9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2013 (11) TMI 126 - AT - Income TaxConstitution of Permanent establishment ( PE ) in India Held that - The issue regarding the period of continuation of the activities has been stated to be less than nine months by the assessee. On the basis of the data furnished, the period falls short only by about 20 days. The lower authorities have not examined the provision contained in article 5(2)(i) - This limited issue is restored to the file of the Assessing Officer to ascertain the period of the existence of the assessee in India and thereafter decide the existence of permanent establishment. Applicability of section 44BB Held that - As the assessee is engaged in the services of laying a pipeline in the offshore area for the extraction of oil and gas the services are in connection with the extraction/production of oil/gas and therefore covered by section 44BB - In case it is held that a permanent establishment exists, its income may be taxed under section 44BB - Issue restored to the file of the Assessing Officer to ascertain the period of existence of the assessee in India. Calculating the total tax payable - the Assessing Officer calculated the tax payable after adding the income ignoring the fact that no refund was paid to the assessee. This matter can be rectified at the end of the Assessing Officer - The Assessing Officer would consider the issue of refund at his end de novo after giving a reasonable opportunity of being heard to the assesse Decided in favour of assesse.
Issues Involved:
1. Assessment of total income. 2. Constitution of a permanent establishment (PE) in India. 3. Calculation of total tax payable and refund. 4. Levying of interest under section 234B. 5. Levying of interest under section 234D. Issue-wise Detailed Analysis: 1. Assessment of Total Income: The assessee contested the assessment of its total income at Rs. 1,45,23,18,561 against nil returned income. The Assessing Officer (AO), following the Dispute Resolution Panel-II (DRP) directions, finalized the assessment under section 143(3)/144C(13) of the Income-tax Act, 1961, at Rs. 14,52,31,860 under section 44BB(1). The DRP upheld that the income should be taxed under section 44BB as business income, not as royalty or fees for technical services. 2. Constitution of a Permanent Establishment (PE) in India: The AO held that the assessee constituted a PE in India under Article 5(2)(i) of the India-Mauritius Double Taxation Avoidance Agreement (DTAA), despite the contract duration with British Gas being less than nine months. The DRP supported this view, stating that the activities did constitute a PE. However, the Income-tax Appellate Tribunal (ITAT) referenced a prior judgment (GIL Mauritius Holdings Ltd. v. Asst. DIT) which necessitated ascertaining the exact period of the assessee's presence in India. Consequently, the ITAT restored this issue to the AO to determine the period of existence in India and decide the PE status accordingly. 3. Calculation of Total Tax Payable and Refund: The assessee argued that the AO erred in calculating the total tax payable by adding Rs. 7,21,97,190 towards a refund that was never paid. The ITAT directed the AO to re-examine this issue during the reassessment process, ensuring the correct tax calculation and addressing the refund claim after providing the assessee an opportunity to be heard. 4. Levying of Interest under Section 234B: The assessee contended that being a non-resident with revenues subject to tax withholding under section 195, it was not liable to pay advance tax, and thus, interest under section 234B should not be levied. Given the restoration of primary issues to the AO, this matter was not separately adjudicated but noted as consequential. 5. Levying of Interest under Section 234D: Similar to the issue under section 234B, the assessee argued against the levy of interest under section 234D, asserting that no refund was granted. As with the previous issue, this was also deemed consequential and left for the AO to address during reassessment. Conclusion: The ITAT restored the primary issues regarding the existence of a PE and the correct tax calculation to the AO for a thorough reassessment. The AO was instructed to ascertain the period of the assessee's presence in India and re-evaluate the tax payable and refund claims, ensuring compliance with the directions and providing the assessee a fair hearing. The appeal was treated as allowed for statistical purposes, with the order pronounced on August 31, 2012.
|
