9911796707
TMI Blog2013 (10) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee has been submitting returns and is being assessed for payment of tax in India. In exercise of its right under Section 90 of the Income Tax Act, the assessee has opted for being taxed in the manner prescribed in the bipartite agreement between the Union of India and the Republic of Korea. During these assessment years, and also during the past assessment years, the Permanent Establishment of the assessee in India has been linked to certain projects in India, with which the assessee got involved. In relation to assessments during the assessment years, prior to the assessment years with which we are concerned in these appeals, the tax liability of the assessee was determined on the basis of 10 per cent of the gross receipt minus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is of receipt minus (-) expenditure established and there was no scope of applying 10 per cent deemed profit of the receipt minus (-) accepted expenditures. The notice was responded by the assessee, whereafter the assessment order was cancelled and the matter was remitted back to the Assessing Officer. We are told that the Assessing Officer acted on the basis of the said order and has made re-assessment. In the meantime, being aggrieved against the order of the Director of Income Tax passed under Section 263 of the Act, the assessee went before the Tribunal. 2. According to us, the Tribunal correctly held that, even in the notice issued under Section 263 of the Act and also in the order of the Director, there is not even an apprehension ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on behalf of the assessee that the method that was adopted by the Assessing Officer was available to the Assessing Officer under Section 144 of the Act. Lastly, the question is, whether having had adopted a mechanism from 1990-1991, could the Revenue take recourse to what was taken to in view of paragraph 5 of Article 7 of the Treaty? The said paragraph is as follows: "For the purpose of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary." 5. The fact remains that this paragraph is required to be read with paragraph 3 of the Treaty. Paragraph 3 of Article 7 of the Treaty is as follows: "In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee has represented that it has maintained accounts, either in cash or in mercantile system, but has failed to establish that it has, in fact, maintained any such accounts, of applying best judgment method of assessment. In other words, if the assessee has maintained the accounts and has established that its expenses are more than its income or receipt, it is not liable to pay any tax in India. In the event, however, it fails to establish all or any of its expenses, the expenses shown to have been incurred, which could not be established, will be treated as the income of the assessee. The manner, in which the assessee has represented, the question of the Assessing Officer using best judgment method did never arise. It, for not a si ..... X X X X Extracts X X X X X X X X Extracts X X X X
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