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TMI Blog2015 (5) TMI 760X X X X Extracts X X X X X X X X Extracts X X X X ..... ing that none of the receipts comprising in total amount of Rs. 1,30,21,079/-, is taxable in India". 4."On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in holding that the business profits of the assessee company are not taxable in India in the absence of any PE in India within the meaning of Article 5 of DTAA". The appellant prays that the order of the Ld. CIT(A) on the above grounds set aside and that of the AO restored. The appellant craves leave to amend or later any ground or add a new ground which may be necessary. ITA No. 3633/Mum/2007-AY-2003-04 "1.On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in holding that the assessee does not have a Permanent Establishment in India, accordingly its business profits are not taxable in India. 2.On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in deleting the addition made of Rs. 1,50,75,790." The appellant prays that the order of the Ld. CIT(A) on the above grounds be set aside and that of the Assessing Officer restored. The appellant craves leave to amend or alter any ground or add a new ground which may be necessary. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. For the said services,the assessee received fees, amounting to Rs. 5.34 Lakhs. As stated earlier,RI had also paid guarantee commission to the asessee.As per the AO,M/s. GEEPEE Leval Proteens & Investments Pvt. Ltd.,an Indian company, required banking and credit facilities, that the Singapore Branch of the assessee allocated an amount equivalent to US$ 40,00,000 to RI.It was found that term and condition of the Indemnity were mentioned in the letter dated 30.08.2001,as agreed between RI and the Singapore Branch of the assessee. For the services rendered by the assessee,an amount of Rs. 4.37 Lakhs was received from RI.It was also found that Utreche(Netherlands) Branch of the assessee had allocated 1 Million US$, on 11.02.2000,to RI in favour of M/s Banner Pharma Caps (India) Pvt. Ltd.,in the form of working capital facility and the guarrantee/indemnity fee.On 22.02.2000 the same branch of the assesseee allocated further 1 Million US$ to RI for the same client and for the same facility.On both the occasions guarantee/indemnity fee was mentioned at 5/8 of the margin received.Thus, the assessee received Rs. 19.30 lakhs (4.37+15.73 lakhs).It was further found that the assessee had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19.30lakhs+4.37lakhs+20.74 lakhs +85.04 lakhs+73,809/-)i.e.at Rs. 1.04 Crores.The AO further held that the asessee was engaged in financial sector and especially engaged in providing credit facility and advisory services,that 30% of the above (Rs.31.25lakhs)was to be taken to be profits of the asessee from its Indian operations. 3.Aggrieved by the order of the AO,the asessee preferred an appeal before the First Appellate Authority(FAA).Before him,it was argued that the assessee did not have a PE in India,that the concept of fixed place PE required the enterprises to have fixed place of business of India or to have a place of management India/have a branch in India/or an Office in India,that the assessee had not office/branch/place of management/fixed place of business of India, that the activities of RI did not result in constitution of Agency PE of the assessee,that RI did not have any authority to conclude contract on behalf of the assessee,that it did not maintain any stock of any goods/ merchandise of the assessee,that it did not secure orders on behalf of the assessee,that it was economically and legally independent,that it was acting in ordinary course of its business and wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t RI had procured the contract of provision of services of two parties, that it had further entered an agreement with the assessee to provide services for a consideration paid by RI,that it could not be held that RI was acting as agent of the assessee,that it had obtained contract independently and thereafter sub-contacted a part to the assessee.He also discussed the guarantee commission agreements entered into by RI and held that perusal of the agreements between the assessee and RI proved that RI had not acted agent of the assessee, that loan was advanced by RI, that to safeguards its own financial interests RI had entered into an agreement with the assessee requiring it to stand as guarantor on payment of guarantee commission,that RI had not at all acted as agent of the assessee, that deputing of an expatriate Director by the assessee to RI did not make an RI and agency PE of the assessee,that RI was an independent organisation.With regard to amount collected by RI on behalf of Rabo Singapore,the FAA held that perusal of the order of the DRAT,letters of various authorities and the bank account of RI proved that RI had collected the payment from DRAT on behalf of its counter part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tly carried on.From the facts available on record,it is clear that the asessee was not having fixed place of business in India.Therefore,in our opinion the FAA had rightly held that provisions of said Articles i.e.5(1)were not applicable. Now,we would take the other issues raised by the AO.In our opinion,for ascertaining whether particular articles of the Agreement of the Avoidance of Double Taxation between India and Netherlands were applicable or not,the exact working of RI, the correspondence between RI and the asessee and the mode of their functioning and operations would have to be examined in toto. The quantum of work done,the services rendered, the contracts undertaken for outsiders would have to be examined to determine whether RI was an agent having independent status or was merely working on behalf of the asessee,as alleged by the AO. In absence of such basic material facts,it is not possible to come to a conclusion as to whether the asessee had PE in India or not. There is no material available on record to prove as to whether RI had significant independent activities on its own or not.The FAA,while allowing the appeal has dealt with the DTAA and held that provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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