TMI Blog2011 (3) TMI 1707X X X X Extracts X X X X X X X X Extracts X X X X ..... ranting relief of tax, or as the case may be, avoidance of double taxation, then, in relation to the assessee to whom such agreement applies, the provisions of this Act shall applied to the extent they are more beneficial to that assessee. The assessee is found to have incurred no liability to tax . Therefore, even if the provisions of the treaty go against the assessee, it has to be granted the benefit under which no liability to tax can be fastened on the assessee. - SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI K.G. BANSAL, ACCOUNTANT MEMBER Appellant by : Shri Pawan Kumar, AR Respondent by: Shri Ashwani Kumar Mahajan, CIT- DR ORDER PER K.G. BANSAL: AM: The assessee had taken 12 grounds in the appeal filed on 02.12.2010. These grounds were revised in the course of hearing. Again the assessee took 12 grounds, which read as under:- 1. That on the facts and in the circumstances of the case and in law, the order passed by the learned Assessing Officer is erroneous and bad in law. 2. That on the facts and in the circumstances of the case and in law, the learned Assessing Officer has erred in holding that the amount paid to the appellant by its custo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onfirmed the draft order of the Assessing Officer holding that the income of the appellant is taxable as royalty. 10. Without prejudice to the above, even if the payment is taxed as royalty, the ld. Assessing Officer has erred in levying surcharge of 2.5% and educational cess at 2% in respect of payments received by appellant without appreciating the fact that the amount of tax chargeable in respect of the royalty could not in terms of Article 12(2)(b) of the tax treaty exceed 10% of the gross amount of royalty. 11. Without prejudice to the above, the ld. Assessing Officer has erred in levying interest u/s 234B of the Act, by not appreciating the fact that no interest was chargeable u/s 234B of the Act in view that the payments received by the appellant were subject to withholding tax and the appellant not being under any obligation to pay advance tax. 12. The ld. Assessing Officer has erred in not granting credit for taxes deducted at source claimed by the appellant in the return of income amounting to ₹ 32,874,228/-. 2. In the assessment order dated 01.10. 2010 passed u/s 143(3) read with section 144C(1) of the Income-tax Act, 1961 ( the Act ), passed by the ADI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6,17,33,443 Global Customers (Attribution @90%) 1,53,85,788 1,38,47,209 13,84,720 Global Customers (Attribution @50%) 8,62,783,522 43,13,91,761 4,31,39,176 Global Customers (Attribution @5%) 1,21,69,44,924 6,08,47,246 60,84,724 Total Income attributed 1,12,34,20,650 11,23,42,063 2.2 The matter was referred to the Dispute Resolution Panel (DRP). After considering the objections of the assessee, the panel directed the Assessing Officer to compute the income as per the draft order. In particular, reliance was placed on the decision of Special Bench of ITAT in the case of New Skies Satellite NV, 319 ITR 269, the salient findings of which have been reproduced on page 4 of the order of the panel. These findings are reproduced below:- From the reading of sub-section (1) of section 142A, it is clear that the Legislature referred to the provisions of section 69, 69A and 69B but specifically e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olding that the amount paid to the appellant by its customers represented income by way of royalty as the said expression is defined in Explanation 2 to Section 9(1)(vi) of the Income-tax Act? (iv) Whether on the facts and in the circumstances of the case the Tribunal was justified in holding that the customers of the appellant were either carrying on business in India or had a source of income in India and, hence, the amount received by the appellant from its customers were chargeable to tax in India? (v) Whether on the facts and in the circumstances of the case the Tribunal was justified in admitting the additional ground raised by the revenue seeking to assess the amounts received by the appellant as fees for technical services in terms of Section 9(1)(vii)? (vi) Whether on the facts and in the circumstances of the case, the Tribunal erred in holding that the depreciation was admissible to the appellant only on a proportionate basis? 3.1 Following grounds were admitted in respect of the appeal of the revenue in I.T.A. No.134 of 2003: (i) Whether the ITAT is right in law in holding that the interest u/s 234B of the Income-tax Act, 1961 should be calculated by giv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alty as defined in Explanation 2 to Section 9(1)(vi) of the Act? In arriving at this decision, the Hon ble Court inter alia referred to OECD convention, commentary thereon, commentary written by Klaus Vogel, decision in the case of Union of India and Another Vs. Azadi Bachao Aandolan and Another, (2003) ITR 706, CIT Vs. Ahamdabad Manufacturing and Calico Printing Company 139 ITR 806 (Gujarat), and CIT Vs. Vishakhapatnam Port Trust, (1983) 144 ITR 146 (AP). 3.4 The revenue had also raised the question regarding applicability of section 9(1)(vii) for the first time before the Tribunal. Although this ground was admitted, it was not decided as the income was held to be assessable u/s 9(1)(VI). No argument was advanced by the learned counsel for the revenue before the Hon ble Court in this matter. Therefore, the submission in the ground regarding applicability of section 9(1)(vii) was not accepted. The result of the decision is that the revenues received by the assessee is not taxable either u/s 9(1)(vi) or section 9(1)(vii) of the Act. 3.5 Before us, the common case of both the parties is that the grounds are covered under the aforesaid decision in the case of Asia Satellite Tele ..... X X X X Extracts X X X X X X X X Extracts X X X X
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