TMI Blog2022 (2) TMI 163X X X X Extracts X X X X X X X X Extracts X X X X ..... an the above amount, then no further income is attributable to the permanent establishment in India. In the present case, we find that the gross receipts attributable to India is ₹ 231,77,31,028/- and 15% thereof is the income which amounts to ₹ 34,76,59,654/- against which the subsidiary has offered the service for income of ₹ 78,32,46,525/- and, therefore, no further income is required to be attributed. No change in the facts and circumstance of the case has been pointed out before us. Therefore, respectfully following the decision of the co-ordinate benches in assessee's own case for earlier assessment years, we allow ground 3 of the appeal of the assessee. 10% of the reimbursement of expenditure held to be the income of the assessee - HELD THAT:- The details of the reimbursement were furnished along with documentary evidences. The above sum was reimbursed by Indian entity to the assessee for various activities undertaken by the assessee on behalf of Indian subsidiary. The assessing officer held it to be the business income holding that 10% of such payment received by the assessee from subsidiary should be the income of the assessee. Accordingly ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... among other grounds: 1. The learned DCIT erred in assessing the total income of the appellant at ₹ 23,18,99,458. 2. Business connection/permanent establishment in India 2.1 The learned ACIT erred in holding that the appellant had a business connection in India in terms of the Act and a permanent establishment [PE] in India in terms of the India-Singapore Double Taxation Avoidance Agreement [DTAA], 3. Income attributable to PE 3.1 The learned ACIT erred in holding that income attributable to the PE in India has to be determined on a gross basis and consequently no deduction should be allowed. He thereby erred in determining the income taxable in India at ₹ 23,17,73,103 (being 10% of gross receipts from India amounting to ₹ 2,31,77,31,028). 3.2 The learned ACIT ought to have held that out of the gross receipts in India amounting to ₹ 2,31,77,31,028, the income attributable to the PE in India is ₹ 23,17,73,103 (being 10% of ₹ 2,31,77,31,028) from which further deduction ought to have been allowed in respect of marketing service fees paid by the Appellant to Sabre Travel Network (India) Private Limited [STN] of ₹ 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the Hon'ble ITAT in appellant's own case for AY 2004-05, wherein it is held that even if the reimbursement is considered as part of business income, there should not be any income chargeable to tax since the expenditure paid by the appellant (i.e. marketing fees paid to STN) is sufficient to absorb its income. Further, the learned ACIT erred in not following the decision of the Hon'ble ITAT in appellant's own case for AYs 2005-06 to 2014-15, wherein it is held that 10% of the reimbursement of expenses which is characterized as business income would justifiably be entitled to set-off against the marketing fees paid by the appellant to STN. Others 5. The learned ACIT erred in not granting TDS credit of ₹ 12,36,79,232 as reflected in Form 26AS and claimed by the appellant in the return of income filed for AY 2017-18. The learned ACIT has also not provided any reason for basis for non-grant of the TDS credit. 6. The learned ACIT erred in not granting interest under section 244A of the Act. 7. The learned ACIT erred in levying interest of ₹ 4,51,43,865 under section 234B of the Act. 8. The learned ACIT has erred in initiating pen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... voidance Agreement as subsidiary company is dependent upon the assessee and is performing only activities for the assessee. This was also so for the reason that coordinate bench in assessee's own case in earlier years has also held that the assessee has a permanent establishment in India in the form of Agency PE. ii. Based on the above findings, the learned assessing officer attributed the income to the permanent establishment of assessee in India. The coordinate bench in assessee's own case also decided this issue in earlier year. The claim of the assessee was that 10% of gross fees of ₹ 2,317,731,028/- would be ₹ 23,17,73,103/- and as assessee has already paid the marketing fees of ₹ 791,671,459 to its subsidiary company the income taxable in India would be Nil and nothing further is required to be attributed. The learned assessing officer rejected the contention of the assessee holding that the agreement between the assessee and its subsidiary companies dated 31/10/2016 is silent on the manner of quantification of fees payable to the subsidiary company and therefore he did not grant set of the entire marketing fees paid to its subsidiary. The learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned DRP-2, Mumbai. The learned DRP issued directions on 29-10-2020 that:- a. with respect to existence of permanent establishment in India and business connection the learned dispute resolution panel followed the order of the coordinate bench in assessee's own case for earlier years and held that as there is no change in the facts and circumstances of the case during the year, it held that assessee company has a permanent establishment in India and 15% of the gross receipts are attributed as accruing or arising in India. b. With respect to the income attributable to permanent establishment, it held that deduction of commission and marketing fees of ₹ 