TMI Blog2023 (3) TMI 711X X X X Extracts X X X X X X X X Extracts X X X X ..... isposal. CIS was practically the projection of assessee s business in India and carried out its business under the control and guidance of the assessee and without assuming any significant risk in relation to such functions. Besides assessee has also provided certain hardware and software assets on free of cost basis to CIS. Thus, the findings of the CIT(A) that assessee has a fixed place PE in India Article 5(1) of the DTAA is upheld. Decided against assessee. Dependent agent PE - Business model of the Appellant and in absence of any material on record that the conditions mentioned in Article 5(4) of the DTAA is satisfied viz. habitually exercising authority to conclude contracts or maintaining stock of goods or habitually securing orders. CIS did not constitute a dependent agent PE of the Appellant in India. Payment link charges / IPLC charges being taxable under royalty - We hold that there is no transfer of the right to use, either to the assessee or to CIS. The assessee has merely procured a service and provided the same to CIS, no part of equipment was leased out to CIS. Even otherwise, the payment is in the nature of reimbursement of expenses and accordingly not ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in India ? (ii) If so, how much profits are attributable to the said PE ? (iii) Whether the IPLC charges received by the assessee are taxable in India ? 3. Ld. AO observed that the assessee does not even admit the existence of a PE in India, although the appellate authorities have been consistently held in the assessee s case, that the assessee has a PE in India. The second issue was of link charges taxable as equipment royalty or process royalty. Ld. AO observed in para 41 as follows :- 41. The Assessee s reply is duly considered. The assessee has received an amount of Rs. 1,76,86,085 (USD 263,568) on account of IPLC cost. Following the assessment order s for the AYs 2008-09, 2009-10, 2010-11, 2011-12 and 2012-13 it is held that this consideration is taxable as equipment royalty at the rate of 10% as per the DTAA. 4. Ld. CIT(A) however has taken into consideration the orders of Tribunal and held that CIS did not constitutes a dependent agent PE of the appellant in Indian and does not have a service PE but sustained the fix placed PE in India and that assessee has business connection in India to be covered under the provisions of Section 9 of the Act. However it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Act, 1961 ( Act ). 3. That the Ld. CIT (A) failed to appreciate that in view of the nature of transaction which was procuring of computer software (IT enabled services) within the meaning of section 10A of the Act from its Indian Subsidiary for the purposes of export, no income could accrue or arise in the hands of the Appellant in India in view of clause (b) of Explanation 1 of sub-section (1) of section 9 of the Income- tax Act, 1962 ( Act ) read with Article 7(4) of the DTAA. 4. That the Ld. CIT (A) erred in law in holding that profits could be attributed to the alleged PE on account of provision of/allowing use of project specific assets/software by the Appellant to its Indian subsidiary for the purpose of executing specific projects/activities, which, in itself could not have created a PE of the Appellant in India. 5. That the Ld. CIT (A) after accepting that the attribution of profits to the PE should be made by applying transfer pricing principles erred in law in holding that profits could be attributed to the alleged PE of the Appellant in India on account of provision of/allowing use of assets to its Indian subsidiary. The above grounds of appeals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roached the Hon ble High Court against the said order of the Tribunal holding that the assessee had fixed place PE in India, the appeals are yet to be disposed of by the Hon ble High Court. Thus, as of date, the order of the Co-ordinate Bench of the Tribunal for Assessment Years 2006-07 and 2008-09 have a binding precedential value for us because bound by judicial discipline, we are to follow the decisions of the Co-ordinate Bench, especially if the same have been rendered in assessee s own case. The relevant observations and findings of the ITAT in assessee s own case for Assessment Years 2006-07 and 2008-09 are contained in para 9.8 of the said order and the same are reproduced herein under for a ready reference :- 9.8 Looking at the entirety of facts and circumstances, we are of the view that the Ld. CIT(A) s order on the proposition of PE deserves to be upheld. The employees of the assessee frequently visited the premises of CIS to provide supervision, direction and control over the operations of CIS and such employees had a fixed place of business at their disposal. CIS was practically the projection of assessee s business in India and carried out its business under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service PE in Indianandn that the AO had not challenged this before the ITAT. The findings of the Ld. CIT(A) are a ready reference :- On the issue of service PE, AO has mentioned in the assessment order for AY 2013-14 that the Appellant is providing services to CIS and these services are not in the nature of fee for included services. In this regard, the appellant has submitted that, the personnel of the Company visited India for rendering services that qualify as Fee for Included Services under Article 12 of the DTAA and the company has accordingly offered such income to tax in its tax return. Even in the assessment order the Ld. AO has accepted the returned position and taxed the said amount as Fee for Included Services in terms of Article 12 of the DTAA. Even in I AY 2006-07, the CIT(A) has held that there is no Service PE in India and the AO had not challenged this before ITAT. Accordingly, I hold that the Appellant does not have a Service PE under Article 5(2X1) of the DTAA. Accordingly, Ground no 5.12 is allowed. 7.0.2 Therefore, in absence of the department pointing out any distinguishing facts in this year, on identical facts, we dismiss the related grounds r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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