Just a moment...

Report
FeedbackReport
×

By creating an account you can:

Logo TaxTMI
>
Feedback/Report an Error
Email :
Please provide your email address so we can follow up on your feedback.
Category :
Description :
Min 15 characters0/2000
TMI Blog
Home / RSS

2022 (2) TMI 163

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....essing the total income of the appellant at Rs. 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 Rs. 23,17,73,103 (being 10% of gross receipts from India amounting to Rs. 2,31,77,31,028). 3.2 The learned ACIT ought to have held that out of the gross receipts in India amounting to Rs. 2,31,77,31,028, the income attributable to the PE in India is Rs. 23,17,73,103 (being 10% of Rs. 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 Rs. 78,32,46,525. 3.3 On a without prejudice basis, the learned ACIT erred in holding that deduction of ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....t 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 Rs. 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 Rs. 4,51,43,865 under section 234B of the Act. 8. The learned ACIT has erred in initiating penalty proceedings under section 270A of the Act." 3. Brief facts of the case shows that assessee is a company incorporated in Singapore, engaged in business of pro....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....sessee'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 Rs. 2,317,731,028/- would be Rs. 23,17,73,103/- and as assessee has already paid the marketing fees of Rs. 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 that AO was of the view that marketing fees paid by the assessee is attributable to the entire gross receipts from India and the claim of the assessee to set-off the entire marketing fees against....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....rdinate 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 Rs. 783,246,555 could be claimed only against the revenue of Rs. 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's own case are contested before the honourable Bombay High Court. c. It also upheld the chargeability to tax of 10% of the reimbursement as income based on the direction of the learned dispute resolution panel for assessment year 2012 - 13, 2....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....er passed under section 154 r.w.s. 143(3) of the Act on 25/01/2021 wherein refund of Rs. 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 issues involved in the appeal along with several decisions of the co-ordinate bench in assessee's own case as well as the orders issued under section 154 of the Act by the learned assessing officer. h. He did not press grounds 5, and submitted that grounds 1, 9 & 10....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....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 system and had identical working in India. In that case, tribunal held that only 15% of receipts could be attributed to accrue/arise in India and since the payment made by the assessee to ADSIL in India was more than 15%, there was no income attributable to PE which could be ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....a." 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 decided in assessment year 1999-2000. Subsequently, the co-ordinate benches followed the above decision. The co-ordinate bench held that the income attributable to the functions performed by the permanent establishment is 15% of the gross receipts. It further held that if the amount ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....,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 Rs. 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 assessee to entertain subsidiary and therefore, no further income is required to be attributed. No change in the facts and circumstances of the case were shown before us. Therefore, respectfully following the decision of the co-ordinate bench in the case of the assessee itself for earlier assessment years, we conf....