783,246,555 could be claimed only against the revenue of ₹ 2,317,731,028/- from Indian operations and not against the income estimated by the AO at the rate of 10% of the total revenue. The reasoning given by the learned DRP was that estimation of 10% of the revenue takes care of all deductions and further as per rule 10 if the income is estimated at a certain percentage of turnover it does not envisage any further deductions. The learned DRP also held that the decisions of the coordinate bench in assessee' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngly, he submitted that the issue may be decided following those judgments. e. With respect to ground 6, he submitted that the assessee has not been granted interest under section 244A of the Act till the date of grant of refund. He submitted that the date of order passed under section 154 r.w.s. 143(3) of the Act on 25/01/2021 wherein refund of ₹ 2,60,19,701/- was determined. However, the same has not been paid and, therefore, according to him, the refund should have been granted to the assessee till the date of grant of the refund. He referred to application dated 09/03/2021 preferred before the assessing officer contesting the same and requesting to re-compute the interest under section 244 of the Act. Before us, he submitted that Hon'ble Bombay High Court in R.A. No. 1199/Bom/1998 dated 17/07/2003 following the decision of the Hon'ble Bombay High Court in case of CIT vs. Pfizer Ltd. 191 ITR 626 (Bom) held that the interest under section 244A should be allowed to the assessee till the date of grant of the refund. He submitted that the refund could be granted only when the cheque is issued in favour of the assessee. He submitted a detailed chart of the various is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r this purpose the host computer had been installed in USA. The marketing in India was being done through ADSIL, its own wholly owned subsidiary in India who had agreement with various travel agents and provided them a dedicated computer with printer and internet lease lines. The assessee was paying 25% of gross receipt in India to ADSIL as commission. The authorities below have held that the assessee was having a business connection in India and that it had a PE through ADSIL which was a wholly dependent agent. Though in the grounds of appeal the assessee has challenged the finding of the authorities below that the assessee was having business connection and PE in India, no arguments were advanced before us against the above findings of the authorities below. The Learned counsel for the assessee submitted that even if the assessee had business connection and PE in India, only the income attributable to the PE could be taxed in India. According to him, there was no income attributable to the PE which could be taxed in India. He placed reliance on the decision of tribunal in the case of Galileo International Inc (supra) which was also in the same business of computerized reservation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ational Inc. (supra) we hold that only 15% of gross receipts could be attributed as accruing or arising in India and since the assessee had already incurred expenditure @ 25% of gross receipts on account of payments to ADSIL in India, there is no income which can be taxed in India. 12. In the orders of the subsequent years, the coordinate benches followed the above extracted order for assessment year 1999-2000. There is no change in the facts and circumstances of the case, as agreed by both the parties. Therefore, we, respectfully following the decisions of the co-ordinate benches in assessee's own case for assessment years 1999-2000 and the orders of the subsequent assessment years, we also hold that there is no infirmity in the order of the learned assessing officer in holding that assessee has permanent establishment in India and, therefore, income of the assessee is chargeable to tax in India. It further held that assessee has also a business connection in India in terms of the provisions of the Income-tax Act. Accordingly, ground 2 of the appeal is dismissed. 13. Ground 3 is with respect to the income attributable to the permanent establishment. This issue is first ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the case, we allow ground 3 of the appeal of the assessee. 14. With respect to ground 4 where 10% of the reimbursement of expenditure held to be the income of the assessee amounting to ₹ 1,26,355/-. Brief facts of the case was that the assessee has shown reimbursement of expenditure of ₹ 12,63,651/-. The details of the reimbursement were furnished along with documentary evidences. The above sum was reimbursed by Indian entity to the assessee for various activities undertaken by the assessee on behalf of Indian subsidiary. The assessing officer held it to be the business income holding that 10% of such payment received by the assessee from subsidiary should be the income of the assessee. Accordingly ₹ 1,26,355/- were held to be liable to be taxed in India. The assessee preferred an objection before the learned DRP, which was rejected, and the order of the assessing officer was confirmed. Assessee submitted before us that identical issue arose in the case of the assessee, fist in assessment year 2004-05 and the co-ordinate bench held that 10% of the gross income of the reimbursement along with other income attributed to the PE is lower than the sum paid by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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