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TMI Blog2015 (4) TMI 713X X X X Extracts X X X X X X X X Extracts X X X X ..... arned Commissioner of Income-tax (Appeals) erred in holding that marketing and management services amounting to Rs. 6,52,13,074 are to be taxed as business profits when it is part of the marketing and management services rendered by the assessee resulting in total receipts of Rs. 68,15,11,339 and which are in the nature of fees for technical services. 3. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) erred in directing that the assessee is having service permanent establishment (PE) in India under article 5(2)(k) of the India-US treaty. 4. Without prejudice, on the facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) erred in holding that receipts of Rs. 61,62,98,265 towards marketing services is not taxable in India after confirming that the assessee has permanent establishment in India, ignoring the fact that the same is attributable to the service permanent establishment in view of the 'force of attraction rule' and hence liable to be taxed as busi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an identical issue has been considered and decided by the Tribunal in favour of the assessee. We further note that in the assessment years 2004-05 and 2005-06 the order of this Tribunal has been confirmed by the hon'ble jurisdictional High Court. In the latest decision dated December 14, 2012 for the assessment year 2006-07 in I.T.A. No. 8621/M/2011), the Tribunal has again considered and decided this issue in paragraphs 2.4 to 2.6 as under : "2.4. Having heard the rival submissions on the point and consi dered the relevant material on record, we do not find any force in the arguments put forth on behalf of the Revenue par two reasons. Firstly-the Assessing Officer treated this amount as 'fees for induced services' under article 12(4)(b) of the Double Taxation Avoidance Agreement by relying on similar view taken by him in the earlier year. Such earlier year's order passed by the Assessing Officer has been eventually considered and overturned by the Tribunal. In this order it has been held by the Tribunal that the amount is not taxable as fees for included services under arti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and-alone basis. We will discuss infra in a little more detail that the provision of the Act or the relevant Double Taxation Avoidance Agreement, whichever is more beneficial to the assessee, shall apply. As the provisions of article 12(4)(b) are beneficial to the assessee in comparison with section 9(1)(vi), it is the prescription of article 12, which shall apply in supersession of section 9(1)(vi) of the Act. We, therefore, hold that the marketing and man agement services rendered by the assessee to WNS India are not chargeable to tax as fees for included services under article 12 of the Double Taxation Avoidance Agreement. The impugned order is, therefore, reversed to this extent. 2.6. As we have held in the foregoing paragraph that the amount of Rs. 41.02 crores cannot be considered as fees for included services, naturally the amount received by the assessee on this score needs to be examined from the angle of taxability under other provisions. It is important to note that the assessee filed its return declaring total income of Rs. 38,78,407 by, inter alia, treating the sum of Rs. 4.11 crores ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ears therefore, the Revenue has raised this issue as an alternative plea. In support of his contention he has relied upon the decision of this Tribunal in case of Hindalco Industries Ltd. v. Asst. CIT [2005] 278 ITR (AT) 125 (Mum) and submitted that the Tribunal in the said case has observed that when principle transaction itself is such that it involves taxability in source country, the transactions subsidiary and integral to such a transaction also give rise to the taxability of subsidiary transactions in the source country. The learned Departmental representative has further submitted that the benefit of services is received in India, therefore the services are deemed to have been rendered or made available in India. 6. On the other hand, learned senior counsel has submitted that the issue in the case of Hindalco Industries Ltd. [2005] 278 ITR (AT) 125 (Mum) was whether the payment for training fee was part of sale of know-how and therefore the said decision is not applicable in the facts of the case of the assessee wherein the principle transaction of marketing and management services was outside India and only because the employees of the assessee visited India for more than ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as those effected through permanent establishment. Learned senior counsel thus advanced his arguments that in the case of the assessee the marketing and management services provided outside India cannot be brought under article 7 in the category of the business activities carried on of the same or similar kind as those effected through the permanent establishment. Accordingly, he has vehemently opposed the alternative ground raised by the Revenue. 7. We have considered the rival submissions as well as relevant material on record. There is no dispute that out of total marketing and management fee of Rs. 8,15,11,339 received from WNS India only a sum of Rs. 6,52,13,074 has been attributed to such permanent establishment because the services were rendered in India. The remaining amount of marketing and management fee received by the assessee is regarding the services rendered outside India. The learned Departmental representative has contended that since the services which were rendered in India and outside India are same or similar in nature and as per the composite agreement therefore, the entire service is attributable to the service permanent establishment in India by applying ..... X X X X Extracts X X X X X X X X Extracts X X X X
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