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TMI Blog2016 (10) TMI 1372X X X X Extracts X X X X X X X X Extracts X X X X ..... DRP vide order dated 30.12.2013. In the grounds of appeal, the revenue has raised following grounds:- "1. Whether on the facts and in the circumstances of the case and in law, the Hon'ble DRP was correct in holding that royalty received by the assessee from Warner Bros Picture India Ltd in pursuance to the agreement for distribution and exhibition of the films in India being business profit attributable to the PE of the assessee in India is not taxable as it is not hit by rigors of Explanation 2(v) to section 9(1)(vi) of the Income Tax Act, 1961? 2. Whether on the facts and in the circumstances of the case and in law, the Hon'ble DRP was correct in holding that royalty received by the assessee from WBPIL in pursuance to the agreement f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e set aside on the above grounds and the draft order of the Assessing Officer be restored". 2. At the outset, the Ld. Counsel for the assessee, Shri W Hasan, submitted that the issues raised in the revenue's appeal are squarely covered by the decisions of this Tribunal in assessee's own case right from the assessment years 2006- 07 to 2009-10. Explaining the brief background, he submitted that, assessee is a non-resident company incorporated in USA and one of its activities includes export of films from USA which are either produced by its Group studios or produced by other third parties. The assessee had entered into an agreement with 'Warner Bros Picture (India) Pvt. Ltd', an Indian entity, granting distribution rights for Cinematographi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remunerated at Arm's Length Price (ALP). The Ld. DRP after referring and following the decision of the Tribunal in assessee's own case right from the assessment years 2006-07 to 2008-09 has allowed the assessee's appeal, holding that its income is not taxable in India. Accordingly, the appeal of the revenue should be dismissed following earlier years' precedent, wherein, it has been held that the amount received by the assessee from the Indian company is not taxable either under the domestic law or under the DTAA. 3. The Ld. DR admitted that this issue has been decided by the Tribunal in favour of the assessee in earlier years. However, he strongly relied upon the order of the Assessing Officer. 4. After considering the rival submissions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the royalty received by it from WBPIPL was not taxable in India either under the Income Tax Act or under India-USA DTAA. During the Assessment proceedings, the AO did not accept the claim of the assessee and assessed the royalty @ 15% under India-USA DTAA. Against the said order of the AO, the assessee filed appeal to CIT (A). The CIT (A) has held that the royalty received by the assessee from WBPIPL is not taxable either under the Income Tax Act or the DTAA. Against the said order of the CIT (A), the Department had filed appeal to the ITAT. The Hon'ble ITAT, "L" Bench, Mumbai vide its order dated 30th December, 2011 in ITA No.3160/Mum/2010 has confirmed the order of the CIT(A) holding that the royalty received by the Assessee (WBPI) from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer as per PE proviso. It was the contention of the learned Departmental Representative that the assessee having business connection, the findings of which was given by the CIT(A), the amount cannot be executed without examining 'PE proviso' provisions of DTAA. In this regard the learned Counsel's submission that under the Income Tax Act as well as under the provisions of DTAA the transaction between the assessee and Indian Company to whom license was granted by the virtue of the agreement cannot be considered as Agency PE as the Indian assessee is not exclusively dealing with the assessee and referred to the receipts from another company 10th Century Fox to submit that the assessee is also dealing with the other Non Resident Companies, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee cannot be taxed as Royalty. Once the income of the assessee company does not qualify under the definition of Royalty, the income has to be held as business income. The business income cannot be taxed in the absence of PE in India. We have seen that the Hon'ble ITAT has categorically held that the WBPIPL is not the PE of the assessee company. 3.3.6 Thus, respectfully following the decision of the Hon'ble ITAT in the assessee's own case, we are of the view that the income of the assessee is not taxable in India and we direct the AO to delete the addition proposed on this account". Since, the aforesaid decision of the Ld. DRP is based on finding arrived at by the Tribunal in earlier years, therefore, consistent with the jud ..... X X X X Extracts X X X X X X X X Extracts X X X X
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