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2020 (1) TMI 66 - AT - Income TaxValidity of Assessment u/s 144C(1) - whether the draft assessment order forwarded to the assessee left unsigned - HELD THAT - Draft assessment order does not carry the force of a final assessment order which results in an enforceable demand against the assessee. Thus, in strict sense of the term, the draft assessment order cannot be treated as assessment order passed under section 143(3) r/w section 144C(3) or section 144C(13) of the Act. Therefore, the non signing of the draft assessment order forwarded to the assessee would not invalidate the final assessment order passed under section 143(3) r/w section 144C(13) of the Act. In any case of the matter, the report of the Assessing Officer furnished before learned DRP clearly states that the office copies of the draft assessment order has been duly stamped and signed. Therefore, non signing of the draft assessment order forwarded to the assessee would not be that fatal to invalidate the final assessment order. The decisions relied upon by the leaned Sr. Counsel are clearly distinguishable on facts In the facts of the present case, there is no dispute that the final assessment order has been duly signed and stamped by the Assessing Officer. That being the case, there cannot be any issue regarding the validity of the final assessment order. - Decided against assessee Income accrued in India - subscription revenue received by the assessee to be in the nature of royalty and bringing it to tax in India - Article 13(6) of the India UK Tax Treaty - HELD THAT - While deciding the dispute relating to nature of subscription charges received by the assessee in assessee s own case for the assessment years 2008 09 and 2009 10, the Tribunal in the decision reported 2014 (7) TMI 899 - ITAT MUMBAI has held that the amount received by the assessee is in the nature of royalty as per Article 13(3) of the Tax Treaty. The same view was reiterated by the Tribunal wile deciding identical issue in assessee s own case for the assessment year 2012 13 in DCIT v/s Reuters Transaction Services Ltd 2018 (8) TMI 1129 - ITAT MUMBAI . Therefore, in our considered opinion, the issue whether the amount received by the assessee from the customers in India is in the nature of royalty stands covered against the assessee by the aforesaid decisions of the Co ordinate Bench. That being the case, we concur with the view expressed by the Revenue authorities that the amount received by the assessee from the customers in India is in the nature of royalty as per Aricle 13(3) of the India UK Tax Treaty as well as the provisions of the Act. Alternative claim made by the assessee that only the royalty income attributable to the PE can be brought to tax in India as per the provisions of section 115A r/w section 44DA of the Act r/w Article 13(6) of the India UK Tax Treaty - When the issue has been decided by the Tribunal against the assessee in the preceding assessment years more than once and no difference in facts obtaining in the impugned assessment year has been brought to our notice by the assessee. Adhering to the norms of judicial discipline, we respectfully follow the decision of the Tribunal on the issue, as referred to above, and hold that the assessee cannot take the benefit of Article 13(6) of India UK Tax Treaty. These grounds are dismissed.
Issues Involved:
1. Validity of the assessment order. 2. Nature of subscription revenue received by the assessee and its taxability in India. Issue-wise Detailed Analysis: 1. Validity of the Assessment Order: The assessee challenged the validity of the assessment order on the grounds that the draft assessment order forwarded to the assessee was not signed and stamped by the Assessing Officer, making it invalid. The assessee relied on the decisions in Kalyan Kumar Rai v/s CIT and Vijay Corporation v/s ITO to support this claim. The Revenue argued that the final assessment order was valid as it was signed and stamped by the Assessing Officer. They contended that the unsigned draft assessment order was a curable defect under section 292B of the Act, and no prejudice was caused to the assessee since the final assessment order was signed and stamped. The Revenue also cited decisions in Deepak Agro Food v/s State of Rajasthan, Home Finders Housing Ltd. v/s ITO to support their argument. The Tribunal considered the rival submissions and the statutory provisions. It observed that the draft assessment order does not carry the force of a final assessment order and is not enforceable until the final assessment order is passed. The Tribunal concluded that the non-signing of the draft assessment order forwarded to the assessee would not invalidate the final assessment order, as the office copies were duly signed and stamped. Therefore, the Tribunal dismissed the assessee's ground challenging the validity of the assessment order. 2. Nature of Subscription Revenue Received by the Assessee and Its Taxability in India: The assessee received ?74,94,76,823 from customers in India for providing services and claimed that the revenue was neither royalty nor fee for technical services but business profit. The assessee argued that under Article 7 of the India-UK Tax Treaty, it was not taxable in India as it did not have a Permanent Establishment (PE) in India. The Assessing Officer, however, treated the subscription revenue as royalty based on previous Tribunal decisions in the assessee's own case and brought it to tax in India. The Tribunal noted that the issue of whether the subscription charges received by the assessee were in the nature of royalty had already been decided against the assessee in earlier assessment years (2008-09, 2009-10, and 2012-13). The Tribunal followed its earlier decisions and held that the subscription charges were in the nature of royalty as per Article 13(3) of the India-UK Tax Treaty and the provisions of the Act. The assessee alternatively claimed that only the royalty income attributable to the PE in India should be taxed under Article 13(6) of the India-UK Tax Treaty. The Tribunal observed that this argument had also been addressed in earlier decisions, where it was held that once the receipt was determined as royalty, there was no need to consider the PE aspect. The Tribunal reiterated that the assessee could not take the benefit of Article 13(6) of the India-UK Tax Treaty, as the issue had been consistently decided against the assessee in previous years. Conclusion: The Tribunal dismissed the appeal, upholding the validity of the final assessment order and confirming the treatment of subscription revenue as royalty taxable in India. The Tribunal adhered to its previous decisions and maintained judicial discipline in its judgment.
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