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TMI Blog2012 (8) TMI 516X X X X Extracts X X X X X X X X Extracts X X X X ..... een mentioned that Article-14 will not be applicable to the facts of the present case and thus these receipts of the assessee are liable to be assessed under Article-7 of the aforementioned DTAA for which the assessee also does not have any objection. Just and proper to restore the issue to the file of AO with a direction to assess the assessee on these receipts under Article-7 of the DTAA after giving the assessee reasonable opportunity of hearing. On taxability of the interest issue it just and proper to restore the said ground also to the file of AO with a direction to readjudicte the issue afresh - ITA NO. 6116 & 6117/MUM/2008 - - - Dated:- 27-6-2012 - SHRI I.P.BANSAL SHRI P.M. JAGTAP JJ. Revenue by : Shri Narendra Kumar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... more than 30 days in the Accounting year relevant to AY 2004-05; ii) in accordance with Article 5(6)(b) of the DTAA between India and Singapore, a service Permanent Establishment was created by the assesse in India; iii) asssesse has not furnished the details of expenses relating to Fees iv) there is no basis for adoption of the rate of 25% 2.2 The grounds of cross objection for assessment year 2003-04 read as under: Each of the following grounds are independent of and without prejudice to one another. 1. On the facts and in the circumstances of the case and in law, both the Assessing Officer and Ld. CIT(A) erred in not considering the report issued by the Transfer Pricing Officer and detailed report issued by International ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... figure stated in Ground No.1, which is sum of Rs.2,24,14,290/-. 3. The main issue arise in these appeals by the revenue and cross objections by the assessee relates to receipts of the service fees amounting to US $ 4,92,000 (equivalent to Rs. 2,37,69,750/- ) for assessment year 2003-04 from M/s Bunge Agribusiness India Pvt. Ltd., which is 100% subsidiary of the assessee. The aforementioned fee is received in respect of two agreements as follows: (a) General services and cost sharing arrangement (b) Legal and accounting services and cost sharing arrangement. 3.1 For assessment year 2004-05 also under similar agreement assessee had received US $ 4,92,000 (equivalent to Rs. 2,24,14,290/-). 3.2 The nature of services made available by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the above treatment given to the service fee another issue relates to interest income which has also been added to the above receipts amounting to Rs.66,94,333/- and Rs.25,30,777/- for assessment year 2003-04 and 2004- 05 respectively. On the above mentioned facts both the parties have argued their appeals and cross objections. 4. Neither Ld. A.R nor Ld. D.R had disputed the existence of Permanent Establishments of the assessee in India. Therefore, Ld. A.R of the assessee submitted that despite the payments received by the assessee may be of fee for included services but in view of Para -6 of Article-12 of DTAA between Republic of India and Republic of Singapore the receipts of the assessee are required to be taxed under Article -7 or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO alternatively in the order for assessment year 2004-05 has mentioned that M/s Bunge Agribusiness India Pvt. Ltd. constitutes Service Permanent Establishment in view Article 5.6(b) as M/. Bunge Singapore s personnel visits M/s Bunge Agribusiness India Pvt. Ltd. from time to time to provide support services. Thus, those receipts are also to be taxed as business profit under Article -7 of DTAA between India and Singapore. Accordingly he estimated the income of the assessee by applying Rule-10 and referred to stand taken by the Department in assessment year 2003-04 which the AO applied for A.Y 2004-05 also and has held that assessee s profit is estimated at 25% of the receipts which is computed at Rs.56,03,572/- and has been held to be t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate will not be applicable if these receipts are effectively connected with PE or fixed base. In that case provisions of Article -7 or Article -14 will apply. It has already been mentioned that Article-14 will not be applicable to the facts of the present case and thus these receipts of the assessee are liable to be assessed under Article-7 of the aforementioned DTAA for which the Ld. Counsel for the assessee also does not have any objection. 6.2 In view of aforementioned discussions it is considered just and proper to restore the issue to the file of AO with a direction to assess the assessee on these receipts under Article-7 of the DTAA after giving the assessee reasonable opportunity of hearing. The amount received by the assessee, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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