9911796707
TMI Blog2012 (9) TMI 94X X X X Extracts X X X X X X X X Extracts X X X X ..... the end of the assessment year 2003-04 and, therefore, the conditions stipulated in the proviso to Section 147 of the said Act would be applicable. 3. The point on which the purported notice under Section 148 of the said Act has been issued is that the petitioner had not fully and truly disclosed the fact that the petitioner has a permanent establishment (PE) in India. It is the case of the revenue that inasmuch as, according to the revenue, the petitioner/ assessee has a permanent establishment in India, the petitioner would be subjected to the higher rate of tax of 20% on the gross amount of royalty. According to the petitioner, even if the petitioner has a permanent establishment in India, it would still not be subjected to the higher rate of tax of 20%. However, it is the contention of the petitioner that that it does not have a permanent establishment in India and, therefore, in any event, it could only be subjected to the rate of tax of 15%. The entire controversy in the present writ petition centres on the point as to whether the petitioner has or does not have a permanent establishment in India. Moreover, the conditions stipulated in the proviso to Section 147 of the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n India. 5. The said notice under Section 148 dated 29.03.2007 and the reasons therefor were objected to by the petitioner in view of the petitioner's objections dated 14.09.2007. In the said objections, the petitioner submitted that it did not have research and development centres in India nor did the petitioner conduct any research and development in India. It was pointed out that two related Indian companies conduct research and development on behalf of a subsidiary of the petitioner. The said subsidiary did not generate licencing revenue. However, the said subsidiary paid the related Indian companies arm's length service fees for research and development services performed in India. It was further mentioned that the related Indian companies were being assessed to income tax separately before the respective jurisdictional officer in India. It was, therefore, contended on behalf of the petitioner that it had no other business connection or permanent establishment in India insofar as the assessment year 2003-04 is concerned. It was also contended that under the double taxation avoidance agreement between India and the U.S.A, the executive meetings and fees for included services, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons products and services based on its code division multiple access (CDMA) technology. For the year under review, order u/s 143(3)/ 147 was passed assessing the income of the assessee at Rs. 37,74,51,420- as against returned income of Rs 20,07,76,421/-. The additional income was assessed as royalty income and taxed @ 15% in accordance with the provisions of section 9(1)(vi) and Article 12(7)(b) of the DTAA. Subsequently, it was observed that the assessee has business connection and PE in various form, in India, under provisions of section 9(1)(i) of IT Act and in terms of Article 5 of the DTAA, respectively. The assessee company is earning Royalties in India from utilization of its patented products including CDMA technology embedded in the handsets supplied to Indian telecom operators. Moreover, Fees for Technical Services is earned from providing technical support services for facilitating the utilization of its products in India. As the year under review pertains to F.Y. prior to 01.04.2003 it is therefore implied that the agreements must/ should have been executed well before 01.04.2003. Therefore, this income must be taxed @ 20% gross instead of 15%. It was the duty of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disclosure of facts is without any basis and the same is not supported by any justification or explanation as to how the assessee has failed to disclose fully and truly all the material facts necessary for the assessment. The above allegation by your kind office is completely contrary to the facts and evidences on record. In this regard, it is pertinent to bring to your kind notice all the information sought/ required for determining the existence of PE in India that was furnished during the course of assessment proceedings.........." It was also pointed out by the learned counsel for the petitioner that the impugned notice dated 30.03.2010 and the purported reasons of the same date were misconceived inasmuch as the entire issue of the petitioner having a permanent establishment in India had been gone into in the first round, that is, pursuant to the notice dated 29.03.2007 which had been purportedly issued under Section 148 of the said Act and which culminated in the assessment order dated 31.12.2007. Therefore, according to the learned counsel for the petitioner, the objection that the impugned notice dated 30.03.2010 was barred by limitation, was fully justified. Howev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se fully and truly all material facts with regard to the allegation that the petitioner had a PE in India. Despite that, the objections of the petitioner have been rejected. Even where the order dated 27.10.2010 deals with the question of limitation, it does not indicate as to how the impugned notice dated 30.03.2010 would be within limitation when admittedly, it was issued after four years from the end of the assessment year 2003-04. 12. Being aggrieved by the said notice dated 30.03.2010 and the order dated 27.10.2010, the petitioner has filed this writ petition seeking the quashing of the same. On the first date of hearing, that is, on 29.11.2010, this Court, inter alia, directed that the assessment proceedings could continue but no final order was to be passed without the leave of this Court. 13. In this factual backdrop, we have to decide as to whether the impugned notice dated 30.03.2010 and the impugned order dated 27.10.2010 can be sustained in law or not. From what has been mentioned above, it is evident that the question of the petitioner having a permanent establishment in India had been gone into in the first round. This is apparent from the reasons dated 29.03.2007 r ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
