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2011 (7) TMI 534 - AT - Income TaxDisallowance u/s 40(a)(i) - payments of export commission to M/s. Al Aquilli Trading L.L.C., Dubai and Mr. James Drutchas, U.S.A. as Consultants/representatives - Miscellaneous application filed - Held that - Perusal of the miscellaneous application filed by the assessee shows that what has been raised by the assessee are fresh arguments on the issues. It is not pointing out any mistake apparent from the record. The assessee has also raised an issue that the non-application of the decision in a proper perspective would amount to a mistake apparent from record. Here we may mention that there has been no non-application of a decision in the proper perspective. It is not the argument of the assessee that the decision has not been considered. A verification of the log book also shows that the decision in the case of Asianet Communications Ltd. (2009 (12) TMI 586 - ITAT CHENNAI) which now being quoted by the assessee was not argued at that point of time. The assessee did raise and argued the case on the applicability of ITO v. Prasad Productions Ltd. 2010 (4) TMI 784 - ITAT MADRAS-B which was considered in detail. A perusal of the note filed at the time of hearing also shows that the arguments on the issues had been considered and it has not been pointed out that there was any mistake apparent from record. In the circumstances, as the issues as raised in the appeal have been considered and the submissions of the assessee have also been considered while deciding the appeal no mistake apparent from the record is shown in regard to the said order. Consequently, the miscellaneous application stands dismissed.
Issues Involved:
1. Applicability of Circular 786, dated 7-2-2000. 2. Section 9(1)(vii)(b) - Earning of income from a source outside India. 3. Article 26(3) of India-USA Tax Treaty. 4. Applicability of Article 12(4)(b) of India-USA DTAA - Fee for included services. 5. Non-consideration of payment to Al Aquilli Trading LLC, Dubai. 6. Non-application of the decision of the Special Bench, Chennai in Prasad Productions. Detailed Analysis: 1. Applicability of Circular 786, dated 7-2-2000: The assessee argued that payments for acquiring orders from abroad are not taxable by virtue of Circular 786 of 2000, which was withdrawn prospectively. The Tribunal noted that the assessee's arguments were reproduced in the order but not analyzed or concluded upon. The Tribunal dismissed this argument, stating that the withdrawal of the Circular was indeed prospective but did not find any apparent mistake in the original order that required rectification. 2. Section 9(1)(vii)(b) - Earning of income from a source outside India: The assessee contended that the payments were related to exports and should not be deemed to accrue in India under Section 9(1)(vii)(b). The Tribunal observed that the representatives sourced technical information in their territory and supplied it to the assessee for business advancement in India. Therefore, the income was considered to accrue in India. The Tribunal did not find any apparent mistake in its original order regarding this issue. 3. Article 26(3) of India-USA Tax Treaty: The assessee submitted that Article 26(3) of the India-USA Tax Treaty provides that payments to non-residents should be treated similarly to payments to residents. The Tribunal held that the DTAA provisions are to be considered during the assessment of the non-resident and not at this stage. The Tribunal found no apparent mistake in its original order concerning this argument. 4. Applicability of Article 12(4)(b) of India-USA DTAA - Fee for included services: The assessee argued that the payments did not make available technical knowledge, skill, or know-how as required under Article 12(4)(b) of the India-USA DTAA. The Tribunal noted that the representatives assisted the assessee in gaining access to technical information, which was considered making available technical services. The Tribunal did not find any apparent mistake in its original order regarding this issue. 5. Non-consideration of payment to Al Aquilli Trading LLC, Dubai: The assessee claimed that the Tribunal did not consider the payment to Al Aquilli Trading LLC, Dubai. The Tribunal acknowledged this oversight but concluded that the omission did not constitute a mistake apparent from the record that warranted rectification. 6. Non-application of the decision of the Special Bench, Chennai in Prasad Productions: The assessee argued that the Tribunal did not correctly apply the Special Bench decision in Prasad Productions, which stated that the payer must have a bona fide belief that the payment is not chargeable to tax in India. The Tribunal held that the assessee did not have a bona fide belief as the payments were considered remuneration, which inherently includes an income component. The Tribunal found no apparent mistake in its original order concerning this argument. Conclusion: The Tribunal dismissed the miscellaneous application, stating that the issues raised were fresh arguments rather than pointing out any apparent mistakes in the original order. The Tribunal concluded that all the issues and submissions had been considered while deciding the appeal, and no mistake apparent from the record was shown.
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