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2014 (1) TMI 653 - AT - Income TaxStatus of Assessee Taxability of Income Applicability of Article 8A of DTAA with Netherlands - Held that - CIT (A) upheld the assessment order in so far as relief under Article 8A is concerned - However, the second aspect of the assessment order, being the assessee having a PE in India and resultantly the income becoming taxable - Following Hoyer Global Transport 2014 (1) TMI 385 - ITAT MUMBAI - There is no appeal filed on behalf of the assessee - it is clear that the provisions of Article 8A of the DTAA cannot be made applicable to the assessee as was originally contended before the AO the order set aside and the matter remitted back to the AO for fresh consideration. Charging of interest u/s 234B of the Act Held that - Where income is subject to TDS provisions, then it is the duty cast on the payer to deduct tax at source - On the failure of the payer to do so, no interest can be imposed on payee assessee u/s 234B of the Act Decision of DIT (International Taxation) v. NGC Network Asia LLC Ltd. 2009 (1) TMI 174 - BOMBAY HIGH COURT followed Decided partly in favour of Assessee.
Issues:
1. Taxability of income under Double Taxation Avoidance Agreement (DTAA) between India and Netherlands. 2. Determination of Permanent Establishment (PE) in India. 3. Charging of interest under section 234B. Analysis: Issue 1: Taxability of income under DTAA The appeal by the Revenue challenged the CIT (A)'s direction that income of Rs.8,98,81,469 earned by the assessee from Indian operations was not taxable under the DTAA. The assessee claimed the income was not taxable in India based on Article 8A of the DTAA and argued it did not have a PE in India. The AO rejected the contentions, holding that the activity did not qualify under Article 8A and that Samsara was not an independent agent, concluding the assessee had a PE in India. The CIT (A) upheld the assessment regarding Article 8A relief but ruled in favor of the assessee on the PE issue, deleting the addition made by the AO. Issue 2: Determination of Permanent Establishment (PE) The Tribunal examined whether the assessee had a PE in India and found that Samsara Shipping (P) Ltd was an agent of independent status, not constituting a PE of the assessee in India. The Tribunal referred to precedents and set aside the order, remitting the matter to the AO for fresh consideration in line with earlier Tribunal directions. The decision hinged on the independent status of the agent in determining the existence of a PE in India. Issue 3: Charging of interest under section 234B The second ground of the appeal concerned the charging of interest under section 234B. The Tribunal relied on a judgment of the jurisdictional High Court, holding that where income is subject to Tax Deducted at Source (TDS) provisions, the duty to deduct tax lies with the payer. Failure to do so absolves the payee assessee from interest imposition under section 234B. Following the precedent, the Tribunal upheld the order on this issue, ruling against charging interest under section 234B. In conclusion, the appeal was partly allowed for statistical purposes, with the Tribunal's decision based on the interpretation of the DTAA provisions, determination of PE in India, and the application of interest under section 234B. The judgment provided detailed analysis and references to precedents to support the conclusions reached by the Tribunal.
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