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Issues involved: Determination of nature of income for taxation, existence of permanent establishment under Double Taxation Avoidance Agreement, levy of interest under Section 234B and C of the Income Tax Act.
Nature of income for taxation: The main issue in this case was whether the income earned by the assessee should be classified as business income or fee for technical services, which also included the question of the applicable rate of tax. The High Court framed a substantial question of law to address this issue. Permanent establishment under DTAA: Another key issue was whether the assessee had a permanent establishment in India as per Article 5 of the Double Taxation Avoidance Agreement between India and Singapore. The Income Tax Appellate Tribunal's decision on this matter was under scrutiny. Levy of interest under Section 234B and C: The Revenue raised a question regarding the levy of interest under Section 234B and C of the Income Tax Act, 1961. The Court noted that a similar issue had been decided against the Revenue in a previous case, and the decision was pending reconsideration with a reserved judgment. The Court did not frame a substantial question of law regarding the deletion of interest under these sections but allowed the Revenue to raise it at the final hearing if a favorable decision was obtained. Conclusion: The High Court admitted the cross appeals filed by the Revenue and the assessee arising from a common order. The Court granted liberty to the parties to file necessary papers/documents within a specified timeframe and directed the case to be categorized as a Regular Matter for further proceedings.
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