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TMI Blog2019 (12) TMI 769X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. Under the facts and circumstances of the case and in law, the Ld. AO erred in proposing that the Appellant has a service PE in India under Article 5(2)(k) of the DTAA without appreciating that: 3.1 Technology Transfer Agreement ("TTA") dated March 5, 2004 and International Personnel Assignment Agreement ("IPAA") dated December 5, 2005 are independent contracts for materially different purposes. 3.2 IPAA between JCB Excavators ("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. 3.3 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 the case and under law, the Ld. DRP and Ld. AO has grossly erred in holding that royalty earned by the Appellant is effectively connected to alleged service PE of the Appellant in India and has failed to appreciate that: 4.1 Intangible property in respect of which royalty has been paid was wholly developed outside India; 4.2 No functions, assets, or risk associated wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate particulars of income." 2. At the very outset, the ld. counsel for the assessee stated that the entire grievances have been considered and decided by the Tribunal in earlier years in assessee's own case. The ld. counsel for the assessee supplied copies of the order of the Tribunal. 3. It is the say of the ld. counsel for the assessee that precisely, the issue of PE has been decided against the assessee whereas the issue relating to royalty has been decided in favour of the assessee. The issue relating to attribution of profit has been set aside by the Tribunal. 4. Per contra, the ld. DR fairly conceded and stated that in earlier Assessment Year the Tribunal has decided the issues in dispute. 5. We have given thoughtful consideration to the orders of the authorities below. We find force in the submissions of the ld. counsel for the assessee. The co-ordinate bench in assessee's own case for Assessment Year 2013-14 in ITA No. 6787/DEL/2017 vide order dated 11.09.2018 has considered all the issues under appeal before us. The relevant findings of the Tribunal read as under: "5. Without prejudice to above grounds, under the facts and circumstances of the case, the Ld. DRP and L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enalty proceedings under section 271(i)(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 or withdraw any ground of appeal either before or at the time of hearing of this appeal." 3. JC Bamford Excavators Ltd., U.K. ('JCBE' hereafter), is a company incorporated under the laws of the United Kingdom and has its principal office at Rocester Staffordshire England ST 14 5JP. It is a non-resident Company for the purposes of the Indian tax laws and is a tax resident of U.K. under Article 4 of the tax treaty entered into between India and U.K. It is the flagship company of JCB in U.K. which develops and manufactures excavators. The return of income was filed by the assessee on 29.11.2013 declaring total income of Rs. 1,81,07,24,365/-. The case was selected for scrutiny and initial notice u/s 143(2) of the Income Tax Act, 1961 was issued to the assessee on 16.09.2014 by DDIT(I.T.), Circle 3(1), New Delhi. After internal restructuring of the Income-tax department, the jurisdiction of the case was transferred to Circle 2(1)(2), New Delhi. Acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and UK ('DTAA') and section 115A of the Act, as the case may be. The details of the royalty income earned form JCB India are as under:- S. No. Particulars Amount in INR 1 Royalty received from Model 3DX 1,71,22,15,010/- 2 Royalty received other than Model 3DX 2,55,62,494/- Total 1,73,77,77,504/- It is noteworthy that JCBE used to receive Royalty in the earlier years, i.e. A.Y. 2006-07 & A.Y. 2007-08, it was held by the Assessing Officer in the case of JCBE that the secondment of employees by JCBE to India resulted in establishment of a Permanent Establishment (PE) or a 'service PE' of the JCBE as per article 5(2)(k)(i) of the DTAA between India and UK. And further to it, based on the facts of the case, it was held that the payment of Royalty made by JCB India to the JCBE in respect of the rights granted by the JCBE to JCB India under the TTA, is effectively connected with the such 'service PE' of the assessee in India. And accordingly, the taxation of such royalties was held to be governed by Article 7 of the Treaty and was taxed accordingly. 3. The Ld. AR submitted that Ground No. 1 is general in nature. The Ld. AR further subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee by the decision of the Tribunal for Assessment Year 2006-07 as well as for A.Y. 2012-13 being ITA No. 1700/Del/2017 order dated 31.07.2017. 7. The Ld. DR relied upon the Assessment Order. 8. We have heard both the parties and perused all the relevant material available on record. As regards Ground No. 4, 5 & 7, in assessee's own case for A.Y. 2006-07 as well as 2012-13, the Tribunal allowed these grounds in favour of the assessee. The relevant extract of the Tribunal's decision for A.Y. 2012-13 are as under: "10. We have carefully considered the rival contentions and also perused the arguments of the parties that issue is squarely covered by order of the coordinate bench and there is no change in the facts and circumstances of the case. The coordinate bench vide order dated 14.03.2014 in ITA No. 540/Del/2011 wherein relevant findings have been given in para 16.5 & 18 which read as under: "16.5 In so far as the question of royalty representing consideration for the transfer of IP Rights simplicitor is concerned, it is clear that the service PE representing eight deputationists had absolutely no role to play either in creating or making it available to JCB ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter allowing a reasonable opportunity of being heard to the assessee." 11. Therefore, respectfully following the aforesaid decision regarding whether royalty is effectively collected to the PE of the assessee is decided in favour of the assessee. Further, the issue of determination income of the service of PE of the assessee is set aside to the file of the ld Assessing Officer and decide it, in accordance with the law and as directed by para No. 18 in the impugned order of the coordinate bench for AY 2006-07. In result ground Nos. 4, 5 and 6 of the appeal of the assessee are decided accordingly." In light of the above findings and also the facts are similar in the present year, we set aside this issue to the file of the Assessing Officer with the direction to decide this issue for fresh determination after following the principles of natural justice given to the assessee. Ground No. 6 is partly allowed for statistical purpose" . 6. Respectfully following the findings of the co-ordinate bench, we hold accordingly. 7. The only other issue relates to charging of interest u/s 234A/234B of the Act. 8. The contention of the ld. counsel for the assessee that the assessee has filed ..... 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