9911796707
TMI Blog2015 (4) TMI 794X X X X Extracts X X X X X X X X Extracts X X X X ..... the cross objection is being filed on 9.12.2013 resulting in a delay of 1101 days. I state that the delay is neither willful nor deliberate but to unavoidable circumstances. I state that this grounds of objection raised on account of additional grounds of appeal filed by department on 11.3.2013. The Delhi High Court had reviewed their decision and the assessee became aware of the same only in 2nd week of August, 2013. The assessee approached their advocates and it was decided to file cross objection to additional ground raised by department. The delay in filing cross objection from the date of filing of original grounds of appeal by the department is only because of the department has filed addition grounds on 11.3.2013 and the assessee was aware of the review of Delhi High Court decision only in 2nd week of August, 2013. It is prayed that in the interest of justice, the delay in filing cross objection may be condoned and grounds of cross objection may be admitted for consideration in accordance with law." 3. We have perused the reasons and are satisfied that there is a reasonable cause for the delay in filing of the cross objection. In the interest of justice, wecondone the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He further submits that management of server installed in USA would constitute permanent establishment of the assessee in USA and both profit and expenditure incurred in USA should not be brought to tax in India. He also submits that the nonresident, INetU is situated in USA and they have no permanent establishment in India and hence are not subject to income-tax in India. Counsel submits that hosting charges is not royalty. He places reliance on the decision of Mumbai Bench of this Tribunal in the case of ITO Vs. People Interactive (I) P.Ltd. in ITA Nos. 2179 to 2182/Mum/2009 dated 29.02.2012. He also submits that these payments do not fall under fees for technical services. He submits that nonresident does not make available any technical knowledge and hence cannot be termed as fees for technical services. He places reliance on the following decisions in support of his contentions:- i) CIT Vs. De Beers Minerals India P.Ltd. (346 ITR 467)(Ker) ii) DIT Vs. Guy Carpentar (346 ITR 504) (Del) 7. Heard both sides. Perused orders of lower authorities and the decisions relied on. This issue has been considered by the Commissioner of Income Tax (Appeals) with reference to the submissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... non-resident only constitutes its business income. The business income earned by a non resident who does not have a Permanent Establishment (PE) in India cannot be taxed in India as per DTAA between USA and India. I also find merit in the alternate ground raised by the appellant in respect of the nondiscrimination clause under the DTAA between India and USA. The Article 26(3) of the DTAA is clearly against any discrimination against the non-resident, whereby any payment to the non-resident is not allowed as a deduction in computing the income of the resident payer. The decisions of the Delhi Bench of the ITAT in Herbalife International (Supra) and MilleniumInfocom (Supra) also support the appellant's case. Since, similar payments (rent, royalty etc.) without deduction of tax to residents would not invite disallowance u/s 40(a)(ia) in the AY 2004-05, which is the subject assessment year before me, I agree that the disallowance in the present case u/s 40(a)(i) of the payments to the non-residents would amount to discrimination against the nonresident, which is not permitted . Hence, for this reason as well, it is held that there could not be any disallowance u/s 40(a)(i) of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e STPI unit after STPI unit was shifted to a new building located at Habibullah Road, T.Nagar, Chennai. The Assessing Officer was of the view that assessee has used computers belonging to its DTI unit for development of software, therefore not eligible for exemption under section 10B of the Act. He was of the view that assessee has not hired building where STPI is said to have been situated and therefore denied exemption under section 10B of the Act. On appeal, Commissioner of Income Tax (Appeals) allowed exemption claimed by the assessee observing that assessee had purchased new computers for STPI unit which is located at 2nd floor of No.2, Sarangapani Street and the entire floor is only STPI unit. Commissioner of Income Tax (Appeals) held that DTI unit was functioning only from the first floor. Commissioner of Income Tax (Appeals) held that new computers were delivered in the second floor for STPI unit. The assessee paid rent by way of debit note to the other unit since lease between one division and another of the same assessee, therefore there is no necessity for paying amount by cheque . The Commissioner of Income Tax (Appeals) was of the view that STPI granted approval to ope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted the assessee to conduct its business from the second floor. He further submits that all the computers were delivered in the address given in the second floor where STPI unit is located and all these invoices were produced before the Assessing Officer as evidenced from the remand report also. Therefore he submits that claim made by the assessee under section 10B is in order. The assessee also filed cross objection claiming that in case deduction under section 10B is not allowable, claim for relief under section 10A should be considered as the assessee satisfies all the conditions of section 10A of the Act. The counsel for the assessee placing reliance on the very same decision relied on by the Revenue in the case of CIT Vs. Regency Creations Ltd. (353 ITR 326) submits that the Hon'ble Delhi High Court held that the claim of the assessee for deduction under section 10B is not allowable claim for relief under section 10A should be considered. 14. Heard both sides. Perused orders of lower authorities and materials on record and the decision relied on. Exemption under section 10B is allowable for the undertaking which are 100% export oriented undertaking. Explanation 2 to sub-clau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. Commissioner of Income Tax (Appeals) extracted the submissions in his order at page 5 & 6 as under:- "The requirement of relief under section 10A are satisfied: 1. STPI approval has been obtained in respect of an identifiable separate space. 2. The business of the STPI was new and different from the existing contracts of the Domestic Tariff unit. 3. The profits claimed as exempt under Sections.10a relates to the new export business carried on the STPI unit after the approval of the same as a STPI unit. 4. Only new machinery, not used before for any other purposes were used in the STPI business. Lease/hire of the machine by the assessee to himself cannot be considered as used for any other purposes. 5. Merely because hire charges were shown payable to DTA, would not mean that STPI unit as not using new machinery. 6. Without prejudice Circular no.1 of 2005 dated 6.1.2005 would show that even existing old units are entitled to relief under Sections.10A/B. Therefore existing business or old machinery are not very relevant for grant of relief under Section 10A/B." Neither the Assessing Officer nor the Commissioner of Income Tax (Appeals) considered whether the assessee is e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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