TMI Blog2023 (2) TMI 1107X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the tax rate of 10% as per India Japan DTAA. Article 12 of India Japan tax treaty provides that the tax to be charged on royalty and FTS shall not exceed 10% of the gross amount of royalty or FTS. Article 2 of the tax treaty defines tax in India as income tax including any surcharge thereon. Therefore, Article 12 read with Article 2 of the tax treaty makes it clear that the rate of tax at 10% would encompass surcharge and education cess as it is also in the nature of surcharge. Therefore, we hold that levy of surcharge and cess over and above the taxable rate of 10% on royalty and FTS is not permissible as per the treaty provisions. Decided in favour of assessee. - ITA No.1789/Del/2022 - - - Dated:- 26-12-2022 - SHRI G.S. PANNU, HON BLE PRESIDENT AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER For the Appellant : Sh. K.M. Gupta, Advocate Ms. Shruti Khimta, AR For the Respondent : Sh. Anand Kumar Kedia, CIT(DR) ORDER PER SAKTIJIT DEY, JM: The assessee has filed the present appeal challenging the final assessment order dated 27.06.2022 passed under section 143(3) read with section 144C(13) of the Income-tax Act, 1961 (for short the Act ) pertaining t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, following the decision taken in the preceding assessment year, the Assessing Officer ultimately held that 50% of the amount received towards sale of raw materials and capital goods is attributable to the PE in India as business income. Accordingly, he added back an amount of Rs.2,77,42,494/-. 4. Against the draft assessment order so passed, the assessee raised objections before learned DRP. Though, learned DRP was conscious of the decision of the Tribunal in assessment years 2014-15 and 2015-16 holding that the assessee had no PE in India, however, following the direction of DRP in assessment year 2017-18, learned DRP observed that the earlier view of DRP has to be followed. However, the learned DRP directed the Assessing Officer to verify assessee s claim in terms of Tribunal s orders and to complete the assessment, keeping in view the departments stand on acceptance of ITAT orders or preferring litigation against the orders of the Tribunal. Basis aforesaid direction of learned DRP, the Assessing Officer confirmed the addition made in the draft assessment order. 5. We have heard Sh. K.M. Gupta, learned counsel appearing for the assessee and Sh. Anand Kumar Kedia, learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be treated as at the disposal of the enterprise when the enterprise has right to use the said place and has control thereupon. 12.4 In light of the facts of the case and various judicial precedents wherein the constitution of Fixed Place PE has been considered and adjudicated upon, in our opinion the conditions laid down for creation of a Fixed Place PE is not satisfied in the assessee s case. Merely providing access to the premises by FRL for the purpose of providing agreed services by the assessee would not amount to the place being at the disposal of the assessee. No doubt the assesee has access to the factory premises of FRL but it is for the limited purposes of rendering agreed services to FRL without any control over the said premises. Moreover, FRL is an independent legal entity carrying on its business with its own clients for which the assessee provides time to time technical assistance as required by it. The business of the assesee is not being carried out from the alleged Fixed Place PE. The Ld. DR in support of his contention that FRL constitutes Fixed Place PE of the assessee has placed reliance on certain clauses of the Licence Agreement and argued that title o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unch of new segment line; etc. In our considered opinion, none of these activities performed by the employees are in the nature of supervisory functions, supervision being the act of overseeing or watching over someone or something which is not reflected in the work done by the engineers in India for FRL. 13.3 Moreover, no installation or assembly project was on going at FRL s premises. FRL is in the existing business since many years and no new line of business has been launched by FRL. The employees were not rendering any services in connection with building site or a construction project or an installation project or an assembly project. From the nature of the services rendered by the employees, it is amply clear that these activities were not in connection with a building site or construction installation or assembly project. Hence the issue of computation of period of six months also becomes academic. The employees are visiting India on year to year basis under the contract. In AY 2014-15 and AY 2015-16, the employees visited India to render certain technical services under the Licence Agreement read with Dispatch of Engineers Agreement which have been duly offered to ta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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