9911796707
TMI Blog2012 (10) TMI 759X X X X Extracts X X X X X X X X Extracts X X X X ..... to be upheld as there is no contrary view or judgment the assessee placed controverting the findings of the AO in this regard. Accordingly, the findings of the ld. AO that amount received by the assessee has to be taxed as business profits in terms of the provisions of Article 7 of the DTAA read with Section 44D and Section 115A are confirmed and upheld - decided in favour of the Revenue. Interest u/s 234B - Held that:- It is noticed that the receipts of the assessee are liable for tax deduction under the provisions of section 195 & that M/s OHPC has deducted tax at source on the payments made to the assessee. Whether the Tax Deducted a Source has been correctly deducted or not is not the issue but the fact remains that the receipts of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mechanically following the orders of earlier years, has erred in arbitrarily estimating profit on consideration for supervisory services @50% of the gross amount. 6. That without prejudice, the ld. AO, mechanically following the order of earlier years, has erred in subjecting the receipts of the assessee to tax @20% on the gross amount received by the assessee. 7. That the ld. AO has erred in levying interest u/s 234B of the Income Tax Act, the provisions of which were not attracted on the facts of the case. 8. That computation of tax, grant of credit for tax deducted at source has been erroneously made. 9. That the ld. AO has erred in initiating proceeding u/s 271(1)( c) of the I.T. Act, which is not attracted on the facts of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder contract with OHPC is to be determined according to the provisions of the agreement for the avoidance of double taxation (DTAA) between India and Germany notified through Notification No. 10235 dated 29.11.1996 along with provisions of Indian Income Tax Act, 1961 and as per terms of DTAA, fee for supervision during erection, start up and commissioning and training is liable to income tax in India. 3. The Assessing Officer, DDIT issued a questionnaire dated 25th August, 2009 which was replied by the assessee company through submissions dated 15th October, 2009 and submitted that the assessee had received final payment of 10% of contract value related to supervision and training activities on final takeover and completion of the warran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er referred to as the Act ) and ground no.7 raises another ground of chargeability of interest u/s 234B of the Act and ground no. 9 is related to initiation of penalty proceedings u/s 271(1)(c) of the Act. 7. Both these main issues came up in AY 2004-05 and 2006-07 and the ITAT Bench H , New Delhi in ITA No.2353/D/2008 order dated 05.03.2010 and in ITA No.1226/D/2011 order dated 09.05.2011 held that the assessee had a PE in India with the following observations:- 3. Both these issues came up before ITAT in AY 2004-05 by order dated 5.3.2009. ITAT held that the assessee had a PE in India by following observations:- In such circumstances it can only be said that the assessee has done the work of supervision simpliciter. Even though ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovided in explanation 2 to section 9 (1) of the act. Further as the assessee has also not challenged the existence of the permanent establishment in India, the findings of the AO and the Ld. CIT(A) in holding that the business profits of the assessee is from the supervision charges are in the nature of fees for technical services from the rendering of supervision services in connection with the erection, testing and commissioning of the power project is liable to be upheld and we do so. In the circumstances the finding of the Ld. CIT(A) that the provisions of Article 7 of the DTAA read with section 44D and section 115A of the act apply to the business profits of the assessee is upheld. Consequently grounds 2 to 5 of the assesses grounds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in India. We further observe that the findings of authorities below in holding that the business profits of the assessee from the supervision charges are in the nature of Fees for technical services (FTS) from rendering of supervision services in connection with the erection, testing and commissioning of the power project deserves to be upheld as there is neither any other contrary view or judgment before us nor the assessee placed before us any material controverting the findings of the Assessing Officer in this regard. Accordingly, the findings of the ld. AO that amount received by the assessee has to be taxed as business profits in terms of the provisions of Article 7 of the DTAA read with Section 44D and Section 115A of the Act are co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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