New User   Login      
Tax Management India .com TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2016 (5) TMI 849 - ITAT DELHI

2016 (5) TMI 849 - ITAT DELHI - TMI - Existence of PE in India - Held that:- Respectfully following the order in assessee’s own case for the assessment year 2008-09, the issue agitated is decided against the assessee by holding that the services PE of the assessee is established in India.

Charging of interest u/s 234B is decided in favour of the assessee and for the remaining issue relating to charging of interest u/s 234A, 234C and 234D of the Act, we hold that it is consequential in .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

6 the assessee sought the stay of outstanding demand of ₹ 21,26,15,744/-. 2. Following grounds have been raised in this appeal by the assessee :- 1. The Learned Dispute Resolution Panel ('Ld. DRP') and Learned Assessing Officer ('Ld. AO') erred in following the order of AY 2010-11 without giving due consideration to the submissions of the assessee. 2. The Ld. DRP and Ld. AO erred in holding that assessee has a service Permanent Establishment ("PE") in India within .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t contracts for materially different purposes. -IP AA between JC Bamford Excavators Limited ("JCBE") and JCB India Limited ("JCB India") provides for employees sent by JCBE to JCB India on deputation (secondment) which is admittedly as per specific requirements of JCB India and not for services in relation to TTA or IPA. -Seconded employees sent as per arrangement under IPAA are employees of JCB India. 4. Without prejudice to Ground No. 3, under the facts and circumstances of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f the case, the Ld. DRP and Ld. AO has erred in not applying the desired computation mechanism for chargeability of Royalty income alleged to be covered under provisions of Article 7 of the DTAA between India and UK. The Ld DRP and Ld. AO has failed to appreciate that: -Under Article 7(1) read with Article 7(2) & 7(3) of the DTAA between India and UK, the entire Royalty received from India cannot be subjected to tax in India since no functions, assets and risks are associated with the allege .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Article 7(3) of the DT AA between India and UK. 6. Under the facts and circumstances of the case and in law, without prejudice to the above grounds, the Ld. DRP and Ld. AO has failed to appreciate that the Indian company i.e. JCB India is a profitable company and as long as the same is earning profit at arm's length, no further attribution is possible even in case of an alleged PE. 7. Under the facts and circumstances of the case and in law, the Ld. DRP and Ld. AO erred in not following the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t attributed to alleged Service PE in India, as directed by Ld. DRP). 9. Under the facts and circumstances of the case and in law, the Ld. DRP and Ld. AO erred in levying interest under Section 234A, 234B, 234C and 234D of the Act. 10. The Ld. AO erred in initiating penalty proceedings under Section 271(1)(c) of the Act for furnishing inaccurate particulars of income. That the above grounds of appeal are without prejudice to each other. That the appellant reserves its right to add, alter, amend .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

014 for the assessment year 2010-11. The ld. DR in his rival submissions submitted that this issue has already been decided against the assessee in assessee s own case in the preceding assessment years. 4. After considering the submissions of both the parties, it is noticed that this issue has been decided against the assessee in the preceding year vide aforesaid referred to order dated 04.07.2014 wherein relevant findings have been given in para 4 which read as under: 4. We have heard the rival .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

such rights by JCBI under TTA and IPAA are same. The only difference that came into the hitherto arrangement was that whereas earlier JCBI was paying royalty directly to JCBE, now it is being routed through the assessee with the deduction of 0.05%. The question of a service PE of JCBE in India came up for consideration before the Tribunal for assessment years 2006-07 and 2007-08. Vide its order for the AY 2006-07, the tribunal categorized employees of JCBE on deputation to India on assignment ba .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ssessee to manage the licensing of JCB UK s intellectual property to JCB India going forward. . To buttress the view that the employees of JCBE constituted service PE of the assessee in India, the AO has observed that the employees of JCBE, earlier seconded to JCBI, continued to render services to JCBI during the year in question in the same way as they were doing in the past. This position was noticed by virtue of Clause (d) of the new Agreement and Clause 4.2 of this Agreement which clarifies .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the DTAA covered within the ambit of other personnel . Since this position has been candidly accepted by the ld. AR as well, we, therefore, refrain from any independent evaluation of this aspect. The ld. AR accentuated that his objections against the holding of the service PE of the assessee in India were practically the same which were taken for the earlier years. The tribunal has discussed and jettisoned such objections in its order for the A.Y. 2006-07. Under such circumstances and following .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t is thus held that the service PE of the assessee is established in India. These grounds are, therefore, not allowed. 5. So, respectfully following the aforesaid referred to order in assessee s own case for the assessment year 2008-09, the issue agitated vide Ground Nos. 1 to 3 is decided against the assessee by holding that the services PE of the assessee is established in India. 6. Vide ground no. 4 and 5 the issue agitated relates to the royalty earned by the assessee and ground no. 6 relate .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

. In her rival submissions the ld. CIT DR although supported the order of the AO but could not controvert the aforesaid contention of the ld. Counsel for the assessee. 8. After considering the submissions of both the parties and material available on the record. It is noticed that identical issues having similar facts have been decided by the ITAT Delhi Bench D , New Delhi vide order dated 04.07.2014 in ITA No. 80/Del/2013 wherein relevant findings have been given in para 5 which read as under: .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nsfer of IP rights simplicitor and also the service rendered by the employees of the second category. The Tribunal further held that in so far as the question of royalty representing consideration for the transfer of IP rights simplicitor was concerned, the service PE representing the deputationists had no role to play either in creating or making it available to JCB India. That is how the Tribunal came to hold that the same was not effectively connected with the service PE of the assessee in In .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e 13 of the DTAA. As regards the consideration for the employees of the first category, the Tribunal has held that the fees for technical services in relation to such employees was covered within para 6 of Article 13 of the DTAA. That is how, the Tribunal concluded that the consideration for rendering of services by the employees of first category was chargeable to tax under Article 7 of the DTAA. The AO was directed to determine the amount of income in terms of Article 7. As the facts for the i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

arlier years in the said order dated 04.07.2014. 10. Ground no. 7 is correlated with ground no. 1,2 and 3, so, it does not require any separate adjudication since the issue has already been adjudicated in the former part of this order while deciding the ground no. 1,2 and 3. 11. Ground no. 8 was not pressed so it is dismissed as not pressed. 12. Ground no. 9 relates to the charging of interest u/s 234A, 234B, 234C and 234D. As regards to this issue, the ld. Counsel for the assessee submitted tha .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

l for the assessment year 2010-11 in ITA no. 6573/Del/2014 wherein relevant findings has been given vide para 10 to 13 of the order dated 08/04/2015 in ITA no. 6573/Del/2014 which read as under : 10. The last issue vide Ground No. 8 relates to the charging of interest u/s 234A, 234B, 234C & 234D. The ld. Counsel for the assessee submitted that the issue relating to charging of interest u/s 234B is decided in favour of the assessee vide order dated 04.07.2014 in ITA No. 80/Del/2013 for the as .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version