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TMI Blog2022 (6) TMI 348X X X X Extracts X X X X X X X X Extracts X X X X ..... for assessment year 2014-15 for the sake of brevity. However, if any particular issue is arising in other assessment year for the first time, the facts pertaining to the same are discussed accordingly. ITA no.6098/Mum./2019 Assessment Year - 2014-15 3. The Revenue, in its appeal for the assessment year 2014-15, has raised following grounds:- 1. Whether on the facts and in circumstances of the case and in law, the Ld. CIT(A) is right in holding the commission income received by the assessee of Rs. 16,38,81,455/- from HDFC Asset Management Company is in the nature of business income and not of the nature of other income? 2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) is right in deleting the addition by the AO amounting to Rs. 16,38,81,455/- as commission income taxable as per article 23 of India- Singapore treaty? 3. The Appellant prays that the order of the Ld. CIT(A) on the above grounds be set aside and that of the Assessing Officer restored." 4. The only issue arising in appeal for assessment year 2014-15 pertains to deletion of addition of commission income received by the assessee from HDFC Asset Management Co Ltd. 5. The bri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fshore Distribution Commission Income is exempted from tax in India under Article 12 of the DTAA. The assessee further submitted that even if offshore distribution commission income is regarded as "business income' of assessee in India, such income would not be taxable in India under Article 7 of the DTAA in the absence of assessee‟s permanent establishment in India. The Assessing Officer vide order dated 16/02/2018 passed under section 144C(3) r.w.s. 143(3) of the Act observed that assessee is carrying out distribution activity of products of HDFC Mutual Fund, which are regulated by SEBI in India and since assessee is the SEBI registered FII/FPI, it is not authorised to carry out any other activity including business activity other than FII related transactions in securities. The Assessing Officer came to the conclusion that commission paid to assessee cannot be treated as fees for technical services as the assessee is getting a fixed ratio of commission on quarterly basis for rendering the services. The Assessing Officer further held that as the assessee is operating as a distributor/lead manager of HDFC Mutual Fund, an Indian fund, which is controlled and regulated by SEBI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the outset, it is pertinent to note certain provisions of the Act, which are relevant in order to decide the issue at hand. Section 5(2) of the Act provides that the total income of a person who is non-resident includes all income from whatever source derived, which is received or deemed to be received in India; or accrues or arises or is deemed to accrue or arise in India to the assessee. Further, section 9 elaborates the expression "Income deemed to accrue or arise in India". As per section 9(1)(i) of the Act, all the income accruing or arising, whether directly or indirectly, through or from any business connection in India, or through or from any property in India, or through or from any asset or source in India, or through the transfer of a capital asset situated in India shall be deemed to accrue or arise in India. Explanation 1 to section 9(1)(i) of the Act, further provides as under: "(a) in the case of a business of which all the operations are not carried out in India, the income of the business deemed under this clause to accrue or arise in India shall be only such part of the income as is reasonably attributable to the operations carried out in India;" Thus, as per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to have accrued or arisen in India as they, according to the department, had either accrued or arisen through and from the business connection in India that existed between the non-resident assessees and the statutory agent. This contention overlooks the effect of cl. (a) of the Explanation to cl. (i) of sub-s. (1) of s. 9 of the Act which provides that in the case of a business of which all the operations are not carried out in India, the income of the business deemed under that clause to accrue or arise in India shall be only such part of the income as is reasonably attributable to the operations carried out in India. If all such operations are carried out in India, the entire income accruing therefrom shall be deemed to have accrued in India. If, however, all the operations are not carried out in the taxable territories, the profits and gains of business deemed to accrue in India through and from business connection in India shall be only such profits and gains as are reasonably attributable to that part of the operations carried out in the taxable territories. If no operations of business are carried out in the taxable territories, it follows that the income accruing or aris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e A.O. to verify the claim of the assessee on the ground involving charging of tax at the rate of 15% (amounting to Rs.2,37,31,728) on interest income of Rs.15,82,11,520) without adjudicating the ground of appeal because such directions tantamount to setting aside the issue for which the Ld. CIT(A) 9is not authorized. 4. Whether On the facts and in the circumstances of the case and in law, the learned CIT(A) is right in not adjudicating the ground of appeal involving computation of education cess and higher education cess amounting to Rs.1,28,19,766 and erred in directing the A.O. to follow the decision in ITA no.1458/Kol./2011, in the event of any income being charged under Double Taxation Avoidance Agreement in final computation of demand because such directions tantamount to setting aside the issue for which the Ld. CIT(A) is not authorized. 3. The Appellant prays that the order of the Ld. CIT(A) on the above grounds be set aside and that of the Assessing Officer restored." 16. The issue arising in ground nos. 1 and 2 raised in Revenue's appeal pertaining to deletion of addition of commission income received by the assessee from HDFC Asset Management Co Ltd. is similar to R ..... X X X X Extracts X X X X X X X X Extracts X X X X
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