and from the agreement any such conclusion could not have been drawn. Barring this agreement, there is no material or evidence with the Assessing Officer to disprove the claim of the assessee that the agent has no power to conclude the contract. This finding is rendered on a complete reading of the agreement. Thereafter Indo-Mauritius DTAA has been referred to and particularly paragraphs 5.4 and 5.5. and the Tribunal concludes that the requirement that the first enterprise in the first mentioned State has and habitually exercised in that State an authority to conclude contracts in the name of the enterprise unless his activities are limited to the pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e with effect from assessment years 2002-03 relevant to which is the previous year commencing from 1st April, 2002. In any event, we find that the Tribunal has rightly dealt with the alternate argument by referring to the Revenue Circular 742. There, 15% is taken to be the basis for the arm's length price. Nothing contrary to the same having been brought on record by the Revenue before the Commissioner as also the Tribunal, it rightly concluded that the judgment of the Hon'ble Supreme Court in Morgan Stanley Co. and the principle therein would apply. Similarly, the Division Bench judgment of this Court in the case of Set Satellite (Singapore) Pte. Ltd. v. Deputy Director of Income Tax (IT) Anr. [2008] 307 ITR 265would conclude this aspect. Therefore, we are of the opinion that the Tribunal's conclusions and which are consistent with the factual materials and the principles of law laid down above are neither perverse nor vitiated by any error of law apparent on the face of the record. 13. Strictly speaking the answers on questions (1) and (2) and which are common for all the appeals disposes of all the appeals against the Revenue and in favour of the assessee. How ..... X X X X Extracts X X X X X X X X Extracts X X X X
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