2018 (5) TMI 2089 - AT - Income Tax

Income taxable in India - attribution of income as effectively connected with the P.E. of the assessee in India - whether the balance receipts not attributable to permanent establishment of the assessee can be taxed as fees for technical services under Article-13 of the India-UK Tax Treaty? - HELD THAT - As issue raised in the present appeal is identical to the issues in assessee s own case for A.Y. 2010-11 2016 (11) TMI 65 - ITAT DELHI and for similar reasons dismiss the appeal of the assessee as held the receipts from the services rendered outside India are chargeable to tax as Fees for Technical Services in terms of Article 13(4) (c) as it makes available the technology to the recipient of services and further the provisions of article 13(6) of the lndo UK Double Taxation Avoidance Agreement does not apply to this sum as it does not arise through and also not effectively connected with the permanent establishment of the appellant. - Thus the appeal of the assessee is dismissed.

Summary

Issues:
Appeals against order dated 20th January, 2016, 23rd September, 2016, 22nd September, 2016, and 18th July, 2017 passed by Ld.ACIT, Circle 2(1)(1), International Taxation for AYs 2011-12 to 2014-15. Applicability of Article 13 as proposed by Revenue vs. Article 7 as contended by assessee under India UK DTAA. Attribution of income effectively connected with P.E. in India.

Analysis:

Issue 1: Applicability of Article 13 vs. Article 7 under India UK DTAA
The Tribunal observed that the factual background for the relevant assessment years was similar to a previous case for AY 2010-11. The dispute revolved around the applicability of Article 13 as suggested by the Revenue versus Article 7 as argued by the assessee under the India UK DTAA. The Tribunal referred to its previous decision and held that receipts from services rendered outside India were chargeable to tax as Fees for Technical Services under Article 13(4)(c), as they made technology available to the recipient without being effectively connected with the permanent establishment of the appellant.

Issue 2: Attribution of Income
The Tribunal further addressed the issue of attribution of income effectively connected with the Permanent Establishment (P.E.) of the assessee in India. It was noted that the receipts in question were not arising through or effectively connected with the P.E. Based on the previous decision and the provisions of the India UK DTAA, the Tribunal dismissed the appeals filed by the assessee for all the assessment years under consideration.

Conclusion:
The Tribunal dismissed the appeals filed by the assessee for AYs 2011-12 to 2014-15, upholding the order passed by the Ld. ACIT. The decision was based on the interpretation of the India UK DTAA, specifically regarding the taxation of Fees for Technical Services and the attribution of income not effectively connected with the Permanent Establishment in India. The judgment reiterated the findings from a previous case for AY 2010-11 and concluded that the disputed receipts were taxable under the relevant provisions of the DTAA and the Income Tax Act.