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TMI Blog2015 (4) TMI 670X X X X Extracts X X X X X X X X Extracts X X X X ..... ollowing the decision of Jurisdictional High Court of Delhi in the case of Jacabs Civil Incorporated [2010 (8) TMI 37 - DELHI HIGH COURT] and the decision of ITAT “C” Bench Delhi in the case of G.E. Energy Parts Inc. [2014 (7) TMI 683 - ITAT DELHI], we are inclined to hold that the CIT(A) was right in holding that the interest u/s 234B of the Act is not leviable in the case of the assessee being nonresident when its entire income is subject to TDS u/s 195 of the Act. Hence, we are unable to see any valid reason to interfere with the conclusion of the CIT(A) on this issue and we uphold the same. Accordingly, ground no. 2 in both the appeals of the revenue being devoid of merits is also dismissed. - Decided against the revenue. - I.T.A.No.4840/Del/2012, I.T.A.No.4841/Del/2012, C.O. No.442/Del/2012, C.O. No.442/Del/2012 - - - Dated:- 25-3-2015 - Shri N.K. Saini And Shri Chandra Mohan Garg JJ. For the Appellant : Smt. A. Misra, CIT DR For the Respondent : Shri Kapil Goel, Adv. ORDER Per Chandra Mohan Garg, JUDICIAL MEMBER The above captioned appeals of the revenue and cross objections of the assessee have been filed against the order of the CIT(A)-XI, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e arising therefrom against the said distribution rights. The assessee company, being a tax resident of USA in terms of Article 4 of the Indo US Double Taxation Avoidance Treaty, filed its return of income. It is also pertinent to note that the assessee, in the past, had not filed its return of income till AY 2001-02 by applying the ratio of the Circular No. 742 issued by the CBDT which required a foreign telecasting company (FTC) not having Permanent Establishment (PE) in India (within the meaning of the relevant Treaty) to compute its income based on the method prescribed therein. Accordingly, since the assessee being an FTC neither had a PE nor it maintained country-wise accounts of its operations in India. Therefore, the aforesaid Circular No. 742 was applicable to the assessee as per contentions of the appellant. 3. Subsequently, Circular No. 742 was withdrawn w.e.f. 31.3.2001 and Circular No. 6/2001 dated 5.3.2001 was made effective for taxation of FTC in India wherein FTC is a resident of a country with whom India has a Treaty, its business income, including receipts from advertisements can be taxed only if it has a PE in India. For AY 2004-05, the AO issued notice u/s 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12(3) of the tax Treaty between India and USA. Therefore, action of the AO was quite justified and was based on cogent reasons. 7. Ld. DR further contended that the CIT(A) while dealing with ground no. 3 and 4 of the assessee wrongly computed that the assessee is an PE in India and both the advertisement and subscription constitute business income of the assessee in India and that 10% of the business income be treated as taxable income in the hands of the assessee in India. Ld. DR pointed out that the CIT(A) misunderstood and misinterpreted the provisions of the Act while granting relief for the assessee, therefore, the impugned order of the CIT(A) may be set aside by restoring that of the AO. 8. Replying to the above, ld. Counsel for assessee firstly has drawn our attention towards para no. 2.2.1 and 2.2.2 of the statement of facts submitted before the CIT(A) during the first appellate proceedings and submitted that as per licence agreement between assessee and DCIN after collecting subscription revenue from the cable operator as a right to retain the same and in turn, the DCIN would incur necessary costs for the promotion of the channel and specially when the entire subscr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iness income and thereafter, 10% of the such revenues were treated as taxable income of the Appellant in India. Thereafter the order for AY 2007-08 was as per the order of the DRP dated 30/09/2010 whereby it was held that:- Before DRP the assessee has filed a letter dated August 20,2010, wherein it is explained that in the case of a group entity, Discovery Asia Inc, USA ('OAI'). The Competent Authorities of India and US agreed that OAI has a dependent agent PE in India in the form of DCIN. It was resolved that the income of dAI from Advertisement revenues and Subscription revenues be taxed under Article 7 of the Treaty i.e as Business income. The two competent authorities then agreed to computation of DAI's income @ 10% of Gross Advertisement and Subscription revenues. Copy of the MAP resolution dated January 2,2006 has been filed. The assessee then submitted that without prejudice to it's various contentions outlined in the DRP application of February 19,2010, to buy peace and to put an end to litigation, it is submitted that this can be resolved in spirit of DAI MAP resolution wherein advertisement and subscription revenues were treated as business incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e same line which has been followed by the CIT(A) in the impugned orders. Accordingly, we are unable to see any perversity, infirmity or any other valid reason to interfere with the orders of the CIT(A) on this issue and we uphold the conclusion of the CIT(A) based on justified reasoning in accordance with the provisions of the Act. Therefore, ground no. 1 of the revenue in both the appeals being devoid of merits is dismissed. Ground no.2 of the revenue 11. Apropos ground no.2, ld. DR contended that the Ld. CIT(A) has erred in holding that interest u/s 234B is not chargeable in the assessee's case, by relying upon the decision of Hon'ble High Court of Delhi in the case of Jacob Civil Incorporated, without appreciating that the levy of interest 234B is mandatory as held in the case of CIT Vs Anjum M.H. Ghaswala Others (supra). 12. Replying to the above, ld. Counsel of the assessee placing reliance on the decision of ITAT C Bench dated 16.7.2013 in ITA No.6049/Del/2010 and other appeals in the case of ADIT vs G.E. Energy Parts Inc. to which one of us (C.M.Garg, JM) was a party, submitted that the CIT(A) followed binding decision of Hon ble Jurisdictional Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X
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