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2021 (12) TMI 1359 - AT - Income TaxIncome accrued In India - amount derived by the Appellant on account of distribution revenue from Turner International India Private Limited ( TIIPL ) as royalty under Section 9(i)(vi) of the Act and also as per the provisions of India-USA Double Taxation Avoidance Agreement ( DTAA ) - Permanent Establishment ( PE ) - HELD THAT - Issue decided in favour of assessee as relying on own case 2020 (10) TMI 245 - ITAT DELHI Non allowance of the credit of taxes deducted at source wrongly withheld on revenue not chargeable to tax in India as per Section 9 of the Act - HELD THAT - Undisputed fact is that the revenue derived from Apalya Technologies Pvt. Ltd. and Parragon Publishing India Pvt. Ltd. are not taxable in India as per Section 9 of the Act. It is also not in dispute that since the income does not form part of the total income of the assessee the credit of TDS was denied. The credit was also denied in A.Y.2013-14 as mentioned elsewhere. The assessee can claim the credit of TDS in the country in which the related income is offered to tax. We, therefore, do not find any reason to interfere with the findings of the DRP. Ground No.7 is accordingly dismissed.
Issues Involved:
1. Assessment order passed under Section 144C(13) r.w.s. 143(3) for A.Y. 2014-15. 2. Treatment of distribution revenue as royalty under Section 9(i)(vi) and DTAA. 3. Classification of Turner International India Private Limited (TIIPL) as Permanent Establishment. 4. Taxation of distribution revenue under Article 7 of DTAA instead of royalty. 5. Disregarding resolution on taxability of distribution revenue as business profits. 6. Non-allowance of credit for tax deducted at source. 7. Initiation of penalty proceedings under section 271(1)(c) of the Act. Detailed Analysis: 1. The appeal challenges the assessment order for A.Y. 2014-15 under Section 144C(13) r.w.s. 143(3) of the Income-tax Act, 1961. 2. Grounds 2 to 5 contest the treatment of distribution revenue as royalty under Section 9(i)(vi) and DTAA. The Tribunal referred to past decisions favoring the assessee and directed the AO to delete the additions. 3. The issue of TIIPL being treated as a Permanent Establishment under Article 5(4) of the DTAA was raised. The Tribunal ruled in favor of the assessee based on previous decisions. 4. Regarding the taxation of distribution revenue, the Tribunal directed the AO to tax it under Article 7 of the DTAA instead of royalty, in line with Article 12(6) of the DTAA. 5. The Tribunal dismissed the contention of disregarding the resolution on taxability of distribution revenue as business profits, following past decisions in favor of the assessee. 6. Ground 6 pertained to the non-allowance of credit for tax deducted at source. The Tribunal directed the AO to consider and allow the claim if found correct. 7. Ground 7 addressed the non-allowance of credit for taxes deducted at source wrongly withheld. The Tribunal upheld the denial of credit as the revenue was not taxable in India as per Section 9 of the Act. This detailed analysis covers the various issues raised in the appeal and the Tribunal's decisions on each ground, providing a comprehensive overview of the judgment.
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